He claims to have made all the classic mistakes of an entrepreneur in the past and thinks that this time, he can’t go wrong. Vasco Pedro, CEO of Unbabel – one of the most promising Portuguese startups – speaks about a few chapters of his story. From working at Google in San Francisco and the failed startups of the past, to his return to Portugal with Unbabel and the experience at YCombinator, Vasco sums it all up in this Pier-to-pier.
When was the first time you actually thought of having your own business?
My first attempt at creating a startup was when I was still doing my PHD in Carnegie Mellon. I got together with some friends and kind of followed the assumption that gaming plus dating equals money and we created something called Mind Keane. The concept was like having a stream of thoughts and quotes and you could only say if you liked the quote or not, while the author remained anonymous. This was a year before Twitter and we had the website up for some time, but then it didn’t work out. We made way too many mistakes, we were very naive, like ‘oh we don’t need to worry about business yet, and if we build something cool users will come’. Hmm, guess they didn’t. People didn’t really need it and we never felt passionate about it. Great learning experience though.
When you’re younger you’re into radical sports – and getting into startups is a radical sport.
Afterwards you started working at Google. What is it like to work at Google in Mountain View?
Honestly, I thought Google was it. They give you unlimited resources and then tell you to solve an interesting problem. It’s la la land for developers. At the time I had already two daughters, and they came to visit me at Google many times. Actually, one of the first words my daughter Mariana said was ‘doodle’. It was a surreal experience. A normal day at Google was like: you got there in the morning for breakfast until 9:30 am, then you worked a bit, then you had a lecture from the latest best selling author. After that, you had lunch and worked again a bit after lunch. Then later on in the afternoon you had another super interesting lecture with Hillary Clinton or Tony Bennett. Late afternoon you went to the gym, then dinner, then you worked a bit again. But at the same time it felt like you were still in college, we were part of a big machine and you had interesting challenges, but your real impact was very small. It was crazy, like right next to you was sitting this guy who went to the Olympics, then you had the creator of python getting his own code reviewed in the language that he created. I thought Google was cool, but it wasn’t the right time, maybe when I’m older. When you’re younger you’re into radical sports – and getting into startups is a radical sport.
When you left Google you ended up founding another startup, called Bueda. What was it about and what went wrong this time?
Bueda started off with my thesis. The initial idea was to create semantic advertising for user generated content, video and images. This friend of mine, John Forelli convinced me to stay in the US to get this started and that he would be my co-founder even though he had other projects. Later on we got into Alpha Lab and it was 6 months of hard work. John eventually left Bueda, even after staying with us full time for some months. So, here’s another lesson. It’s like Mark Cuban says, ‘your co-founders are the people who quit their jobs to start a company with you’. So, if you’re working closely with your co-founders, your decision making process is much faster and the absorption of information is way greater! After John left, I stayed as the only founder and being just one founder is tough. Bueda had this technology that needed to be developed, but when I became CEO I didn’t have much time to do it. My programming capacity was like 10%. Truth is, our technology was very interesting but we were a technology looking for a problem to solve.
When I look back at my previous startups, it’s like a checklist of classic mistakes entrepreneurs do.
And then there was Dezine, another startup. What was it like to come back to Portugal and get into a new business?
It felt good to be back and I was already working with João Graça, who is now one of the co-founders at Unbabel. However the problem with Dezine was lack of focus. When I look back at my previous startups, it’s like a checklist of classic mistakes entrepreneurs do. The good thing was that we got along very well as team here in Portugal and when we were done with Dezine, that’s when the idea of Unbabel came along.
So, what is the story behind Unbabel?
We decided to take a surfing weekend – we knew we wanted to start something together, maybe related to Machine Translation. So, I bought everyone notebooks so that they could write their own ideas and we started talking. One of the first thoughts that came through our minds was: ‘what if we put together machine translation and crowdsource curation to solve the problem with translation’. Then, the more we talked about it, we realized: 1. That we felt passionate about this 2. The idea was unique and 3. We had the skills and expertise to pull it off.
First thing we did was to get a website up. We were just testing to see if people were interested. We got a pretty good conversion rate and we realized we had enough clicks to go forward.
How was the YCombinator experience?
