U. S. accelerator dials up app
An almost surefire way for a tech startup to become successful is to move to Silicon Valley and surround yourself with successful people.
With this strategy, and help from Y Combinator, which provides seed funding and guidance for select startups, the team behind Toronto- based Kytephone plans to become the first smartphone used by every child in the world.
“There’s no magic to Y Combinator,” says Martin Drashkov, one of the founders of Kytephone, an app that turns any Android- powered phone into a child- friendly smartphone with parental controls.
“What they try to teach you there is how successful people think and what mistakes they made. We really try to absorb how they think and how they approach solutions.”
Y Combinator, or YC, is a startup accelerator that provides a small amount of funding for promising tech- based companies. Successful applicants move to California for an intense three months of development, where YC connects entrepreneurs to Silicon Valley’s top minds and investors. Since 2005, the launchpad has provided funding for more than 450 startups so far including Reddit, Disqus, Dropbox, Scribd and Songkick, some of the Internet’s most ubiquitous names.
One of those lucky startups is Kytephone, which launched officially in April. The app is based on a “freemium” model, in which the base version is free, and a premium version, which will launch this summer, is available through a paid subscription.
Parents can program phone numbers and games into Kytephone so children can accept or make calls to only authorized numbers and use approved apps. All activity can be monitored and maintained from a computer and GPS allows parents to see where their children are at all times. The playful interface uses cartoons, is child- friendly and is easy for little fingers to navigate.
Renat Gautallin, one of the app’s co- founders, says it’s an honour to be chosen by the accelerator. “We were excited,” he says. “Acceptance rate into YC is very low — less than 50%.”
One of the opportunities Y Combinator gives entrepreneurs at the end of their three- month stint is Demo Day, where startups get two- and- a- half minutes to pitch their business to 500 of Silicon Valley’s top investors.
“Of course we were nervous, but because you have only twoanda- half minutes, you have to be quick and confident and concise on delivering what you have built and why investors should invest in you,” Mr. Gautallin says. “The strategy is to make them excited so they remember you and come talk to you afterward and potentially give you money.”
Mr. Drashkov says knowing the difference between a potential customer and a potential investor is important. Many entrepreneurs often confuse the two.
“Because you only have two and a half minutes, you can’t get into details. So Y Combinator recommends you hit emotional hotspots with the investors and focus on two or three main ideas, so you don’t get bogged down with the details,” he says.
When pitching to investors, those main ideas have to be about opportunity, not product details, Mr. Gautallin notes.
“We’re brand new and we didn’t have growth or user numbers to show off, so we talked about opportunity and why this is going to be big in the future. The good thing about Kytephone is that it was easy to explain it because everyone understands the problem,” Mr. Gautallin says. “It is not a sales pitch to a potential customer. It is oriented to investors and you have to show that this solution is a great opportunity to make money.”
Besides researching potential investors, Mr. Drashkov says, delivery on Demo Day is also key.
“The other thing is to speak slowly and clearly and be very confident in what you’re saying,” he says. “Even though that sounds simple, it’s actually quite challenging because investors have to go from knowing almost nothing to being willing to put their money behind your solution.”
During their time with Y Combinator, the Kytephone team met Jack Dorsey, creator of Twitter, and Max Levchin, co- founder of PayPal, during one of YC’s weekly dinners, where entrepreneurs mingle with people behind successful tech giants.
“Jack Dorsey was one of the best speakers we had there,” Mr. Gautallin says. “I think the biggest takeaway I got from him was how he always knows what he’s doing. He doesn’ t have any doubts. He always knows exactly what he has to do and he just does it. He’s a good visionary.”
One virtue all the speakers and Y Combinator participants seemed to possess was “an incredible sense of focus,” Mr. Drashkov says, adding that following a strict routine helped him stay on target.
“When faced with a situation, they knew what was a waste of time, what was more important, where they should allocate resources,” he says. “They have a vision, are able to focus on it and are able to execute it despite people who are being unsupportive.”
But support is exactly what Kytephone got from investors after Demo Day.
“We’re happy to support Kyte,” says David Wallerstein, an investor in Kytephone and the senior executive vice- president of Tencent, one of China’s largest Internet service portals. Mr. Wallerstein says he was impressed because Kytephone is an “elegant and powerful solution” to an increasingly relevant problem.
“We felt that Kyte has an opportunity to open up a new market for Android- based handset manufacturers and telecom operators alike. The controls they can bring to Android devices for youth can help grow a new market segment.”