Interview with Giorgi Laliashvili, a co-founder of a very successful Georgian technology startup ‘STACK’.
Changing the world for the better, seeing opportunities where others see problems, working on interesting issues, choosing your own team and getting several million dollars of investment – all sounds too good to be true, right? Well, that’s the list of privileges you might get if you decide to become an entrepreneur.
Is changing the world as simple, straightforward as it seems at first glance? Co-founder of ‘Y Combinator’, Paul Graham, says that: “The odds of getting from launch to liquidity without some kind of disaster happening are one in a thousand.” According to statistics, 95% of all startups fail.
If the likelihood of failure is so high, why is entrepreneurship so attractive, interesting, and desirable? Why do startups and entrepreneurs get so much support from both the public and private sector?
Perhaps because in the 21st Century, entrepreneurs are the main agentsof change in turning Georgia into a knowledge-based economy.
Entrepreneurs are people who go outside of their comfort zones and try to make the world a better place, who try their best to solve problems in different sectors through innovation and technology. If a startup succeeds, the founder, investor, and country benefit; not only financially but also intelectually by developing competencies.
Yet, who are entrepreneurs? Superheroes with hidden superpowers, or people willing to give up comfort for an idea that they believe in? Is there an entrepreneur in each of us; who, when awakened, understands his/her secret powers and embarks on an adventure?
Giorgi Laliashvili, a co-founder of a very successful Georgian technology startup (‘STACK’), thinks that entrepreneurship is more a direction of thinking rather than a skill.
“Scientists study the world and develop rules, while engineers make technology based on these discoveries. Entrepreneurs try to solve universal problems using technology and ensure that solutions are delivered to every customer,” says Giorgi.
Giorgi tells us about his startup, the multifaceted nature of entrepreneurship and the path that he took from the birth of the idea to its presentation in front of an investor.
What is ‘STACK’, how did youcome up with the idea, and at what stage of development is it at now?
‘STACK’ is an alternative browser, which provides the opportunity to work more intuitively and easily with web applications used daily.
Our tech-guru, Ziko, came up with this idea while working on our other project. At first, ‘STACK’was created to launch social media applications, but after Ziko received hundreds of positive reviews from several tech platforms, he started to think about the idea as a standalone company. Currently, we are growing by 5% per week. In the next four months, we should increase this figure to 8%.
Our next milestone is 10,000 users by the end of the year and a steady 35% monthly growth rate. Since our product is completely free for now, our focus is on the number of users. The sales will come later.
How did you get started?
As soon as we decided to make ‘STACK’a startup, we started to think about the target audience, the most effective way to solve the problems that we focused on, and the most efficient way to test our assumptions. Then, we set the expected deadlines following the estimated financial costs breakdown, and we started working.
I’m sure you’ve had a lot of business ideas. What convinced you that ‘STACK’was worth the time and money you invested in it?
Customer feedback and the potential for a major tech breakthrough were the things that helped me get outside of my comfort zone and brought me this far. I can say the same thing about the whole team.
What is your background and how much did it help you in the work you do today?
Thanks to my parents, I have always wondered how the world worked. I studied physics at university, which taught me a simple approach to complex issues. Then, I started setting up startups and learned a lot about innovation, business, and user psychology. Then, I led a business incubator at the ‘Innovation &Technology Agency’; I looked at startups from a different perspective – as a mentor, investor, and facilitator. This experience still helps me to evaluate STACK’s potential, its development trajectory and my every step in many ways.
It is very difficult to get to traction from just an idea, or a prototype. What was your path to success?
It can be said that from its launch, ‘STACK’ took two days to get traction, as it took Ziko (our CTO) this amount of time to make and run the prototype. However, we all worked together to get traction: we have close contact with our customers to know their needs and demands. The development team is constantly working on changes considering customer requirements and product development. At the same time, we go to the biggest tech events around Europe to get ‘STACK’out to the right audience. The rest is done by customers themselves spreading the word.
