My presentation in SFHMMY 2019. It contains advices and strategies from my first business attempt with Cyclopt PC.

1. ADVICES AND STRATEGIES I LEARNED
FROM MY FIRST BUSINESS ATTEMPT
Kyriakos Chatzidimitriou
Cyclopt PC
PhD in Electrical and Computer Engineering
kyrcha@cyclopt.com
http://cyclopt.com

2. PREAMBLE
•My 1st attempt
• No silver bullet
• The presentation will surely harbor “Narrative Fallacies”:
• Our need to find patterns in facts through narration just because as human we prefer it,
simplifying though more complex links.
• Take book thumbnails as suggested reading for that particular slide.

3. ABOUT ME
1978 - Birth

4. ABOUT ME
1978 - Birth
1997 – Dept. of Electrical and Computer
Engineering, AUTH

5. ABOUT ME
1978 - Birth
1997 – Dept. of Electrical and
Computer Engineering, AUTH
2003 – First job as a programmer in an
R&D project, AUTH

6. ABOUT ME
1978 - Birth
1997 – Dept. of Electrical and
Computer Engineering, AUTH
2003 – First job as a programmer in an
R&D project, AUTH
2004 – Master of Science in Computer
Science, CSU with Assistanship

7. ABOUT ME
1978 - Birth
1997 – Dept. of Electrical and
Computer Engineering, AUTH
2003 – First job as a programmer in an
R&D project, AUTH
2004 – Master of Science in Computer
Science, CSU with Assistanship
2007 – PhD Student @ ECE in RNNs
and RL

8. ABOUT ME
1978 - Birth
1997 – Dept. of Electrical and
Computer Engineering, AUTH
2003 – First job as a programmer in an
R&D project, AUTH
2004 – Master of Science in Computer
Science, CSU with Assistanship
2007 – PhD Student @ ECE in RNNs
and RL
2010 – Greek economic crisis

9. ABOUT ME
1978 - Birth
1997 – Dept. of Electrical and Computer
Engineering, AUTH
2003 – First job as a programmer in an
R&D project, AUTH
2004 – Master of Science in Computer
Science, CSU with Assistanship
2007 – PhD Student @ ECE in RNNs and
RL
2010 – Greek economic crisis
2012 – Finish my PhD, work in R&D
projects, tech knowledge, awards with
team Mertacor

10. ABOUT ME
1978 - Birth
1997 – Dept. of Electrical and Computer
Engineering, AUTH
2003 – First job as a programmer in an R&D
project, AUTH
2004 – Master of Science in Computer
Science, CSU with Assistanship
2007 – PhD Student @ ECE in RNNs and RL
2010 – Greek economic crisis
2012 – Finish my PhD, work in R&D projects,
tech knowledge, awards with team
Mertacor
2017 – Low PoP stats

11. ABOUT ME
1978 - Birth
1997 – Dept. of Electrical and Computer
Engineering, AUTH
2003 – First job as a programmer in an R&D
project, AUTH
2004 – Master of Science in Computer Science,
CSU with Assistanship
2007 – PhD Student @ ECE in RNNs and RL
2010 – Greek economic crisis
2012 – Finish my PhD, work in R&D projects, tech
knowledge, awards with team Mertacor
2017 – Low PoP stats
2017 – Cyclopt is founded

12. ABOUT ME
1978 - Birth
1997 – Dept. of Electrical and Computer Engineering,
AUTH
2003 – First job as a programmer in an R&D project,
AUTH
2004 – Master of Science in Computer Science, CSU
with Assistanship
2007 – PhD Student @ ECE in RNNs and RL
2010 – Greek economic crisis
2012 – Finish my PhD, work in R&D projects, tech
knowledge, awards with team Mertacor
2017 – Low PoP stats
2017 – Cyclopt is founded
2019 – 2/2 VCs said no to funding us

