Ela Madej: Know Your Reason Why (Episode 8)

sam cook:
Hello Project Kazimierz listener. This is Sam Cook, your host, with my co-host, Richard Lucas. How are you doing, Richard?

richard lucas:
Very well, thanks.

sam:
We’re back here, sitting at The Stage, which is a very interesting place in the history of the Kraków startup scene, where Hive 53, which is beginning in about an hour and a half, and sitting here is someone that is pretty well known, not just in Kraków, but also is becoming very well known in the United States startup scene, in New York and Silicon Valley, so I’d like to welcome Ela, and Richard, I’ll let you give the formal introduction since you always know more about our guests than I do, because of your long history here.

richard:
Well, just very briefly I’ll say that Ela’s extremely well known as being the face of the Kraków startup community. When Kraków wasn’t so well known there was one person that everyone wanted to have who would represent the city well because not only is she extremely good-looking and highly intelligent, but she’s also had a fabulous startup which has evolved in several different directions since she moved West. Rather than have me do the introduction I think perhaps, Ela, it would be better if you did the first introduction of yourself.

ela madej:
Hi. Thanks for those two nice introductions. I’ll do the third one. My name is Ela Madej, I’m an entrepreneur and an investor. I started my first company in 2006, here in Kraków. I was actually born and raised here, so I have warm feelings towards this city. Right now I live in the States, but I’m always happy to be back here. I’m doing a few different things and I’ve done a few different things. I kicked off the Kraków startup community that Sam mentioned, Hive 53. I co-founded a Software House called Applicake. I co-founded a CRM company called Base, that’s right now doing pretty well. I co-founded some failed startups. I’m a COO at a social good startup in New York called Amicus. I’ve partnered at a V.C. Fund. I do Angel investing. I have some plans for the next two years that I’m not disclosing yet, but in my own perspective I’m just accelerating. That’s pretty much it.

richard:
Thanks for that introduction. One of that things we’re very interested in is helping listeners from around the world get a sense of what Kraków is like and what the startup community is like. As someone who was rather early in the scene, could you take us through your route into it, because one of the things we want to do is inspire people in different countries to think about doing something similar in their city. So what was your route into entrepreneurship? Did you always know you were going to be an entrepreneur, or did it just happen to you randomly?

ela:
I think I always knew I wanted to be an entrepreneur. I was the president of my class since I was 6 years old…

richard:
So basically Ela is a “high-achiever”.

sam:
[Laughing] There were no term-limits on that presidency?

ela:
[Laughing] I don’t think there were. But, I was going to go into physics, and at some point I decided that I probably wanted to run my own company. When I started my university I co-founded – well actually got involved in an organisation called Collegium Cogitantium, and my role was the section of promoting entrepreneurship and I started doing it when I was 19 or 20, and I did workshops on how to start a business, so I guess I pretty much always knew that it’s going to be, and then when my friends needed help in starting their software company, I was there to help and I found myself being a COO of that company, because they didn’t let me leave, and that’s the story of Applicake. It was using an opportunity. Both of my parents are computer scientists, my sister is a computer scientist, most of my friends were physicists or computer scientists, so I was very much in that community and although I would never expect that somebody would pay me for working in that space. So that happened in 2006, and then we wanted to hire the best people, the best Ruby developers, because that’s what we were doing in the market, and we started getting involved in the young Ruby on Rails community, and we started organizing not-for-profit events, and then some bigger for-profit events, such as European Rails Conference, and European Ruby Conference, and some big mobile events. They got quite well known. It all kind of escalated, and I think pretty naturally, so my advice would be to get involved in something that interests you and you can take it from there.

richard:
I remember when we got together to do a project in your school for entrepreneurship you clearly felt, as I did, there was a need to promote entrepreneurship in school. Do you think that when you were growing up in Kraków, I guess in the 1990s, maybe the 1980s, I’m not quite sure how old you are, but I’m guessing like…

ela:
Twenty-one

sam:
[Laughing] The ’90s, definitely.

richard:
I say I’m twenty-five, plus or minus twenty-five years. But when you were growing up, do you think that Polish education was doing enough to promote entrepreneurship? How do you think the school handled it and do you think the situation has improved now in terms of the status of entrepreneurs in Polish education or society in general.

ela:
I don’t know what’s happening now because I don’t go to school anymore, but when I had entrepreneurship classes in “Piąte liceum” which is the fifth high school, a very good high school in Poland…

richard:
That’s the one with a top reputation, for listeners, and people who go there certainly let you know that they’re going nail you at school.

ela:
It wasn’t done by a practitioner, so that was alarming, the person who was teaching, she was a very nice person, but she was not an entrepreneur and she was teaching us about taxes and essentially being adult, not really about taking risks and assessing business ideas. It was just all about social security, the Polish version of social security, and taxes and all that, so that wasn’t very helpful. And I’m not sure if it’s getting better, but there are many organizations and non-profits and maybe for-profits that are trying to fill the gap, and there is a small startup scene in Poland that’s running events and promoting entrepreneurship, specifically startup entrepreneurship, so hopefully that’s starting to change.

