Startup Showcase: Knowledge from Thanks to x23.

I was recently contacted by Marika of Xoolab about showcasing their new startup project, The Primate. Since that time, the company has changed its name to X23. Below is the interview with Giuseppe...

I was recently contacted by Marika of Xoolab about showcasing their new startup project, The Primate. Since that time, the company has changed its name to X23. Below is the interview with Giuseppe Laquidara, CEO and founder. (The content has been edited only to correct typos and re-arrange two of the sequences of questions.)

In the first two parts, Giuseppe talks about the company, project and experience. In the third and fourth parts, he talks about the Italian startup situation and venture capital, so make sure that you read his replies on those topics.

Please remember to email me at [email protected] if you want to showcae a startup, venture fund, idea, company, institution or idea.

Your Startup

Tell me what your company does.

X23 is the startup running which is the real startup project. Our company also deals with many other projects in ICT and we develop them for our clients (preferably institutional organisms). is the Knowledge platform. Our objective is to become a point of reference for any person looking for knowledge, meaning cultural, scientific and humanistic information. The Primate collects cultural and scientific resources accordingly to a scientific method (Dewey Decimal Table) so that the user can easly identify the topics (named “peculiar minds”), surfing the miscellaneous resources (video, movie, docs, images, reports, etc.). Every user can also identify himself as a “peculiar mind” (Scientific, Humanistic, Religious ones, etc.) entering the registration form: during the time spent on the platform, The Primate – through its own reasoner Filamento® – will be able to show to the user the resulting changing of his/her “mind” due to different resources he/she lives on the platform and he/she shares with others.

ThePrimate is a social platform and every resource can be ranked, tagged, clustered, shared, commented, geospaced, and every user can also upload resources of his/her own. It assembles reliable resources coming from relevant scientific and humanistic partners both in Italy and in the rest of the world so that the Knowledge displayed on The Primate is certified, original and in many cases offered to the audience for the very first time. A huge amount of resources are free and could be displayed and downloaded by users at any time. A special section of the resources, instead, can be reached accordingly to subscriptions, or bought individually.

How long did it take you to come up with the idea for your product?

The Primate was developed whitin the last two years. But I can say that the core business has been defined in the last 6 months.

You got your product out to the market really fast. How did you do it?

We worked very hard on developing the prototype, focusing on user experience which is the most important key-point for us. The development of is a non-stop process: we are about to release important features in a very short time, but we shall remain under the permanent beta for a long time.

Did you consciously follow the “Lean Startup Movement?”

Not really. I heard about it and we are interested in learning the methods.

How did you find your team?

Xoolab has always been an open laboratory, where have come hundreds of technologists, researchers, designers, journalists and creatives. At one point we decided to coalesce a team made of enthusiastic people to work on ThePrimate. Though I have to say it has been an only partially successful experience: at the first, there was a great mood, which – for example – you can experience listening to our Manifesto – Italian language only]. Then we faced the phenomenon of disorder, the typical problem of the Italian approach, which means that if people are not asked to fulfill their tasks quickly and accordingly to hard rules, then they will misunderstand self-government ability with the freedom to do completely as they please. But the overall project goes on, though the team is smaller than before now and perhaps we are all a bit ‘more moderate.

What’s your next step with the company?

To get funds. As every startup company, we need economic support in order to gain the market and to become a real company.

Your Experience

You launched your company within the last year, right? How did you decide to launch a company?

To tell the truth, Xoolab (now x23) is a lab existing since 2001 dealing with ICT technologies, web environments, repository, 3D and both multimedia and traditional communication techniques. In 2008 we signed a partnership with Fondazione CRUI spinoff – Più Srl. – in order to create the first Italian university web platform 2.0. The Primate was born on these bases. The partnership also extended to MiBAC [Ministry of Heritage and Culture] with a specific agreement aimed to include The Primate in the Europeana project and it is still working at present time.

In 2010 we assumed that the partnership with Più srl and Fondazione CRUI was not working at the best, due to the extremely officialism of the partners so we decided to do us part, though the project would always be based on partnership with universities, research institutes and academic organisms.

During the first two years we signed a huge partnership agreements with relevant media, cultural, scientific and commercial organisms (Sole24Ore, MTV, CNR, Enrico Fermi Museum, etc.) and we proceeded in developing the project. Finally, in October 2011, we decided to turn The Primate into a real startup project. We founded X23 Srl and we presented The Primate to “I percorsi dell’Innovazione”, a special section of SMAU, to a huge parterre of investors. And we got very interesting feedbacks. We are strongly working on them at present time.

Tell me about your best experience and your worst experience with your startup.

The elevator pitches can be considered the very best part of being a startup, though our project is such peculiar and very heterogeneous we had some problems to present it in 3 or 5 minutes. We had a disrupting experience during SMAU fair, we appreciated the relationship with investors in the very following days. It is challenging to explain your project, presenting potentials, receiving feedbacks and hints to improve the project itself.