13. GENERAL ADVICE #1
Life is hard and full of problems
To be happy and for the problems
you can choose, choose those that
you like solving.
By working on the 10K hour of
more…
…you will be too good to be ignored
and you will achieve that by focusing on
deep work and working on difficult
problems
Positive feedback loop,
where good things happen

14. CYCLOPT P.C.
• Founded on November 2017
• Aristotle University of Thessaloniki spin-off
• Our last app is our bot (for analyzing JS projects)
https://bot.cyclopt.com
• Free to install:
https://github.com/apps/cyclopt

15. PRODUCTS
We support also 3 open source projects:
1. npm-miner: Web app with analysis of npm packages
2. jssa: JavaScript Static Analyzer
3. js-starter-kit: JS web app starter kit for the MERN stack
along with a software development lifecycle proposal
Quality assessment reportsQuality-as-a-Service Bot

16. THE TEAM
Dr. Kyriakos Chatzidimitriou
Manager & Tech Lead
Dr. Andreas Symeonidis
Research Lead
Dr. Themis Diamantopoulos
Software Reusability
Michalis Papamichail
Software Maintainability
Ilias Ouzounidis
Branding Design &
Digital Promotion

17. WHAT IS A COMPANY?
“…a business is a repeatable process:
1. Creates and delivers something of value…
2. That other people want or need…
3. At a price they are willing to play…
4. In a way that satisfies the customer’s needs and
expectations…
5. So that business brings in enough profit to make it
worthwhile for the owners to continue operation.”

18. CREATES AND DELIVERS SOMETHING OF VALUE…
http://www.paulgraham.com/startupideas.html
Few users Many users
I need it much
I need it a little
Strategy # 1 (and the one we used)
Google now
Made-up
startup
Harvard Era
Facebook

19. MARKET VALIDATION EXPERIMENT
­ Created 2000 quality reports for top open source JavaScript software
projects
­ Send them to their developers/maintainers
­ Pareto principle
­ ~ 20% opened (400)
­ ~ 20% clicked (80)
­ 34 answeres our questionnaire, while we had replies like:
­ “Anyone else just get spammed by cyclopt…”
­ “Thanks for your email. It's very interesting.”
­ 1 connected

20. PIVOT
• Source code quality reports à Monitoring code and teams
• From developers à To managers
• Lesson learnt: the obvious: startup business plan != reality
• We stared with zero knowledge on what it means to sell a new product
from zero…
• Strategy #2: spent time learning it (10Κ hours? By for example
working in another startup) or bring in someone who has done it
before
A startup is a human institution
designed to create a new
product or service under
conditions of extreme
uncertainty

21. PROBLEM #2: COSTS
Let’s write down the basic monthly costs for 2 co-founders in a Private Company so that they
say they have a company:
€ 200 - Coworking space
€ 150 – Accountant (€0 if co-founder, €300 markup price)
€ 84 – Yearly company tax
€ 130 – Basic insurance for the manager (if no other activity)
€ 50 – Some basic expenses (domain name, business portal, bank expenses,etc.)
€ 614 – monthly without fixed costs, cloud costs etc.
With seed capital € 10Κ à Less than 16 months runway
So that business brings in enough profit to make it worthwhile for
the owners to continue operation.

22. FUNDING
Savings
Friends – Family – Fools
Competitions
Clients
Angel Investors
VCs
Grants, i.e. SME Instrument etc.

23. SAVINGS
For a 10K seed capital and 2 co-founders
If I save 200 euros per month … I have to work 25
months or 2 years to regain them.
Is it a good investment?
There is the notion of expected utility:
Lottery A – the startup
UA = 0,01 (€1.000.000) + 0,99 (0) = 10.000
Lottery B – Bet on the home team with 0% rake
Home: 2,00 – Draw: 3,75 – Away: 4,28
UB = 0,5 (€20.000) + 0,5 * 0 = 10.000
Lottery Α – also win: life lessons, knowledge
Lottery Β – also win: a possible heart stroke if the away
team is in front during the first half
But this simple utility functions are if you don’t have a
sense of money.