richard:
Your actions, I mean you set up, I think was it with Piotr Niedziński, you set up Hive 53, so you clearly felt there was something that needed doing. I guess you wouldn’t have done it, I mean it’s quite a lot of work. What motivated you to do that kind of community building? You already had Ruby on Rails conference, so you’re obviously into events. Is it just because you enjoy them, you like meeting people, or is there some higher purpose?

ela:
There are two things happening. The first one was just Piotr, who came back from Denmark, and he really wanted to kick up the startup community, and I think I should definitely… he was just looking for someone to help him, so I think the idea was all on his side. And at that time we were already organizing startup type of talks at Applicake, because when you’re running a software development house for startups, there are your clients that come over very often. We worked with international clients. Whenever we had someone over we would invite 20-30 people to our office and just have an open type of conversation because we wanted kind of to share access to that person, because, you know, whoever comes from the West could share the experience they had, and that was very needed, and I think he participated in one of those talks and he said, “Hey, let’s do something bigger, clearly our office is not big enough.” So that’s how it started.

richard:
There’s a lesson to learn there. I think that quite often people have business partners coming in and I remember it being quite nice for your business partners. People quite like the attention. Maybe in their day-to-day life they’re not necessarily regarded as a star guest, but if anyone listening anywhere has got someone coming in from another town, you can organise even a small meetup where they just give a talk or explain when they do and everyone’s interesting to someone, right?

ela:
Yeah, and for us, maybe we got over-excited about those people, but to be fair, still, I think, sales and marketing skills are missing, and I think of 80 years ago when some of these skills were literally non-existent, because nobody had that type of experience. There were some Polish tech companies that were doing well, but I don’t think there were Polish companies with global aspirations even. I mean there must have been some, right? But not that they were very visible. It was just nice. Even if those people were not high-profile celebrities, they had a different perspective, and I guess Americans or Westerners had a longer experience with capitalism a bit longer than the Polish exposure to it.

sam:
One of the things I’m finding really interesting just observing from an outsider, I’ve got a very fresh perspective, being here for only 6 months, is entrepreneurship, yeah it’s not really taught in school, but to be honest, I don’t remember it being taught in school in America either, but there might be something more inherent about the way all subjects are taught, wherein in the United States, if you compare the extremes, I think you have China where memorisation is everything, and in the United States it’s much more free-wheeling. Many Europeans and Asians would think we’re pretty lazy with our lax school schedule, but kids do a lot of extra-curricular activities and other things aside from school…

ela:
And you sell cookies, and lemonade. [Laughing]

sam:
Yeah, we have bake sales and girl-scout cookies and things early like on in life, I remember when I was in band, we would have to raise money for our band trip, going to sell to our neighbours. I look back on it now, and I wasn’t entirely comfortable doing it, but it was a really interesting social, economic environment. I know you’ve been in the United States for a while now, compare how societies nurture entrepreneurship, and how you think Poland might be changing.

ela:
So, obviously there was no history of entrepreneurship during the communist times, but then in the early 90s everybody thought that they could start a business and do something because finally they had access to the tools and that was okay, but this was still very young. Culturally, I think we are very clever and very entrepreneurial in the way of working with limited resources, which is a very important skill for entrepreneurs, but the skill of “thinking big” is not necessarily there, or maybe we’re just learning about it. So…we never.. at school, or when I was to school, it may be changing obviously, a lot of it was about memorisation. I was lucky enough to go to a pretty good school, where critical problem solving was important. But yeah, I don’t necessarily think entrepreneurship was a big focus in school.

sam:
Just as the overall DNA of the society, it seems to be… because one of the things I am impressed about here is there’s this almost, and you were there, I think we’ve all been there where you start your first business you think you can do anything and you’re a bit naive, and there’s this general, I think good naivety in the entrepreneurial community now in Kraków where people are just not afraid and they’re getting their hands dirty, whereas you go to a city like New York city where everyone’s pretty jaded and you have a good idea, and someone’s going to say, “Let me pull you aside and tell you how the world of business in startup works.”
So I think we’re in an interesting period in the development.

ela:
Yeah, I think just living in New York, I realise how much bigger the risk is to start a business in New York and maybe the alternative cost is way bigger. So everything is going to be way more expensive. I think that..I don’t want to focus too much on that, but even accounting and bookkeeping and payroll reporting, all those things are done separately, and I think just interacting with many professional services companies is extremely expensive, so you really need a decent amount of startup capital to start a business in New York, and I think Polish people who are really…they do extremely well with very limited resources, and we take advantage of the really low costs here. I think really at the idea stage, for the first year, if you have a little bit of savings, if your living in Kraków, you don’t really have to worry about money, especially if you have co-founders, so you don’t have to hire people, which I’m not sure is the case in cities like New York where it’s pretty expensive. I always thought that one realisation that I had is that working with Polish companies may be a bit risky, because people may try to take advantage of you, but business in the States is pretty ruthless, if you think of the real estate market in New York, I had some really bad experiences there, or if you think of different professional services companies where you see the bill and just don’t believe and there’s a lot of back and forth and arguing.