I got an email at 6am from YCombinator, on the day we were supposed to sign the investment deal, saying that they wanted to see us in November. At the same time we were also selected for Seedcamp and we had already said yes. It was very interesting to see the differences between the two processes. Seedcamp was like – you do the pitch in Lisbon, get selected and go there for a week. It’s all about the pitch, the slides, the pitch, there’s no time for demos, and you can only take two people from your team. They ask you to bring t-shirts with your logo, stickers – if you have them – to give to investors. It’s all a hype. For YCombinator you have 10 minutes, there are no slides, it’s just a conversation, they ask you to show them what you got, a demo if you have it, and it’s all very real. It’s high stakes, you have four people firing questions at you and then when the time’s up they say ‘okay you’re done, that’s it’. And what they do is, if they call you, you’re in – and if you’re out, they’ll send you an email with feedback explaining why you didn’t get in. They called us on our Portuguese number, I answered the phone and it was Garry Tan saying they really liked us and that they liked the market and that they would like to invite us to join YCombinator. I told them ‘yeah, cool, tomorrow we’ll go to Seedcamp but then we’ll come back’ and Garry was like, ‘no, you’re in YCombinator, there’s no need to go to Seedcamp’. We eventually agreed, of course, and sent an email to Seedcamp explaining the situation. We then celebrated for like 10 min. and went to bed – we were exhausted from the jet lag.
The whole YCombinator experience was crazy, then Google Ventures came along… wow. It was nuts, completely different from my previous experiences with raising money. Before Demo Day, we already had $240K committed and three days later, it was closed. YCombinator has a talent for creating this high pressure for investor – they give you great insights, they all have a lot of experience, former founders of amazing startups, they’ve been through this before. They tell you to focus on your product before talking to any investors, there’s no reason why you should talk to investors before having a product. We had investors calling but we were like: we’re currently not raising money, we’re focusing on our product.
Only the fact that we got in YCombinator tripled the round of investment we were negotiating here in Portugal – so we had a much higher valuation. And after YCombinator, our valuation increased 12 times in 3 months.
Why join an accelerator? Why YCombinator?
Well, for obvious reasons. Only the fact that we got in YCombinator tripled the round of investment we were negotiating here in Portugal, so we had a much higher valuation. And after YCombinator, our valuation increased 12 times in 3 months. Another good reason is growth. We launched our product during the first week when we joined YCombinator, and since then we grew 40% a week. YCombinator follows the motto: the relentless pursuit of growth. Focus on what’s important – if this metric is important to you forget about everything else, you’ll focus only on this and grow at least 10% every week. It’s really tough to get those 10%, but when you simplify and focus everything on one thing it’s easier. Every decision you make is based on that, because that’s what matters. At that time, for example, we kept on talking about machine translation to the partners and they said forget about that and focus on growth – after YCombinator you can think about that. If you’re an investor, you’ll care about growth not about how cool your technology is. And the fact that we were really focusing on that, we were sharing a house and working all day – there were no distractions, just work – that really helped us. Our experience at YCombinator was the 5 of us in a 2 bedroom apartment. We would go to YCombinator once or twice per week for meetings. It’s like: you put your life on hold for 3 months, for 3 months of your life you’ll only do this. This is a huge advantage! You focus on your product and talk to your customers thinking that you need to grow those 10%.
We got that hustling mentality back and realized there are no silver bullets, it’s pure hard work.
And after those 3 months, can you keep the same attitude?
We’ve been trying. You can tell from our growth up until now. During YCombinator we grew an average of 40% per week but once we came back to Portugal we chilled out. We had money and we wanted to take our time to do things and then we looked at our growth and came back to wanting to grow at least 10% a week. We got that hustling mentality back and realized there are no silver bullets, it’s pure hard work. In the first dinner at YCombinator they say ‘we expect that at least 50% of you fail and our job is to make it happen faster’. So, at the end of the day, your main concern should be to build something people want.
You are 5 co-founders and that’s not very common. What are the advantages and disadvantages of being so many co-founders?