What has been the biggest failure for ‘STACK’ to date, and what have you learned from it? Have you made any mistakes, which in hindsight you would like to have avoided?
Two rejections from ‘YCombinator’ were the most painful for me and taught me that no matter what the accelerator, incubator, or VC foundation writes on their websites or in other communication channels – the key factor in evaluating startups is still its financial viability..
Frankly, I think we had to make all the mistakes we made. The only thing I would change is that we didn’t take direct steps because of fear of making mistakes. For example, we do not have a Windows version yet, because we did not know if it would work and do not want to disappoint ten times more users than we currently have. We are still afraid in some regards, but we are facing our fears.
What do you think is more important – the idea you work on or the team you work with?
In my opinion, the most important thing is to like what you do and to do what you like. The rest is up to one’s personal preference. Sometimes, the idea and vision are so great that it doesn’t matter with whom and in what environment you work. Sometimes, the team is so cool that it doesn’t matter what you do with them. I love both, our team and the idea so much, that if anyone ever lags other will always compensate.
How did your team form?
Most of us have known each other since we were students. After university, we parted ways, but ‘STACK’ reunited us. We are all very close friends.
How important is it to have different competencies within the team?
Diversity in the team is very important, not just in terms of competencies. But also, different visions, interests, habits, skills, approaches to issues, and other characteristics. Uniting all these around the goal and idea gets the best possible results, based on our experience.
What is a typical day like as an entrepreneur? How do you think it will change along with the development of your startup?
To tell you very briefly – whether I want to or not – I think about ‘STACK’ even when I sleep. In the morning, we have a “standup meeting”, where the whole team gathers to review the completed assignments and make plans for the next day. Then we start working: calls, emails, presentations, finances, communication messages, plans, discussions, agreement with the team, and lots of thinking mainly on how to make something new without damaging something else. One thing that I know will change for sure with the startup’s development is that there will be more to spoil and more to think about.
I have to ask you about your plans, what development plans do you have for the future? An exit strategy?
Our vision is the following: we want to change and improve the communication methods of mankind. Today, people exchange most information through the internet, and we’ve started by improving a browser. However, a browser is not our limit. In the future, we will develop communication between people using other methods too. So, we’re still far from the exit.
How realistic is it for a Georgian company to attract investment abroad?
We’ve met and talked with many venture capitalist investors and foundations. One of the main reasons why these institutions are reluctant to invest in Georgian companies is distrust due to lack of information and experience. Someone has to start and set a clear precedent for a successful investment and exit in a Georgian company. This will generate trust toward us from international investors. We believe that ‘STACK’ will make a significant contribution in this endeavor.
Where should we look for investors? What was your path?
Of course, if no one uses your product and no one appreciates it, then it’s very difficult to convince someone just with your own belief and enthusiasm to take a risk on you. That is why it is important to have sales or even customers before you start actively seeking finances. As for finding investors – different types of investors are involved at different stages of the company’s development.
We started fundraising with grant projects and family members. Once we had accumulated enough of a customer base, we started a so-called “seed investment” search and joined an accelerator that can be considered as an early-stage investor. We now have a larger team, our customers are growing rapidly, and venture capital investors are also interested in taking part in the next investment round. These types of investors are usually interested in sales, but in exceptional cases, rapid and steady growth in customers is also a sufficient condition for their interest.
What is the essential ingredient to attract an investor’s attention? How important is having several investors?
Potential. All investors are interested in growth potential. Their goal is to make investments that will probably decuple or at least double shortly. The higher the probability of success, the higher the chances an investor to agree on less return. It is the responsibility of the company founders to reduce risks and prove it with numbers. Large numbers of customers, large sales, or by demonstrating the rapid and steady growth of these numbers. In the end, it all shows the potential of growth of the company, and this is of interest to the investor, as well.
Having many investors is both good and bad. Relationship management with many investors is a complex process. There may be no agreement between the investors and this could hurt the company. On the other hand, the more powerful and generous partners you have, then the greater your chances of success.