richard:
There’s a point that Sam raised about the impact of Communism, that when I came to Poland I was really struck by, there’s this idea of the lean startup, making something with very limited resources, and learning how to get things done with limited resources is extremely useful. Communism had the effect that nothing really worked, so people had to learn how to get by, and there’s a kind of, “What have I got that other people need?” “What do I need?” “How can I get it?”. In a system that didn’t work there was a kind of entrepreneurship that I think gave Polish people an edge, and not just Polish, but Poles most uniquely for the former Soviet block that could get the right to travel relatively easily, compared to say East Germans or Soviets, Poles could travel around, so there was that kind of edge, but of course is doesn’t scale so well because there is a moment where it stops being good to do everything as cheaply as possible, and what’s value for money. It can be the case where you can spend $10,000 and get it done really well, rather than spend 6 months doing it yourself not so well. And in the end of these days that lack of money is less of a problem. Communism and that period did give Poland an edge, and it’s interesting now with the kids growing up in a completely different society, people say they’re a different generation, but sometimes the young kids are almost a bit spoilt. They’re not used to the kind of adversity that created the tough entrepreneurs of our generation. Although I say “our generation”, I think Ela’s not exactly the same generation as us, right?

ela:
I can’t say about the kids, but…[Laughing]

sam:
[Laughing] She’s one of the kids!

ela:
There’s definitely more access to money right now, which makes it easier, especially if you want to go global, you will need that money at some point.

sam:
One of the things I like, Richard, and I’ve travelled around Eastern Europe a bit, and I think definitely out of all the former Eastern European Soviet Block countries, Poland has the strongest entrepreneurship culture, and there’s a lot of deep historical roots. I was just talking to my old finance professor who I want to interview later, and he said that the period from 1919 to 1939 when Poland was born (the modern state of Poland, before World War Two), was an incredible period of Polish economic flourishing, so there was some memory and pent-up energy that the Pols had in the inner-war years, you have the influence of three distinct empires, the Russian empire, the Austrian Empire, and the German Empire. And then a long history in Poland of freedom. I don’t think most Americans are aware that they weren’t the first freely elected constitution. It was actually Poland, actually Switzerland, very very early, and Poland was the first major kingdom to have significant rights among the nobles at least, to vote, which was a lot better than England had for the longest time, and the United States, at the beginning of our founding had very limited…

richard:
We’re not going to compete about British vs Polish and American…

sam:
But they have that tradition, which I don’t than any other government had in that period, and there seems to be that sense of, definitely pulling out of that as the strongest country to pull out of Communism economically. There’s a lot of that going on here that I think is working out well.

ela:
It’s also a big country, and some reforms in the early 90s were actually done well, with a lot of human capital. We got lucky, in some ways. The economy’s doing really well, there are many multi-nationals here, and maybe not everybody knows that in the last years when the recession hit Europe, we were the only country with positive GDP growth.

richard:
It’s interesting, Poland wasn’t and isn’t in the Euro. When the European crisis hit, Polish złoty, our local currency, went down by 20-25%, which made Poland, unlike all the other Euro-Zone countries, not locked into this exchange rate with the rich countries. That was an example of exchange rate flexibility that really helped. As Ela said, we’ve got a lot of international companies, and they partly came here to start with because Poland had the biggest market with almost 40 million people, which may not sound like a lot to an American or a Vietnamese or a Chinese listener, but here in Europe, there’s the four big ones – France, Italy, Germany, and the UK – and then there’s Spain and Poland as the next ones. I feel like the domestic market is one of the reasons foreigners came here. But thinking a bit forward and from the current situation, if you like advising people what to do, maybe 10 years ago or 15 years ago, you were thinking about choices about: do you stay in Poland, do you go West, do you do a startup, do you work in a corporation. What sort of advice do you give to someone who’s – say they’re a younger person – whether they’re Polish or indeed, anywhere else in the world, what are best first steps for them to take as they start leaving education and start thinking about how they’re going to earn money, make a living, and do something with their life?

ela:
It’s a hard question…

richard:
Yes, I’m not asking you easy questions. [Laughing]

ela:
I don’t often actually get an opportunity to give advice to teenagers when they’re still deciding what to do for their life. I think for most people I would just say, follow whatever’s interesting to you, because if you like it, you’re probably going to get good at it. But in terms of…I think everybody should try or at least consider entrepreneurship as your career path. It’s a great adventure, and starting a small business is actually relatively easy. Having experience with just like running your own small consulting company, if you have any skill, it will already give you business experience and some exposure to what it is like to run a company, and if you enjoy the responsibilities there. I think it very much depends. I would definitely think that being able to fully shape your career is amazing. It might be harder, so you probably need to have some idea about where you want to go. When I started Hive, I think I’ve made a full circle here, because when I started Hive it was all about startups, and the hype of startups, and right now I think that not everybody should start a startup, and also not everybody should seek financing, and not everybody should run a million dollar company, and neither should they attempt to do that, because there is a certain probability and expected value there, and you should probably figure out what you want to do in life, and then decide what path to achieving it would be best. It might be by a non-profit, it might be a small bootstrapped company, it might be a rocket-ship type of startup. What I really think is the most important for me, and I know it’s more trying to impose my values onto the rest the world rather than giving neutral advice, but I wish people did more meaningful things. I think many people are doing things because they see a market need, and they want to fill it, and they see an opportunity to make money, and I think that’s great, but I think the system is ready for some group of entrepreneurs to define themselves as social entrepreneurs and try to do things with a double bottom line, where they actually make money but also make something that has some good impact on people, on the local environment, on the rest of the world, beyond just profit.

