Austrian entrepreneur Philipp Omenitsch sold his mental health startup Stresscoach in 2022. He joined Sequel as CTO to join his passion making angel investing easier for athletes. He is also the cofounder of Netzbeweis, a company that preserves evidence on the internet with PDFs that can be brought before court. Today we discuss his founder journey so that you can better navigate your own.
Shaun Gold: I'm Shaun Gold with OpenVC coming to you live from the 305. That's right, Silicon Swamp. And I'm here with Philipp Omenitsch for our exit interview. Philipp, how are we doing?
Philipp Omenitsch: Good, Shaun, how are you?
Shaun Gold: I'm good. I'm happy to do this. I'm happy you're here. I mean, this is my first exit interview that I'm doing. I'm an exited founder myself. Every time I tried to pitch something or raise money, everyone showed me the exit! So I think you're a little further along than me. I think it's going to help a lot of our viewers and a lot of our readers. The principle behind this is simple. We're talking about your entrepreneurial adventure for 1 hour without any fluff. We're not sugarcoating anything. We're going to go from startup to exit. The goal is to go beyond the press releases and the social media and really understand the secret sauce of your success in order to educate and inspire future entrepreneurs. With that being said, are you ready to rock?
Philipp Omenitsch: Let's do it.
Shaun Gold: All right, so introduce yourself, tell us about your background and your journey.
Philipp Omenitsch: So I'm Philip Omenitsch, I'm from Vienna, was born and raised here and I went to university like so many others, and studied computer science, actually in machine learning. And already during university I was very interested in startups for some reason. I think a lot of my family had an influence on me. I had an entrepreneur in my family who already had a software business and it looked kind of cool, so I wanted to do that as well. So I tinkered with stuff. I was interested in many things. At one point I was kind of trying to make a home access solution because the problem was I was living in a flat with my friends and when the pizza came, we always had to run to the intercom, right, to bring people up. It was super annoying because it was almost 20 meters away.
Shaun Gold: That's a bridge too far, especially for college students.
Philipp Omenitsch: So what I did is I took a Raspberry Pi, hooked it up to the intercom, made a web UI and had people who could open the door and downstairs it was called Open Door.
Shaun Gold: Wow. Okay, very simple. How long did that take?
Philipp Omenitsch: Well, I don't know. I mean, the prototype, I think we had it quite fast after maybe one month or so, but then we tried to commercialize it, we didn't really know anything. What is raising money? How do you do this? Do I have to work full time on this? All of that. So we found an investor who wanted to give us money and looking back at that, I was really amazing that with that little knowledge we could find someone like that. But in the end it didn't work out because they didn't really respond anymore. We got sidetracked and I thought I wanted to finish my master's degree and I kind of took the safe route there but this is kind of my first interaction with entrepreneurship and I think I got hooked. So for my master thesis, I wanted to work at a startup as well. I was very much into face recognition at the time but there was nothing in face recognition in Europe. It was kind of around that time when convolutional neural networks really became hot and so when you could really start to use them on GPUs but there was nobody doing it here. So I applied to a startup in Russia, actually, and I went to Russia for six months and worked at a startup and it was a really good decision. I worked with a really great professor. And while I was there we grew from ten to fifty people. I was there for a year, so I learned quite a lot.
Shaun Gold: What year was this, if I can ask?
Philipp Omenitsch: I think it must have been 2015. And while I was in Russia, I got all interested in crypto because there wasn't enough, right? Only machine learning. And I started organizing a few meet ups in Moscow. It wasn't really difficult, I just posted on meetup.com in the group and people showed up and after five meetings there were already 50 people and it was just the time, right? It was growing like crazy. And then when I came back to Vienna, I wanted to start my own thing. I knew that at the startup I didn't get any equity. I knew that going forward I wanted to have equity.
"I wanted to start my own thing. I knew that at the startup I didn't get any equity so I wanted to always have equity and I knew that going forward I want to have equity."
Shaun Gold: Well, going back to that, because it's an interesting thing with startups is that a lot of them, at least here in the US, they don't want to pay, they only want to give equity. In your case, you were compensated with actual money, but no equity, correct?
Philipp Omenitsch: Exactly, yes. And I wanted equity.
Shaun Gold: Would you have done it for equity only or would you have done it for a hybrid?
Philipp Omenitsch: No, I mean, I wouldn't have worked only for equity. At the time I was a student, I didn't have any money. I needed some money for sure.
