How Tech Startups Deploy Agility In Their Practices and What Affects Their Choices
A comparative case study research
Thanasis Mandaltsis - 11391316
MSc BA – Digital Business | Supervisor – Dr. Peter van Baalen Statement of Originality
This document is written by Student Thanasis Mandaltsis who declares to take full responsibility for the contents of this document.
I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.
The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
II Abstract
Agile project management is an alternative to traditional project management techniques that focuses on people, communications, product, and flexibility. While originally created for software development projects, agile has started diffusing in the business sector offering ventures flexibility and the ability to efficiently handle change in today’s ever-changing business environment.
Nevertheless, as transitioning from traditional management structures to agile might be challenging, more often than not, agile methodologies are being implemented in startup environments to help early ventures deal with the high level of ambiguity that surrounds them. The following research examines how entrepreneurs in thus said ventures choose the agile methods to be used – as well the factors that affect those choices – through six semi-structured interviews with tech startups. The results indicate that the complexity of a growing business venture does not allow for strict adoption of a single agile framework. In contrast, it calls for a combination of aspects from different methods according to the needs of the startup and most importantly great devotion to the values and principles of the Agile Manifesto (2001). Last but not least, the choice of the various agile aspects is affected by the prior knowledge and vision of the entrepreneurs an in turn by the product and its particularities.
Keywords: Agile Project Management, Agile Work Practices, Agile, Startups, Tech-Startups,
Information and Communication Technologies, ICT, Entrepreneurship, Innovation
III Table of Contents
1. Introduction ------Pg. 1
2. Literature Review------Pg. 2
2.1. Agile Work Practices ------Pg. 4
2.2. Entrepreneurship, Innovation and Startups ------Pg. 5
2.3. ICT and the Nature of Work ------Pg. 7
2.4. Information, Startup Unicorns and Project Management ------Pg. 8
3. Conceptual Framework ------Pg. 10
3.1. Agility and Methodologies ------Pg. 10
3.2. SCRUM ------Pg. 12
3.3. Extreme Programming ------Pg. 14
3.4. Feature Driven Development ------Pg. 15
3.5. Test Driven Development ------Pg. 17
3.6. Dynamic Systems Development Method ------Pg. 17
3.7. KANBAN ------Pg. 18
3.8. Methodologies Comparison ------Pg. 19
4. Research Design ------Pg. 21
5. Research Instruments ------Pg. 22
6. Results ------Pg. 23
6.1. Mini Case Studies ------Pg. 23
6.2. Travis the Translator ------Pg. 24
6.3. The Main Ingredient ------Pg. 29
6.4. ThirdSkin ------Pg. 33
IV 6.5. BrainsFirst ------Pg. 36
6.6. ParkFlyRent ------Pg. 40
6.7. Seedrs ------Pg. 44
6.8. Analysis ------Pg. 48
7. Discussion ------Pg. 58
8. Conclusion ------Pg. 63
8.1. Theoretical Contribution ------Pg. 64
8.2. Practical Implications ------Pg. 65
8.3. Limitations ------Pg. 66
8.4. Future Research ------Pg. 66
9. Bibliography ------Pg. 67
Appendices ------Pg. 71
Interview Appendix: Questionnaire ------Pg. 71
Interview Appendix: Travis the Translator ------Pg. 73
Interview Appendix: The Main Ingredient ------Pg. 77
Interview Appendix: ThirdSkin ------Pg. 80
Interview Appendix: BrainsFirst ------Pg. 82
Interview Appendix: ParkFlyRent ------Pg. 84
Interview Appendix: Seedrs ------Pg. 87
V 1. Introduction
“Music is a moral law. It gives soul to the universe, wings to the mind, flight to the imagination, a charm to sadness and life to everything” were the words of ancient Greek philosopher Plato. Music means setting no boundaries, constantly creating new combinations and changing. In those words, it is difficult to find a better representative from the business world for the ‘concept’ of music than the Swedish pioneer, Spotify. Spotify is a company that is transforming the music industry offering a music player where one can seamlessly find and play any song. The number of active users on
Spotify recently reached 100 million (statista.com 2016) which adequately shows the impact that the company has on spreading music. However, while this is a noble cause it is not the only reason the Swedish company is steps ahead of the competition. The secrets behind the company’s success that allows Spotify deliver music to such a huge audience efficiently are; alignment and autonomy as well as innovation over predictability (Kniberg 2014).
Before the craze of the past years, Spotify was just a Swedish startup from Stockholm taking its first steps. The first public beta of the Spotify player was released in 2007 and a year later the streaming service was officially launched by the startup Spotify AB. Since then the music giant has been growing in rapid rates to more than 1600 employees in twenty locations worldwide
(Wikipedia), reaching a point where challenges regarding its inherent flexibility emerged as, while it is easy for startups to embrace agility and flexibility in their work practices, it gets difficult when scaling up. However, these are important aspects that keep employees satisfied and foster innovativeness in a company. Ek and Lorentzon, founders of Spotify understood that, and moreover, that the constant creation of novel combinations was as important in their case as it is in music. Therefore, in order to remain competitive and innovative they had to keep operating without losing their original agility. This resulted in the creation of a tailored agile method of work
1 that if anything, has helped the company expand in numbers and rise in popularity. According to
Bloomberg, Spotify is now the ‘biggest player’ in music industry showing no signs of slowing down despite the recent entrance of significant competitors such as Apple Music, Pandora Media
Inc. and an expected reaction to those by Amazon as well (Shaw 2016).
This research will be devoted to the examination of the relation between agility in work practices and startups as well as to the composition of generic guidelines for implementing agility in an enterprise, answering the following question:
How do tech startups deploy agility in their practices?
- Do they create their own or use existing tools?
- Do they use a single tool or combine more than one?
- What common traits can be observed in their practices?
- Which factors affect the choice of those traits in the distinctive startup/product phases?
2. Literature Review
Almost a decade and a half ago as a reaction to heavyweight methodologies that were popular for software development at time, the Agile Manifesto was created and contained a certain set of values and principles for agile development (Fichtner 2011). The four agile values are the following:
- Individuals and interactions over processes and tools: The agile mindset prioritizes
communication and collaboration between individuals over the strict adoption of a
framework
2 - Working software (product) over comprehensive documentation: Focuses on the minimum
viable product creation instead of extensive planning on that
- Customer collaboration over contract negotiation: Introduces customers as valuable
feedback source in the product lifecycle
- Respond to change over following a plan: Encourages actors to engage with the
development of the product, embracing failing attempts as opportunities to learn and adjust
instead of aiming at product release straight out from design
(Agilemanifesto.org 2001)
Despite that those sets of values and principles were created based on software development they have been widely adopted in the business world because; in the words of Mary Poppendieck
“Organizations that are truly lean have a strong competitive advantage because they respond very rapidly and in a highly disciplined manner to market demand, rather that trying to predict the future”.
Every project that follows the values and principles of the agile manifesto can be considered agile.
Nonetheless, it is not easy to stay agile while taking a venture to the ‘big league’ and regardless the extensive literature on agile work methodologies there is very little research in the ways entrepreneurs choose agile methods and how they stick to them as the venture grows. Furthermore, despite the rapid proliferation of startups the past years as well as the increasing interest in them from academic and managerial perspective a general operational framework is yet to be composed.
This paper presents an attempt to map the agile practices of different tech startups and constitute possibly a stepping stone for further academic research. The following paragraphs will provide the necessary knowledge and theories about the foretold topic as well as the entrepreneurial aspect
3 agile methods have and their possible, disrupting, capabilities when combined with new technologies.
“If we are building something that nobody wants, why are we so proud of being on time and on budget?” Eris Ries
2.1. Agile Work Practices
Nowadays, as projects continue to proliferate in the business society, investments account for trillions of dollars annually. One major setback however, is the failure rates that can be observed in those projects as despite the significantly high importance placed on them the failure rates have remained high and relatively stable across over a decade (Serrador & Pinto 2015). A representative example of this paradox that can shed light to the impact these failures can have to organizations is the multi-billion Iridium project by Motorola. From an engineering point of view this project can be considered a success as it was ‘on time’ and ‘on budget’. Although, Motorola’s project team failed to see the quick expansion of the cell phone network, taking place during the course of the project, that would undermine Iridium’s satellite phone business model. This resulted in catastrophic commercial failure for the tech company (Collyer et al. 2010; Serrador & Pinto 2015).
With scenarios like this in mind numerous researchers and practitioners started seeking alternatives to the traditional models for project implementation which reach bottlenecks emerging from early planning and the continuous changes during the implementation period. These and other problems account for the rise in popularity agile methodologies have had the past years (Dybå & Dingsøyr
2008).
In contrast with traditional project management methods, agile methodologies emphasize on:
4 - Continuous design
- Flexible scope
- Freezing design features as late as possible
- Embracing uncertainty and customer interaction and
- Modifying project team organization
In other words, agile methods can be considered iterative and incremental as they aim at avoiding traditional approaches that emphasize on early design, specification freeze, fixed project scope and low customer interaction (Serrador & Pinto 2015). At this point it is important to note that the agile methodologies do not completely abandon front-end planning. According Coram and Bohner
(2005), more planning is required in agile environments with the distinction that it is spread across the whole development cycle. Balancing traditional and agile methods is quite probably the most appropriate approach (Serrador & Pinto 2015) but its success depends on the proper implementation by the practitioner; manager or entrepreneur.
2.2. Entrepreneurship, Innovation and Startups
According to Lazear (2005), entrepreneurs must be the jacks-of-all-trades who need not to excel in a single skill but are competent in many. In this term, entrepreneurs have a variety of capabilities at their disposal which in turn leads to the exploitation of arising opportunities in order to create successful ventures. Schumpeter has defined entrepreneurship as the novel combination of goods, markets, sources of supply, methods and – organization of – industry. Moreover, entrepreneurship and new combinations are inextricably connected with creative destruction; in the case of new entrepreneurial activities this creative destruction could very well mean the substitution of traditional work methods and organizational structures with new ways of conducting business.
5 Existing literature in the field of entrepreneurship indicates that innovation is a highly important feature of entrepreneurship. Boyer and Blazy (2014) have pointed out that the importance of innovation in entrepreneurship originates from the fact that innovation can be a source of sustainable competitive advantage that can help companies acquire market share over competitors and can even lead to the creation and/or establishment of a monopoly situation.
Many researchers, among them, Schumpeter have attempted to show that new small firms are major source of job creation, technological innovation and consequently regional growth.
According to Luger and Koo (2005), in order for a firm to be considered a start-up it must be new, active and independent. More specifically, a firm is considered active if it sells goods and services to customers and independent if it is not related legally, financially and functionally with another firm. Similar to the relation that entrepreneurship has with innovation is the one that startups have with agile methodologies as, if anything, startups are basically built on hypotheses regarding a future product or service.
Relating to the famous Spotify model and its internal small-sized team structure with tribes and guilds, numerous studies have focused on the importance of teams in the discovery of opportunities, the innovativeness of the firm and consequently the success of the startup (West
2007). West has pointed that the heterogeneity of teams in new ventures can be linked with higher performance and perseverance of the venture as long as it is accommodated with good prior experience. In that view, building heterogeneous teams can mean broader resources and different ideas that in turn can contribute to better recognition and exploitation of opportunities (Munoz-
Bullon & Sanchez-Bueno 2015). The following interesting question emerges from those observations: Why do nine out of ten startups fail since agile methodologies are among the startup essentials?
6 2.3. ICT and the Nature of Work
Work has always been necessary to human as it defines a person’s identity and constitutes a key part of the experience and condition (Applebaum 1992). In these terms, technology has been involved in the changing of work in every phase of the human history. Around ten thousand years ago when the human mastered the technology (more specifically the tools and knowledge) to sow and, in turn, mow seeds the result was the Agricultural Revolution. That shifted the locus of work from vast, dangerous valleys where people used to hunt animals and gather seeds for living to applying these newly acquired skills in delimited areas close to the safety of their own homes
(Harari 2014).
One concept that has always been intimately related to work processes is that of information. In the previous example, knowing how to hunt, when to plant the crops and when to sow are issues of major significance in order to successfully conduct these jobs and so is information in all its different aspects when conducting any job. Nowadays, there is a widespread belief and the supporting evidence that the nature of work still changes. Existing literature points that information and technology have brought unprecedented changes in the nature of work (Forman et al. 2014), changes that may continue to alter not only the way people work but their perception of work as well. According to Alan Moran’s “Managing Agile” (2015, pg. 40) the rise of online media has already started altering the way firms develop, deliver, market and consume solutions. This can be traced back to the explosion in the amount of data captured and processed from those media. This increase in data entails a high level of business digitization that presents yet another confirmation of the ubiquity of ICT and new technologies in our era and in the years to come. This technological omnipresence may, not surprisingly, bring upon an array of novel ways of work regardless of the nature and/or industry of each job.
7 2.4. Information, Startup Unicorns and Project Management
In his book, ‘Entrepreneurship – Strategy and Resources’ (2008), M. Dollinger has suggested that
“In the new millennium, the ideas, talents, skills, and knowledge that promote entrepreneurship are evident in people all around the globe, but especially in today’s generation. This new direction is a change from previous times when the forces for economic growth tended to favor more established businesses from the corporate world. But the face of the world economy has shifted, and young people today are well suited for entrepreneurial activity”. In a way this realization seems prophetic when thinking of startup unicorns; ventures that have managed to grow almost exponentially – like Uber, Airbnb, Dropbox, and Spotify did – reaching valuation of at least a billion US dollars. What these, and other unicorns, have in common is that they were created by entrepreneurial individuals without the expertise or the money that multinational enterprises possess and yet have managed to reach a highly competitive level putting them in the position to antagonize with those long established corporations.
Like all businesses, startups exist in different sizes and industries and serve different purposes.
Nevertheless, if one takes a look at the unicorn companies lists maintained by several trustworthy organizations (“The Wall Street Journal”, “Fortune Magazine” or “Techcrunch”), one will realize that most of those companies do no profit from tangible products. The foundation for their success is based on software, applications, programs, and widgets. In other words, knowledge, data and manipulation of information.
Despite the fact that knowledge has been crucial for every job conducted and advancement achieved by our race (Harari 2014) according to B. Fuller’s “Knowledge Doubling Curve” up until early in the 20th century the knowledge basis of our race doubled approximately every century. By the end of the second world war that rate quadrupled leading to quarter-century cycles (Russel
8 2017). Nowadays, different types of knowledge double in different rates but on average the doubling cycle lasts 13 months and according to IBM (2006) the emergence and wide adoption of
Internet of Things will lead to the doubling of information every 12 hours.
As information prevails, so do those who exploit it effectively to innovate through their business model design by adding novel activities, linking activities in novel ways or changing one or more parties that perform any of those activities (Amit & Zott 2012). Looking at certain startup unicorns and their disruptive business models, their innovativeness is easily observable and not surprisingly, as their rapid scale-ups also suggest so. A great example is that of the famous hospitality platform
Airbnb. The Californian startup has disrupted the hospitality sector by “changing one or more parties that perform the activities” making the possession of expensive hotels and resorts obsolete and creating an peer-to-peer community, seamlessly connecting individuals who look for or offer accommodation. The lack of need for expensive facilities has launched Airbnb to the third place of the “Fortune Magazine Unicorn List” for 2016 with a valuation of 25.5 billion U.S. dollars
(Fortune Magazine 2016). Nevertheless, Airbnb is more the exception that proves the rule than the rule itself. Startups failing at the incredible nine out of ten rate has been the motive for vast research in the specific field. According to the analysis of 101 Startup Post-mortems (CB Insights 2014) the top three reasons for startup failures are:
- No market need (42%)
- Ran out of cash (29%)
- Not the right team (23%)
This and the fact that other failure reasons on that list relate to the lack of management skills leads to the realization that more effort and devotion should be put in business planning. A way to succeed at that is project management.
9 Based on the project management definition (Project Management Insitute) being; the application of knowledge, skills, tools, and techniques to project activities to reach project requirements – the creation, growth and establishment of a business can be seen as the increments of a project. Adding to that, Accenture’s Strategic Pulse – Towards High Performance (Rodríguez 2014), suggests that;
“Today, every business is a digital business. The world is changing around us and the Information and Communication Technologies (ICT) are driving a significant part of this metamorphosis”.
Combining the above, the following conclusion can be drawn; as business planning is crucial in attempt to reduce failure rates of ventures and as most young businesses today are connected to digital then agile practices should be the road most taken for boosting the survivability of startups.
The central objective of this research is the comparison of the agile methods entrepreneurs tend to follow in tech startups throughout three distinctive phases;
- Phase 1: The period from the idea conception until the minimum viable product is ready
- Phase 2: The startup has started gaining customer base and achieves repeated sales without
significantly altering its business model
- Phase 3: The startup scales up – regardless if the venture is at that stage or planning towards
it
This is achieved through the use of relevant literature and case studies on 6 innovative ventures.
3. Theoretical Framework
3.1. Agility and Methodologies
Drawing inspiration from the essential agile notions of iterative development and incremental delivery as well as the twelve agile principles specified in the Agile Manifesto (2001) bestowing emphasis on
10 and combining those with certain, high popularity, agile methodologies a framework is used to constitute the base on which interviews with suitable candidates take place to acquire the data needed for analysis.