richard:
I think you raise some really interesting points there, because I certainly, when I’m advocating entrepreneurship, one of the things I say is that it’s not for everyone. You’ve got three current or former CEOs around the table here, and we’ve all got the stress, it’s not always easy, and you have to make tough decisions, but this idea that you have more control over your life is important. The second thing, the great thing is you can make your own definition of success. If you’re in the corporation, if you’re in some hierarchy defined by someone else, then somehow that hierarchy has it’s own… The senior vice president is more important than a middle manager, right?
In a big company like Shell, which is not to disrespect the big companies, I think that the big companies are very necessary, and they do their job, better or worse, just like small companies. But the other thing is concept of a social entrepreneur, whether it’s organizing something like the Hive meetups, which are promoting entrepreneurship, or a coach-surfing meeting, or a TEDx, there’s just this sense that you’re doing something that wouldn’t happen if it wasn’t for you. That gives your life meaning. Obviously, if your activity is helping, I don’t know, helping cocaine smugglers not be detected at airports, then you’re making a difference, but it’s not necessarily a positive difference. But I think that feeling of ‘the world would be different if it weren’t for you’ is something that matches very well with having a sense of meaning, but of course, having a tool that optimises web searches for Amazon merchants, that’s useful, but it’s not necessarily a social mission.

ela:
I think their are many things you could be doing to do something meaningful, and many product ideas don’t seem great, but in fact you can always claim that they make some group of people feel better about their work, that they solve some important problem, that they’re solving some efficiency problem, and I think that’s fine, I think that’s important, as long as you’re not making the world a shittier place, that’s already fine. If I could…

sam:
Sure. [Laughing]

ela:
…advocate something I would ask people to do something that’s actually…

richard:
From Project Kazimierz, we have an important message for our listeners: “Don’t make the world a shittier place.”

sam:
The Hippocratic Oath for entrepreneurs, first of all, do no harm, right? That’s great.

richard:
On the other hand you have to take risks, and as someone who’s started businesses that have failed completely, as well as businesses that are doing okay, I think it’s just like we were saying how the problems of Communism created some kind of entrepreneurship, there’s a double edged coin that if you want to do anything that’s worth doing, there’s got to be risk of failure. And if you fail, people say fail fast and fail often, but as someone who’s been through it, if you fail you don’t pay your taxes, you don’t pay the bank, you don’t pay your staff, you don’t pay your suppliers, a lot of people are very angry and they blame you, personally.

ela:
Yeah, it’s terrible, it’s terrible.

richard:
And you feel like shit. So on one level you need to have that awareness, but if you set out to give high-interest credits to poor people, that is a business model that is highly profitable, but I don’t think it’s necessarily a respectable business, even if you do it very efficiently and very well.

ela:
Yeah exactly, and going back to the failing part, and going back to the darker sides of entrepreneurship, me and Seth, my partner, we recently spoke at this conference, Youth and Leadership, three days ago, just this Saturday, and there was a room full of 300 over-achievers, between teenagers, and maybe early 30s.

richard:
People like you. [Laughing]

ela:
People like me, exactly. There were a lot of…they were trying to learn some leadership skills, whether they would be used in a bigger corporate setting, for starting their own businesses, running and NGO, doing essentially whatever, wherever they wanted to take it, and we actually talked about the stress and the darker sides of entrepreneurship, and it’s going to be very stressful at times, and maybe doing something that’s meaningful… that can push you through the harder times and might actually make it worthwhile. Because if you’re going to fail a company, which is always likely, and for startups it’s very likely, just looking at the numbers, and you’re going to fail, and you’re going to have to go through the emotional consequences of letting people down, of having to drag yourself up again and start, you might as well try doing something that’s actually important. I know it sounds cliché, but we just have one life, and we really have limited time, and there’s always an opportunity cost, and whenever we’re making millions doing X, we’re not…

richard:
I sometimes have the attitude that some of my businesses, they’re basically technical services for corporations… and by the way if you’re wondering about the noise here, earlier we had the church bell, we’re sitting in a very nice courtyard under a large Carlsberg umbrella, and the rain is beginning to fall, so this may influence the quality a bit, I don’t know.

ela:
You can always imagine that there’s a wedding nearby and the bride and groom are being thrown rice.

sam:
Exactly, whatever you want it to be, it will be.

richard:
We can imagine that Sam wasn’t in Iraq, that we was in Vietnam and this is a monsoon.