24. EXPECTED UTILITY
Lottery A – The startup
0,01 x U(Sk+1M)+ 0.99 x U(Sk-10K) =
0,01x 44,96 – 0,99 x 1,55 = -1.0849
Lottery B – Betting
0.5 x US(k+10K) + 0.5 x US(k-10K) =
0,5 x 1.39 - 0,5 x 1.55 = -0.08
Lottery C – Do nothing
1.55
Mr. Beard’s Utility Function
U(Sk+n) = −263.31 + 22.09 log(n + 150, 000)

25. STRATEGY #3
If you start with your own money (and a similar utility function like that of Mr. Beard)…
Create the need before you found your company…
Create something to show around…
Create content/SEO around your product/presence to increase trust (these guys know what
they are talking about)…
And only if you close some deals then found your company (just to start billing) or go for
other sources of funding. Because investors are looking for 3 things:
1. revenue,
2. revenue,
3. revenue.

26. FUNDING
Savings
Friends – Family – Fools
Competitions
Clients
Angel Investors
VCs
Grants, i.e. SME Instrument, etc.

27. COMPETITIONS
We got 2.5K from competitions
I have heard of as much as 70K
Strategy #4:
Try 1-2 for starts
If you get an award continue going, broadening your geographical horizon. (Local, National,
European, US, Global)
If you don’t … stop going for that idea.
Wins: Free-equity money, dissemination, experience in pitching, feedback, possible a client from
the sponsors
Losses: Time (one more presentation, business plan etc.)

28. FUNDING
Savings
Friends – Family – Fools
Competitions
Clients
Angel Investors
VCs
Grants, i.e. SME Instrument etc.

29. VENTURE CAPITALS
• Equifund
• After many emails, skype calls, presentations, demos, meetings etc.
• 0/2
• Other than market validation (revenue, revenue, revenue) two other basic things I
say they were looking where:
1. Defensibles
2. Scaling
• Advice #2: Before going to VCs, solve those three prerequisites.

30. DEFENSIBLES
• Secret sauce…something that cannot be easily copied
• Patent (difficult in software)
• One in every country
• The software must have a further technical effect (i.e. ABS)
• A large company has the personnel (legal/technical) to do something similar without
infringing your patent
• Other things:
• Annotated data by experts
• A specialized ML pipeline
• An Expert database
• In general in software it is a good idea to get first out in the market, have a
good timing and your defensible will be that early start.

31. SCALING
Assumption 1: A company is sold 5 times
its revenue
Assumption 2: VCs will like to exit within 5
years
Let’s say that a VC funds 20 startups with
seed capital 200Κ for a 20% percent
equity
Statistics say 1 out of 20 startups
succeeds
­ Others say 90%, 95%, 99% failure rates
What revenue should you have by the
end of the 5 years?
So, from the 1 company they will have to
get 20 x 200K = 4Μ+ to break-even
4M+ for the 20%, thus the company must
be sold 20M+
Thus its revenue must be 4Μ+
With this scenario the 200K seed capital
must be made 4M+ revenue within 5
years
Obviously you cannot predict how much you will sell, but now you have a target and an idea what the VCs
want to do with your idea…to scale it.
A simple exercise from the VC point of view

32. VC INTERVIEW QUESTIONS CHEAT SHEET
• Which problem are you solving?
Which KPI are you improving for the
users?
• What is your go to market strategy?
•Competition?
• What are your defensible assets?
• Total addressable market?
• What have you done so far with your
idea?
• Describe us the perfect customer.
• If we fund you what will you do in the
next 6, 12, 18 months?
• What are the strong points of your
tema? Why you? What is your track
record?
• What are you missing as a team?
• What is your next milestone?
•Customer Acquisition Cost (CAC),
Customer Lifetime Value (LTV)?

33. Strategy #5: Good Luck
kyrcha@cyclopt.com
www.cyclopt.com