​[INTERVIEW] Silicon Valley entrepreneur cites persistence as virtue of successful startup

By Park Sae-jin Posted : November 5, 2019, 16:48 Updated : November 5, 2019, 16:48

Bold Metrics CEO Daina Burnes speaks during an interview with Aju Business Daily in Seoul. [Aju News DB]

SEOUL -- Young entrepreneurs who strongly believe in their ideas and ability to lead startups to success have fantasized about Silicon Valley, but it actually is a jungle ready to eat up unprepared and weak-hearted venturers who fail to see the cold hard reality that lies just beneath the pinkish landscape of the booming tech world.

Although media outlets often speak about successful startups that have grown to become unicorns, many startups fail in general. The high failure rate makes the fundraising environment harsher than before. Data from Statistics Brain, a U.S. research institute, showed that key factors in failure were lack of consumer interest in the product or service, funding or cash problems, personnel or staffing problems, competition from rival companies and problems with the pricing of product or service.

However, Silicon Valley in the San Francisco Bay Area still draws a large number of venture capitalists. "I think that it still maintains to be its strong point," Bold Metrics CEO Daina Burnes said in an interview with Aju Business Daily. Her company provides "Smart Size Chart", a machine learning-based solution that shows customers how the clothing will fit, and collaborates with apparel companies such as Levi's and H&M.

According to an outlook by Silicon Valley Bank, a high-tech commercial bank, six out of 10 American startups, mainly based in Silicon Valley, expected their business conditions to improve in 2019. Some 24 percent of successful startups analyzed that their current fundraising environment was not challenging and about 52 percent preferred to receive investments from venture capitals.

A noticeable trend now in Silicon Valley is that more companies are just not specifically oriented to their specific geographical region, Burnes said, adding collaboration across the border grows in a digital world.

"What I'm starting to notice is that a lot of these large powerhouse venture capitalists with big funds have a presence in other countries too," Burnes said. "We moved together as a global society where there's more collaboration between the countries in more interconnectedness of the areas of the world and so as Silicon Valley grows with its own venture community."

Of the top 20 cities in the world for startup deals, half are in the U.S. and the San Francisco Bay Area accounted for 13.5 percent of global startup deals, according to the Center for American Entrepreneurship.

"There are a bunch of venture capital firms that are like that. It's not unusual to have company-specific venture capitals that are investing in startups," said Burnes. "There's less and less of a need to be only in one country but to be more of a global company and so I think we'll see ... an increasing trend anyway for more of global companies starting global earlier than later."

Silicon Valley where everything is expensive is not the only place to establish startups because it's just good for growth-stage companies. "It's almost harder at first for startups to start without a good idea or product in Silicon Valley," Burnes said, advising early and small startups to open their offices at first in other areas where expenses are cheaper.

Bold Metrics using an application programming interface (API) sells mathematics basically and didn't need to have the overhead of an office. It took about a year and a half to transform an office culture with employees in the same place into a "remote culture."

"Whenever we're hiring and we don't think about location. Working remotely is more flexible and then we can have a major discount on employee costs," said Burnes. "It definitely is a trend because we are completely remote now and we are making it work really well. we spend less money on operating expenses."

Many have a fantasy about Silicon Valley, but only certain types of people who feel comfortable with high risks and maintain a "calm cool and collected" attitude in an unknown and chaotic situation, can be true entrepreneurs, Burnes said, citing persistence as the biggest factor for success. "Everyone wants to start a startup and nobody knows how much effort it takes. Honestly, persistence is the biggest thing, but most of the people think you are not trying hard enough."

Startup statistics from 2018 show that a good business idea is all about demand. Running out of cash is the second most common reason for failure and having a wrong team came in third. Burnes said that successful companies have in common. "Whatever it is, it's always a rocky road building up a company and so to become a successful company, you have to stay in business."

As a good example, she pointed to Nintendo, a Japanese consumer electronics and video game company that has pivoted its business many times before adopting a gaming concept. "If you look at their story it's been an incredible story of persistence," she said. "My favorite word is persistence. In other words, a simplified way of saying that all persistent companies have one thing in common. They are all in business but in other words, they all have persistence."

In startups, many decisions are made under uncertainty, and hence a key principle for startups is to be agile and flexible. Founders can embed options to design startups in a flexible manner so that their startups can change easily in the future.
 

Bold Metrics CEO Daina Burnes (right) speaks with an Aju news reporter during an interview in Seoul. [Aju News DB]

"There's always been a fantasy for sure, but only certain types of people can be entrepreneurs. It takes a certain personality type," Burnes said. "For example, you need to be someone that doesn't like working for people in general. you have to be comfortable with high risks. That's actually the main thing."

She said that many startups fail because they cannot handle chaos and mental pressure. "You have to be comfortable working in chaos because it's not going to be orderly. Nothing's going to be explained to you. It's going to be like risky and unknown and chaotic and you have to be like totally calm cool and collected."

Burnes suggested tech companies should have a technical partner as a co-founder. "The reason for that is because you're not going to have the same level of persistence to succeed during the hard times with a hired employee," she said, describing hired CTOs as "hired talent" as opposed to the mindset of founders who will go persistently through ups and downs.

She said entrepreneurs need to have some sort of "unfair advantage that gives you a leg up within the industry to start the company." For companies with unfair advantages in the market place, it is easier to enter the market quicker, have their product gain popularity and acquire clientele faster. "So that company will have a higher chance of succeeding than the competing company that doesn't have an unfair advantage."

Burnes founded Bold Metrics due to her family background in the apparel industry. With her training in engineering and data science, she took an old-road concept to revolutionize her family business to be more applicable in the digital world. Her startup has grown to have clientele mainly in the U.S. and Europe. "To get the company on the right track, we identified ourselves as a lean-startup company, which is essentially a concept where you build the minimum viable product to get the product into the market and then test with real people and real customers."

U.S. entrepreneurs saw AI and big data as the most promising sectors now and in the future. A Silicon Valley Bank survey showed that about 60 percent of American entrepreneurs believe that AI is the most promising technology for investments as interest in AI is expected to keep steady well into the next decade.

Burnes agreed that the increasing trend of startups is solving problems with data science and AI. "There's a trend for companies to identify sort of how this data can be used in a way that makes it more valuable, to make use of all this information and also organize all this information in a way that's usable. It has been a trend for some time now and it's definitely not going away and there are more and more data scientists now in the workforce to help employ people to solve these problems."

She called for a delicate balance in financing saying it is probably dangerous to raise money too much too quickly. "In terms of financing, a delicate balance should take place and then ultimately identify as quickly as possible a product that has value within the marketplace."

 
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