sam:
Oh no, no.

richard:
You know, one of the attitudes I get is that sometimes you can make the money in one business, and use it for social projects in another. For me, obviously if someone’s doing something really bad like slavery or toxic waste disposal in pristine oceans, then there’s no excuse whatsoever, but I think sometimes there is a right time. It’s much easier to be the generous social entrepreneur when you’ve made your money…

ela:
Yeah, that’s true.

richard:
…and you’ve covered your bases. Personally, I feel like I have different tracks. If I spend something on myself I think, “I have another budget for spending on other people,” but it’s much easier for someone who’s recently comfortable like me to say that, rather than some guy who’s struggling to pay his kids’ education or whatever.

sam:
Well, look, social good is a very broadly defined term. If you’re doing an honest job fixing people’s cars, that’s a social good. You don’t rip people off and you’re providing a key service to help them get to work. Google has solved a lot of problems for a lot of people online, and so have Apple with the iPhones, and… [Interruption while they get out of the rain]

richard:
There’s this expression “taking a rain check”, do you know where the expression “taking a rain check” comes from?

ela:
I do not know that expression.

richard:
I learned that from Pawl Nowak, who gave us a rain check, meaning he wasn’t going to come. This was where you give a refund for the ticket buyers at an event. A rain check is where you get a check back for your ticket, because it rained at your event.

sam:
Really? Wow.

richard:
Project Kazimierz is the source of trivial facts as well as entrepreneurship.

sam:
One of the things, you know, Google, for all of it’s original… I think their original motto was “don’t be evil”, or I don’t know, whatever it was, and obviously as a company gets bigger, jealousy gets bigger, and people are going to accuse that company of not living up to their motto, but you think about the things that big companies have solved, Google or Apple. The iPhone is having a revolutionary impact on Africa right now, and people’s ability to make a living, and more efficient health-care. So you don’t need to go out and find something that, the headline is great, if you’re making people’s lives better and providing value then, I think all of us would agree that maybe there are some big companies that have pushed unhealthy food that is not good for the world.

richard:
It also depends on what you want to be proud of. Maybe you’ve got a company doing someone quite ordinary like distributing paper, but you have a great culture, you treat people really well, you’re an active member of your community. There’s more than one way. Applicake was quite famous for its culture in Kraków. Could you describe… Applicake was the company Ela co-founded, out of which Base, which is this world-class mobile CRM company, emerges, and is suddenly one of the highest profile Kraków… it’s beyond a startup now, but success stories. What was the culture at Base, and did that just happen or did you sit down and ‘think’ you want to have a great culture in your company.

ela:
Just to add to what you were saying before, by looking at my track record, I was doing pretty normal companies, they were not changing the world. This was just my advice to give to someone who is starting now and who knows that this is an option. To answer your question about Applicake – The culture was pretty amazing, and it was not designed, we knew nothing about running a company. I think it’s the reality of running your first company, you just start something, and then you learn how to do things.

richard:
You started it with friends, right? You started it with a bunch of people who were on the same wavelength.

ela:
Yeah, so we were a bunch of friends who really enjoyed working together, who enjoyed what we were doing. We had access to the global market. We wanted to create something special, and I think when we realised we were doing something special for the circumstances of 2006-2007 in Kraków, we wanted to share. It was a very open culture. As soon as we started growing, we started hiring friends, because that’s what we knew, and it created this pretty great culture of openness, of transparency, of really good internal dynamics and communication. Looking back I think we did many things right. There are probably alternative universes where we could have scaled the company even more, and maybe with some of the earlier projects we worked on we could have been successful faster and had an even bigger impact. You might always argue that could have been the case, but I think we genuinely enjoyed what we were doing, and it never felt like work, for 6 years, and I never thought of my co-workers as co-workers. That’s just the word I would used. I always thought “I’m working with a group of friends”. I don’t think I had a single day when I didn’t feel inspired to go to the office, which just understanding the struggles of entrepreneurship, was pretty remarkable, how much positive psychic energy there was.

richard:
I remember when my brother, Edward Lucas, who we interviewed earlier, who’s the international editor of The Economist, came to speak at the TEDx Kraków and we had a pre-meeting in the Applicake office, and he walked in and said, “Wow, this is like Estonia!” And you know Estonia has got this amazing reputation of being the most modern, advanced ex-communist country of all. I remember being really proud that a Kraków company – because he’s objective, he’s not just saying it to be nice. “This reminds me of Estonia.” I think the furniture was colour coordinated with the logo. There were little things that aren’t that hard to do if someone cares.

ela:
There was also very…So, two out of four co-founders were women, were female, and we had a good ratio of women programmers. I’m not sure if that changes everything drastically.

sam:
It definitely makes the style a lot better. [Laughing]

ela:
We had…we also did many things that were just plain stupid, and I’m slightly embarrassed when I look back at some of the things we did. I mean I’m proudly embarrassed, I would probably not…I mean hopefully I’d do it one day, and I really want to said I really want to believe that I’d do it, but we did this Ruby LipDub, where all of us dressed up, I was dancing on a table, and at that time my co-founder was skiing on a table.