Shaun Gold: Of course, because again, that's the things we always see here and startups always approach me and they always have the equity so it's like take all the equity you want, but don't take any money because we don't have any. And to me, I'm very adverse to equity where it's like don't even bring that up. Especially because it's essentially meaningless right now because you're a pre-seed or in most cases a pre ground. We don't even have the seeds, we just have the logo. It looks wonderful. You're going to love it. So I had to ask that. Okay, so you wanted equity, but you wanted but now you wanted your own equity. You wanted to control pretty much your own destiny and not have to be doled out in little small parcels of compensation, correct?
Philipp Omenitsch: Yeah. You make it sound really bad. I had kind of learned a lot during the job, but yeah, going forward I knew that I wanted to have equity in something.
Shaun Gold: So you came back to Vienna and then what was the next move?
Philipp Omenitsch: So I actually went back to university for an entrepreneurship course because I didn't really have anybody to found a company with and I didn't want to do it alone as being alone is boring. And there I met another Philipp, because my name is Philipp and two Philipps is easier than one.
Shaun Gold: All Phillips are friends. If you ask them, they're going to say that all Phillips are friends.
Philipp Omenitsch: So we started getting very interested in crypto and really hit it off. And our first idea was to start a cryptocurrency exchange, decentralized actually, because there was something going on with open banking and crypto. We were very optimistic that banks would embrace this, right? Boy, were we wrong.
Shaun Gold: It's a hypothesis. It's a hypothesis you were testing.
Philipp Omenitsch: Exactly, we tested and the hypothesis was completely wrong. Banks didn't want to have to do anything with crypto in 2016. But my cofounder had a request to help with marketing for cryptocurrencies and we looked at each other and we were like, well, let's do that? At least we have customers that are people paying us. And so we started a cryptocurrency marketing agency where we helped people raise $13 million for ICOs and scaled from five people in the founding team to fifteen in just over half a year. It was really like a hockey stick growth, right? It was a super crazy time with a crash in the end. So a good experience.
Shaun Gold: Wow. So you have a lot of different experiences. And I think that's something that founders need to understand is that the first idea may not be the one idea that is going to grow and is going to become something. You have to really be flexible in your interests and what you want to pursue. And I think that's kind of lost on many because people, they instantly want to build the next Google or the next Facebook. And I feel like they're going to have to go through a variety of different ideas and failures until they stumble upon something that is actually worthy of growing it to be something massive. So I'm going to ask what's next? What happened after that? Because it clearly wasn't the end. What happened after? You're already up to three different things right now. This would be number four.
Philipp Omenitsch: Well, I mean, we kind of tried to pivot to a normal marketing agency, but we weren't really passionate about that. And I think you really strike a good point that it's super important to just follow your passion, to follow your interests. That's at least my belief that only if you follow what you really want to do and what you're interested in, that's when you can be successful. Because it's just the easiest way to motivate yourself, right? If you are doing something you don't really like or you kind of like but you're not willing to sit until three in the morning because you're so excited about it, maybe it's not the right thing.
Shaun Gold: Of course I resonate with that and I agree with that 100%. You say you stay up till three in the morning because you're excited, but what was your average hourly output on your startups per day? Because we all know startups are not typical 8 hours. So you have to be passionate because you're going to be spending the vast majority, let's say 90% of your time doing it. I mean, was your average day waking up early and staying up late? Was it working until say, dinner, from breakfast to dinner and calling it even? Or did you go back? How was your workflow and how was your capability for building and really working on your passions?
Philipp Omenitsch: It was actually a very good question that's coming and really nice leading into the next topic. So at the agency we were really working crazy hours because it's project work, right? At one point my girlfriend got really upset because we went to dinner and then during the dinner I was on the phone for 1 hour. It's just a big move, right?
Shaun Gold: It could have been worse, it could have been the anniversary dinner! Oh wow. Yeah. I mean, again, that brings me to another question. Just because we touched on the topic now, is that how hard is being a founder on your personal life? Just the fact that having friends, family, hobbies, relationships, they all tend to take a backseat to what you're building. So before we get to the next stage in the journey, what else did you have to face and how did you kind of cope with that? Because I'm sure the girlfriend wanted to do girlfriend things like go to a concert or take a walk in the park and I'm sure the family wanted to have you home for dinner and I'm sure your friends wanted to play soccer. We all have it. But how did you have to balance your personal life and your startup life?