Several agile methodologies are being used nowadays. Some of them, such as Extreme
Programming (XP) and Scrum, focus on lightweight approaches favoring strong product development and others, such as Dynamic Systems Development Method (DSDM) and Scaled
Agile Framework (SAFe®), on heavier approaches favoring project management and architecture, respectively. Each of those methodologies has certain particularities, i.e. XP and Scrum are more human oriented whereas DSDM is focused more on structure – e.g. business need, on-time delivery, collaboration, control demonstration.
Furthermore, when it comes to agile project management Alan Moran (2015) considers its major elements as they are perceived through the lens of the DSDM Agile Project Framework. The reason for that is that DSDM can be seen as a framework that structures and embeds daily agile work practices. This entails the transition of the traditional project management triangle by introducing fixed time for delivery, referred to as Timebox, fixing costs the earlier possible and allowing
11 features to vary instead of being fixed from the beginning. The result as illustrated in Figure 1 constitutes a simple visualization of the differentiation between traditional and agile approaches displaying with simplicity what agility deployment brings to a venture.
Figure 1: Traditional vs DSDM Perceptions on Project Variables (Moran 2015, pg.73)
Prior to the composition of the conceptual framework of this research a brief illustration of the most popular agile methods is considered essential. The following explanations and illustrations are based on the work of Anand & Dinakaran (2016) and other project management sources across the web such as the Project Management Institute and project-management.com.
3.2. SCRUM (Schwaber 2016)
One of the popular agile frameworks, maybe the most well-known. According to Ken Schwaber, creator of SCRUM, “It employs an interactive and incremental approach to optimize predictability and control risk” and it involves
a) a product owner,
b) a Scrum master and,
12 c) the Scrum team (project team)
The SCRUM Process
Product Owner: Receives inputs from end-users, customers, stakeholders and creates the Product
Backlog (a list of features prioritized by the Product Owner in accordance to business requirements). Backlogs are kept alive and owned by Product Owners who constantly revise them and are the only actors that can alter them. From the Product Backlog the team pulls the Sprint
Backlog (a procedure that happens for every sprint) and executes the building of products in Figure 2: Process - SCRUM
Sprints.
Sprint: Fixed period of time that the team commits to work in developing the product. Its length is decided by the team and the product owner. The committed deliveries do not change along its duration, nor does the duration itself. In case of major obstructions the Product Owner can terminate it and start an new one.
Scrum Teams: They consist ideally of 5-9 people. They are self-organizing, self-managing and must be cross-functional. Teams select their delivery commitments for each sprint and plan the each respective task for that delivery. Every day, teams update a Burndown Chart showing the remaining tasks and the hours left for all of them and have short meetings to update each other on
13 progress and obstacles. The aim of the Scrum Teams is to complete 100% of what they committed and potentially add it to the project. These respective increments must be fully implemented and tested without major defects.
Daily Meetings: Casual meetings, up to fifteen minutes in duration where each team member stand up and report three things: 1) Done since yesterday, 2) done by tomorrow and 3) blocks and obstacles.
Scrum Master: Makes notice of the obstacles the team has encountered and is responsible for protecting and serving the team. The Scrum Master is essentially the guide of the team and coordinating it and solving internal/external obstructions.
Sprint Review: Takes place at the end of each Sprint among the Product Owner, the team, the
Scrum Master, stakeholders. At this point the increment is checked and feedback is taken. In other words, can be considered a product review.
Retrospective: Primarily concerns the team, the Product Owner and the Scrum Master. Those actors meet to review their way of working and improve their effectiveness, what can be also considered a process review.
3.3. Extreme Programming (Wells 2009; Dudziak 2000)
XP bestows a lot of emphasis on teamwork and according to its creator Kent Beck “it is a lightweight methodology for small to medium sized teams developing software in the face of rapidly changing requirements”.
14 XP Essentials
- Communication: Extreme Programmers constantly stay in contact with customers and
other programmers
- Simplicity: One of the main
target is keeping the design
as simple and clean as
possible
- Feedback: Taken constantly
from day one by continuous
tests Figure 3: Process - Extreme Programming - Respect: Every small
success strengthens the respect of the team for each individual contribution in the project
- Courage: Self-starting and ready to attempt and even fail
XP delivers to customers as early as possible and implements suggested changes even late in the life cycle.
3.4. Feature Driven Development (Pang & Blair 2004)
Is one of the lightweight agile methodologies that uses a short iterative and incremental model.
Basically it is a combination of other agile methodologies and recognized best practices from other industries and is considered best suited for scaling up larger projects or teams.
Feature: A small valued function that is expressed in client valued terms. If the set of given features is not that big it is supposed to be completed in a two-week window. Otherwise, the set has to be broken into smaller sub-sets of features that can be completed within two weeks.
15 FDD Roles:
• Project Manager
• Chief Architect
• Development Manager
• Domain Experts
• Class Owners
• Chief Programmers Figure 4: Process - Feature Driven Development
FDD Steps:
1. Overall Model Development – Gain knowledge and shared understanding of problem
domain
2. Feature List Building – Organize features in certain hierarchy
3. Feature Oriented Planning – Construct initial schedule, assign team members’
responsibilities
4. Feature Oriented Design – Form feature teams, collaborate, update model
5. Feature Building – Implement and test designed feature
16 3.5. Test Driven Development (Duka & Hribar 2010)
Is based on the repetition of a very small development cycle. It can be used for testing before taking a product live i.e. for a
Digital Marketing campaign that uses A/B testing to measure customer engagement. The process is small and easy to understand containing the following steps:
1. Add a test
2. Run tests – note success/failure of the test
3. Make adjustments
4. Run tests again
5. Refactor
Figure 5: Process - Test Driven Development
3.6. Dynamic Systems Development Method (DSDM Agile Project Framework 2014; Voigt et al. 2004)
DSDM is an agile project delivery framework, iterative and incremental that also includes customer involvement. Compared to the previous methodologies it is a more generic framework for project management and solution delivery and is the longest established full-project agile approach. DSDM terms include MoSCoW, Timeboxing, Prototyping, Testing, Configuration
Management.
DSDM Principles:
1. Focus on customer needs
2. Involve active users
17 3. Focus on frequent releases rather than maximizing quality
4. Correct solutions, if needed, through iterative development
5. Test throughout the project
6. Involve and communicate
with stakeholders
DSDM Steps:
1. Study Feasibility
2. Model Functional Iteration
3. Design and Build Iteration
4. Implement
Figure 6: Process - Dynamic Systems Development Method
3.7. KANBAN
This method was developed in the late 1940s when Toyota found a better engineering process from and unlikely source; a supermarket. The key was that store clerks restocked grocery items based on the store’s inventory and not on vendor’s supply. Toyota noticed that only when a product was near sellout did the clerks order more. This ‘just-in-time’ delivery process was the spark to rethink engineering methods and pioneer this new approach.
Kanban is a method for managing knowledge work that bestows emphasis on timely delivery and avoidance of team member overload. Visualization that allows better understanding of work and workflow is essential for Kanban. The core mechanism of the method revolves around a work-in- progress axis which facilitates the location of problems in the system and stimulates collaboration for its continuous improvement. The Kanban method, does not prescribe roles or process steps but
18 starts with existing roles and processes changing the whole system in a continuous and incremental manner. This is the reason that Kanban can be used as a tool to manage change.
Kanban Principles:
1. Visualize Work – Create a visual model of work and workflow to easily observe the flow
of work moving through the system
2. Limit Work in Process – Less unfinished work in process translates to less time for an
item to travel through the system
3. Focus on Flow – Use
work-in-process limits and
team driven policies to
improve smooth flow of
work and collect metrics to
analyze the flow
4. Continuous Figure 7: Process - Kanban
Improvement – Measure effectiveness by tracking flow, quality, lead times and more.
Adjust the system accordingly
3.8. Methodologies Comparison
After explaining the fundamentals of some of the most popular Agile Methodologies table 1 is used to concentrate the different characteristics each of them has and constitute the basis for the interviews with startups. The interviews are used for the formation of case studies on every startup respectively, ultimately aiming to the comparison and depiction of Agile Methodologies that tech startups tend to follow.
19 Methodologies/ Team Approach Iteration Team Size Project Size Characteristics Communication
Iterative and All Project SCRUM 2 – 4 weeks 5 – 9 members Informal Incremental Sizes
Iterative and Max 20 Small XP 1 – 6 weeks Informal Incremental members Projects
Iterative and Less than 2 More than One Complex Follows FDD Incremental weeks Team Projects Documentation
Few Basic Open Actors in the Time based Beginning – Small Communication TDD Iterative on Product More Added Projects between Managers- Built Later Developers Accordingly
Independent Iterative and All Project Follows DSDM 2 – 3 days Teams – Any Incremental Sizes Documentation Size
Time from Different Size the
Beginning of Cross- Small KANBAN Incremental Informal Work until at functional Projects
least MVP is Teams Live
Table 1: Popular Agile Methods and Features
20 4. Research Design
This study is based on qualitative research. More specifically it is a multiple case study that follows the inductive approach and in terms the exploratory studies approach. The reason for this approach is the nature of the research that involves: the discovery of new theoretical insights about a topic without satisfying volume of literature to define it and variables that are difficult to identify. The unit of analysis is a set of business practices that shows how startups deal with their projects, customers, product.
The selection of the cases/respondents is inextricably related with the objectivity projected by the author, thus constituting one of the most important decisions when conducting research (Flyvbjerg
2006). Consequently, after research on startups and association with some, both in a casual manner and in working environment the following realization was used for the selection of the participants:
In order to enhance the generalizability of the research, the respective tech startups
represent different industries and products dependent to software, hardware or their
combination. Moreover, all of the respondents have completed the first phase of the
product development having at least a minimum viable product and achieving repeated
sales with it.
Moreover, the six cases examined are characterized by their dependence on technology, low or high. According to Amit & Zott (2012), a business model can be seen as an activity system with the purpose of satisfying the perceived needs of the market, specifying which activities are conducted and by which party and lastly, how these activities are connected. In other words, it is a system of interconnected and interdependent activities that aims at value creation for the company. Based on those, tech startups are defined as following for this research;
If the core activities and the value creation of the startup are dependent on technology on
21 a significant level, hence the operation of the venture would not be viable without the use
of such technology, it can be considered tech startup.
5. Research Instruments
The aim of this research is the examination of the methods that entrepreneurs use in new ventures in order to be lean; respond in a rapid and disciplined manner to market demand, instead of trying to predict it. Moreover, the causes and forces that led to the implementation of these methods are of high significance. Consequently, the most suitable way to collect the data needed is the semi- structured interviews technique in an attempt to create a regular conversation flow with the interviewee that will provide insights not only for the methods and tools that startups use but also the motives behind their choices. In order to achieve representative results, the interviews are concerned with three different development stages or phases:
I. Idea conception to MVP: Includes the implemented practices of the venture from the
moment that a conceived idea starts developing until when a minimum viable product is
complete. The definition of this stage is important as it reveals the motives behind the
practices that entrepreneurs find most suitable for the realization of their ideas
II. Operation of the startup and achievement of repeated sales without significant
alterations in its business model: This stage includes the operation of the startup based on
the developed minimum viable product and the commencement of its establishment and
growth. The significance of this stage is reflected on the differences that appear in the
operation of a venture once the product is ready and the goal is not only its iterative
advancement but also the generation of sales and awareness towards it
III. Scaling or planning to scale: This final phase includes the practices of a startup that scales
22 regardless if the venture is currently scaling or planning towards it. The significance of this
phase lies in the difficulty of ventures to maintain flexibility that accommodates this
potential expansion – internal or in market share.
The interview questions revolve around the agile methodologies, the agile values as specified in the Agile Manifesto (2001) and the agility emphasis points that differentiate those practices from traditional ones (Serrador & Pinto 2015). Moreover, the topics to be covered are mostly linked to the combination of practices the ventures implement. Last but not least, voice recordings of all the interviews are used for recurrent analysis and further precision.
6. Results
6.1. Mini Case Studies
This part of the research consists of mini case studies of startups that were picked, among others, for their innovative practices; table 2 provides the basic information of the six respective respondents. The cases formed through interviews with the startups, their respective web domains, and several web sources serve for the better understanding of the background of each venture as well as for the analysis of agility deployment in their practices. The incorporation of agility is separated in three distinct phases and presented in tables following each case. The most significant discrepancies among the agile practices of the startups occur in the transition of the ventures from one phase to another. Consequently, after the case studies, a concentrated table is created. Table 9 includes all six startups and, separately, presents the agile implementation features in those ventures across the three phases, so that the comparison between them is more clear.
23 Startup Headquarters Interviewee
Travis the Translator Rotterdam, NL Brend Kouwehoven, CTO-Co-founder
The Main Ingredient Amsterdam, NL Sander Nieuwenhuizen, Co-Founder
ThirdSkin Birmingham, UK Simon Austen, CEO – Founder
BrainsFirst Amsterdam, NL Marieke Dresme, Business Manager-Founding partner
ParkFlyRent Amsterdam, NL Niels de Greef, CEO-Founder
Seedrs London, UK Thierry Zois, Business Development – BENELUX area
Table 2: Examined Cases
6.2. Travis the Translator
The fading of world barriers is observable more than ever in our era with the wide diffusion of
ICT making collaboration between people living in distant places more common than ever and the scaling of its effect imminent. No matter what, not everyone has access to the same quality of education and in a globalized world where talent and cooperation is highly appreciated language is still a major impediment to reaching our full potential as a global society. However, this has been an ever existing problem.
Following a famous biblical story, the high ambitions that have always been characterizing the human race sparked the undertaking of a construction tall enough to reach heaven. God, watching their tower punished this hubris by confounding their speech so that they could no longer understand each other. The Tower of Babel was never completed and humanity was scattered around the world (Wikipedia). Despite it being a fictional story, from time to time people have wondered what the collective potential of human race could be. Fortunately for us, pioneers have always existed throughout history to make us believe that ‘sky’s the limit’. One modern example that could bring that collective collaboration one step closer to realization is also also known as
24 Travis.
Travis is a Dutch-born startup from Rotterdam that bases its operation on three pillars; Hardware,
Software and Artificial Intelligence. With these in mind the team behind Travis is about to bring on the market a translator with the ability to translate up to 80 languages from speech – 20 of them offline. To the eye of a beholder this might not seem like radical innovation, but Travis is not yet another Google Translate – its secret lies on the backend of its implementation. This translator runs on a machine learning algorithm, such that will be able to make it better in translations the more people use it. In simple words, similar to a kid, Travis will possess language understanding from the beginning and will become more adept as it listens and talks with people hopefully reaching the level of understanding actual humans.
Travis is a technology startup founded by Lennart van der Ziel and Nick Yap in April 2016.
Commencing with the mindset of a hardware company, the startup focused on building a plastic mockup of what the device would look like as soon as possible and figured how the software would be embedded in it. Showing a first product and how things can be done very soon, the team committed to really finalize the it and managed to do so within a relatively small period, presenting their first complete prototype in February 2017. A month later Travis’ crowdfunding campaign on
Indiegogo went live realizing incredible popularity and reaching its first crowdfunding goal of
80.000 USD as quickly as three days later. As of May 26th 2017 Travis is still attracting users eager to be part of this community reaching an extraordinary 784% of its initial funding aspiration and planning to deliver to its crowdfunding backers by July.
Looking at a huge crowdfunding success and anticipating Travis’ first learning days seems easy to get carried away. However, this is not the case for the people who work with the vision of eliminating linguistic barriers worldwide. According to the CFO Brend Kouwenhoven, the startup
25 operates with flexibility that strictly revolves around its 4 core values.
- Mission over task: Working at Travis means sharing the vision of the venture and
understanding that part of its mission is your responsibility
- Better sorry than safe: The culture of the startup includes encouraging people to try –
failure is part of life
- Self-starter mentality: Extending ‘mission over task’ Travis’ team must excel in starting
things independently
- Humility: The Travis team is like a family, admitting one’s faults and be open to discussion
is considered crucial for the successful confrontation of impediments
Consequently, it is not difficult to understand how the Travis team has remained down-to-earth and devoted to its ultimate goal.
Having sold more than 5.000 translators already the goal for the first year of operation for Travis is reaching 50.000 users creating a community that will work as a school for the artificially intelligent translator, a goal that does not seem difficult to achieve looking at its huge pre-retail audience. Following that, the startup has already explored its opportunities regarding further distribution, legal affairs, business establishment procedures and even exit strategies but refuses to decide just yet. Instead it chooses to be indifferent and open in any kind of options, at least until the 50k community becomes reality. Additionally, in the operational perspective, Travis aimed at being revenue driven from its very beginning always trying to maintain a positive cash flow so that it also maintains a certain degree of independency showing great signs of management competency that other early ventures can look up to.