What is most important during pitching? How sincere are you with investors and how much do you embellish the facts?
When pitching, there are three things you need to know: what an investor is interested in, what you’re talking about, and to say only what you believe in. In this case, the pitch is very natural, it fits well, and the listener is satisfied. This is very general advice, but the rest is about technique and experience.
Of course, at the initial stage, we try to present our company to investors in the best possible light, but sincerity is essential. One thing we must all understand is that an investor is not a stranger from who you just borrow money and pay interest. The investor is your partner and his or her interest in the success of the company is no less than the founder’s. Before any financial transaction, all the partners will learn the truth, and at this point, if something goes wrong it will lead to distrust between them in the future. Consequently, lying to investors is counterproductive and makes no sense.
What are the questions that an entrepreneur should ask an investor?
The same questions that you would ask an employee or a business partner. You need to understand how an investor can help the company and what they expect in return. Founders and investors don’t need to have the same interests. These interests must be reconciled at least within a certain timeframe. We ask all the investors in what industries do they have investment experience in. We ask for the names of specific companies, and then we ask these companies about their cooperation. We also ask what they expect from the companies that they invest in, what methods they use and how much they are involved in management, when and how they choose to exit the company.
If you could, which experienced entrepreneur would you have onboard?
Peter Thiel, or Elon Musk. In short, anyone from the “PayPal Mafia”.
Which accelerator are you in and what is the accelerator’s role in the development of your business?
360Lab is an Austrian-American accelerator owned by ‘360Group’. We started looking for an accelerator from the beginning. We were looking for something that would give us finance, workspace, quality connections with future investors, and knowledge. Of course, we targeted some great ones like ‘YCombinator’, ‘500 Startups’ and ‘TechStars’. However, we were at an early stage for these accelerators and could not get into the current programs. Later, we found 360 looking for teams for the second round of accelerated funding. We searched for detailed information, learnt about the benefits we would get and the kind of partner we would acquire as an accelerator, talked to previous teams for recommendations, participated in the qualification round, and eventually won along with 4 other startups.
I would like to clearlyexpress the role of an accelerator for beginner entrepreneurs. As a rule, accelerators help startups to get through any particular stage quickly. To this end, they also make a small financial investment and assist entrepreneurs with the knowledge and experience of mentors in return for a share of the company. In our case, the rapid growth of our customers is what the accelerator helped us in the most. It also provided a free workspace where we, along with other startups, are surrounded by experienced mentors and professionals.
What will be your next move if ‘STACK’ fails?
For us, ‘STACK’ is not a product but an idea. After many iterations and endless attempts, if it fails as a product, we will try to implement our idea through other means.
When would you say you are successful? What is your success metrics?
It is very difficult to say precisely because every time I move to the next stage, I have new success metrics. However, at this point, I think that when 1,000,000 users are satisfied with ‘STACK’, then I’ll be satisfied too.
What would you say to your past self five years ago?
It was exactly five years ago that my entrepreneurial life began when I went to Dubai to start a startup with Ziko. Now, if I had the opportunity to talk to myself then, I’d say you are on the right track, but go faster!
How easy is it to start a business/startup in Georgia today?
It is very simple to start. Georgia is among a limited number of countries where talented and creative people live, the internet is affordable, and life is not expensive compared to other countries. Therefore, it’s a great environment to start and test something new. However, scaling and growth are not easy at all. Due to the scarcity of population and the language barrier with the international market, the management of a rapidly growing company in Georgia entails many difficulties. However, based on my observation, this situation is changing for the better. As I already told you, it is important to see opportunities among difficulties and problems than to solve them step-by-step. But we should start from the bottom with the ‘Bottom-Up Approach’, as marketers say.
If entrepreneurs are not ashamed of their ideas and are not afraid of failure, if consumers have more confidence and an open attitude toward Georgian innovations, then accelerators, corporations, investors and the government will be more interested in supporting and promoting this process.