Philipp Omenitsch: Well, I think I'm a bit more in the European way and this approach. So I think I really tried to get my time off when I needed it. Going to the end of the agency thing went so crazy that I really already felt that I needed more time off and wanted to do something else which actually also led me to my next company. So I took some time off after the agency and we actually took the money from the agency and invested in a startup, it's called Tonestro. It's still around, doing fine, so that was quite a lucky one. And that's also how I got kind of into startup investing myself. I got interested in startup investing and I was looking for the next thing to do and having dealt with negative experiences through the agency life, lots of work hours, I knew that going forward I wanted to do something more that helps people and also work hard, but not like a maniac, let's say. So the project work from the agency is really different to when you do a startup and you build a product because yes, you have to work hard, but have to sometimes react and do something for the whole night but if you do it right, you don't have to work every day, like super long or crazy. Of course it happens if you want to. And there were nights when I was just coding, right? Because it's also who I am, it's interesting to me. But also there were nights when I finished the work and I went home because I didn't want to do anything anymore. I think you really have to strike a balance.
"There are times in the startup where it's stressful, of course, but there's times where you can be your own man and decide for yourself how much you want to work."
Shaun Gold: Of course. I mean, we have the Hustle culture, which I think is terrible, but I think a lot of founders kind of fall into that. Essentially if you don't have a 19 hour day, it's not going to happen. And make sure when you wake up, you start your morning by meditating, praying, making your bed, listening to an audiobook as you stretch out and as you do a two hour workout and as you take calls. And then you start your day at 06:00 a.m and go until, I don't know, 03:00 a.m. So you can be a success at a startup and people need to have a balance and I'm glad you brought that up where it's like if you felt like you were done to a certain time, you went home and that was it.
Philipp Omenitsch: Like I said, it always depends on the time. There are times in the startup where it's stressful, of course, but there's times where you can be your own man and decide for yourself how much you want to work. I mean, there are studies that show that yes, there is a diminishing return in terms of hours and especially when programming and some things that happen so often to me that I sit until two in the morning and I cannot find a solution to something. And then I wake up the next morning with the computer and within five minutes, the problem is solved. But I couldn't solve yesterday in 4 hours.
Shaun Gold: Of course,
Philipp Omenitsch: You don't have to work late, right. It overloads your brain. I mean, people are different, but that has worked for me.
Shaun Gold: Yeah. I've always been a fan of the path of least resistance. So if I can get it done at a certain hour and I can get it done and have some free time, then I'm going to do that. Because there's always tomorrow. There's always tomorrow, there's always later. Which brings us to the next question. What were you building? If my math is correct, this was your fifth, not including your investment, your fifth project that you're working on.
Philipp Omenitsch: Basically, I was a bit burnt out, but not really. And then I met Manuel, who was building Pocket Coach back then. It is now called Stress Coach, which is a mental health app for people with stress and anxiety.
Shaun Gold: So everybody with a pulse, I love it. So you met him. Tell us more. How did that go?
Philipp Omenitsch: Well, I met him and he had this product which he kind of put together. It almost looked like a stuck tape. But it was working and people were paying for it. And people were actually thankful that he created something like that. They were really happy that they could find content which helps them calm down, which helps them relieve their stress, you know? And it was kind of weird because I've never seen it in the crypto world that people are, like, thanking you for building a product or selling some cryptocurrencies. Right? Those people were a bit more hostile. So I really liked it that he was actually doing something that good. And I also thought I should kind of do something good in my life. If you can make money and do something good, that's ideal, right? That's what most people want, I think. So in the beginning I started working kind of like a consultant to him. I did it for free. I was kind of helping him with technical problems. But then over time, yes, we start working more and more together. First on Facebook Messenger, because that was kind of the era of the chatbots. We had our chatbot there. We were completely in Facebook Messenger. We thought that we'd hit a big home there. And then there came a time where we decided to raise money and go and create our own mobile app.
Shaun Gold: How much did you raise for this?
Philipp Omenitsch: So we raised in stages. We also got a lot of government grants. I think we raised around 160K from Angels in Euros, and we got another 200K. Don't quote me on the number. I always get it wrong.
Shaun Gold: Only an interview. Let's just say it was a lot.
Philipp Omenitsch: I only did the tech. Manual was doing the fundraising.
Shaun Gold: You're doing the tech. Because one thing, I mean, I want to touch on, which I ask every founder is just the fundraising aspect. And I know you were more on the tech side, but how was your experience? Was it stressful? Did it take a while? Was it annoying? Was it a lot of back and forth and then investors would kind of stop responding? I mean, again, you were on the tech side, but is there anything you remember about that period that stood out to you as something you enjoyed, something that annoyed you, something that you would do again if you had to, or something that you would never want to touch and you just want to stay forever in tech?