Agility within Travis
Interviewing Brend Kouwenhoven assisted in the formation of the agility mentality that Travis
26 possess. The reposition of equal significance to the three basic pillars of Travis – Hardware,
Software and Artificial Intelligence – inevitably leads to differentiation of practices in the development stages of the venture. More specifically, the team of Travis is led by professionals, adept in project management and certain methodologies such as Scrum, Kanban and Lean. This gives them the ability to foresee the necessity for versatility and thus choose to be agile in their agility deployment adopting an accumulation and adaptation approach to their practices. During phase one the approach of Travis was both incremental and iterative as it involved the building of the physical product that hosts the innovative software.
Concluding, Travis may not be a common startup, one that the average aspired entrepreneur can identify with. It is however a startup that demonstrates great performance and drive to succeed in the digital era as well as enviable social entrepreneurship aspirations. Ventures like this exist to remind us the beneficial side of new technologies that can help society evolve and that new ideas never seize to exist. Sometimes, we just need to take a step back from the tree and try not to miss the forest.
27
Methodologies/ Project Team Approach Iteration Team Characteristics Size Communication
Few Basic
Aspect Mix, Actors in the All PHASE Incremental Time Based on Beginning – Accumulation Project Informal 1 –Iterative Product Built More Added –Adaptation Sizes Later
Accordingly
Time from the Aspect Mix, Independent PHASE Beginning of Small Informal – Accumulation Iterative Teams – 2 Work until at Projects Formal –Adaptation Any Size least MVP is Live
Aspect Mix, Time Based on Independent PHASE Small Informal – Accumulation Iterative Product/Feature Teams – 3 Projects Formal –Adaptation Built Any Size
Table 3: Agility - Travis the Translator
28 6.3. The Main Ingredient
One of the main human characteristics that differentiate us from other animals is versatility, a characteristic that not everyone possesses in the same degree but, undoubtedly can cultivate. We have the ability to adjust in our environment, put our habits in oblivion and innovate to evolve and survive. Through the course of history countless innovators have walked the earth. Not every one of them was a disruptor or a pioneer but they have all influenced the face of our society today.
The technology we possess nowadays along with the vast diffusion of ICT facilitate creative destruction that goes together with innovation and for the first time allow small numbers of people disrupt whole industries. As startups proliferate globally, their increase in number is accompanied by a 90% failure rate, failure that most of the times can be traced back to poor management skills
(CB Insights 2014). This is the reason this case examines the ingredient that can make a startup more versatile helping it, in this way, adjust and survive in a business world that changes now, more swiftly than ever.
The idea of The Main Ingredient was conceived in 2014 by Paul Reijnierse and Sander
Nieuwenhuizen fueled by their passion for creating new and innovative online products. The startup was officially founded in 2015. What makes TMI particularly interesting for this study is its business model. Operating similarly to what a startup accelerator – incubator mix would look like, The Main Ingredient invites entrepreneurs to seek their services and assists them to transform their idea into working business within a twelve week span, tackling an array of projects; from design to coding, to marketing and business development. Following that phase, TMI maintains a partnership with startups for a longer period (around a year) helping them reach full potential.
Additionally, TMI offers its expertise in design, product development and agile to bigger
29 companies who attempt transformation diverging from traditional management structures or seek new ways to innovate through digital.
Agility is the pillar on which TMI is built and considering the service that the startup offers it needs to be agile in both its own practices focusing on how to tackle the undertaken projects, and at the same time make sure that its respective clients develop their ventures in an agile manner.
While this may seem to complicate the operation of TMI, the company manages to maintain a certain standard on which it chooses and implements projects while being as flexible as possible in the consultation of its clients. This reflects on the fact that, in contradiction to the beliefs of many traditional corporations, The Main Ingredient is proud of doing things differently and thinking out of the box, and its results are inspiring. From its commencement in 2015 TMI has collaborated with several established companies such as Bacardi, Albert Heijn, Heinken, ING and
Abn-Amro and has partnered with startups assisting them to go live by innovating through digital and creating new exciting products. Those collaborations have brought to life, among others, ideas like Tikkie; the app that allows users to send payment requests to friends and family seamlessly through WhatsApp currently available for every Dutch bank, and Ligo; a platform that takes advantage of technology to offer entrepreneurs legal services for a fraction of the time, cost and complexity of the traditional system. These and other ventures constitute a great representation of the the way The Main Ingredient chooses its projects. The startup offers its services to any kind of business from seed level startups to big corporations as long as digital innovation is involved and there is some financing on board.
“Give a man a fish, and you feed him for a day. Teach a man to fish, and you feed him for a lifetime”
30 Based on excellent understanding of the digital business world, the ambiguity that surrounds new ventures, the problems they face, and the tools to confront them The Main Ingredient plays the role of an agile coach teaching its clients how to be flexible in a rapidly changing business environment. Within the period of collaboration with the ventures, the ultimate goal of TMI is to help them embrace the agile principles and embody them in their cultures to implement them on their own and continue to grow. The Main Ingredient is an agent of change hoping to contribute in the transformation of modern business towards entities that:
- Prioritize communication between individuals over plain adoption of framework/practices
- Focus on creating at least a minimum viable product instead on expending their powers
planning for it
- Understand that customer feedback is essential in the development of a successful product
- Accept the fact that every plan always changes and adapt instead of making big plans
Agility within The Main Ingredient
Following an interesting talk with Sander Nieuwenhuizen, a picture of the startup’s practices became more clear. The Main Ingredient deals every case in accordance with its respective needs and capabilities combining aspects of certain methodologies such as Scrum, Kanban, Lean to create a tailored solution for everyone of them. The approach it follows can be characterized iterative as firstly, TMI aims at bringing its clients live within a projected timeframe and following that it stays active for up to a year reworking with them and helping them improve. The Main
Ingredient is an example of versatility showing that entrepreneurship cannot be constrained in frameworks but must be based on visualization, communication and adaptation; features that the startup tries to integrate in the culture of its cases.
31 Methodologies/ Project Team Approach Iteration Team Characteristics Size Communication
Few Basic
Actors in the Aspect Mix PHASE Up to twelve Beginning – All Project (Scrum, Iterative Informal 1 weeks More Added Sizes Knaban) Later
Accordingly
Aspects of PHASE Up to twelve Max 20 All Project Different Iterative Informal 2 weeks members Sizes methodologies
Independent Aspects of PHASE Up to twelve Cross- All Project Different Iterative Informal 3 weeks functional Sizes methodologies Teams
Table 4: Agility - The Main Ingredient
32 6.4. Third Skin
Modern technology undoubtedly facilitates many aspects of our every day lives. Calling forth the huge array of applications available for smartphones, one can become more efficient in personal and professional organization. Communication and collaboration even between very distant places becomes seamless and swift. To top those, many different apps exist allowing individuals to tackle issues previously impossible to, from keeping track of dietary patterns and workout sessions for better outcomes to even knowing which route to follow to avoid traffic conjunction and save valuable time. Although, what seems to become more and more evident nowadays is the digital distraction that accompanies all those facilitators. Older generations blame digital natives for being obsessed with their smartphones, dependent on social media and incapable of ignoring a notification alert from their beloved devices. While similar obsession can be observed in every generation’s trends two major distinctions exist:
- Because of the vast ICT diffusion, nowadays such behaviors and dependencies appear in a
much bigger scale
- We have the potential to make this technology more efficient by assuring it becomes less
intrusive for its users
Third Skin is a startup based in Birmingham, UK that tries to do exactly that. It was founded by
Simon Austen in the middle of 2015 and revolves around the idea that; ‘As our clothing should be comfortable like a second skin, the technology we wear should be no different – a third skin.
The first product of the startup; HY, the concealed earbuds is live on Indiegogo – planned to ship in May 2018 – and has already reached 185% of its crowdfunding goal (as of June 1st 2017) and going. HY constitutes a completely different pair of wireless headphones that integrate music, calls and information in such a natural manner that as Simon says: ‘its users will hardly notice it is
33 there’. More specifically, not affecting its users natural hearing this pair of earbuds does not need to be taken off when it is not in use. Adding to that the battery power of HY is a much as 5 times that of common BT headphones and allows its users to control it through voice commands and gestures. The technology behind HY combines high quality speakers and vibrating elements for rich deep bass; leading to excellent sound that augments natural hearing when it is on and make it almost unnoticeable when it is off. At the moment HY supports ‘all day wear’ by giving its users the ability to execute a variety of tasks such as checking the weather, monitoring their well being, set reminders, search the web using voice commands and listen to music or enjoy conversations without the need to take their phones out of their pocket. At the same time, more features are being developed that will allow users to record and share audio experiences seamlessly or listen together wirelessly; hoping that HY will change the way people think about personal audio.
Agility within Third Skin
Interviewing Simon Austen provided valuable insights regarding how such an entity operates and the impediments it faces in the different phases of the product development. Third Skin presents another case where the entrepreneur bestows more value in individuals and interactions over processes and tools. In those terms all 3 phases entail an aspect mix from different agile methods with the certain particularities appearing in the first phase – developing the physical product – making incremental approach the most suitable one. The iterations show differences in the first phase as well being based on the product build and subsequently becoming 3 months long, on average, in the next phases. Last but not least, it is important to note that through its course of existence the startup is constituted by a few main actors – starting with only the founder – and chooses to outsource certain projects such as the hardware development adding members gradually and accordingly.
34 To conclude, Third Skin’s mission is to create technology that is intuitive, invisible and constant,
to enrich and support lives through technology, and remove dependency to obstructive
smartphones and crude peripherals and on its journey to that its goal is to remain as flexible as
possible, question everything, welcome and exploit change.
Methodologies/ Project Team Approach Iteration Team Characteristics Size Communication
Founder – Time Based PHASE Outsourcing Big Scrumban Incremental on Product Informal 1 Tasks Project Built Accordingly
Few Basic
Actors in the – All PHASE Scrumban – Iterative and 3 month Outsourcing Project Informal 2 Adaptation Incremental Chunks Tasks Sizes Accordingly
Different Size Aspect Mix, Informal – PHASE Iterative and 3 month Cross- Small Accumulation – Follows 3 Incremental Chunks functional Projects Adaptation Documentation Teams
Table 5: Agility - ThirdSkin
35 6.5. BrainsFirst
If one looks at the growth of sciences and technology through the past centuries one will notice an exponential advancement accompanied with a lot of differences in our everyday lives, the way work, we travel, we communicate. The characteristic curiosity and restless spirit of the human race have always pushed aspiring individuals to challenge and disrupt the status quo. Those who manage to do so usually create innovations that change our whole perception about something; e.g. the first iPhone introduced by Apple completely changed the way we thought of mobile phones and constituted a driver for the wide diffusion and adoption of this technology – making it difficult to imagine today’s world without it – resulting to the commencement of the digital and mobile era.
A period during which the ICT help us be more efficient under different circumstances and in a vast array of tasks. Yet the basic concepts and techniques regarding the recruitment of suitable talent to continue the generation of innovative ideas remains pretty much the same. This is more or less what a University of Amsterdam spin-off is trying to change, with the distinction that
BrainsFirst’s NeurOlympics games can be used for the assessment of a wide spectrum of talent; from scientists, to business strategists, to professional athletes.
BrainsFirst is a startup that came out of the Innovation Exchange Amsterdam – an expert interface between Amsterdam-based academic institutions and parties interested in their research findings and knowledge – and bases its value proposition on brain and cognition sciences along with cutting edge machine learning techniques to identify relevant data patterns. Using the NeurOlympics assessment games, an interface created by the startup, it generates cognitive profiles to offer extra performance predictors and find the most suitable candidate for a specific job. The brain-based assessment game BrainsFirst has created is easy to use and designed to justify the complexity of the human brain. The cognitive profiles of people are created by measuring the performance
36 bandwidths of their core cognitive components, predicting, in turn, performance levels and leading to next-level talent identification. BrainsFirst is a startup that takes advantage of the existing knowledge about brain and cognition and combines it with the computational power of machine learning creating a product that is bias-free, scientifically valid and data-driven. Technology like this gives companies the ability to measure the important building blocks of today’s potential using the possibilities of tomorrow. For the first time corporations can hunt talent more efficiently, making better decisions and identifying hidden potential while at the same time benefit from the cost-saving effects of automation.
Despite its short existence, BrainsFirst has already gained the attention of established organizations. The past April PSV Eindhoven and AZ Alkmaar became the first sport institutions using the NeurOlympic games to investigate the brains of their talents showing willingness to try this novel recruitment process. Most importantly though, the consultancy giant, McKinsey &
Company was one of the first ambassadors of the NeurOlympics games showing that the startup has what it takes to establish itself in the business world and stand tall among big corporations.
The Amsterdam based strategic consultancy firm has selected to use BrainsFirst’s games to recruit the best top talent graduating in the Netherlands. Students can showcase their brainpower while doing neuroscientific tasks. The program matches “cognitive supply” indicated by the results with the cognitive demand set by McKinsey leading to much more optimized feedback than that from traditional recruitment tasks.
Agility within BrainsFirst
Marieke Dresme, Business Manager and founding partner provided useful insights regarding the ways that BrainsFirst chooses to manage its projects. According to her, the philosophy of the startup bestows a lot of emphasis on the job to be done and not the strict adoption of frameworks
37 and constitutes an essential ingredient important to stay as is even if the venture scales up. Similar to that, the startup’s approach to projects has been iterative from the beginning, affected mainly from the nature of its core activity which is based on the NeurOlympics games. The iterations of the projects indicate some differences in the three phases of the product development with the first phase iterations lasting from few weeks up to six months – that were needed for the creation of the games – and following that, the iteration duration in phase two and three is mainly based on the product built. Additionally, the communication within BrainsFirst was informal from the beginning and is intended to stay like this in all the product phases with the possibility of using documentation in phase three depending on the growth of the startup team. From the idea conception behind BrainsFirst, the startup operated with the as many as three members – the founders – and added a three more actors as the product and venture progressed. At the moment,
BrainsFirst is operating with a cross-functional team of six planning to expand more in numbers while maintaining this ‘all-around’ character. Last but not least, the startup was tackling projects of all sizes during phase one of the product development – including marketing, business development and most importantly the development of the NeurOlympics games. Once the program was complete the challenges that the startup faced were constrained to smaller projects and looking forward to phase three and a potential scale up it is quite possible that the size of projects tackled will vary again from weeks to months.
To conclude, BrainsFirst’s attempt to facilitate the recruitment of best-fitting talent in several industries could not be realized without the most suitable practices for the startup. Combining an aspect mix from different agile methods, keeping the first principle of the agile manifesto in mind and adjusting to the respective needs of its core business activity is the recipe for success of this tech startup.
38
Methodologies/ Project Team Approach Iteration Team Characteristics Size Communication
Few Basic
Actors in the Aspect Mix – All PHASE 3 months on Beginning – Focus on Iterative Project Informal 1 Average More Added Process Sizes Later
Accordingly
More
Aspect Mix – Time Based on Actors – PHASE Smaller Focus on Iterative Product/Feature Cross- Informal 2 Projects Process Built functional
Team
More
Aspect Mix – Time Based on Actors – All Informal – PHASE Focus on Iterative Product/Feature Cross- Project Follows 3 Process Built functional Sizes Documentation
Team
Table 6: Agility - BrainsFirst
39
6.6. ParkFlyRent
According to the World Economic Forum (2017) cars sit idle 96% of the time. The average owner uses his car roughly 29 hours every month. In return, valuable resources are spent annually to satisfy the worldwide automobile demand, whose scale is really easy to observe. Simply by taking a walk through a crowded urban area one will realize that apart from commuting cars, streets are filled with an extravagant amount of parked vehicles occupying space that could otherwise be exploited in more efficient ways. This situation reaches a whole new level in the case of airports and airport parking. Whether travelling for business or leisure, missing a flight is never pleasant and a risk nobody wants to take. Many studies on risk perception have been conducted through the years and a common pattern that seems to appear has to do with control over risk. According to
Boholm (1998) people are more willing to take a bigger risk they have control over rather than a smaller one that they cannot control. This could be one of the reasons why such extensive areas are devoted to parking in big airports – people may not be able to shake off the feeling that something will go wrong, even in the most efficient public transportation networks. Nevertheless, this observation sparked the curiosity of Niels de Greef, founder of PFR, to investigate a potential entrepreneurial opportunity that could as well relieve this reckless expense of resources and energy. According to Niels, 22.000 cars are sitting idle, momently, in Schiphol Airport of
Amsterdam and theirs owners pay money to have them getting dusty. Simultaneously, rental companies operate a fleet of 6.000 cars which they replace on yearly basis. Taking in account the number of airports worldwide these figures become staggering.
In an attempt to tackle this phenomenon ParkFlyRent invites drivers to engage with the sharing economy and help solve this problem in the most social way possible. Outbound travelers can use
40 ParkFlyRent to park their cars for free regardless of the duration of their trip and inbound travelers can rent out the parked cars for a fraction of the price that established rental companies offer. In that way, the need for big rental fleets decreases and both the renter and the parker save money creating a win-win situation for all the peers involved in this circular economy – which despite its obvious benefits still has its doubters. While the concept of sharing and circular economies has been widely embraced in the cases of Airbnb and Uber a certain reluctance is understandable in the case of car rental. An Airbnb host evaluating the risks of offering an apartment knows that in the worst case scenario enough evidence can be provided to claim satisfactory compensation for any damages. However, this is not the case with car sharing and this is why ParkFlyRent makes sure to insure all vehicles for every possible outcome and thoroughly check the background of every renter. This way, the startup ensures that every rented car is returned to its owner in the condition it was offered and of course fresh out of carwash.