The worst experience is to be found exactly in the feedbacks of the investors once they read a business plan or listen to a presentation: in Italy we have a great number of projects dealing with the internet and with social web, but I think some investors of ours are slightly skilled on these topics. We are frequently requested to be extremely clear in our presentations, to avoid English words or technical expressions, to focus on simplicity and to stress revenue and costs. This in not so simple when you are running a social web project or business: revenue are often astonishing if compared to small costs to run the business and this causes doubts and suspicion.

The Primate is a project based on Knowledge and it can generate various business models: it is an organic hub for several business nodes. It is hard to focus investors attention on the core business and the others as well, even if you consider that the Knowledge Business is something still almost unexplored in Italy, and in the local web marketing. We, as a startup, have to do a double strain to prove its real potential.

What about your experience makes you a good candidate to be an entrepreneur?

Actually, we have been running a lab since 2001, so being strictly “an entrepreneur” doesn’t represent an attempt for us or something new to deal with. Of course it doesn’t mean it is easy, nor that it is the same to be the leader of an art-technologies laboratory; we must be as much well prepared to face the market. But we have a team who is highly skilled, on the base of a long term experiences run together on web and social web technologies; the two founders of the startup have a huge experience in communication and strategy techniques as well as in technological issues.

We have a systemic approach to the market coming from our decennial experience so that we are able to analyze the scenario through market researches, we steadily practice parametrical formulas to set target limits and we examine relevant case histories to identify strengths and weaknesses, to set strategies and policy price.

The Italian Startup Scene:

There is a lot of talk about the rise in activity in the Italian startup scene. Let me ask you some questions about it.

Do you think it is genuine?

I think the Italian startup phenomenon is a naïf movement at present time. It is genuine and it is naive, because it is still not prepared to a real, complex and structured impact with the industrial precints. Currently, we (as startuppers) are still looking at the US model only to learn how to behave, how to growth, and to defend our from the – possible – starting of commercial speculations.

The State Government, meanwhile, is starting to look with interest at the issues of startups, and this creates a double edged sword. We would like to keep the world of innovation safe from collusive behaviors, and we are looking forward to the meritocratic principles will emerge spontaneously, corrisponding to unconditional criteria and rules.

Do you think that it will continue to grow and how long will it last?

Yes I think so, we are just at the very beginning. Recently our Governor released a set of rules to facilitate startup companies and angels in order to improve our economy, which is suffering from a crisis. The startup phenomenon is about to spread in the next two years, I suppose.

What are the underlying strengths of what is going on?

The crisis crossing our country and Europe is a powerful lever to innovate and stimulate economy. Internet and the social web projects – i.e. startup companies dealing with these topics – actually play a relevant role in the economic scenario. Youth and unemployness are the keys to get out of the crisis; to run a startup company or supporting it will become relevant too.

What do you think are the structural issues that are limiting startups?

Despite the number of statements is growing, the banking system and the lendings to young companies are still based on very traditional parameters. Banks use a too high caution to support the risks of a startup company. On the other hand, banks often appear to be the only skilled interlocutor in the areas of venture capital; the government offices, the innovation departments of Italian public administration, even the same “incubators” are very far from an adequate standard to support the rules of pure competition. The amount of bureaucracy, and its current quality, could still be a major limitation in the process from the seed of a new idea towards the success of a new company.

What can be done to improve the availability of venture capital for startups?

The Italian scenario suffer from a too persistent investors’ caution, even more in the field of venture capitalism. In order to get funds you must have passed the “seed stage”, you have to prove to have got some incomes, at the end you have be already a company. This makes a huge difference when you are presenting a project. Recently we registered some “good job, but sorry, you are almost in a seed stage and we do not invest in seed companies”, even if we are running our company since 2008 and we have been releasing a prototype since a couple of years.

What about the “support ecosystem?” What strengths and weaknesses do you see?

Italy business system is made of 90% Micro, Small and Medium Enterprices (MSMEs) and this is an Italian peculiarity; most of them are run by families. Going deeper into the startup market, startup companies rise thanks to bootstrapping just ‘cause entrepreneurs come from a family model business and because it is hard to be financed in a seed stage.

I think this is the reason why of the lack of relevant startup in Italy, only few count. We (as startupper) are experiencing an high level of competitiveness but at the same time we suffer from a mood combining aspirations and suspicion. This causes a slowdown of the market growth and a spread of experimentalism, we are now living and playing. Incubators are more likely disposed to caution rather than acceleration, which should be their very feature to play the market in order to increase and fulfill startup goals.
Regulations are lacking as well, thus leaving undefined a relevant market insted of boosting it to an high and profitable level.

Do you think that Italian startups should expand their markets into western, central and eastern Europe first or should they go to the US?

Despite US market is a sort of dreamland for everyone, I think that Europe is going to become “by definition” a very prolific place to present and submit projects, and a true interesting market. Europe crisis is about to introduce a definitive choice: to create a new single European market, or to split itself into something insignificant – and it is not sustainable. So that, a new season and a new connective tissue, including political and financial ones, is upon us. Europe has the largest amount of internet users, though in the US you can find the most influent and wealthy investors of the planet. An upcoming global approach is the best key.