"We went out and pitched. We met with Austrian angels. I mean, back then, I really wished that a tool like OpenVC would have existed."
Philipp Omenitsch: I mean, for sure, fundraising is not easy, especially when you haven't had an exited company or have a huge network of investors amongst your friends. Right? And that was kind of what was happening for us. We knew some people, and that's also how we raised, actually, all around through our network. But it was like a superfitting network, I would say. We went out and pitched. We met with Austrian angels. I mean, back then, I really wished that a tool like OpenVC would have existed.
Shaun Gold: Here's the plug. What a great guy. I think it's something that people need to realize that there's no fun in fundraising. I like to make a joke that I put the fun in fundraising, but it's not whether you're a VC trying to raise from LPs or a founder trying to raise from VCs or friends or families or whatever, it's just not a fun experience. And here at Opensvc, we try to ameliorate the entire experience with the offering so you can take a lot of the headache and stress out of it. So thank you for the plug. Go to OpenVC. Go to the home page after this and start your fundraising journey without headaches and stresses that we all face. Okay, so you dealt with that. I mean, it's common among founders. How long did the process take for you to raise to do your funding round?
Philipp Omenitsch: Yes, we really did it in a weird way because we wanted to raise 150 or 200K was cool. And then we really couldn't find anyone, but we had one angel who gave us 50k and we were super thankful for that. And we just went to work with it. We were like, well, let's see how far we can get with the 50K, Get more traction and then raise more once we have more traction. And so that's what we did with the 50K. Basically launched the app and got, I think, $20,000 in a week, which was another week, maybe $10,000, but the number is so high. But $10,000 in a week, which was quite a big success. And then we raised kind of a completed round.
Shaun Gold: So one thing I want to also touch on is that when you were doing this, this was your full time job, correct?
Philipp Omenitsch: Yeah.
Shaun Gold: Okay, so you said that you had paid customers but was it enough to cover your personal bills, your rent?
Philipp Omenitsch: Yes.
Shaun Gold: Okay, because again, a lot of founders, we talk about the runway startup runway, but I always like to get into the personal runway, the founder runway, as in the grocery bill, the power, the WiFi. Was that money that you used from your previous endeavors to kind of fund your life as you built the startup, or did you use some of the angel money for personal expenses?
"Call it a Ramen salary if you want."
Philipp Omenitsch: A very small salary. Call it a Ramen salary if you want.
Shaun Gold: Of course. Yeah. We have an article that I wrote on how much founders should pay themselves only on OpenVC, and the Ramen profitable is up there.
Philipp Omenitsch: I think it was a lot less than €1000 would be paid off in the beginning of the month because I was used to living cheap from being a student, and I didn't really need much. But, yeah, I guess I would do it again. I would kind of pay us a bit more earlier because it was kind of tough and we were saving money sometimes in the wrong spot, but we couldn't do everything perfectly.
Shaun Gold: Of course. Well, start up is the antithesis of perfection because there's so many unknowns and there's so many things that can go wrong. And even if you're, you know, equipped or even funded to handle problems, there's still going to be new problems that people don't foresee. Okay, so you had a small Ramen salary that didn't cover anything, but you still kept working and plugging away. So how did you stay motivated with so little money? And you're raising money and you're building this out, you know, something's there. But what was the internal motivation? Because at the end of the day, after working hard and putting all these hours into the startup, you do want to kind of treat yourself. You do want to kind of respect your time, and you do want to have some measure of success that you can enjoy before you actually get to that real level of success through an exit acquisition. So tell me about that. What was it just mentally? What was it like? I mean, you're working on a mental health product, but how was your mental health knowing that all the requirements for perfect mental health, such as your basic needs being met and personal relationships and sunlight, let's say, I mean all the things that we need to stay sort of sane and healthy. How did you kind of cope, especially with such a low salary and a heavy workload?
"It's really cool if you launch a new feature and then you have people sign up and then they write you something."
Philipp Omenitsch: I really enjoyed working on it. It's really cool to be the one person who could decide where the button goes, where the drop down menu goes. But it's really cool if you launch a new feature and then you have people sign up and then they write you something. So we try to always kind of get feedback from users and it's just really cool when you see that the software you build really helps the mental health of other people. And that was the motivation in the beginning. And there was the motivation, I think, also going forward, at least partly, and also I'm like a data geek, so seeing all the data of people who you really use your product, at some point, you can see that actually, I think I forgot the number. There were hundreds of thousands of messages being sent on our app, even though we only had 10,000 users. It's really cool, kind of, because you can see that you built this and it's being used. There's a lot of things happening.