It’s not very common and it’s even less common that after more than a year we’re all still here, nobody has left. We had one big advantage: we had worked together before, not as founders but in a startup. Another thing is that the tasks and responsibilities are very clear and well divided amongst us. So, when we’re having a discussion, we have different points of view, but everyone has their own tasks and responsibilities. Do I recommend it to others? No, I might even say it will be a disaster. But, in our case, it’s been going great – although we might be the exception. First, because all of us, except for Hugo, have some experience. We’re not fooling around playing at startups. So, the big advantage is that these are people you can count on, that you trust. During the first 6 months of Unbabel we weren’t getting paid, we went up to the limit. We reached the point of not knowing if we could pay the rent next month, and this can be tough when you have 4 kids. But it’s funny that at the time in YCombinator, people said we were a communist startup and we thought: oh these Americans that see communists everywhere. But actually it was kind of true because, for salaries, each one of us took what they needed to survive – so we had different salaries according to our needs. We had very different realities, we had the family guy with 4 kids and we had the 20-year-old kid and everything in between. We had limited finances, so we had to adjust accordingly.
The only big disadvantage here is dilution – you have 5 founders who share equity. But if you’re actually thinking of the bigger pie I don’t see it as a problem.
You can have many kinds of debts, technical debt or marketing debt – but there’s one debt you can’t have, and it’s actually something you see very often in startups, and that is emotional debt.
If you were to say one thing that all startups should avoid, what would that be?
There is this theory that I’ve been thinking of, which is: in a startup having technical debt is something you actually want to have, it’s not bad. For example if you’re developing your product so much and doing everything, you’re wasting too much time, but if you’re developing a product and adapting you’ll end up having to pay that technical debt, so it’s desirable. But startups also have other types of problems and debts, like marketing debt – you don’t have someone who’s good at marketing but you manage to get it done, or even sales debt. But my point here is: you can have these kinds of debts and it’s okay, but there’s one debt you can’t have, and it’s actually something you see very often in startups, and that is emotional debt. It’s stressing to work in a startup, it’s a war in the trenches, it’s a rollercoaster ride and it’s easy for you to not solve those small issues that happen during the workweek. You don’t say what you’d like to, words remain unspoken and after 6 months you grow tired of the people you’re working with and you reach a breaking point. So, at Unbabel, we solved this emotional debt with surf. Every week, the whole team goes surfing. We’re not even good at it, but it does help us get some things out of our systems and makes us realize that we actually started this with people we like to be with.
In which Portuguese startup would you invest?
Codacy. We’re actually using it here, we’ve just installed it. They have a huge potential. But then there are a few startups which I like and see potential in, but I feel like smacking their heads.
Portugal is a lot like California. Even geographically. We don’t need to re-create Silicon Valley in Portugal, but we need to have the same kind of successes.
What are the next steps for the Portuguese Startup ecosystem?
I see this pretty much like a story. Now we have people fighting in the trenches – but then you need the heroes. You need astonishing exits so that people realize it’s possible. Having a startup is not like having a local shop or business, it takes a lot of time and it takes a lot from you, emotionally. But, honestly, I don’t think it will take long for us to see those success cases. Unbabel was the first Portuguese startup to get into YCombinator, then there was Orankl and then after that the number of Portuguese startups trying to get into YCombinator increased so much just because people realised it was possible. Portugal is a lot like California. Even geographically. We don’t need to re-create Silicon Valley in Portugal, but we need to have the same kind of successes. Something that they told us in the last dinner at YCombinator that annoyed me, but I kind of have to agree with, is that ‘lameness is contagious’. So, in fact, you’re not a Portuguese company or startup – you’re competing at a global level, on a global market. It’s important that your surroundings push you to the limit. Like when we were at YCombinator, everyone kept on pushing us, because everyone is working so hard, and pushing for results, that it is contagious. It’s inspiring, there’s a compound effect. Nowadays it’s all about traction. So for me having a lot of startups pushing each other is key to have a strong startup ecosystem. You can’t just think you’re a Portuguese company, it’s easy to be tempted by it – but you need to go further. Portuguese companies sometimes think small, and startups are kind of changing that. We need to change that mentality. And, in order to change it, we also need to bring international people to scene.
Who would you invite aboard the ship next for this pier-to-pier?
Like where this is heading? Did Vasco Pedro give us the right coordinates for the next interviews? Then, stay tuned for the following pier-to-pier with the fellow adventurers.