Agility within ParkFlyRent
Niels de Greef conceived the idea of PFR in May 2013 when he and his girlfriend took a trip to
Sardinia. Niels had chosen to park at the airport realizing that he had lost more on parking costs than he did for the plane ticket. Adding to that the car rental service he chose in Sardinia was far from satisfactory. With these in mind Niels decided to find a way to take advantage of the countless idle cars he saw parked at the airport.
Being an entrepreneur, Niels understood that before he could hire more people or get investors to join he needed an MVP which in that case would be the PFR platform. He worked alone, iteratively on the basis of the Lean Startup method building, measuring and learning for a period of six weeks.
After validating that parkers – suppliers of the cars – would return to PFR he was ready to pitch to investors in an attempt to get the funds that would assure the regular operation of the startup.
41 Entering the second phase of the product development it made sense for PFR to start growing and was when more actors were added forming a cross-functional team parted by full-time employees and interns. PFR is still follows the principles of Lean Startup, works iteratively on improving the customer experience and automating as many processes possible. As Niels says; building a company from scratch one needs to have a plan to start with but from daily friction one understands that most of the times new challenges may come up as soon as existing ones are taken care of. In that sense PFR currently tackles projects of different sizes on a build-measure-learn fashion and tries to keep communication informal while at the same time bestow formality and follow documentation on certain situations. Following a successful crowdfunding (126% of the goal as of
June 10th 2017) ParkFlyRent prepares to enter the third phase of its product development and scale.
To achieve that, the startup currently focuses on automation of its service and preparing the organization so that more time can be dedicated on what matters when PFR goes abroad. From agility perspective this entails few distinctions that are mostly related with new locations and the size of the team. PFR intends to continue using the Lean Startup method which has been beneficial for it until now, staying however, open to adding aspects of different methods accordingly. The potential expansion to different airports and countries calls for internal growth, adding more specialized positions and new team members. With that in mind Niels and his team are already planning on how the startup’s structure should look like in such a scenario hoping to create independent ‘cells’ operating within the bounds of PFR infrastructure and grow themselves.
42 Methodologies/ Project Team Approach Iteration Team Characteristics Size Communication
PHASE Lean Startup Time Based on One Actor – Iterative Big Project Informal 1 Method Product Built Founder
Lean Startup
Method – Time Based on Few Basic Informal – PHASE All Project Adjustment with Iterative Product/ Actors – Cross- Follows 2 Sizes Different Feature Built functional Team Documentation
Aspects
Lean Startup Independent
Method – Time Based on Cross- Informal – PHASE All Project Adjustment with Iterative Product/ functional Follows 3 Sizes Different Feature Built Teams (cell Documentation
Aspects structure)
Table 7: Agility - ParkFlyRent
43 6.7. Seedrs
Information and communication technologies have changed many things in our everyday lives with the way we do business not being an exception. New technologies render an increasing number of professions and tasks obsolete making people wonder how far is the day that computers will take over all the jobs. However, as has always been the case, this kind of creative destruction is accompanied by room for new opportunities. One such opportunity is related with the emergence of crowdfunding platforms. Before the existence of crowdfunding, aspiring entrepreneurs that were not able to self-fund their ideas were obliged to approach venture capitalists, angel investors, government institutions for grants or even to put their neck on the line getting bank loans. All those funding alternatives have one thing in common; big amounts of money coming from few investors.
Combine that with the timely financial instability and the startup fail rate and fundraising can become quite challenging. In contradiction to those traditional funding alternatives, crowdfunding brings entrepreneurs to the spotlight allowing them to pitch their ideas online and claim small investments from individuals. According to Crowdfunding Centre (2014) the two primary crowdfunding types are:
- Rewards Crowdfunding: Essentially, entrepreneurs pre-sell their concepts to backers of
the projects
- Equity Crowdfunding: Backers pledge the amount of their preference for a project and
receive corresponding share of the company in return
Seedrs was the first equity crowdfunding platform to be fully regulated by the Financial Conduct
Authority of the UK and the idea behind it was conceived in 2009 by a team of nine MBA students in Oxford University. Jeff Lynn and Carlos Silva were the only two who kept on with the idea
44 after the completion of the program. For the following three years Lynn and Carlos focused on building the MVP. The fact that the pledgers pay for company equity complicates the situation from regulatory perspective. This translated to a lot of work for the two founders but also to first- mover advantage that such innovators have. Lynn and Carlos needed to create a new legal entity that would serve as a crowdfunding platform and have the regulatory authority to conduct equity exchange in an attractive and seamless manner for both its distinctive customers, entrepreneurs and investors. Once the MVP was created in 2012 the venture started operating quickly took upwards course developing a pan European character and expanding to Berlin, Portugal,
Amsterdam and recently taking the leap across the Atlantic ocean to New York.
Agility within Seedrs
The first phase of the product development in the case of Seedrs was three years because of the complexity and novelty of the concept. The development of the MVP was incremental and comprised by two equally important increments; technology and regulations. These two part were developed separately and iteratively by the two founders who also outsourced some activities accordingly. As in the first phase, once the MVP was live Seedrs continued to use an aspect mix of different agile methods prioritizing result over tools. In the meantime, a remarkable for the time,
150k funding round allowed the startup to expand in numbers focusing initially on the backbone of its core activity; the legal and technical team. Following that, more actors were added in the investment and business development team. This increase in numbers entailed the formation of independent cross-functional teams that tackle mainly small projects and communicate informally in most cases. The approach that Seedrs follows in phase to is iterative, time-based on the product built.
45 During phase two Seedrs gradually grew from a team of founders to eighty people and has currently raised ten million worth of funds. At this point the agile methods, the approach and the iterations in Seedrs’ projects remain practically the same as the startup’s desire is to maintain the flexibility that characterized it since its commencement and this also reflects on the structure of
Seedrs which share similarities with the tribes & guilds model of Spotify. The communication within still happens in an informal manner. Nevertheless, due to the arithmetic and geographical expansion of the venture more documentation is required in comparison to the previous phase.
That involves weekly standups between teams and company meetings on two week basis.
46
Methodologies/ Project Team Approach Iteration Team Characteristics Size Communication
Two
Time Based Founders – PHASE Incremental and Complex Informal - Aspect Mix on Product Outsourcing 1 Iterative Project Personal Built Tasks
Accordingly
Independent Time Based Informal – PHASE Cross- Small Aspect Mix Iterative on Product/ Follows 2 functional Projects Feature Built Documentation Teams
Independent
Time Based Cross- Informal – PHASE Small Aspect Mix Iterative on Product/ functional Follows 3 Projects Feature Built Teams (cell Documentation
structure)
Table 8: Agility Seedrs
47 6.8. Analysis
Every of the examined cases presents its own particularities which also vary in the three defined phases. In order to give a more thorough and clear explanation regarding the agile implementation in startup ventures it is useful to separate the analysis results in those three phases.
PHASE 1
Within the first defined phase, the creation of the MVP is crucial for the startup. As expected, startups that profit from more tangible products develop them mainly incrementally;
- Travis: a pocket-size machine learning translator
- ThirdSkin: augmented reality wearable technology (headphones)
- Seedrs: first officially regulated crowdfunding platform to conduct equity exchange
activity
In contradiction, the NeurOlympics Games of BrainsFirst and the ParkFlyRent platform were two products that were developed in an iterative manner. Another pattern that appears here has to do with perception of the entrepreneurs towards the minimum viable product with the majority respondents appearing to think of the MVP as a single project. Leading to the conclusion that within phase one the approach and the size of the projects are mainly determined by the product itself.
“we developed a game and that project on its own is like a project for half a year and then make it better, make version 2.0 etc, so those projects that are big projects”. BrainsFirst
“at first we really focused to build an MVP, so Nick has a lot of experience in China with the manufacturing company so within 3 weeks we had plastic mockup of how we thought our device would look like that made it tangible for us”. Travis the Translator
48
“[…] the next 3 years they started building the team and the concept cause it was something very innovative in the market”. Seedrs
PHASE 2
After completing the minimum viable product, startups enter a period within which their main concern is growth – in market share and/or internally. To achieve that, continuous iterations for improvement of the product are necessary, as is marketing and business development.
Consequently, the nature of the projects undertaken also differ from phase one which is more focused on novel creation. This is the reason projects within this phase are inherently smaller – without that meaning big projects are non-existent – and focus on increasing product quality, raising awareness and achieving sales.
“They change much in the sense that scaling in a startup, as soon as you fix one thing another comes up and is on fire. […].It is a constant process of tackling what comes up in medium term and simultaneously keeping track of the long term goal”. ParkFlyRent
“Yes, we tackled smaller projects, had to deal with more customers, focused more on the quality of the product approach stayed the same”. (iterative) BrainsFirst
Such a transition to smaller projects of this nature is the reason behind a common pattern in the second phase. This indicates that the majority of startups approach projects exclusively iteratively except for ThirdSkin which is iteratively developing the increments that will constitute HY in anticipation of its early-bird shipping in spring 2018. Another interesting observation in this phase
49 is related with the team formation and characteristics with the ventures. Most startups add more actors – creating cross-functional teams – in response to the proliferation and variety of tasks.
These additions can happen in the form of full-time positions, internships and outsourcing.
Nonetheless, five out of six respondents did not set an limit for the team expansion at that point inferring that growth and the addition of many actors is welcome but constrained by the limited resources of the venture. The Main Ingredient was the only of the respondents clearly indicating that culture is a defining factor for the addition of new actors in the venture.
“Currently thinking of hiring 5 people. Don’t wanna grow too fast. We could easily go with 20 people maybe for more but the culture should stay as is”. The Main Ingredient
Last but not least, the iteration length in this phase is defined by the product but mostly by the entrepreneur. Travis, BrainsFirst, ParkFlyRent and Seedrs base their iterations on the time needed to build a product or one of its features. In that way, they show that in a growing company one cannot hope to schedule exactly how the development takes place but must be responsive with the new challenges in a rapid manner. The Main Ingredient follows the same philosophy with the distinction that a time limit of twelve weeks is set on the projects it undertakes. The only startup diverging from that mindset is ThirdSkin approaching projects in three month chunks. This diversion can be attributed to prior knowledge, experience and convenience of the entrepreneur but is more strongly related with the incremental approach of the venture during this phase.
“[…] if you could split it up it was probably in three month chunks and through those periods it was essentially a case of; ‘these are the steps we got to do in order to make this happen’ and I had a very definite order critical path. […]I think if there has been a staged approach, which I think has, as I have not managed to do more than one thing at once properly. So there have been these
50 around 3 months phases where I have been working on a particular step which would enable the next step” ThirdSkin
Phase 3
Concluding with the final phase that concerns this research, the approach to projects remains the same for the ventures as in the previous one. Additionally, the iteration length remains unchanged for the cases. This is an indication that there are not many discrepancies in the undertaken projects when the venture is scaling or preparing to scale. The size of those projects that also remains unchanged validates this inference as well. The most obvious differences come in the team size and characteristics and entail a differentiation in the communication within the venture.
“We ‘ll start to work a bit more structured in the iterations we do. As we go through the process we ‘ll use the roadmap we used for Eindhoven. […] There are the things that will be written out at some point. We are gonna test more in the future for sure when the volume gets higher. We plan to start building better tools for testing as well”. ParkFlyRent
During this phase, it appears that the communication becomes more formal in most of the cases and documentation starts being a requirement.
“We have KPIs in place and a spreadsheet that we pull out every single time that shows our KPIs and OKRs and see whether we have achieved them over a week time and whether we can increase it this week to hit the OKRs of next week”. Seedrs
Lastly, scaling or looking at potential scale-up, all of the ventures aim at adding more actors. In order to maintain their original flexibility they tend to form (or plan the formation of) independent
51 and cross-functional teams. The goal is to create a cell structure where every team can and should operate on its own but all of them communicate so that no feeling of seclusion exists in the venture, especially if the scale-up entails a geographical expansion as well. Furthermore, these teams – despite their independent nature – must be able to cooperate and complement each other while working in an informal manner internally and following a certain level of formality externally.
Summary
Analyzing the cases of the six startups and examining their position towards agile implementation along the development of their respective products, some generic realizations come up. First and foremost, four out of six entrepreneurs, trying to be as flexible as possible, avoid the strict adoption of frameworks and methods. Instead, they choose aspects from different methodologies, basing their decisions on their own prior knowledge and experience with agile, their vision for the venture and the particularities of the team, the industry, the product. The above defining factors can be verified through the two exceptions from this phenomenon, ParkFlyRent and ThirdSkin and the reasons that entrepreneurs based their choices on as mentioned above.
Additionally, the findings lead to certain realizations regarding the five features of agile implementation that concern this research. (1) The approach entrepreneurs choose to tackle projects is directly related with the product of each venture and its development across the three defined phases. Same applies for (2) the size of thus said projects. That is not the case with (3) the formality of the communication and (4) the characteristics of the startup team which are more related with the vision of the entrepreneur and the funding of the venture. However, one can assume that the vision behind the idea is one of the ingredients that gives value to the product and in turn increases the possibility of attracting capital. In that way a weak causal effect on
52 communication and startup team can be attributed to the product itself. Lastly, the particularities of the product can be a defining factor for the (5) duration of one iteration but not the only one as the entrepreneur’s perspective towards projects also affects it.
The most common patterns appearing in the analysis were related to (3) and (4). More specifically, responses about the adoption of formal frameworks by the startups indicate that most entrepreneurs want to be as flexible as possible implementing agility in their practices.
“We did not change anything on that term but still I am convinced that agile is a way of doing it but not how to. So we use aspects of agile and scrum, lean etc. but we want it to be about the message, about the job”. BrainsFirst
“Coming from an MBA class they used all the different tools that were provided to them. It’s a very consulting way of looking things. Revolutionizing an industry, these tools may not be up to date or even be misleading sometimes”. Seedrs
“We want results and the method is like the second, even third place. We kinda borrow tools from scrum, lean, agile lean startups, design principles. We kinda add those all to the mix and then boom this is our method and it differs also per project, per startups”. The Main Ingredient
“We did not really say this is going to be our framework, I worked on them before, Nick used them as well so we know them, we know SCRUM, I know agile, I know Lean but, I cannot say I really mastered them but we know what their intentions and ideas are so it is more in the spirit of them than literally”. Travis the Translator
53 Moreover, all the respondents regardless if a formal framework was adopted for the practices of the startup, clarified that in their attempts to be agile, the message and the job were – and should always be – prioritized over the processes, validating in that way the importance of the first agile value; “individuals and interactions over processes and tools”.
The second most common pattern appearing is related to the communication within the startup which is informal in all six cases within the first phase and changes accordingly as the startups progress to phases two and three. This informality is explicitly related to the size of the team as one can observe that along with the completion of phase one and the addition of team members formal communication or even documentation is added. Moreover, in the case of external partnerships, i.e. with investors or more mature companies this internal informality is replaced by documentation. Nevertheless, entrepreneurs value the informal manners that characterize early ventures and do not want to completely abandon them regardless of the venture’s growth. Answers regarding the transition to more formal communication as the venture grows are an indication of that.
“It is not but for instance tomorrow we are going to have our first real team meeting. […]that is also the story we wanna share with our team – which being still quite small, they are here everyday and it keeps the conversation mostly running instead of having all kinds of formal meetings, but the 3 of us, the board, meet every 2 weeks for about 2 hours to go through all the stuff needed”.
Travis the Translator
Most of it was informal, within our management team, Jochem, Pieter and I. We communicate more in terms of matrix […].We do a bit more of actual plans, meetings, and progress reports in that sense so we have a monthly shareholders meeting, which is Jochem, I, Hans and Robert and
54 a VC. For those meetings we go more in depth regarding the strategic things we need to do. […]
I think informal fits us cause its quick and we need to have a team with people that can think on their feet and actually make decisions”. ParkFlyRent
One of the biggest challenges that startups have to face is ambiguity regarding product development; an unstable situation affected by the nature of the startup’s core activities but most importantly by their ability to raise funds. Drawing from the conversation with the respondents, the size of the team regardless the phase is affected by the culture of the venture – as intended by the entrepreneur – and funding.
“I only started adding people after we raised funding”. ParkFlyRent
“[…] have you already planned to get more members for your team?”
“Yes absolutely and the specific order on which they will arrive. Sadly, it is very financially motivated which is not what I planned for […]”. ThirdSkin
“Currently thinking of hiring 5 people. Don’t wanna grow too fast. We could easily go with 20 people maybe for more but the culture should stay as is”. The Main Ingredient
Combining these observations with the connection between the size of the startup team and the informality in its communication; indirect causal relations in early ventures can be traced between communication and:
- resources - funding
- entrepreneur’s vision
55 To conclude, early ventures with the goal to grow and the perpetual changes that accommodate that goal, are influenced by many different forces – internal and external – leading to a great degree of ambiguity concerning not only their goals but their very existence. This array of forces constrain the startups and their practices in a variety of ways. However, it is safe to assume that the most important forces affecting those practices are the entrepreneur and in turn the product itself.