Shaun Gold: Essentially the personal fulfillment aspect is what went beyond other aspects. It was just you were building a product that you were proud of. This product was making a real difference in the lives of the users. And it was a product that was benefiting everybody. It was a win-win. It wasn't just, here's a new way to book hotels. It was something that was just very passion driven and it was just you could see the real time results of your user base, which is 10,000 users it's not a million, but it's not zero. I mean, 10,000 users, I think is still remarkable.
Philipp Omenitsch: That was the first week.
Shaun Gold: Yeah, it was right to start. So how did the journey evolve from there? How did you grow? How did you scale? How did you eventually get to the next stage?
Philipp Omenitsch: So we launched kind of a hypothesis that we launch for free. Products will be free to get more users. We will launch in the US. And then we slowly will kind of monetize in the US. We'll introduce payments and then we'll see the conversion rate. And then, I mean, if you know a little bit about the mobile app industry, you know that the conversion rate affects, of course, your customer lifetime value. And then the customer lifetime value has to be higher than the customer acquisition cost. Right? So we were always trying to measure and to get really to that point where the customer lifetime value is two times higher than the acquisition cost. And so that was kind of the main thing. We were optimizing after that. So after we launched in the US. We tried for a while actually to improve the product, to increase the conversion rate. Also toy with the business price because it also affected, but we really couldn't make it work. And we knew also from conversations, from looking at competitors, B to C is really difficult in that space. And most companies, they pivot, like a head space, but also smaller ones. I'm missing the names now, but there's a lot of companies that pivot to B to B, but B to B to C. And so we knew that in Germany, there's actually a way to make your app certified, that insurances have to pay for it. It was really like this one strategy meeting with Manual and I said it was not really working in the US. What can we do? And then after that meeting, we said, okay, we'll go to Germany and we'll try to do this through the insurance. So we did like a huge pivot in the way. We also had to kind of fire half of our team, which was sad, and hire other people. Because of the German language focus, because we had native speakers create the content before for the US. We managed to get the app certified. It's reimbursed by German insurance now. And we also managed to get one insurance report, which I don't want to get into the details of. It gets quite complicated.
Shaun Gold: Let's keep it simple just for me.
Philipp Omenitsch: How it works is the person signs up to the app, and then they can check with the insurance. If it's reimbursed, then they get the money back after they finish the course.
Shaun Gold: So that Pivot essentially worked out for your favor, correct?
Philipp Omenitsch: Yeah.
Shaun Gold: And did you expand beyond Germany, or did you just keep it in that country and keep it in that sector?
Philipp Omenitsch: No, we still actually were in the US. In the UK. And everywhere in the whole world. It's just to be really focused on Germany because through the reimbursement program, it's just much easier to monetize because people don't want to pay for their mental health. They know that it's important, but they don't really want to pay for it.
Shaun Gold: Yes, it's the most important thing they could pay for, and they refused. So it's the one thing they need, but nobody wants to pay whatever small fee per month it might be. Yeah, I totally see that myself. So how long after this Pivot did you really get your next level of growth? And when did the exit come about? And how did the exit come about?
Philipp Omenitsch: So after the pivot, we kind of thought, well, this was kind of working. But I would say, like, we were not on track to be a unicorn or anything anymore because it's kind of niche and it works and it's nice. But it's not like we are getting 10,000 customers a day for this. So we're really thinking we actually did also deal with another company, which is similar, where they can create coupons and then their users can use our app, and then we get reimbursed by the company. So we knew that we could go down this road. And another learning here was, well, we only offer kind of solutions for stress and anxiety, but there's also depression, there's sleep problems, this, this, that. And really, the companies who are in the B2B sector willing to pay for it, they want a whole solution. They also want you to have therapists. They also want you to have a hotline, maybe like a center people could go to. So they need to raise this full time approach. And we only cover this tiny thing. So for us, there are two options. Either we become a platform or we integrate with platforms. And also another the second option would have been to go down more in the medical route to become a certified medical product. There's something called the Tiger in Germany. It's more for really sick people because our product is more like a wellness product. It's not focused on clinically ill people, but if you focus on clinically ill people, the insurance and the health system is paying for that. And there's ways to get more money per patient. But we didn't really both have a medical background, and it also takes a long time to build a medical product because you have to know what you're doing and to also test those things, do studies. We really weren't interested in that. So we talked to a couple of these partners, these platforms, and one of them, which we made a deal with, they actually said, well, if you ever want to sell us this, let me know. It was ust dropped in a sentence. And then when we came back to this discussion, like a year later or something, we were like, well, I don't know, what are our options? We could go medical. We could create our platform. Do we want that? Where do we want to go? And so we started talking to them, and then we thought, well, if you're already talking to them, we should talk more. And so we kind of opened the sales process. We really tried to run our own process with brokers andwithout brokers. It was like a whole deal with many kinds of participants. And then in the end, we found the buyer, which really worked out nicely for us.