richard:
We’ll have show notes with these, so we’ll post links to that.
But it was a brilliant branding and marketing tool because, you have to remember that back then, Poland had this very conservative, old-fashioned image of the country, and the Applicake people, Ela is and was good-looking, and a lot of the other people there are young, dynamic, well dressed, and so there’s this sort of complete clash with what you would expect a Polish software company to be like – men with moustaches and…

ela:
A lot of what we did was very consciously created, because we realised at some point after our first contracting client, we could not find more work and we had to go to the U.S., we worked at bars during the day and coded at night, or actually the other way around, and we saved enough money to re-invest into the company, which the entire time actually was bootstrapped. But then we realised, people think of us as, “There’s this software development house in Poland in 2006, 2007?” – it was not a category. People didn’t want to pay us what we thought our work was worth. So we thought, okay, from now on we’re going to over-share, we’re going to show everybody. We’re going to limit the psychological risk associated with paying for a complicated service where the outcome is hard to document, and those people are often starting their first company, or investing a lot of time or money into it, so we understood that we need to help them buy it. This was the reason why we were kind of oversharing what was happening. It’s almost like Stefan Sagmeister, the New York city designer who has a camera in his design studio to show what he’s doing. We were maybe not quite there, but we really wanted to show, “Hey, we work on Mac computers. Hey, our office is pretty fucking cool,” – sorry for the language – “We are very nice people. We speak English. We organize big events. It’s safe to send us work, we’re not going to fuck it up.” – Sorry.

richard:
And I think for anyone listening, this idea of self-awareness. A lot of entrepreneurs want to believe that their business is wonderful, and they actually don’t want that critical feedback. And there was that sense of conscious self-criticism, but then coming up with a solution. Okay, we’re from Poland, people will probably think we’re cheap, off-shored labour. What can we do to smash the stereotype? I think that’s a very valuable business lesson for everyone. Like, I’m British, and British people have this reputation for being a bit arrogant, a bit imperialistic, so I very consciously refer to British history, because I know that for a Polish person who comes from a country that has basically been kicked around by foreigners for many hundreds of years, if I can somehow reference the fact that I’m aware that that’s what the British used to do… And I work with Irish people… This is a conscious decision to address a subconscious objection, which actually leaves you way ahead, because by showing that you’re self-aware, you get psychological credit. I think you had some experiences like that with your negotiations in your previous job, representing the Americans in Iraq.

sam:
I think, what I’ve seen, there’s this thing I call the elephant in the living room, which is, when you’re doing business with someone there’s something pretty obvious. When I was in Iraq in 2007/8 it was obvious to everyone that America had messed up that whole country, and when I saw my commander actually acknowledge that in 2006 and get a great response from people, it just made sense to me that… I like to joke that I’ve made 10 times more mistakes than most people in life, but I’ve tried probably 100 more things than most people because that’s the way I am, but you have to absolutely get out in front of those mistakes, and those issues that people have and those objections, rather than try to hide it or brush over it. I think that’s what you’re saying Ela did so well with Applicake was acknowledging the objections and getting out in front, and I think that’s really important.

richard:
What’s the mistake, and what’s the real mistake that you wouldn’t do again?

sam:
[Laughing] Just don’t show that to your grandmother, right?

ela:
No, I don’t care much. I think the real mistakes that I’ve made later on as the CEO, and just the whole, coming in inexperienced, it was not a mistake, but as a whole I made a lot more mistakes there. I misjudged the stage we were at and misjudged how quickly we can do things, because you start believing in your own myth of, “Yeah, I just do things great, and I’m going to do it in like 4 or 5 months because I can scale businesses.” So I think later on, when you have your first experience of failure, that’s when you actually learn. In the moments you got lucky and the moment you actually played something well. So that was a way more interesting experience, and now I’m able to talk about some of my mistakes with way more perspective.

richard:
I think that’s a very powerful lesson, and that’s the second thing to take away, that success is not the best tutor…

ela:
Oh, it never is!

sam:
Oh, no.

richard:
… and failure is. I remember we had Tim Jackson, who founded the British equivalent of Ebay, QXL, which made him around £4 million in his exit, and he came to talk at a conference in Kraków, and he said that a lot of entrepreneurs put 90% of their success to their brilliant idea and execution, and 10% to luck, and very often, it’s the other way around, that luck is incredibly important. Of course you can create your own luck, but I think that if things are going well, don’t do what Ela obviously referred to, and I certainly did, which is to think “I have a talent for business”. Maybe you were just in the right place at the right time, and there was someone else who had the same idea 5 years ago, and they failed completely, not because they were any less of a person, you just happened to be in the right place at the right time.

ela:
It’s good to acknowledge that you have some skills that objectively you have, but then what those skills will lead to, there are so many factors involved, and so many people that will get you there. Everybody running a company knows that it’s mostly about the other people, who are the team.

