One of the first hurdles any organization must leap in the adoption of new technology is funding it. In this special two-part episode, Julie chats with The Startup Station founder Victoria Yampolsky about how to plan your budget, for the best and worst-case scenarios.
Julie: Hello, my name is Julie Smithson and I am your XR for Learning podcast host. Join us today with our next guest, Victoria Yampolsky. Victoria is the founder and president of The Startup Station, an educational and consulting company committed to help founders be successful and get funded faster. She focuses on the creative, credible financials and valuations for early-stage ventures. Specifically she's helped entrepreneurs master the necessary finance skills, so that they correctly translate their business plan into a financial plan, evaluate the financial feasibility of different initiatives, and credibly present their companies to investors, and use their financial model to drive the business forward. Thanks so much for joining me, Victoria.
Victoria: Thank you very much for inviting me, Julie. It's a pleasure to be here.
Julie: Our topic today is going to be a little bit different. We're gonna talk about budgeting, and finances, and starting up a business, and being able to budget for innovation, which is something that not many people understand, what the implications of technologies and the advancements of impacts they have on businesses. So maybe you can tell me a little bit more about your company, and the approach that you started to take and the demand and need for your services.
Victoria: So I started my company in 2013, after I was an entrepreneur myself. And then I began advising the company and I saw a huge need for business and financial expertise in the startup world. My first venture was in media and entertainment. And it was pretty clear that a lot of filmmakers were extremely passionate about the projects that they were making, and they put very little thought into thinking how they going to monetize it, how they're going to bring their projects to market. And when I began advising my first non media and entertainment company, I realized that the same problem persisted in the startup community as well. There were a lot of brilliant entrepreneurs who wanted to propel innovation, who wanted to change the world, who wanted to disrupt industries that were not working efficiently, who wanted to solve problems that were not being sold or sold not in the best way. And they were coming up with solutions, but they didn't yet think through how to make those solutions into businesses, how to bring those solutions to market, how to reach mass adoption. And so that brought me to a starting the Startup Station, where I help entrepreneurs think through those roadmaps, make sure that the plans that they put together are financially feasible, how to put together those baselines which help them to evaluate if their strategy is working, if their plans for bringing the product to market are efficient and react faster to market feedback, to conserve capital and to also be successful.
Julie: Are you working with any startup companies that are dealing with XR technologies like virtual reality, or augmented reality, or artificial intelligence right now?
Victoria: So none of those technologies are one of my clients right now, but I have talked over a thousand founders, because in addition to consulting one-to-one, I also teach entrepreneurs, and I teach them how to evaluate those business plans and put together those financials in their own. And out of those students I did teach a few XR companies.
Julie: So I think that the introduction of all of these technologies into a business where one day, we have brand new hardware release or a software update and massive changes in the company need to take place. What is your first piece of advice that you give to these companies, to prepare for these massive changes and unexpected changes which equals innovation?
Victoria: Right. So I think on the technology integration side, I think you need to have-- if you're going to adopt a new technology such as XR/VR -- which comes with a lot of uncertainty, which comes with a lot of changes -- you need to have great technical people on the team, who not only understand the implications of any changes that may happen in those technologies, but also understand the implications of what those changes mean for your organization. And so I would suggest, just like in financial modeling -- where we do a low, medium and high case scenarios -- that those technical people, when they begin adopting technologies, they think through scenarios of what may happen if some changes are effected, whether it's going to be change to their platform, whether it's going to be change to hardware, whether it's going to be the change to software, what kind of change it's going to be, and how their organization should react, and what is going to be the financial cost, and what's going to be the labor cost, and what's going to be the time cost. And so if you go through this preparatory work as you are adopting those technologies -- or even before -- then you're a lot more prepared for whatever changes may come your way.
Julie: Yeah, I think it's obviously very important to have the right team when you've got your startup, and a team that understands the implications of the future. And obviously having a futurist who can forecast the technologies that are coming in and are being adopted. And I've read a few things with regards to what technologies are coming in. There's a futurist by the name of Matthew Griffin, and he created a technology reel that shows over 440 different technologies before 2070, which is obviously very far out. But the number of technologies in that great of mass, it's overwhelming to to be prepared for all of these things and how they're going to be implemented into the business, and be prepared for how it will impact the business. Maybe you can talk a little bit about the strategy itself, and how to prepare even right down to the statement of work and in the financial forecasting. I know in some of our projects we have a contingency plan buffer built into our finances. Now, maybe that's something else that you can kind of speak to, on what kind of advice do you provide with that strategy to protect yourself, to adopt and take on these different technologies?