Shaun Gold: Okay. The person that dropped in the sentence that if you're ever looking to sell, that wasn't the buyer. He just started the process?
Philipp Omenitsch: They were thinking about buying us, and they actually still have good relations with them, but they didn't buy them.
Shaun Gold: So from the slide, if you want to sell dropping in the sentence, it was a year later that you had the exit from a different party, correct?
Philipp Omenitsch: Yeah, around that time.
Shaun Gold: Okay. So what was the entire time frame that you spent on the startup? From meeting the co-founder consulting to actually selling it? What was the time? How many years?
Philipp Omenitsch: I think four years. I think it was more on and off. Right. And more full time. We sold this in summer of 2022 or beginning of summer. We started working in 2018. About four years.
Shaun Gold: All right. That's relatively, I'd say, a short cycle. Do you miss it?
Philipp Omenitsch: I mean, the cool thing is how the deal worked out in the structure is that we sold our assets, like everything, the content, the rights, the trademark, everything. But there's still a lot to run the app and collect the profits, and the revenue.
Shaun Gold: You got a sweet deal.
Philipp Omenitsch: We got a really good deal because the buyer is an American EAP who really wanted to buy us for the content and the technology. And we had all these customers in Germany, and they were like, well, why should we buy an Austrian company? We deal with German customers. We don't have anyone who speaks German on our team. We have to focus on the US. And Canada. And so they were thinking, well, we could buy it, and then we could just kind of remove the app. Or we were like, well, you can just leave it to us. Our customers who are happy with the product and using it can still use it in the future, right. It doesn't cost you anything. We'll make sure of that. And it's actually cheaper for you because we'll just run the company.
Shaun Gold: So you're still involved. It's still part of your day to day?
Philipp Omenitsch: Well, I mean, that's the beauty of our software, right? It runs on its own. Yes, I'm involved. There's sometimes a customer support email, but it's rare. I mean, we really try to automate everything from the payments to the reimbursement process to really having good emails already, templates and everything. So it's not really a lot of work.
Shaun Gold: Oh, wow. So was it worth the Ramen salary at the beginning?
Philipp Omenitsch: Yes.
Shaun Gold: Okay, very nice. So I have to ask them because you've done again, according to my calculations, my arithmetic, you were involved in five different things. One out of five was the one that worked out. That was the one that you actually got the home run with and sounds like you got a really sweet exit deal. So what advice would you give to Founders starting out right now? That it might be on idea One or Idea Two and maybe a really impatient they want to get it out there and start making a profit and try and be a unicorn or decacorn whatever stupid name they have and really try and make this happen and have an exit in three years for eight figures or seven figures. I mean, everyone has different ideas. Most of them are kind of just going to stay ideas. But as someone that actually had to pivot a lot and had to switch things up and went through the entire journey, what's the best advice you can give?
"It almost never works out the way you plan, especially not in your first startup. Just learn as much as you can."
Philipp Omenitsch: I think really backward thinking is good. So you want to have a billion dollar company in three years. Well, what should happen in two years? How big does it have to be? Two years and in one year, right? And then what do you have to do and reach next month to be able to get $2 billion in three years to kind of really understand what that means? Like, how many customers do I need? How much does one customer have to pay to be able to get there? That's really important because some people, they have these expectations, but then they never think of the numbers, right? What's the math, really? How does it work out? Because for Stress Coach also, we were charging a customer $100 a year. Well, you need a lot of customers to become a unicorn, right? It's $100 per customer. So really think of where you want to be, if that makes sense, if you can get there. And then my second part of advice is it almost never works out the way you plan, especially not in your first startup. Just learn as much as you can. And I think the big advantage when you start your own company is that after you've done it, if you want to search for the next thing, it will be good anyway, right? If it failed, if it succeeded, it doesn't really matter, but you will learn something valuable and people will value you for having that experience.
Shaun Gold: So there's a stigma with failure. And I feel like with founders, failure is essential because, as you said, they're going to fail in different areas. The company might not fail, but they're going to personally fail, let's say customer acquisition costs, let's say, underestimating the challenges of entering a new market, let's say not having a product market fit that in reality isn't what they imagined. So what advice would you give to someone that is facing failure after failure? But they know they can pull this out. They know they can make it as a founder, but they're getting discouraged just at the mountains that they face. And I want to hear your thoughts just because, again, you have a very interesting background. You did a lot of different things. You pivoted and you've succeeded where I guess the majority would have given up. So what advice can you give when it comes to dealing with failure after failure? As a founder?