METHODOLOGIES / CHARACTERISTICS The Main Travis ThirdSkin BrainsFirst ParkFlyRent Seedrs Ingredient
Aspect Mix, Aspect Mix Aspect Mix – Lean Startup PHASE 1 Accumulation – (Scrum, Scrumban Focus on Aspect Mix Method Adaptation Knaban) Process Lean Startup Aspect Mix, Aspects of Aspect Mix – Method – Scrumban – PHASE 2 Accumulation – Different Focus on Adjustment Aspect Mix Adaptation Adaptation methodologies Process with Different Aspects Lean Startup Aspect Mix, Aspects of Aspect Mix, Aspect Mix – Method – PHASE 3 Accumulation – Different Accumulation – Focus on Adjustment Aspect Mix Adaptation methodologies Adaptation Process with Different Aspects APPROACH Incremental – Iterative and PHASE 1 Iterative Incremental Iterative Iterative Iterative Incremental Iterative and PHASE 2 Iterative Iterative Iterative Iterative Iterative Incremental Iterative and PHASE 3 Iterative Iterative Iterative Iterative Iterative Incremental ITERATION Time Based on Time Based on 3 months on Time Based on Time Based on PHASE 1 Up to 12 weeks Product Built Product Built Average Product Built Product Built Time from the Beginning of Time Based on Time Based on Time Based on 3 month PHASE 2 Work until at Up to 12 weeks Product/Feature Product/Feature Product/Feature Chunks least MVP is Built Built Built Live
56 Time Based on Time Based on Time Based on Time Based on 3 month PHASE 3 Product/Feature Up to 12 weeks Product/Feature Product/Feature Product/Feature Chunks Built Built Built Built TEAM Few Basic Few Basic Few Basic Actors in the Actors in the Founder – Actors in the Two Founders Beginning – Beginning – Outsourcing Beginning – One Actor – – Outsourcing PHASE 1 More Added More Added Tasks More Added Founder Tasks Later Later Accordingly Later Accordingly Accordingly Accordingly Accordingly Few Basic More Actors – Few Basic Independent Independent Actors in the – Max 20 Cross- Actors – Cross- Cross- PHASE 2 Teams – Any Outsourcing members functional functional functional Size Tasks Team Team Teams Accordingly Independent Independent Independent Different Size More Actors – Independent Cross- Cross- Cross- Cross- Cross- PHASE 3 Teams – Any functional functional functional functional functional Size Teams (cell Teams (cell Teams Teams Team structure) structure) PROJECT SIZE All Project All Project All Project Complex PHASE 1 Big Project Big Project Sizes Sizes Sizes Project All Project All Project Smaller All Project PHASE 2 Small Projects Small Projects Sizes Sized Projects Sizes All Project All Project All Project PHASE 3 Small Projects Small Projects Small Projects Sizes Sizes Sizes COMMUNICATION Informal - PHASE 1 Informal Informal Informal Informal Informal Personal Informal – Informal – Informal - PHASE 2 Informal Informal Informal Follows Follows Formal Documentation Documentation Informal – Informal – Informal – Informal – Informal - PHASE 3 Informal Follows Follows Follows Follows Formal Documentation Documentation Documentation Documentation Table 9: Agility - Concentrated
57 7. Discussion
Within this section the results of the case study analysis are compared with the relevant literature of this research and discussed in order to create links with the observations.
To begin with, what fundamentally connects all six responding startups is their devotion to the agile values and principles defined in the Agile Manifesto (2001). To validate the true agility of the ventures a comparison of startup practices and the four agile values is considered essential at this point.
First Value – Individuals and Interactions over Processes and Tools: Through the interviews with the selected startups it was clearly stated that entrepreneurs prioritize the job to be done – through collaboration of the actors – over strictly following a particular tool. Moreover, the choice of the majority of entrepreneurs to combine aspects from different methodologies indicates that despite the obvious assistance and convenience these tools offer, they are less significant than the team itself, the venture, and their needs. In that way, all respondents fulfill the first principle with
‘religious reverence’.
Second Value – Working Product over Comprehensive Documentation: This principle is validated through the devotion that ventures show in the minimum viable product creation; to the degree that after its completion their practices show significant changes. This way, early ventures manage to create, essentially, the very first edition of their product in a rapid manner and then improve it accordingly.
Third Value – Customer Collaboration over Contract Negotiation: The case of the third principle discussed in the interviews, indicates that all the ventures bestow emphasis on customer feedback, initially for the creation of the MVP but also for the addition of features in its value proposition.
58 Fourth Value – Respond to Change over Following a Plan: This principle is also validated through the interviews as most of the respondents confront challenges in the order they come up after prioritizing the most significant ones. Nonetheless, in the case of early and growing ventures this is the most considerate approach.
Similarly to the agile manifesto, the six startups embrace the four agile values, essentially, showing that despite how valuable the items on the right are, they value the items on the left more. The significance of those items; Individuals and Interactions, Working Product, Customer
Collaboration, and Response to Change, is reflected by the commitment all respondents show to the agile principles (Agilemanifesto.org 2001). In particular, apart from the principles that can be directly related to the agile values – e.g. Embracing Change Attitude – the appreciation of the respondents towards them was inferred or stated during every interview. The most evident of them are related to the communication within the ventures. Niels de Greef claims that ParkFlyRent needs people who are self-starters with the ability to make decisions on their own indicating he values self-organization and wants to empower his team by supporting and trusting it. Thierry Zois from
Seedrs explicitly mentioned that weekly standups take place. There teams have a chance to reflect on what they accomplished during the past week, what they failed to accomplish and what their goals for the following week are; conveying, in other words, information through direct communication and boosting effectiveness through team reflection. Lastly, simplicity, is a principle inherently evident in the operation of all the startups but, if anything, is easier to observe in the communication within them. Responses regarding the product itself are also indicators of the significance agile principles have to the entrepreneurs. Not surprisingly, all of them work on their products iteratively making sure to constantly advance their specifications and features in gradual
59 steps (Frequent Delivery of Functional Components, Continuous Delivery) but at the same time never choosing quick solutions over quality (Continuous Attention to Technical Excellence).
Furthermore, in contrast with traditional project management methods (Serrador & Pinto 2015), the approaches selected by the respective respondents – regardless if they use a single method, a combination, or a hybrid of aspects – focus on the continuous design of the product (even after
MVP creation) within a flexible scope (no extensive prior planning) and avoid freezing its design features for the longest possible. Adding to those, the cross-functional project teams are organized in different manners within the startup, accordingly to the goals that need to be fulfilled. Lastly, while extensive planning is avoided, continuous planning takes along with the product development and the venture growth. This in not a surprise as according to Coram and Bohner
(2005) this is indeed a fact in agile environments.
Drawing from the above, despite the discrepancies in practices that the six respondents have indicated, their ventures follow the four basic values of agile project management and differentiate remarkably from the traditional project management guidelines. Consequently, the operation of all the ventures that participated in this research can be considered agile. For now, the examination of the entrepreneurial element in the startup equation is crucial.
All the startups participating in the current research support Lazear’s (2005) claims that entrepreneurs must be the jacks-of-all-trades. Looking at each respective case, one will realize that the masterminds behind the ideas share few common traits apart from their ‘thirst’ for novel creation and innovation. Simon Austen – ThirdSkin; physicist by profession and self taught software developer that undertook the operation of the startup on his own. Niels de Greef –
ParkFlyRent; entrepreneur in the furniture industry, self-taught front-end developer that undertook the MVP creation, the validation, the pitch on his own – and the list goes on. The variety of their
60 capabilities and their willingness to learn and adjust are responsible for their potency in combining goods, markets, methods – conducting entrepreneurial activities (Schumpeter). Variety appears to be evident wherever entrepreneurship and innovation exists. According to West (2007), more heterogeneity within a team translates to broader resources and different ideas that in turn lead to better recognition and exploitation of entrepreneurial opportunities. Regarding this claim, if one does not consider the resources and funding constraints of the first phase of the examined ventures, heterogeneity is a trait that characterizes all of them, which work in cross-functional teams were cooperation between members that conduct different tasks is crucial. In the end of the day, that structure is an important factor that sets them different from traditional, more rigid organizations.
This distinction can easily be traced back to technology and the unprecedented changes it has brought to the nature of work (Forman et. al). No matter if the selected candidates are low- or high- tech startups, if their products are tangible or not, they are all characterized by the agility in which they build their products, confront challenges, raise awareness, and inductively by ICT. The ability these ventures have to operate with few actors and from distant places with such ease would not exist without ICT. New technologies such as web analytics and online marketing are the reason that the respondents can use A/B testing, measure customer feedback (very important agile feature), thus significantly lowering the risk of failure. Last but not least, combining the above it is no surprise that Travis (12 team members) has sold over 5000 translators across the world or that BrainsFirst started a collaboration with McKinsey & Company back when its team was constituted only by the three founding members. In that view Dollinger’s claim (2008) acquires substance; “In the new millennium, the ideas, talents, skills, and knowledge that promote entrepreneurship are evident in people all around the globe, but especially in today’s generation.
This new direction is a change from previous times when the forces for economic growth tended
61 to favor more established businesses from the corporate world. But the face of the world economy has shifted, and young people today are well suited for entrepreneurial activity”.
Concluding the analysis-literature comparison, another connection among the six respondents is successful exploitation of information and through that, business model innovation (Amit & Zott
2012).
Travis the Translator: Adding novel activities – Machine learning in translation, creating a translator that gets better the more it is used. Changing one of the parties that perform the activity
– the wide adoption of Travis may constitute the job of translator obsolete.
The Main Ingredient: Adding novel activities – Offering agile transformation coaching to established companies. Changing one of the parties that perform the activity – Presents alternative to accelerator-incubator programs for startups.
ThirdSkin: Adding novel activities – Combining augmented reality and wearable technology
(headphones) to create a seamless, non-intrusive set of multimedia technology.
BrainsFirst: Adding novel activities – Uses brain and cognition mini-games to evaluate EQ of talent for a variety of industries. Linking activities in a novel way – Brain and cognition mini- games have existed for long, however their combination with advanced computing and EQ standards have created a new market for the startup.
ParkFlyRent: Changing one of the parties that perform any of the activities – Can disrupt the car leasing company by constituting car fleets obsolete and using individually owned cars instead, within a sharing – peer-to-peer – community.
Seedrs: Adding novel activities – Introduced equity crowdfunding. Linking activities in novel ways
– Individuals can use the Seedrs platform to ‘play’ investors among a big array of projects.
62 Changing one of the parties that perform any of the activities – Investing for equity has never been easier for individuals, not only big investors get a ‘slice’ of the pie.
8. Conclusion
The aim of this paper is the examination of the agile methods entrepreneurs tend to use in early ventures in order to respond to change in a rapid and highly disciplined manner, thus compensating for the ambiguity that surrounds such ventures. More specifically, the central objective of the research is to provide answers to the following research question and the sub-questions that accrue from it:
How do tech startups deploy agility in their practices?
This objective is achieved through comprehensive study of theoretical constructs of agile; the agile manifesto values and principles as well as six popular agile methodologies. Additionally, literature on entrepreneurship, innovation and startups is used to depict the particularities these early ventures have and the traits of startup entrepreneurs. Lastly, literature on ICT and the changing nature of work is used to enhance the relation new technologies have with startup ventures.
Subsequently, a comparison of the popular agile methodologies is used as a benchmark for the composition of a questionnaire to be answered by tech startups.
Answers to this questionnaire are used to generate six case studies based on qualitative data. Each one of the cases provides the reader with the necessary information about each venture. Following that, a brief explanation of agility incorporation in the three distinctive startup/product phases – as they are defined in this study – is created to facilitate the discussion of the findings in comparison to the literature used. The analysis of the data indicates that the prior agile knowledge of the entrepreneur can be defining in the choice of methods. Nevertheless, being truly versatile, none of
63 the respondents aims at the strict adoption of a formal framework. On the contrary, they tend to combine aspects of different agile methodologies and are willing to abandon current practices and adjust to novel ones if they better fit the venture. Most importantly, the acquired data was a source of major insights regarding the agility deployment in early tech ventures highlighting that the entrepreneurs and in turn the product are the main factors that define the methods used by tech startups.
8.1. Theoretical Contribution
As Information and Communication Technologies give an increasing number of individuals the ability to become entrepreneurs, startups proliferate the business society. Nevertheless, the rapidly changing business environment and the volatility that characterizes early ventures leads to an alarming failure rate for startups. A solution that could address these issues is agility. Agile Project
Management gives ventures the ability to respond to change with quickness and discipline; features of major significance in today’s ever changing business environment. While extensive literature exists on this topic a research gap is located in the ways early tech ventures exploit the agile mindset to compensate for the ambiguity that surrounds them.
The empirical observations of this thesis contribute to existing knowledge by highlighting the incompatibility of immediate application of agile methods in startups. Furthermore, the results show the need for generic agile guidelines, constituted by the agile implementation features but not confined by them. In other words, analyzed data indicates there is no need for more agile project management frameworks but for a comprehensive and easily applicable agile manifesto for business ventures. On those terms, this research can commence a movement in the academic
64 society towards the understanding of the true impact agile can have in the following years. An impact not constrained in the case of startups but also in that of established enterprises.
8.2. Practical Implications
Based on the empirical results of the study discussed on the previous chapter as well as the theoretical constructs explained throughout the paper, this sub-chapter will highlight the implications that emerge for practice. It is evident that the complexity of business ventures does not allow direct implementation of a single agile method in their operation. Furthermore, analyzed data shows that respondents try to adapt and use aspects and tools from different agile methodologies but they do not consciously choose those methods one by one. To elaborate, apart from Scrum and Kanban none of the respondents explicitly stated an aspect choice from the other methodologies mentioned in this thesis. This can entail either or both the following:
- Entrepreneurs are usually not aware of the numerous agile project management
methodologies but have started realizing their value, thus choosing to be agile by following
the most well-known of them
- The narrow application scope of some methods does not mark them as ideal choices for
entrepreneurs who aim at growing their ventures
First being the case, means wide diffusion of the applicability of agile methods in business is required. Latter being the case, indicates that not all agile project management methods are useful in practical application within startups. However, they cannot be excluded as possible choices for entrepreneurs because some of their characteristics appear in startup practices. E.g. while Test
Driven Development (TDD) was not explicitly mentioned as a method of choice it perfectly describes the operation of ParkFlyRent within the second phase of product development.
65 8.3. Limitations
The most obvious limitation of the research design is its qualitative nature, a fact that entails the necessity of strong internal and external validity in order for the study not to be perceived as biased.
In order to strengthen the case as it is not based on hard data – that is generally perceived as more reliable – six startup cases are examined, providing greater external validity and generalizability
(Eisenhardt et al. 2016). Further validity is bestowed on the study as the participants represent different industries and products all of which are dependent and related to technology. Additionally to those, a limitation of the study emerges from the interviews and the analysis of the data. In the commencement of this research it was expected that most of the respondents, being in fact technology startups, would implement agility in a more formal manner. However, considering that the operation of a novel and growing venture is significantly more complex than a software development project – because of external and internal forces that interact with the venture – this was not the case.
8.4. Future Research
This paper can constitute the base for further research regarding agility in early ventures and how this is connected with the funding, the success of the startup or other objectives. Researchers can use the observations made in this paper to relate the five features of agile implementation with factors of their respective studies, keeping the current limitations in mind. Most importantly, this research constitutes evidence that proves agility cannot be implemented, as originally intended, in ventures because of the high complexity and the various forces that interact with them. Instead, researchers should emphasize on the agile mindset promoted by the agile manifesto and realized through the five agile features.
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70 Appendices
Interview Appendix: Questionnaire
STARTUP PHASE 1: IDEA CONCEPTION – SEED LEVEL
To begin with I would like to know how
Firstly, how many people were involved in
How did you deal with daily projects (iterative – incremental approach)?
How long did those projects take to complete on average?
How big were those projects (the issues you were trying to tackle?)
How was the communication – collaboration among the team(s) (informal – formal – following documentation)?
Background of the team – was it cross-functional?
Did you use some formal project management framework?
If yes à Can you please elaborate on that?
Did you follow it strictly from the beginning?
How did you decide on that specific method?
STARTUP PHASE 2: ESTABLISHING ITSELF IN THE MARKET – SHOWING SIGNS OF SCALE POTENTIAL
When
What changes in your practices did this “expansion” entail?
How many more team members were needed following that attention and the early adopters wave?
71 Considering that
Once again can you tell me how long projects lasted on average and how extensive projects you chose to tackle each time?
Did teams increase in number internally or externally?
Did you decide to deploy agility through an AWM and how?
How did you decide to combine the already implemented methods with others to serve your purpose better?
Did you add a personal note to the already adopted agile practices?
UNDERSTANDING HOW AWM WERE CHOSEN AND WHETHER THEY HAVE BEEN VALUABLE FOR THE STARTUP
What specific facet of
SCRUM i.e. is a popular method that is human oriented and ideal for small teams that work in informal manners and so can KANBAN be. However, KANBAN is an incremental method while SCRUM is also iterative.