richard:
I wrote a blog post about this many years ago that was called “Rip My Idea to Pieces”, where the mistake I made when I was 23, 24, or younger was I didn’t want that negative feedback about my ideas. I got this idea and I wanted people to praise me. What I advise people now, and I wish somebody had told me then is to say, “This is my idea, tell me what’s wrong with it.” It’s actually much more valuable to get what’s wrong with your idea, because people start criticizing it, and instead of feeling offended, you can say, “Thank you, I appreciate this negative feedback.” Obviously you need to know what you’re good at, but if they say, you want to be a fashion designer and you don’t know how to make clothes, you have no taste in clothes, and you don’t have any fashionable friends, maybe that’s a very reasonable objection to your idea of being a fashion designer.

sam:
And that’s really hard for entrepreneurs, Richard, because I think with entrepreneurs there’s a certain amount of self-confidence…

richard:
Delusion?

sam:
Delusions of self-grandeur. There’s a certain amount of arrogance that you need to think that you’re going to be one of the 10 businesses, you know that 90% of businesses fail, and when you are like that in your personality, people around you just automatically assume you don’t want feedback. So not only do you have to be confident, but you have to actively invite that feedback. I know from my first business experience, had a lot of success right off the bat, got arrogant, and I consider myself lucky now to have not succeeded in that first business experience because that was very humbling for me, and one of the first big setback I’ve had in the army, fortunately, I could always get more money or more bullets or whatever I needed, and in business there’s the hard reality of economics that sometimes you don’t run into in a government organisation.

richard:
You can’t get more bullets in the business world.

sam:
[Laughing] No, no, you certainly can’t in a legal sense. But that was really good, and we’re all sitting round the table here and from Ela’s story, and Richard yours, that failure is definitely – and I don’t want to over-glamorize failure, you don’t want to seek it out consciously like a martyr – but you do need to be open to it and the lessons that it provides.

richard:
I think we’re moving towards the end of our allowed time. Is there any failure that you’d like to share with us? Something that went specifically really, badly wrong? Failure is defined in different terms for different people. Is there anything that you’d like to share? This is a chance to bare your soul.

ela:
[Laughing] So there is business failure which you can measure by the numbers, although not fully, because you never know the alternative outcome. But there are some things that I wish I had done differently, and maybe not all of them I have to be sharing for various reasons…

richard:
[Laughing] So we’re not going to get the real confession.

ela:
No, but I think these are more subtle, about what I think is the wiser thing to do. They’re not necessarily business lessons. So business-wise, our experience with Y Combinator, which is the world’s top startup accelerator in Silicon Valley and companies such as Dropbox and AirBNB and Reddit and right now a few other billion dollar companies come from there, was that we were actually not very open to feedback from the partners, who were not excited about the idea, but I think the biggest problem there was that we didn’t really think long enough, if this is what we wanted to do. When you grow your company organically, for 5 or 6 years, everything happens in a certain way and there’s time for things, and when you start something new and you put yourself in a startup accelerator it’s pretty intense. I think it’s very easy to lose perspective, and with just got there because we heard all this hype of “Oh, this is a great program we have to go there”, and right now I’m very glad that I’m part of this network, but I think it came at a cost. I still had Applicake, which was over 30 people, and I just stepped down, for some time, as the CEO, as I was doing the program, but I never really sold it. Before we had Base, which was already 50 people in total, right now 140 people. I had the biggest European Rails Conference which was coming up in few months. And I was organizing all of these things all at once, because I thought, “I’m great, I have all these people to do everything”, and there’s this limit that you hit, where you just cannot do everything. I think some things you just cannot speed up. So my good friend and CEO/Executive Coach, Jerry Colonna, who’s also an investor in New York city, he was the ex-business partner of Fred Wilson, who was a very famous venture capitalist. He was very sceptical of me going into an incubator, accelerator setup, and he said, “Ela, this is a sprint, and you’re a marathon runner.” And I was like, “No no no, I’ll just be fine.” And then I made a mistake, I should have known that I am a marathon runner, and three months of very quick acceleration when we were not sure in which direction we were going is going to end up in some random place, just by the laws of physics. If you are accelerating in an unknown direction, you’re going to get very far somewhere, but maybe not where you wanted to be. I think you just have to ask yourself questions, “Why am I doing it? Do I know where it’s going to lead me in one or two years?”

richard:
It’s a book I read a long time ago, but there’s this concept of the six ‘whys’, that it anything goes wrong you have to keep on asking “Why?”, and there’s this famous TED talk about leadership with the power of ‘why’, and I think that if people don’t have a sense of purpose, sooner or later they will go off the rails, and it isn’t inspiring for a young person to come and join a company where they say, “We want to make 8% profit on capital.” That doesn’t actually motivate people, and if you know why you’re doing what you’re doing, then you’ve got a chance, but if you’re leading a company, and you’re not really sure why, it’s just about ‘being cool’, or the ‘why’ isn’t good enough for yourself in the long run, then you may suppress it, but that sense of frustration will grow. You can’t, as a leader, be an actor. If your heart’s not in it, people will sense it sooner or later.