Victoria: Sure. So let's begin with assessing new technologies. So as I was thinking about this podcast, I thought that that's a really good idea. And I think a lot of companies are doing it already, to create kind of a think tank inside your company that is going to monitor all the emerging technologies and performing that futuristic work. Now, they don't need to necessarily come up with all the 440 technologies. And there are people -- like you mentioned, Matthew Griffin -- who is doing that. But it is extremely important to stay on top of what's going on. And then do the following work, in terms of assessing what that means for your organization. And that work is to A) figure out what is the minimum commercial viability of any new technology, and that technology needs to achieve in order to be appropriate for your organization. And then try to put some sort of a timeline of when that may happen. Now, that part is incredibly difficult because of the speed with which technology innovation happens. And so whatever timeline they may come up with needs to be revised aggressively as new information becomes available, or even halved as soon as they come up with a new timeline. And then they need to consider -- once they determine the minimum commercial viability of new technology -- then they need to think, "Well, is this even a good technology for us? What problem will it solve?" And this is very similar to anything that a new startup when they coming up with a new idea. The question that they need to answer. "What problem am I solving? Why am I creating this new technology?" For any organization that is going to adopt the new technology. What problem will this technology solve? What is the gap in the market that is not currently addressed? What can I do better? Because a lot of these technologies actually have an impact on the bottom line, rather than the top line. And so once they figure out that question and you sort of begin to understand the impact, they then move on to understanding how much it's going to cost them to implement those technologies. And there, they have three options. They have the option to develop that technology themselves, using whatever information is available at the moment. They have the option to start an accelerator. Which is a lot of organizations are doing and propel innovation by inviting companies who are already working in those technologies into that accelerator, and then investing into most promising candidates. They have the option to license the technology from somebody who has developed it up to the minimum viability level they determine, or acquire a company. So these are the four options that any organization has. And how will they choose which option is the most viable for them, that's a question of the size of the opportunity. How big a problem will they be able to solve if this technology is adopted? How big a competitive advantage will they be able to get if they're going to be the first mover into the market with that technology, or the second mover or whatever? And then the cost. Some technologies are extremely expensive to create. And that was the issue with AR/VR for a few years. And now, of course, with the 5G, it's becoming-- some of the problems are going to be resolved sooner. And because the cost of the hardware is coming down as well. So when you have those issues, the cost component is extremely important. And so some companies cannot even consider the option of developing something in-house, because of the price tag. And they're kind of stuck with the option of either licensing technology, or waiting until later, and acquiring a candidate outright. And so the cost can come in three ways. First, the cost of the technology,y whether it's the development costs or licensing costs. Then it's integration costs into the current systems. So how will this technology going to work with whatever systems already in place? And finally, the maintenance cost. Now that we understand all of these components, I want to talk a little bit about contingency. Contingency is extremely important in all of their financial planning, because it accounts for the unknown. As much as we like to think that we can project the future, even if we have a lot of information with a high degree of accuracy, things come up even for companies that are publicly traded. They only give guidance in their financial performance for three months. Why? Because even for them -- and they have so much more information than any startup, so much more information than any company beginning to adopt new technology -- even they face uncertainty. Like the coronavirus. A lot of businesses couldn't possibly predict. Starting in January 2020, when they were given guidance for this year, that that's going to happen, it's going to be such a huge disruption to their businesses. Now, for some businesses, this is actually a positive for those businesses that exist remotely, for those businesses that promote human interaction, et cetera. And for some businesses such as small restaurants and travel industry etc., this is really big a hit, as this pandemic continues. It's not always possible even for large businesses to make predictions. For smaller businesses, it's even harder. And so contingency gives you this breathing room to plan for that. Now, how big a contingency should be? I recommend that it's 10 to 20 percent of your budget. If you think that this is too low, and you need to have a 50 percent contingency, this means you haven't really thought through your costs. You don't really understand your business. What do you do then? What do you do if you are completely unsure? You first look at comparable projects, or budgets, or companies. You go to technical people and you ask them to give you their low, medium and high estimates of what certain things can take. And then if you're feeling very insecure, you only take the high estimates and then you add on the 20 percent contingency on top of that. But I recommend against a contingency higher than, let's say, 30 percent, because that would mean that you don't really understand what your cost structure is. And this is a better position to be in, as a startup or as a bigger organization.
Julie: I think that's a great topic right now, is the contingency plan. And to understand your input on the percentage, too. Because people don't necessarily know how much breathing room do we need and it's such an unpredictable market, is innovation. And even before the pandemic kind of started right now, it's-- we were playing a guessing game every day with our industry, just to see what was going to come out new, and what was going to change that would affect current developments or future ones. I'd like to go back to the conversation of this pandemic that we're going through the coronavirus. And obviously, there are a lot of unpredictable measures being taken now, and forecasting with businesses that have never-- well, none of us have ever faced anything like this. And as you said, there are certainly some businesses that will thrive over others during this time, and enterprise is not exempt from being hit with the changes and the unpredictable markets right now. Even the stock market plunging, and that sort of thing. So coming back to our startups, and I know we're going to have a part 2 series of this, but maybe you can tie this this episode off with if you're a startup today, what would your advice be on taking a look -- based on our current situation -- on how to think about the next couple of months? Do you have any advice for startups out there?