In today’s business scene and especially when the value of a business model is located in ICT- based features its realization can take place with very few people. As
How much does growing in customers, but not necessarily in numbers, mean also ‘growing’ in the way you face changes, obstacles and your product itself?
How well did the current practice serve you when
How did the increase in the number and size of projects affect:
The approach (iterative – incremental)
The time spent tackling them
The communication of the project teams
72 STARTUP PHASE 3: SCALING – PREPARING TO SCALE
Reaching a certain level of establishment in the market and preparing to go live/scale-up must be exciting and challenging at the same time for
How did this increase in market share has affected
How many people work for
Did project teams grow in numbers or in size?
How big – how many project teams do you aim to sustain for proper operation of
Did the projects continue to grow bigger in size or just in numbers?
Considering the increasing numbers of employees working for
How do you deploy agility looking ahead to the potential and desirable growth of
Do you use a specific framework or a hybrid of frameworks?
Did the previous project management techniques stop serving with efficiency?
What affected your decision on the proper practices to follow?
Interview Appendix: Travis the Translator
To begin with I would like to know how Travis began. I imagine that after the idea conception its realization was a challenging situation, so I would like to know what steps you took. The aim was starting a hardware company and launch such a company and to prove that model we started with our own idea that was Travis and Travis is going little bit crazy.
You are around 700k at the moment Yes we are over 700k right now. We started with that main idea of how to jumstart a hardware startup so from the beginning our idea was like, ok; we have to go public as soon as possible by going through a Kickstarter or Indiegogo campaign use all that feedback and create a minimum VALUABLE product – I like to say more valuable product instead of viable – and reach out to the public try to really convince people to buy such a thing and use all that feedback to improve the company.
And it took around a year to build it right from scratch From scratch, I have to be honest. It took us 3 months. For the public we say a year because otherwise its sounds too short.
73 Since you say it took you just 3 months, how did you deploy agility to deal with everyday projects? From focus to focus, so at first we really focused to build an MVP, so Nick has a lot of experience in China with the manufacturing company so within 3 weeks we had plastic mockup of how we thought our device would look like that made it tangible for us. In addition we figured how we are going to connect all the software and wrote it out and with all these in place we created a first working prototype and that was our starting point to go for Kickstarter kind of campaign (crowdfunding) and we chose Indiegogo cause we already thought of our earlier contacts and Indiegogo was best.
Are you thinking China is the biggest market? Cause I saw that your website has three language options English, Dutch and Chinese. We have quite a few connections over there but really it is a big question and a big market but we also consider America will be a big one as well. If you look now at our sales from Indiegogo, the US is the biggest but much less big than they normally are for this kind of campaigns. They usually are half of the sales, now they are only 1/3. The second is Netherlands but that is our home country and we got the best network here and the third is Spain and then we got China, Japan and Korea. So there is a lot interest in the East.
Considering that you had to split your projects as it took you too little time to finish your project, how long did it take you on average to finish each of them and did you do it iteratively or incrementally? We are now in iterations developing still our software, so we said, ok; we know it is possible, it is a little bit of how Elon Musk is working. Really soon he shows a first product and how things can be done and show that thrive and that commitment to really finalize the product.
So that is what you did from Day 1, what your goal was. Yeah, our goal was having a good idea, show it to the public as soon as possible and be open about it and share it and develop with them as well, so use their feedback. Regarding agility, being as agile as possible cause they are our main users so we can think what is good for them but they can better tell themselves
Did you approach the first cycle of the development just with the founder? We were our own developers, our first checkups; “is this what we want to happen?”, and then immediately ask the public.
Since you were such a small number of people your daily communication was mostly informal, am I correct? Yes
And what about the team? Was it cross-functional? In the beginning it was but the we starting hiring people for specific projects: a software development team, our manufacturer for the hardware and other stuff but we also hired social media experts and online advertisers, press and language people so that is how we created a team of over 20 people and now we are going down again as we stopped the campaign and atm we are only on demand so that is another approach.
Great, so right now you are not using any social media specialists. We are starting up again in a different way, we want to have local campaigns in addition to our Indiegogo for specific markets as well. So our big goal for this year is – and this is also about agility, not saying we are done yet we have sold over 5000 devices now – to sell 50.000 devices this year but only to those who think they are able to contribute, so we sell to BETA users. We still want to develop, it is a way of co-creation with our BETA users and they have to do a buy-in and use the device so Travis gets better. It is their buy-in in the community cause when they buy the device then they are able to contribute and get along with us and create a better translation together.
More specifically, regarding agile; are you using any specific framework in the beginning? We did not really say this is going to be our framework, I worked on them before, Nick used them as well so we know them, we know SCRUM, I know agile, I know Lean but, I cannot say I really mastered them but we know what their intentions and ideas are so it is more in the spirit of them than literally.
74 I noticed this as well. In the startup I work at the moment we are around 10 people and we do not work with SCRUM, KANBAN or a specific framework but we have this agile mindset and we try to adjust it to the culture of the company. As you said you managed to create a prototype and you are going live on July, am I correct? This July yes
So, atm you have realized a big expansion. Your initial target was 80k funding. Did that expansion entail any differences in your practices? Yes that was our initial goal and we hit it in a day and a half. But we were prepared for this so we were prepared for even better results to be in the position to answer a lot of questions that come up when going big. So we thought of the opportunity after being in Barcelona with the attention we had over there.
When you increased your workforce did you decide to deploy a method more strictly to get better results? Of course, you miss some elements so you search specifically for those and we didn’t do a quite difficult hiring process, we reached out to people that were able to help and hired them for the project. Just after finishing the campaign we said that we want to set our culture values cause now we are really going to hire for the long term and we need people that fit to our company and will be here for the long-term. But partly we hire from the temporary people of the first phase cause they did well, wanted to be involved and were a good match.
You said you had already planned for this potential ‘eruption’ and I was going to ask you if you thought that Travis was going to be this huge and projects proliferated quickly. What was your approach on that? Did you break projects into smaller ones? We kept it quite simple from the beginning so the whole project was not that difficult. We used to say that Travis is in a mathematical way: Travis = (device x OS) ^ AI. So we got 3 main elements, the hardware the operating system – on which we combine all kind of engines, translation engines and add a smart element to it to improve but we didn’t focus on AI yet. We first wanted to have the hardware which was quite simple and then we needed to have the software and then we need to sell it. After finishing the campaign we thought ‘now we have to worry about setting up the company, the legal structure but now we are with administers, accountant, legal staff, tech staff and all those kind of things we are discussing now because it is now that we know: how big it is, how it is going to evolve and how much money is involved so now we got those kind of conversations.
What about your competitors? We see anyone dealing with any form of translation as a competitor. We cant say there is no competition, especially the last month, by accident, we didn’t foresee that as language barriers are more imminent now. All the other are taking phone as a centerpiece and that’s were we do it different. They use a phone with a translator, they use BT headset with a good microphone cause they see that the phone is not able to keep the conversation going so they seek another solution. Our solution has a broader audience than the headset one cause when we talk I am not going to use your earpiece to talk so that doesn’t work but even we foresee a necessity that they all focus on the private consumer and what we also see is a business model, for instance when doctors are not gonna use their phone it has to be on the wall sitting there in order to grab it and put it on the table when necessary (anecdote).
I want to understand a bit better how you choose you AWM, cause as you said you don’t use a specific framework but you must have a benchmark, some techniques that you decided to chose over others. I have quite some experience in running bigger projects, I have ran SAP in bigger corporates so we are quite familiar of how to run a project and it is more a matter of our DNA and how we want to do it and then we follow a really strict program. When we think one thing is applicable we use it then when needed we change going in a different way so we are even agile when using agile methods.
So you use your experience adjusting to the culture, the people .. And keep focus on ultimate goal and several smaller things at a time and respect each other’s word, I m not gonna sit on the chair of the CEO-CTO I want to be informed on certain things, I want to add on that when I think of something regarding the hardware and the softaware. Nick is doing all the daily business and he doesn’t have to explain because I trust him on that, so i.e. I do the funding, the structure and the payments and they have to trust me
This trust to each other is really important. Did you know each other before? I know Nick for 3 years already and Leonard for 1.5
75 ATM, you have grown, does the communication between the team change? Is it more formal than before? I suppose you need more documentation It is not but for instance tomorrow we are going to have our first real team meeting. After the campaign we kept on writing our storyline, how we are going to approach the market, how we see this upcoming year, what’s our goal after the Indiegogo campaign – so in that story we want to have 50.000 BETA users and that is also the story we wanna share with our team – which being still quite small, they are here everyday and it keeps the conversation mostly running instead of having all kinds of formal meetings but the 3 of us, the board, meet every 2 weeks for about 2 hours to go through all the stuff needed.
So do you have any plans regarding the device? You do not want to embed it in a smartphone atm For short-term no, but we set up our company in a way that software and hardware is brought to the market as a whole but we can use them separately as well. It is also a contingency, for instance regarding our hardware everyone asks if we are afraid of getting copied as we produce in China. No, because I chose for a company that does this for a long time. There is no real high-tech or innovative thing in it, I just wanted to have a reliable partner in producing these. The software is the key and we put it in the latest moment so we are not afraid about he hardware.
I would like to talk a bit about the final phase of the startup because having sold 5000k translators how do you plan a potential scale up? We are really still a startup and we want to be as well so we are already revenue driven, we have a positive cash flow and all those kinds of things but that’s how we did it from the beginning cause we wanted to do a startup out of positive cash flow. We still want to go for an additional funding to develop our AI and be and independent own eventual sale starter so we want to be able to run our AI team for a year and we want to fund that with additional investment money. If we meet our forecast we could fund it ourselves as well but this is only unless we do meet it and we don’t want to be dependent on that and we wanna avoid scale up yet. That is why we say; we really want to have 50k BETA users worldwide and that’s a real small amount of people and we want them to be a part of the community and develop together with them. Some see it as scale up, we see it as reaching out to our first early bird customers willing to help. ATM translation is not on the level for the bigger audience but there are a lot of people and this is why we don’t want to say we scaled up yet it is all about developing. We ask them to pay a small amount of money to be part of that movement
ATM how many people are you at Travis? We are 12. 5 interns, 2 employees, 3 founders and a manufacturer
How do you manage to communicate efficiently? Slack and WeChat, we even have meetings with WeChat.
I think I have everything I need, you actually answered a lot of my questions without me needing to ask. To conclude, I would like to know, what would be the long-term plan from now on. The first year we want to have these 50k users in place, we do know already the different options for further distribution, B2B, B2C, directly to consumers, are we gonna use distributors. So we find them but we don’t want to decide just yet. We know our opportunities and we want to explore our options and only when we know for sure we want to decide cause when you decide too early you are tending towards a solution and we still want to be indifferent and open to any kind of option. Even for the long term we know what kind of exit strategy could be in place. We have defined all those issues but we do not want to make a choice yet. Firstly, we want to gather 50k users, use campaigns, online marketing sell them and after make decisions on how to proceed.
I like that you are taking humble steps. Mostly, though, my question was regarding the operational part. Now we have the 3 elements, hardware and software are in place. The software is more contracting now, we want to get it in house and AI, we are setting it up so that our usage will make them better and that’s how we improve now but in long-term we want to have our own layer of AI as well, so that’s also different and the reason we can say there is already AI involved and making it better but we also built our own AI team so that’s why now we are looking for a good CTO and and in that structure we will have our VP of hardware, software and AI and that AI element is also gonna have some developers.
So do you plan to expand more in numbers? Yes we wanna try to get an investment done to get our own AI team but there are still some thoughts on what to be done in order to build it and there should also be a lot of room to explore.
76 Correct me if I am mistaken but you give a lot of emphasis on the culture and the way you like to do things, so I would assume you are not planning to change your practices. I want to be flexible and maybe it is good to mention our 4 core values. Mission over task – I don’t want to tell someone individually what he has to do, he has to believe in the mission and a part of that mission is his or her responsibility and he or she must self- decide what to do and what’s best. Second, is better sorry than safe, I really want people to try. Self-starter, you must be able to startup the things yourself and indeed; humility – admit your faults and be open to discuss them cause when someone is sticking to his faults we cant move forward. You don’t have to be humble in general but from inside we must be open and transparent and not too proud to make mistakes. You have to take steps and extra space to make mistakes.
Interview Appendix: The Main Ingredient
To begin with I would like to know in the first phase of the startup, how many people where involved with TMI. From day 1. From day 1 we started the two of us Paul Reijnierse and myself back in 2014 we got up with the idea and founded in 2015 and here we are.
When you started TMI did you initially began with the core activities you have now? Trying to facilitate the operation of other startups from the beginning? Yes, actually what we did in the past was agile coaching and training, I wanted to pivot that more towards product development company in the end and Paul wanted that as well, so we started working together and what we actually experienced is that it was not that from day 1 so we both did some agile coaching and guidance for startups more and more. Some large companies also contacted us so we did agile coaching for them as well. Now that has been minimized – one training for this year – and we don’t want to do it so between the two of us we asked a really high price to avoid it but they said yes. But we actually changed the stuff that we work on to actually creating startups. So we did one in 2015 – that went well – but we are focusing more and more in creating startups and also doing startup creation work at corporates. So instead of being asked to guide them they are asking us for teams now. It takes some time but we re getting there.
I wonder how did you deal with consulting them. How did you deal with those projects since there were only the two of you. I mean that after you found clients you did agile coaching for them, so my question is how you run those projects, being only the two of you. Most of the times we split up. We didn’t like it actually. So I did some work for a client and Paul did as well. Deliberately, we don’t want to work 5 days out of the office so we want to work together three days for clients, that’s the max and we actually for the agile coaching thing that is a freelancer thing, I was there full time but now we re focusing on the very beginning. Last year we did Tikkie for ABN-Amro, we are working for them right now. We focused on their very beginning. There was an idea, sort of a team, no strategy. We helped them and then after 10 months we split. So in the very like ideation startup creation phase we re there and we re telling them that this is our playing field and we don’t want to be like a project manager, we don’t want to do long-term coaching. So if a startup has some sort of innovation, that’s our thing. That starts to stick with them. They are asking us back for those kinds of projects.
Basically what you do can be considered consulting in agile project management and startups and I was wondering how can you apply agile on that? Basically teaching people how to be agile – how can you be agile doing so? The cool thing is that I am running now a startup with ABN-Amro and it s so complex within that environment that I have to constantly change my strategy and the things I want to achieve on a daily basis. I told them that for three weeks we should create some kind of product backlog and they were like “yeah we should!” but there is no business case yet so I have to be very strategic and picking how I as a startup lead I am going to take the team to the point that I want to take them, where I think it should be. That’s like agile in a meta level, it is kind of hard especially when dealing with more traditional people, bigger companies for example. Cause you got to deal with legal and compliance and BizDevs and everything an for TMI we re so used to doing everything ourselves from strategy, marketing, design, branding and if something pops up there they are so used to “now we should call this and that person because they are running the strategic part” and not trying to deal with it as a team, so I am trying to convince them that as a team we should be able to do anything. We re personally the people in the room thinking on another level and doing things totally differently than they are used to, and that’s good.
77 Since agile can be characterized by certain features like iterations, and feedback from customers, trial and tests, product use etc. Before, you mentioned that certain teams in the businesses you consult i.e. the BizDevs or the Legal team may bring obstacles to you is that what feedback. Definitely, what we try to achieve then is try to get them on board. For example this afternoon we re running a bizdev session and I think they are use to working in a totally different way that I would like them to be but I want them to be on board. I don’t know if tou know the lean canvas or the business model canvas, so we ll probably try with the lean canvas and ask them for input and we re trying to convince them to also validate that cause we think of this and that parties we should involve or contact or they will buy our product and get them on board, maybe being a pilot customer. They hear the term validation more and more but they are not doing it in a proper way. So I m trying to get the help from them and the least I need to validate is our product and our team working on the right things.
To clear things up, as I would like to know a bit more for the 1st phase of TMI. I would suppose that the communication initially was informal as you were just 2 people. But operating with bigger companies must have complicated things. So I wonder if you used certain documentation to stay on track or did you communicate mainly informal? Very informal. Obviously we have a dropbox folder with all the documents, proposals and everything but mainly face to face communication, phoning, drinking beers. We do that. Now we re growing actually.
The next part is “establishing yourself in the market”, I think you have already done that. Short of, we are in a really early stage still. Many parties still don’t know us. But we re thinking of changing that and know can become more well known to also large companies, that’s why we went to Uprise. I hoped to speak to more corporate customers. At MI seem to very potent with agile so I was wondering if you started using a more formal project management tool. No formal tools. Apart from slack maybe, but that’s mainly for communication. We re very used to working in that way, kind of sloppy as well, it’s in our DNA and we expect it to be in our employees too. They’re young, fresh out of school.
Do you want them to be self-starters? I have noticed that in other startups especially in the first phase it is quite difficult to adopt a formal tool, probably because there are too few people and in the beginning the need for formality is not that big. We want results and the method is like the second, even third place. We kinda borrow tools from scrum, lean, agile lean startups, design principles. We kinda add those all to the mix and then boom this is our method and it differs also per project, per startups. Some need a more formal approach some free-informal.