ela:
But getting back to six ‘whys’ just in any decision that you’re going to make, because you make so many decisions in the business life, and very often you start doing too many things, and saying ‘no’, which will probably come from asking yourself “Why would I do that? Why is that interesting for me? What is the outcome I am trying to get?” It’s good to ask yourself those questions, because I always have a feeling that it’s easy for me to say yes to things, but I think the most impressive entrepreneurs and business leaders, they’re very very set on their target, and they don’t let anything A) take them off the target, and B) distract them and see, you know, set a different target that they would pivot to.

richard:
So learn how to say ‘no’. I think also another lesson, which something you said reminded me of, I’m not sure exactly what it was, the ability to confront difficult issues, that quite often in big corporate environments avoid the challenge…
Seriously, they say, “We’ll ‘park’ that issue.” You don’t acknowledge that there’s a dispute.

sam:
“Kick that over to the other department”.

richard:
And you just let it wash. But if it’s your own company and you’re in charge, ultimately you know in your heart of hearts that it’s your own responsibility and if you don’t confront that difficult HR issue, which means that difficult person in your organisation who’s spreading bad culture or whatever, if you don’t take it on, it’s your fault, it’s not that guy’s fault, because you’re the boss. Ultimately you and the other leaders, if you don’t take it on, you’re responsible even for the staff.

sam:
Silence is consent.

richard:
Silence is consent, exactly, that’s a good concept. We’re running towards the end of our allotted time, and I notice the battery on my laptop is running low, so Sam, is there anything you’d like to say to wrap this before we give Ela a chance to say any concluding remarks?

sam:
I just think that really some powerful lessons to summaries are the ability to not be afraid of failure and to learn from it, which is your most powerful teacher, seeing the journey of the Kraków startup scene, being self-aware to know if entrepreneurship is for you, and then finally, and this is a thing that I really admire about what you’re doing, Ela, and think that everyone should take this lesson is to be socially aware of the impact that your business is having. I like to say sales and marketing, which is my specialty, is simply taking someone (this isn’t my original thing but it’s a distillation of what I’ve learned), taking someone from where they are to a better place. That’s really the essence of business. If you solve someone’s problem, people are going to give you money for that and they’re not going to resent you for it, unless you trick them, and then they find our you didn’t really solve their problem, you made it worse. That’s really the essence of business, and Ela by encouraging that and what you’re doing right now with your message to young aspiring entrepreneurs, and some of the things I know you’ll get involved in, that’s a really great message. Life’s too short to do a business that, you know, odds are is going to fail, and that you hate, or that you’re just doing it for the money, because at the end of the day, you have to be able to look yourself in the mirror and say that it was worth it, and I didn’t waste this precious time I’ve been given to live this life doing it. I think they are some awesome lessons. Ela, any concluding remarks for our audience, which by now, we’ve had a really interesting run of of it here with all these interviews and it’s great to have you on here finally.

ela:
No, I don’t think so. Thanks for your patience with our weather conditions, which were chaotic, so we had to move around a bit, [Laughing] so that was a bit distracting. Come to Hive 53.

richard:
Hive53.com, we’ll post that in the show notes.

sam:
You don’t need to be in Kraków to come to Hive 53. Just look at our website and fly in for it, that’s fine.

ela:
But yeah, there’s one in Poznań and there’s one in Warsaw, and if you want to start one anywhere in the world, go to JoinHive.com, and all our materials are there, so you can start spreading, you can start growing the startup community from wherever you are.

richard:
I was just reflecting as we were going through this, normally you would really flag the fact that Ela along with her co-founders are Y Combinator alumni. We didn’t even bother to say that in the introduction, which was either a slip or show how self-confident we are here in Kraków. The other thing is that Ela’s based in the United States now, she’s back in Kraków, that anyone listening to this broadcast, if either you’re going to be in Kraków, or you know someone who’s going to be in Kraków, if you’ve got something to say, that’s worth spreading to our audience, we will do what we can to bring you into this community. Thanks to this digital technology the idea, you know, you could be in a tent in Alaska listening to this, or you could be here in Kraków in the next room. The internet gives us incredible global distribution of ideas, so if you’ve got ideas worth ‘shedding’… I mean… [Laughing]

sam:
We’ll take them!

richard:
Ela had one glass of wine during this interview, and I’ve finished my first beer, so perhaps on that outro, thanks very much for being with us for this episode, and make sure you go to iTunes sign up and subscribe, because there were a lot of great episodes you’ve missed already, and there are even more coming up.

sam:
And leave a review.

richard:
If you hated it, don’t leave a review…

sam:
Email us! Just email us! [Laughing]

richard:
If you hated it, email us, or commit suicide.

sam:
No, no. [Laughing] Alright, there you go, social good.

richard:
Reducing the number of sad people in the world.

sam:
If you enjoyed today’s show, please let everyone else know by leaving a review. If you have any great feedback on how to make it better, please send us an email. Go to our website, ProjectKazimierz.com. Thanks again for taking this time to invest in yourself, and give yourself a broader perspective, whether you’re here from Kraków or have never been here and are just interested in what’s going on in this part of the world. We’ll see you for another episode shortly.