Victoria: Well, depending-- I think technology startups -- this is an AR/VR podcast -- I think they're in a much better situation, because everybody is able to work remotely. And I think this is really the time for people to also set aside a little bit of time to think about the company's long-term strategy, to think about innovation, to think where they can go. Now that they're at home, and they're at least saving time in the commute. And then they're in a -- I guess -- safer environment, rather than being around other people and may be distracted by things that are going on in an office. And so I think that this is a time for reflection. That's number one. This is also time for some companies to reassess their planning for situations like that, because some companies that have been more prudent in their financial discipline and their financial planning will fare better than those that have not. And specifically, technology companies, those companies that have high fixed costs, they are-- if their ratings go down, are susceptible to an economic downturn, rather than those that have a high variable costs, variable costs are those that change with the level of sales. So I think from a working perspective, I don't think that technology companies are very much affected by the current innovators. However, if the economy becomes affected, then everybody is going to feel an impact. The net impact is going to last for much more than those two months. And then it would be very wise to spend these two months to plan for what's there, to calm and to really prepare for a variety of scenarios, and be a lot more aggressive potentially with how do you convert customers in the sales tactics and the products. Potentially consider slowing down the product development timeline, so that you conserve costs and be able to prolong your runway, if you're not generating revenue yet.
Julie: That's great. And I'd like to thank my guest, Victoria Yampolsky. Please join us for part 2 on forecasting for innovation and the execution roadmap.
Check out Part 2 this Saturday.
XR tech often has a visual focus, but we have to be careful in that line of thinking; those who are visually impaired might be left out of the conversation otherwise. Yvonne Felix, an inclusion expert at CNIB, knows from experience that the visually impaired - or anyone with any impairment - don’t have to be excluded from XR; we just have to be forward-thinking and make accessibility considerations to include users from all walks of life. Julie: Hello, my name is Julie Smithson, and I am your XR for Learning podcast host. Today, I look forward to bringing you insight into changing the way we learn and teach using XR technologies to explore, enhance, and individualize learning for everyone. Today, my guest is Yvonne Felix, who works with the Canadian National Institute for the Blind in the Accessibility and Inclusion Division as an experienced community specialist, with a demonstrated history of working in the medical industry. Thank you so much for joining me today, Yvonne. I'm really, really excited to have you here. Yvonne: Thank you, Julie. I'm very excited, too. Julie: Let's start with your role at CNIB. We've had several conversations over the last year just on-- a little bit about immersive technologies and how it affects people with disabilities, such as being visually impaired. And maybe we can start off with what your role is and, of course, how you got involved. Yvonne: Sure. First, I'll start by just sort of explaining why I wanted to work at CNIB and actually how I became interested and ...
We interrupt your regularly-scheduled podcast for this special announcement, where Julie introduces the XR Collaboration project. MetaVRse, along with other major players in the XR space, have come together to develop an easy-to-use guide for the newly-home-office-bound to navigate the many telecommunication tools available from the industry. ...
The jobs of the future are going to increasingly require people familiar with XR technologies, but developing those skills now can be a challenge, when the tech is so new and expensive. Rahel Demant from VR First explains how last year's headsets can help develop tomorrow's innovators. Julie: Welcome to the XR for Learning podcast. I am your host, Julie Smithson. And today we have on the call Rahel Demant from VR First. Rahel worked in Deloitte's Transaction Advisory Division. After a consulting job in Canada, the US and Costa Rica, she founded an event marketing agency organizing events across Germany in the arts. Fascinated by the power and possibilities of emerging tech, she joined VR First as CEO in 2016. She and her co-founder Ferhan Özkan have led the program to a network of thousands of developers in order to support the diversity of the tech scene. She has initiated the Women XR Laureate Breakthrough Oggi Award; her mission to democratize VR and AR development worldwide through VR First, various support programs, and online competitions. The newest program is the XR Boot Camp. Welcome, Rahel. Rahel: Thank you for the invitation, Julie. And thanks for also being on our advisory board. Julie: Yeah. It's an exciting time. Thank you so much for asking me to be a part of the XR boot camp. I think there's some great people that are coming together to discuss upskilling and how this industry is changing so much. So tell me a little bit more about VR First, and what you're doing, and how you got to where you are today. Rahel: So basically what we've seen three and four years ago ...