And speaking about the projects, how long does it usually take you to complete one of them, one consultation? We do our different things. For example, for our own startup we give ourselves 12 weeks and then it should be live. Money should be earned, so there should be a business. That is our own timeline and in between that we go live probably ten times or 50 depends. But at least the last day of the 12 weeks we are live. For the corporate ventures, it takes a bit more time cause there are more parties. Tikkie took 4 months which is a bit longer. For the current project probably 4-5 months till launch. We re hoping to do that in three months, we re not done of course but at least we should actually validate our results by then. For consultancy in bigger companies maybe the first 8 months we re there and then we off cause then the team should be able to take over an maybe that could be pivoting as well cause now like last year Paul and myself did the startup leads now we got developers working for us and they can stay a bit longer.
Trying to stay as flexible as possible? Yes and also enthusiastic that why not staying for longer than a year within one project for a client.
One could say that you operate like an accelerator. What do you think? It’s a sort of mix between accelerator and incubator pretty much.
At the moment you re trying to expand your customer base, get more projects. How many more team members did you need to accompany this expansion? Currently thinking of hiring 5 people. Don’t wanna grow too fast. We could easily go with 20 people maybe for more but the culture should stay as is. People should be confident and happy at work and if we just focus on growth, no I don’t believe in that. So we d like to grow in a more steady base and make TMI part of the RDna cause also Paul and myself are not gonna be involved with every client and yet every client should have the feeling of this is how TMI works. That’s why we don’t want to grow fast. Currently we are around 8 full time and interns.
78 Still more projects are coming your way, so I wonder how you deal with them at the moment. More clients to consult means since you may not have the manpower to assign every person to a single task. How do you deal with that? Break the projects? For the startup role, you got a team working on the same task. One of them – me – the startup lead has to communicate with the startup lead of other team – Paul – and create some sort of link between them even if we are in different cities we need to be in contact. And this goes on with other teams and startup leads. We re trying to create a connection so when I have a question I can think of those two leads and their reams and they can think of more people with whom to share this and be challenged. Maybe theyre even working for that team one day. Right now we are looking for more startup lead people and also want to be delivering that kind of team. That’s why we need different kinds of people. We re also talking to freelancers. I.e. developers, designers etc. It is tough to balance everything. Now we run 4-5 projects and every one has its own startup lead.
Can you briefly explain what the lead is? Someone with a keen eye for innovation, ability to find leads, search the market and then locate the startups with potential to grow. I like to introduce it as a scrum master on steroids. Companies nowadays think they know agile, but they do not I think. Most of the times they just maximize the standups to 15 minutes arrange all the meetings in practice being a PM and we don’t want to do that cause it is not useful. So we named a different term but it seems like scrum master on steroids. Scouting the market, coaching the teams. Scrum Masters tend to be very technical cause Scrum agile is also introduced by technical people. So the Scrum masters also focus on creating software, and also marketing, design, validation. Those sum up what we consider being startup lead.
So your teams must be cross-functional in order for those to work. Yes they are
As you said before you tried to combine agile methods. I understand trying to avoid implementing agility strictly through frameworks as this is probably what bigger companies do. Focusing on the tool and neglecting the purpose, the work. I ve observed that in startups it’s the other way around with informality and focus on the process prevail. That is so counterintuitive cause, do you know the 4 principles of agile manifesto? No1 is individuals and interactions over processes and tools. But on corporates it’s the other way around. We don’t do that we go the opposite direction and this is why we are hired. Cause we say forget this, we need to ship some stuff in 2 weeks from now.
I believe agile is gonna be really huge in the near future. I am a bit afraid of that cause many people do not really understand it, they think they do and don’t wanna talk about it. But actually being agile as in the agile manifesto I don’t think so. Already people start getting a nasty taste in their mouth when you say we re gonna do scrum. If you show them what it really is about though they are surprised so many people fuck it up and it’s a big business now. In startups its more common changing it from being agile to a lean startup kind of way but they also notice to mention progress through KPIs and validate the product. They did not do it till a year ago. Most people try to confirm what they believe in. That leads to confirmation bias.
I would like to understand a bit more the methods that you use or at least the aspects you take from them. What led to the choice of a particular method/aspect? Comes from the heart mostly, one startup was more Kanban approach, a continuous flow and for a startup we re working with now we re running a sprint. In between those, within the 2 weeks we re shipping live versions to the production but also we have like planning sessions review, retrospective, we always do that. When not fully doing Scrum retrospectives are fully important to do and do well. I think for corporates running sprints is already super fast trying to send new version every day and its kind of impossible but they try to make that right, it challenges them to get through that. So within a corporate environment if its up to us we would be more to Kanban approach with the risk of being sloppy and not deliberately think what we want to achieve in each week or start working not towards a clear goal. We want it to be like a single piece continuous flow like Kanban but sometimes we mix Kanban and Scrum lets say that.
I suppose that the approach you choose and if it will be iterative-incremental is decided based on the project you tackle, right? Yes, absolutely
At the moment you are only in Amsterdam but you have acquired a lot more customers, trying to raise awareness of clients for TMI.
79 We work with clients in Amsterdam and around, used to work in Rotterdam for some time. We are also thinking if some startup from SF or SV calls us, yeah we re going there, which might actually be happening in a couple of months. So we re not limited to Amsterdam
Do you have a plan preparing to grow bigger? Scale? We want to focus on this year, the projects we re running right now, we re planning to be more present but for this year we should achieve this. Making plans that will probably change, we just want to work evolve and talk actively about it, where we want to go. For the next few months we want to focus on our projects and see what happens. Trying to take things gradually, you don’t want to constrain your team with framework and you try to be agile using agility. We re not totally oblivious of whats gonna happen.
I want to ask a couple more questions on that. Thinking about scaling-growing and opening new offices maybe in other places. How would you expect such a growth to develop? Would you need to be more strict in your agility deployment? On a smaller scale we are training new people and aiming to become larger you need obviously people that can train in the way that we believe it should be done. So in the end. Echardt created the company that eventually
To conclude, you really don’t want to conform into frameworks but retain your culture and this is how you also wish to grow. From what I get its important to have people that share the same vision-values with TMI and thus be proactive. Know that this is how you work and be willing to work to reach your goals on their own because they want to be part of that vision Correct.
Interview Appendix: Third Skin
To begin I would like to know after the idea conception which is clearly a challenging situation, how many people were involved with the startup from day 1? Just one, that would be me.
Are you a programmer? Yes I am by trait but I am a physicist by training
Would you like to tell me a bit about how you began at ThirdSkin since you were on your own? I came up with the idea for a new type of headphone in April 2015 and then through essentially funding it through friends and family managed to put together a prototype proving the various concepts and iterate the design in a speaker myself. To the point that it was validated and then I actually outsourced the scoping and cost of the development program to a product development consultancy and once they had given me an idea of how much it was going to cost then I looked at funding and at this point it started becoming a little bit too much so my wife starting helping me with the day to day running of the company and then I had the product progressed by a professional scientist from a university and he has been advising the driver and the speaker stuff and a couple of advisers as well in the wearable specs.
So you had a really small team Yes, it has been very unorthodox project for a hardware project but essentially we are focused on finding anything that I could not do and the people that could do it.
No matter what I must say that you appear very professional despite the fact that you did it in a very informal manner.
80 I tried very hard to do that given that I wrote all of the text and edited all the photography, worked on the graphics, designed the device myself. When I say we are a small team I mean I have done a lot and outsourced the gaps that I could not take care on my own.
In the beginning how did you deal with your daily projects? Did you apply an iterative or an incremental approach to them? An incremental approach because at this early stage, despite that I am a big fan of agile methodologies for things like software development, in hardware development it’s rather different because the speed in which you can iterate is much slower and a lot more planning is required so most of the relatively informal and definitely incremental approach was used, for example Kanban. But in terms of agile approach I suppose it comes naturally and some aspects, design iterations so the sprints were defined by testing a particular feature but certainly through natural designed iterations.
In the beginning being on your own did you choose to implement a specific agile project management tool strictly or did you just use some aspects from e.g. Scrum or Kanban and combine them? Combining the money we find and how I have worked in an agile environment in a formal team previously taking the aspects of that that work better in an incremental approach and trying to apply those to our personal project management and managing any third party interactions. In the early stages I was executing different aspects of Scrum and Kanban which is about as complex and formal it will come to and it is a very effective task management tool. Whenever I have worked Scrum in a team we always used Kanban boards cause it helps maintain visibility.
At some point you realized you needed to outsource some operations especially for the physical product and you asked your wife to come in and help you as well, so you started to try to establish yourself and find a position in the market to start your crowdfunding campaign eventually. I would like to know what changes in your practices that entailed. Did you need to add more members after that to your team?
It was just the two of us. Essentially, in terms of product management I managed to outsource the whole design manufacture but did not have the way to pay for it and then it was focused on the next problem was actually having the funds to do it …
I would like to know how long your projects lasted on average at that point? Between iterations as it were. So I reckon if you could split it up it was probably in three month chunks and through those periods it was essentially a case of; “these are the steps we got to do in order to make this happen” and I had a very definite order critical path and this might be interesting from the point of view of your thesis; I was still working on the development of the company at that point and was pretty much the only person on that task. So I would probably do three months on e.g. the IP protection so I was working on the patent and then after that I spent 3 months preparing for the campaign which failed in the end of last year and then 3 months on the Indiegogo campaign which was successful and now having done a bit of support to the guys for the P.D. team who is actually doing it, these 3 months have been about investment fundraising so I think if there has been a staged approach, which I think has as I have not managed to do more than one thing at once properly. So there have been these around 3 months phases where I have been working on a particular step which would enable the next step. Identifying this quite early was important. Long story short it would be three months.
As you said you decided not to multitask so I suppose the projects were quite extensive and did not allow you to do so, am I correct? Yes they were too extensive, there were not enough money and not enough people so the only way to do it was step by step and with a lot of patience and not much sleep.
Now I would like to hear a bit more on how you chose the agile methods you deployed. E.g. Scrum is a popular method, human-oriented, ideal for small teams that work in informal manner as you did, so I would like to know why you chose the methods you did. The method I chose is basically a hybrid of the constraints put upon me from the hardware project which was a very definite step by step and when it starts shipping it cannot be iterative any more. So this changes for the software and the firmware but certainly it is a very much incremental process, however, I do come from a software background so a lot of the tools that are employed in Scrum such as using cards. The idea of literally having pieces of paper to define tasks and be able to chunk those into small enough pieces and shuffle them around on the table and work out what was required, what was next and what was a prerequisite. The individual tools developed in agile methodologies and the fact that I have learnt to use them in a more iterative environment come in handy to isolate and streamline the steps and the task need to be done in an incremental process.
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As you started growing and up to surpassing a failed campaign and launching another one on Indiegogo that is in fact successful, how well do your practices serve you at the moment? Did you need to change any aspects of your approaches? Now as you said you focus a bit more on the crowdfunding part so your tasks might be different, not being so focused on the software part or the physical product. Yes but I could not tell you exactly what because it has been a case of adapting through requirement. The same tools can be used, e.g. I have been to a couple of conferences the past couple and have spoken to a lot of people and I am really on top of stuff. Later today I am going to Trello, and spending my day there reshuffling all of my task and working out what I am going to do. So it is the tools more than the process and the process has come organically so basically adjusting to what the company needs and trying to respond as fast as possible and also prioritizing as it is just me and my wife and a couple of other full time employees. So at the moment I try to keep things in order according to deadlines to make sure that I we make the deadlines and there is not something that hold the development back. The problem is we don’t have enough people to even make up a Scrum team so there is a lot of adaptation required.
Right now you are at an exciting position, you have raised your crowdfunding goal and I suppose you have a lot in mind on how you should grow and how you should keep going with your operation. What I would like to know how this final phase would affect your operation, have you already planned to get more members for your team? Yes absolutely and the specific order on which they will arrive. Sadly, it is very financially motivated which is not what I planned for, I really want to just make cool stuff but for the company to survive the next step would be to bring on a business development person to
From our talk I would expect that you prefer going for an informal way of communicating and a down-to-top management style I suppose you would continue to use agile in an informal manner like Scrum and Kanban like methods and not a holistic project management approach. This is where somebody like you comes in cause I am not a project manager. I know my way around and how to work in a Scrum environment but that is not what I do and as you probably have understood by now is that if there is something I cannot do I will outsource it whether that’s to an employee or an agency. Generally my philosophy is as you said; a hierarchical approach only makes sense if the person at the top is better than everyone else on making decisions. But that s completely wrong cause they never can be especially nowadays. There is a saying “nobody knows how to make a pencil” meaning that a single person cannot undertake the whole procedure of making a pencil. I want to make cool stuff and find the right people and place to be able to work as a team to best maximize their capabilities and try and leave the management to a process cause if you don’t follow the process it becomes apparent that something is not working and adapt. One of the reason I find Scrum a little bit is that it is so heavily focused in allowing people to work in a informal fashion and yet it has almost this religious following that if you break the rules youre not doing proper Scrum and its never going to work whereas something we use to deploy flexibility is so inflexible and I ve always found this strange so getting things do it’s the best philosophy I have found this far and using the right tools so if a better tools comes along than Trello I am more than happy to use that.
Interview Appendix: BrainsFirst
I would like to know whether you are familiar with agile project management and techniques for agility deployment in a company. I work with such techniques, I think I am, yes.
Great, to begin then I would like to know how many people where involved with BrainsFirst from day 1? From day 1 it is 3, and we are already 6.
How did you deal with your daily objectives and projects when you were only three people? Did you use any agile methods? Did you deal with them iteratively or incrementally? Iteratively
How long did it take your team of three to finish each project on average?
82 That’s really hard to say as it depends on the project. I can say that when we tackle a big development project it can take 6 months but when we are preparing something like a proposal kind of thing it can take a week. It is really hard to say, you could say that it takes on average 3 months but that does not really say anything.
So from the beginning of your operations you were tackling ever bigger projects, right? Yes, we developed a game and that project on its own is like a project for half a year and then make it better, make version 2.0 etc, so those projects that are big projects and most problems we have are development problems, backend problems, user experience
Did the collaboration of the teams happen formally, informally did you use documentation? Informal regardless of the project sizes
I suppose the team was initially cross-functional as otherwise you would not be able to operate with just three people, am I correct? Yes it was cross-functional
Did you begin by using a formal APM framework like Scrum, Kanban, a combination? Not really. I think it is always a little bit connected with working in a small company, on all projects are being used some aspects of Scrum or agile but it is not like they only do that, or they only do lean, they use different aspects in their work. It is not black and white.
Yes I understand that as I also work at a startup and I have observed similar ethics. It is difficult to follow the frameworks strictly from the beginning so we also have aspects of them but we are not using specific methods exclusively. You don’t want people dealing with a framework but you want people dealing with the work and a framework is just a way of helping you how to do your job. You should not have to.
Following the first phase of the startup, when you started getting some attention, getting more clients, maybe realized the potential of the market that you are into, you had to expand and hire more people. I would like to know what changed in your practices at that moment? Did you need more staff? Yes we hired three more people.
Did the projects become more extensive? Yes they did
And did you decide to tackle them as before? Did you break them into smaller projects and face the separately? Yes
Would you say that those projects would last on average the same as they did before? No, not actually, the development projects they always take a longer period but the smaller projects on a weekly basis are done.
When you started expanding did you deploy any project management tool or did you continue to be agile but informally, as before? No we did not change anything on that term but still I am convinced that agile is a way of doing it but not how to. So we use aspects of agile and scrum, lean etc. but we want it to be about the message, about the job.
So you kind of wanted to add your personal note to the practices, as a company It is not my personal note but I want people to have to deal with a tool all the time cause they have to do their work and a tool would not be helpful all the time
The next question is concerned with how you choose the agile methods that you use and whether they have been valuable for the startup. I.E. you said that you pick some as aspects from different PMT and you adjust them to your needs, so if you choose aspects from Scrum and a different method, what leads you to your choice. I don’t really get this question
83 Let me rephrase; Every agile method has some certain features. The approach it follows, how big the projects it tackles, how big the teams, how long the projects last. If e.g. you wish to tackle projects in short periods of 1-4 weeks using Scrum and adjusting it to your practices would sound like a reasonable idea. My question is how do you choose those aspects? I don’t really think we made a decision, like I said we use aspects of agile but we don’t really like thinking that this kind of project we are going to do it like this per say.
I noticed that your team is still bellow 10 people. I was wondering how much growing in customers and in market share – but not in team numbers – how much does that mean that you have to change to face the obstacles that come along with that growth? Well, we doubled. We were 3 and now we are 6. That is 100% growth and I think that when you have 3 more people you can do more projects.
Speaking of that doubling, how did it affect your approach to the projects? Yes, we tackled smaller projects, had to deal with more customers, focused more on the quality of the product.