Philipp Omenitsch: I think what was really kind of one lesson, also what Manuel helped me with was to really reflect on the things we're doing. So sometimes you have these spaces where you have to kind of run straight through the wall and have to try as hard as you can. But if after three or six months, the wall is still there, and you cannot break through, maybe you should think if you should change your approach, really take your time and reflect. Is that what I'm trying to do? Does it really work or has it worked or why hasn't it worked? Be kind of strategic or be structured about it. I have tried this, this and that. What else is there that I can try? Have I exploited all my options? Do I need to pivot completely? I think that's really important. So you can go forward, right? But if it doesn't work for three to six months, or it can be even shorter, it depends on how you want to measure it. But there has to be this certain time where you really have to think hard and also ask other people, right? Is that really not working because it's just not luck or it didn't work out yet? Is it a time thing or is there maybe something fundamentally wrong in my assumptions? Maybe I don't know, whatever. It can be anything, right?
Shaun Gold: Correct. There's this notion of shame involved with being a failure in business and entrepreneurship, in kind of anything, really. Nobody wants to be a failure. Nobody wants to have to, especially in this day and age, make a big deal on LinkedIn and what they're doing, and then six months later have to go out and say, oh, well, we've moved. What advice do you have for dealing with that stigma of a failure? Because it's really my perspective for founders and essentially life in general, is that everything is an experiment. You're testing a hypothesis. I don't really feel shame or failure if something doesn't work out, because that's just the nature of reality. Things aren't going to work out. But when it comes to entrepreneurship and it comes to, I guess, the amount of press you give yourself as being this founder and you're going to disrupt the market and it doesn't work out, I mean, what advice do you have as someone that's had the pivot from dealing with the stigma? Did you care what anyone thought when you went from one idea to the next? Did you pay any attention to anything on social media that you posted? Did you worry about what your parents were saying to you? What were your experiences with it?
"As long as you try your best and as long as you believe in what you're doing. I think they shouldn't be afraid of the stigma."
Philipp Omenitsch: So I think the worst time was actually in the crypto market when everything crashed. But we kept going. As long as you try your best and as long as you believe in what you're doing. I think they shouldn't be afraid of the stigma. Of course, if you kind of think this might work or it's cool to raise money, I'll take some money from investors and pay myself, like, a lot of money. Go to San Francisco, spend a lot of money and oh, no, it didn't work out after one year. But I spend all the time partying. Well, I mean, everybody has to live with themselves, right? But I wouldn't want to be that person.
Shaun Gold: It only took $5 million and I found out that it didn't work. But we got some great context and don't worry, guys, it's only money.
Philipp Omenitsch: It was a great pool party, though. I spent a million dollars on it.
Shaun Gold: Yeah, it was great. We got the metrics. You should see our company instagram. It's amazing. But there's a lot of that as well. But again, I like to always find the reality.
Philipp Omenitsch: What I want to say is there's always risk involved in reputational risk, right? And there's also the risk of losing money. Yes, of course. And losing money from your investors. But again, all the investors who worked with you or where we lost money or whatever, when they see how you work and when you can explain why you lost money and that you didn't just try, oh, it didn't work, but you can explain why and what you learned, right? They understand that and they will not shame you for that. On the contrary, they will want to invest in you again because you have this knowledge now and you have made this experience and you actually built a relationship with them and you're more experienced, so they want to invest in you again, for sure.
Shaun Gold: Yeah. And I think one thing people need to understand is that everyone, especially investors, know that startups are inherently risky. It says that you could lose some or all of your investment. It says it in every single financial document, in every term sheet and everything. Like startups are essentially, I always say, they're suicide missions. Most of the time, they're one-way trips. And people that are investing, if they don't understand that, they shouldn't be investing. So founders really shouldn't stay up all night, oh man, I'm going to get their money back. I mean, yeah, it should be a concern, but at the same time, people that have that kind of money to invest, especially if they're giving small checks, they're probably making other investments and making other bets in other companies. So focus on what you need to do to be a success. And it goes to your point if you're not, but you did your best and you learned and you fought it out. Well, you have something to show, you have something to say. Hey, we didn't expect the government to release something that affects our business overnight. None of us could have predicted it. And people, they get it. And essentially, an investment into a startup is a leap of faith. Through an investor into a founder, it's a gamble, it's a calculated risk to bet on that person and their vision and to make that vision a reality. And speaking of that, what's more fun, being a founder and starting a company or investing in a company and a founder?