Italian Startups

Are there any characteristics that successful startups share?

No, I think a startup company differs from another. Resolution and a bit of luck could be a common element.

How do Italian startups need to improve? What sort of training do the need?

Currently, it is the business model that must be implemented. We all have smart ideas, we work hard to realize our projects, but the tradition of Italian firms, which created the famous “made in Italy”, is based on the durability of their own products and the stainless asset. Rarely we have experiences of short duration, and the “failure” is considered a misfortune almost indelible and existential. We need to invigorate the Italian innovative enterprise culture reintroducing the positive concept of experiment and attempt.

To get this goal, however, the system of rules must sew a sort of “land in the half”: at this moment a countless number of micro-enterprises are hoping to make a long leap to become a company of enormous size. The middle size is almost non-existent.

Are there any startups you would like to highlight?

Last October 2011 at SMAU we met a startup I considered impressive: they presented a project for a interpreter of thoughts, through a sophisticated tactile system that could change the whole paradigm of the evolution of mankind. Its name is Liquidweb, and that day I thought that it was something really necessary, in a mega-super-market of unnecessary bullshits…

What are some areas (i.e., types of technology or services) that will be “hot” in the next 6 to 9 months?

Knowledge (of course), smart cities and new grids of public services, earth-emergencies management, new social management of lands for agriculture purposes.

Do you think that most startups need more help with financials—like a CFO—or some other area?

Yes, as I said in a previous question.

Where do you think that Italian startups are strongest—e.g., technical, engineering, marketing, etc.?

We have a lot of genius brains in technologies, engineering, medicine and math, as well as communication. But I suppose that for the new areas it could enhance some typical capabilities of Italian culture – perhaps less taxonomic and regular then the Middle-European or the Anglo-Saxon ones, but a little more flexible and able to “fend”. We are pretty good as “System-D persons” – in the words of Robert Neuwirth.

What is it about Silicon Valley that makes startups want to go there? Do you think they are right?

Funds but also an approach to business extremely different from the Italian one.

Venture Capital:

What are the strengths and weaknesses of the venture capital community in Italy?

It is still a small community, meeting the same people almost every pitch and every part of the country. This is a positive value, but also a limit.

I have heard a lot of people say that Italian venture capital funds are trying to invest too much money in companies that don’t need that much. In other words, they are following a model for VC investment that went out of date three or four years ago?

Yes, I agree. The funds go to company already secure on the market, meaning that the investors are very conservative in choosing the companies to invest on. This represents a lower funds availability for the other truly potential startup companies, and it is an unconscious tendency to the traditional concept of “monopoly”. I think we have to completely break down it.

I have also heard that one of the constraints is that many of the funds are actually run by former private equity bankers and that they run their funds—and make investment decisions—like private equity bankers? Do you think this is so and do you think that this is a problem?

Yes, I think so. And it obviously represents a problem and a limit mostly if you consider the crisis scenario like the one Italy is facing at present time.

The way I see it, Italian startups could benefit more from seed and angel size investments at the moment. Obviously, they will need follow-on financing but what do you think?

Angels and seed investments are not enough to start a real business. VC funds represent an organic follow-on in order to become a real company. However, this is not the only existing alternative hypotheses, something else should not be excluded. The concepts of “co-business” between companies and cooperation maybe have something oldest in their soul, but there is a way to renew them through networking systems. Then, the role of public investors should be reformed, we have to bring the concept of venture even in public institutions and in the public banks.

What about private banking and private bankers? They do not seem to know much about or understand startups and investing in venture capital funds. Do you think they are a problem or a solution?

At the moment they are a problem. But I don’t think they do not know the question, and I’m pretty sure that they have clearly understood the potentials of venture capital investiments; the problem is to be found in a strong mood of caution in the european private banks world, which is becoming something innate, as if banks violate its own nature of actors of risks and suppliers of credit. There is a sense of “recession”, leading banks to retreat to safer areas, meaning that, at this time, startups have to face one more problem to persuade investors of their potentialities.

What are the exit strategies?

Regarding our project (but it is quite the same for most of the startups) the exit strategies are: company buy back from investors the stocks of the pre-money period; the stocks are sold to a Venture Capitalis; the stocks are sold to media networks (i.e. Telco).

Are there any VC-funded companies coming up for possible exits?

Do you mean in Italy? Yes, that is The Primate. Really, I do not see any reason to fail our goal, and at the same time I still do not see any other truly disruptive project at the moment. I’m pretty sure that in the entire world there are thousands of new seeds that are about to bloom, destroying the 2 or 3 existing Goliaths.

What about transborder investments, inbound or outbound?

Yes we need it to work harder and faster then now. I’m very interested to work as an enabler for a lot of african+indian business ideas, probably through our network web-platform The Primate, as a bidirectional bridge to Europe and the West. We could make our contribution to the unborn backbone of transborder investments.

Is there anything I haven’t asked and that you would like to write about?

Yes, you didn’t ask me if the financial question is the killer-problem for us startupper. No, it is not. [To be continued…]

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