Did the communication of the team change on the way? You said before that your communication was informal, did it remain that way? Yes the communication remains informal
Now I would like to ask you a few questions about the current phase of the startup. You now are with six 6 people, and you said that the time taken to tackle your projects has grown I don’t think that the projects have grown bigger but that we have more projects. The projects are still the same
The last thing I would like to know is how you plan to keep growing. You are in a position where you have the potential of scaling, you have already cooperated with big companies and gone into sports as well which is quite interesting in my opinion. So I was wondering if you plan on employing more people at the moment, do you plan to continue as is until you eventually have to add team members? We are already thinking of planning more people for scale up and we are already thinking of what growth we need in the future, we are trying to think 3 months ahead and right now we are expanding on different aspects of our job. We are expanding on operations, the technical part and the data part to make sure that we can have quality on our daily projects cause it is really important when you get more customers, have the quality you want. So we are expanding in all the aspects of the business
Do you any plans regarding agile because as you keep growing the more difficult it will get to maintain this informality in your practices It certainly get more formal
Do you have specific plans for tools and methods ? No, we use a planner as a PMT but as I said we use agile project management aspects and I don’t think that will change maybe in a year or so we will need to choose a method but right now we are doing it as I told you.
You are being agile using agile PM. I think it the best way to go. I am also a big fan of the Spotify model, are you familiar with it? Yeah
So I suppose what you are doing at BF is something similar not deploying agility through PMT per say but being more flexible and keeping in mind that you have to be agile in your practices. Yes, exactly
Interview Appendix: ParkFlyRent
To begin, I would like to know how many people were involve with the startup from day 1.
84 It was just me, then we added two informal investors and people to the team. Then we added a VC and then more people to the team.
And how long did it take you to go from idea conception to the commencement of your operations at PFR? The idea came to me in May 2013 and creating the website was the goal, run tests make the platform better. That was our MVP. From there we started pitching investors and signed the first contract in February 2014 and launched our first location in March 2014.
Did you have a standard way of tackling the projects? Before even creating the MVP. Specifically I used the lean startup method for this project, so the 1st question I asked myself was what are the variables I need to test before starting this business? So before doing that I wanted to validate the BM and determined that a success factor for PFR would be if we can get enough people to park their car with us – the supply – if we can rent out those cars in a sufficient occupancy rate and if the avg price per car rental day was high enough to have a good turnover and on the other end control costs and risks so we could operate with profit. These are the factors I looked at and the one I determined to be risky at start was whether or not we can convince enough people to start sharing their cars. That was the first thing I tested by building the MVP focused on the parkers, just testing the the supply side.
Developing the platform and you business model did you work iteratively? There were a few factors we knew we would need from the beginning, likes a sales channel, insurance, a team to operate the collaboration side of things so we started organizing that and ever since we ve been reiterating that process making it better, more scalable.
How long did it take you to tackle the project? From the idea until the MVP was ready to operate. Six weeks and it was only me at that point. I built the platform, the Google ads campaign, I did the A/B testing the analyzing, I was the one standing at Schiphol Airport with a PFR sign and took people’s car keys. It was just me doing everything at that point. But it was a relatively cheap way of testing the project on the sight. In order to determine if it would be the main project I needed to validate it first.
Once you finished with the MVP, as you said you wanted to test the willingness of people to engage with sharing economy, you went live – did you immediately add more people to the team? I only started adding people after we raised funding so at first PFR was just part of a business I already had. Only after I had the first results so I could show the cost per parker to sign up with our service which was 57 euros. Every parker would show in the car they promised they would and understood that their car would be actually rented out. It was not actually rented at that point but was a good way to validate as customers we willing to use PFR again. This validation was what I needed to pitch to investors cause I knew when I would really get started I would need enough staff to run a location 365 days a year and 16 hours a day. I needed additional investments to pull this through.
And how did you progress from there? Did you add more people? 1st hire was Jim, who was our content manager and added also an intern. Then we hired a few more interns. From that point it actually made sense to grow. After a couple of years I really did notice that we need to up our marketing capacity in the sense of promoting the brand to get a uniform identity and people can respond to it.
So you didn’t actually need a marketing specialist until last year when Jochem came I think I should have started sooner, I figured that the increase in engagement was high at some point. If you have a 100 people using the product, they will tell 500 people
You finished your MVP, working on it iteratively and making the process more seamless. Now, I would like to know how the communication between was executed at that point. Most of it was informal, within our management team, Jochem, Pieter and I. We communicate more in terms of matrix as well, so we kinda track what is on track and what do we need to scale up for and whos the person to pick that up. We do a bit more of actual plans, meetings, and progress reports in that sense so we have a monthly shareholders meeting, which is Jochem, I and Hans and Robert and a VC. For those meetings we go more in depth regarding the strategic things we need to do. With Pieter is more operational management. My role is very broad, atm I am also the country manager in the Netherlands and at some point we re gonna have to have a CFO, not a CTO prob – I do that – a COO.
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The CFO usually comes after a couple of years of operations in startups The CFO costs money, doesn’t really add to growth, but adds profitability to growth.
Earlier, you said that you used some of the Lean principles. Do you continue to do so or did you need to change some things? We still use it, we don’t pivot particularly closely to the original plan, we just keep updating it with new findings. Sometimes we test things that are a little more rigorous like the climate neutral proposition, which is quite complex and requires a very different positioning. So before we actually change our product for that we started building the nudge page which basically functions as a way to test this without affecting our current business manners. It does not work, we tested it also with small scale survey among current users to see their perspective about changing from our current sharing model to a climate compensation model. As soon as you grow a little bit and start getting some users you also get to the point where you have something to lose. So we are trying to build around those users and start to grow exponentially and I think we have most of the elements of the model but it comes to how we communicate the model. It is still something we are open to. If we got solid evidence that we need to change the model we ll test it and decide accordingly. So we stick to the principles in that case which are basically build, measure, learn. We ll probably build other things and test them and worst case scenario all we ll lose is a little bit of time and money.
Since we talked about building new solutions. After you had the platform did the projects you tackled change? Did you stilt tackle such extensive projects? They change much in the sense that scaling in a startup, as soon as you fix one thing another comes up and is on fire. Now we have our IT system which is largely running – we have a lot of things to work on that but it is running. Now we are noticing our occupancy rate is dropping, so we gotta replace and build new functionalities in order to work that out. It is a constant process of tackling what comes up in medium term and simultaneously keeping track of the long term goal. For those, we clearly set them and described what we need to do to get there. The main thing is opening new locations and grow them quickly. So we figured what we need to get there and now we execute and as we do we run into new troubles. So this is how new projects pop-up in a way. E.g. for automation I stick to the philosophy that if something costs less to automate than to run it for a year then we automate it now. If it takes longer we wait until the volume gets to the point where this is the case.
To sum this up would you say that you tackle challenges as they appear but you also have a certain level of planning going on for the future. Yeah, the risky bit of it is starting seeing everything as a major problem that needs to be solved now. The key is to classify how much of a threat is this to my long term goal.
Can you tell me how/why you chose the lean method? Did you base it on PFR in particular or just used it because of its universal acceptance for startups? For me it resonated with something I was already doing in sense. I don’t believe in market testing. So I figured the only way to really test the product was putting it out in the market. It’s so cheap these day to build something, so I just decided to go with an agile method to compensate for that uncertainty. Also, even a tiny bit of traction helps so much when approaching investors. So the lean startup method, in my opinion is a really good way to get results that actually count without spending huge amounts of money and time.
The fact that you were an entrepreneur before must have helped you in that decision. Yeah it did cause I had a more complete picture of what I should be able to present to successfully pitch my idea to investors. The first business I built was essentially bootstrapped from start to finish. We didn’t raise any funds, my own neck was on the line if it did not work. That makes you more aware of what you need and of the fact that saving even little money in the first phase of your business is a big deal.
Concluding with the 3rd phase. You already talked a bit about expanding and the actors you would need in order to facilitate the operation of PFR. Do you have a plan regarding this expansion? We fundraised to automate more so that’s what we re doing for the next few months. We are also planning to have our organization ready so when we actually go abroad we can dedicate the time specifically to that. Currently, we are also talking with the next party to get the next round of financing quickly to speed up expansion to Denmark. That’s what we do in the background. We are getting our team to grow as well. Unfortunately, a couple of members will be leaving us until the end of the summer. That was not planned.
86 So now the question is what we are going to focus on. So we opened positions for both of their jobs. We are trying to get our organization to be a little more mature already to see if we can get it ready quicker. As soon as we go abroad, Jochem will remain in the NL doing MKT and also doing MKT for Denmark. We ll have local staff there too ofc. The team in Denmark would be able to focus more on the local market as we will have completed the other facets of PFR. After that filling in the C roles would be the goal. We need to get more people in the right jobs and get ready to grow.
Do you have any plan regarding how this change will affect your practices? We ll start to work a bit more structured in the iterations we do. As we go through the process we ll use the roadmap we used for Eindhoven. As soon as we move to a new language territory there are some things that need to be changed, like our IT architecture, and some things to keep in mind; e.g. the meta test for the Danish market. There are the things that will be written out at some point. We are gonna test more in the future for sure when the volume gets higher. We plan to start building better tools for testing as well.
Concluding our interview I would like to know, briefly, how your communication will be affected. At the moment, your communication is informal and this is based firstly, on the mentality of PFR and of course the size of the team. I recall you saying earlier that you plan to be more structured. Do you have any plan about it or is it just build and see? Basically there are 2 aspects to that; 1) new locations – they will basically have a cell structure (similar to Echart Notes) with a few full-time employees the Country manager, the assistant country manager etc. and they should be contained meaning they should be able to do all the things they need to do internally. An independent cells operating within the bounds of PFR infrastructure and grow themselves. A small informal team. 2) At some point there are going to be more members to our team with more specific positions and responsibilities. We have the roles now as well but they are not full-time employees, each of us run more than one role. This is going to change with growth. We have already created an organogram towards our growth, gradually adding more details and levels to it. I think informal fits us cause its quick and we need to have a team with people that can think on their feet and actually make decisions.
Interview Appendix: Seedrs
To begin with I would like to know how many people were involved with Seedrs from day 1. To give you an idea, Seedrs started off as an MBA project at oxford university. I was not part but the idea aroused between 9 members and at the end of the MBA only two remained and pushed the idea through, the two founders – Jeff Lynn and Carlos Silva and for the next 3 years they started building the team and the concept cause it was something very innovative in the market, hence in 2012 they were the first equity crowdfunding platform to be fully regulated by the Financial Conduct authority of the UK (AFM in Netherlands). So the team has been growing steadily since. They hired a CFO, CTO, CLO so the core team was around 5 people. The CFO came after they started raising.
So when Seedrs began the first operations were run from the two founders? Yes, they were basically doing the job of a whole team without necessarily having the best skills to do so. They were hustlers, but realized quickly that they needed to hire people in order to bring the company to the next level.
Are you aware how they tackled their daily projects? Being only two people the needed to be cross-functional Absolutely, I can just imagine how it was back then, they really tried to make the product the first legal entity. Cause equity crowdfunding was not regulated at that time, it was not even present in the USA. That’s the first time that Europe had such a step ahead of the US. It was a step by step approach. Jeff Lynn is a lawyer from Columbia and Carlos was more of a techie guy so Jeff was trying to build everything around the legal part and that’s why it was such a slow process and Carlos was more focused on creating the platform. There was a lot of outsourcing in the beginning and started hiring as soon as they met the right people.
In the beginning they were a small team working iteratively in distinctive tasks. Are you aware how the communication between them took place? Formally-Informally? One for sure is that back in the days there were no formalities for the simple reason that the team was too small and they were basically friends. Now, as we are a highly international company with offices across the world and when working in a satellite office, some times you feel secluded from the HQ and its important to have something in place to keep the spirit up, i.e. we use
87 Slack, we also have company meetings using Google Hangouts where all offices come together, we got events as well. That is an ongoing process and will surely be adjusted in the future. Communication and clarity on the tasks are among the most important things for any company.
Are you aware if they were following any PM frameworks in the beginning? Coming from an MBA class they used all the different tools that were provided to them. It’s a very consulting way of looking things. Revolutionizing and industry these tools may not be up to date or even be misleading sometimes. So they are great in order to make case studies and it’s good to have them but you always have to take a step back and look things from an outside perspective as well. You should never assume things when creating a startup, you should always test and these tools assist in that testing.
Around when did Seedrs starting establishing in the market and expanding to other countries as well? As I mentioned it took 3 years until it was fully regulated, hence did not operate till then. In 2012 were the first raises they made and after getting some insights they managed to make a 150k round which for the time was extremely difficult. It was a very early things, they only had early adopters. Today, it’s a lot easier, average campaign sizes are more than 600k pounds. They always considered themselves a pan European company – Carlos being Portugese and Jeff from the UK – the reason they secluded it was the vision of Seedrs taking over Europe and ultimately the world.
In 2012 they started expanding their main team and of course going to different countries, do you know how many members were added following that expansion? It was a big expansion in the legal and technical team. These were the biggest issues. Once that was in place the bizdev team started developing. The first expansion in Europe was in 2016 when small offices started here in Amsterdam and one in Berlin as well and this year our first NY office opened.
You kept on expanding so the projects must have kept proliferating. Were they more extensive than before or just more in numbers? Did that change the approach of Seedrs towards them? Absolutely, things get easier in raising the funds and also you create yourself a name and people start coming towards you for advice or help and you don’t need to hunt them anymore. That’s the current phase, to give you an idea funding rounds also play a big role cause then you can build the marketing team, the investment team and so on. So all these were factors that would determine how fast we were able to grow. To give you an idea, I was the 45th hire and in a year and a half we reached 80 people. That shows how fast we were expanding and I think that once being at this growth stage its all about how much money you can raise as it is an industry were you need critical mass in order to raise revenues.
You mentioned before one of the goals was to expand the legal and investment team, so was there a point where Seedrs decided to use agile work methods to handle these projects? The investment team was responsible for all the due diligence for every company cause that’s the service that we provide. The current phase is one where we position ourselves as a data company, we are expanding our data science team in order to get more and more insight on investor behavior and retention rate and investor rate towards the platform. On a case by case it depends on the industry. Dealing with humans it’s difficult to track them and we use vatious tools to do that like Google analytics, mix-panel, intercom for direct communication and during campaigns we allow users to directly interact with entrepreneurs and ask questions. So if a lot of users ask for the pitch from the entrepreneur we might use that as feedback and start including it. In the sense of feedback we got two customers, the investor and the entrepreneur. We use Trello and salesforce as well but that’s more to keep track of our efforts and not to be strictly followed. Even in the scale phase those tools are really important to keep track and answer questions easy.
You have grown in customers and numbers significantly. How does this grow change your practices. As you said you did not use formal communication. There are many ways we re trying to automate to save money and time. We want to have the necessary resources to build this automation or data to make sure this is the way to do things. I.E. when we have a deal with an entrepreneur we have an engagement letter sent automatically, I just need to click one button instead of a whole – inefficient – procedure that took place in the past.
As the teams grew bigger somehow they must be able to stay synchronized. E.g. If you want to add a new feature on the platform all the teams must be aware and on the same page with the technical team that deploys the update. How do you approach such situations?
88 First and foremost, out IT division is divided in 4 groups and each of the divisions focus on one thing. One is focusing optimization of the investor onboarding, another one is focusing on the main product. Lookin that from an outside perspective, the biz dev team for example and see a flow that you think is highly irrelevant you can flag it via ‘formstack’ and at every company meeting the most relevant ones are taken into account, discussed and maybe even implemented. Every division has a head and all of them report to their head who is the CTO.
The divisions are smaller project teams usually cross-functional to implement these changes? Yes and sometimes a request may fall into someone else’s division who will evaluate whether there is actually some sense implementing it. To do that the request goes through the Data Scientist team who run tests to validate its implementation. Similarly to the Spotify model.
Looking at scale-up how did the current expansion change the startup’s operation? So far we have raised 10 million so we consider ourselves as a growth company. Currently we are 80 people. So the biggest step for Seedrs was in the beginning and was to put clarity and more importantly how you will be able to track progress. Working without being able to track results is very dissatisfying. We use e.g clarito to track performance. The second biggest would be communication. Making sure that the challenges are communicated in a proper manner and that each person understands what he/she has to complete. I think that company meetings really set a deadline cause every division will have to present at least 4-5 minutes on their findings and say what they have/haven’t accomplished or what they are going to accomplish. Like daily standups but we do it on a weekly basis cause we believe daily is not really working. It is great if you are a small team but if you grow bigger it is eating up precious time.
Do the divisions individually hold daily standups or not? We do it on a weekly basis. The company meetings are on 2 week basis and once a week is a division meeting talking about what that division is doing during the week, that’s every Monday. Back in the days it was happening on daily basis but it was too time consuming. Doing it first thing in the morning you lose some of the most productive hours.
Do you have an upper limit for each division’s members?\ Yes, it really depends from company to company. We are divided in divisions but some of them work together. I.e. the biz dev team works together with the marketing team as they are highly correlated and the legal team. This merge tends to be 15-20 people.
What about the communication at this stage? We have KPIs in place and a spreadsheet that we pull out every single time that shows our KPIs and OKRs and see whetehr we have achieved them over a week time and whether we can increase it this week to hit the OKRs of next week. This is how we track and discuss the meeting, we follow guidelines to structure the discussion.
To clarify, you don’t use a specific framework but you just deploy agility in different manners depending on the teams (divisions) and your respective goals. Yes
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