Philipp Omenitsch: I think being a founder is more fun because I was trying to invest in more startups, actually, in the beginning of this year. But I think it gets so boring and you see what all those people and smart people are doing and they're so excited about it and yeah, you can give them some money, but that's it. But you don't really know what happens in the day to day. For me, I want to be operational. I want to build something. I want to see what I've built being used. And investing is more like pure financial terms, which can be, of course, lucrative, but I think it's just not so much fun.
Shaun Gold: And for a European founder, I mean, does it matter where they're based? Do they have to go to Berlin or London or Vienna or Paris? Or can they do it remotely? Or do they have to be somewhere in a local venture ecosystem to really help them scale and grow and make the right connections?
Philipp Omenitsch: I think it really depends on which area of startup you're in. If you are in the financial sector, I think it really makes a lot of sense to go to some financial centers, to be able to connect to so many more people in your industry. There's a lot of trust involved also with fundraising, so meeting people face to face is important. I would advise everybody who's fundraising to at least spend some time in London or Berlin or wherever we did that as well. But I think it's possible. And people have definitely shown that there's two unicorns in Austria. Most people don't know where Austria is. Probably for those who don't, where is Austria? It's the heart of Europe. Okay. And for those who are still wondering, where's Europe? No, it's definitely possible. I think it's easier to raise money somewhere else, maybe in the US or in the UK, in London and in Hubs, because it involves trust. But if you can show that you have the right traction, that you have the right metrics, and that you just need the money to scale. Corona has helped with that a lot. I think I have become more open to invest in remote companies. Yes. I mean, make sure you understand what company structure you have. People don't like to invest in Austrian or German companies, even though they still do. If they really want, they will make it work. But it has been really a deal breaker for some people.
Shaun Gold: Understood. Well, with that being the case, for all this talk of what you've done and all the fun you had, what are you doing right now? What's the current plan besides missing being a founder and still running sort of your exit startup a little bit and investing. What are you doing day to day?
Philipp Omenitsch: So I was thinking a lot about what I should do, and I looked into start up investing, but it's not really like a full time job and there's just so much time. So I tinkered and worked on some projects, but then I met lots of people, actually. I was in London and Paris where I met Steph from OpenVC. Also applied to some incubators, but then I meant Alex McDonald from Sequel.
Shaun Gold: Oh, we know Alex. He did one of our roasts. Love Alex.
Philipp Omenitsch: Yeah, true. So, yeah, he asked me to join him at Sequel. I'm the CTO now of Sequel, and at Sequel, we help professional athletes to invest in startups. We kept the deals from top VCs.
Shaun Gold: Wow. All right. Are there any of your top athletes that were investors that you wanted to meet that even though you didn't need to be on a call, you were like, "let me hop on this call."
Philipp Omenitsch: Actually, I've met some and it has been quite cool so far. Not to say who it is, because we, of course, try to try keeping this information private. Who is in our club? It's an invite only club, right? But, yeah, it's some really exciting people, and I hope we can share some more news on that soon when we launch, and I'm sure you'll hear from us. I'm looking forward to it.
Shaun Gold: That's great. He was great on the roast. He's a super smart guy. I think you're going to have a wonderful time with them. It's just going to be fun, if anything. That's it for my questions. I want to thank you for being here and doing this and sharing the journey, sharing what you went through, sharing what you're doing now. That sounds awesome. Where can we find you? Do you encourage people to reach out to you on LinkedIn? Do you not want to deal with them? What's the best way to approach you if you want to be approached?
Philipp Omenitsch: Yeah, LinkedIn. I have all the information on LinkedIn. I think that's the easiest way to find me.
Shaun Gold: Please add a message. Don't just add them for the clout. When people add me for no reason, just to say they are connected. We don't want that. So please add a message saying you read his exit interview, you watched his exit interview, or you're an athlete looking to make moves. Just something, not just a blank message. Because I don't know about you, I delete all those. So, yes, I want to thank you for being here. I want to again, thank you for sharing your story. I enjoyed it. I think founders around the world are going to truly benefit. And please keep us updated. Please let us know what you're doing. I think it's really cool, and I think your story is fascinating, and I think the next five to ten years is going to be even more fascinating for you. So thank you for being here.
Philipp Omenitsch: Thank you, Shaun. Have a good one. Thank you. Bye.