Enrico Morandi, founder of MIND:IN, spoke about the power of neuromarketing to the
Fintech District community during a lively and populated mentorship session. We asked him
to share his knowledge and experience also in an interview dedicated to the fintech sector.
Enjoy reading it!

Neuromarketing: can you give us a definition to convince us that it is not a marketing
invention?

Neuromarketing is a discipline that makes it possible to measure the effectiveness of
measuring communication and marketing possible through the direct measurement of
emotions and basic processes linked to purchasing decisions.
It stems from the convergence of the most recent neuroscientific and brain image research,
traditional marketing and consumer psychology, and therefore operates on a solid basis.

What advantages does this discipline offer? What tools/opportunities does it offer?

It aims to assess what happens in people’s brains in response to marketing stimuli related to
products, brands or advertising. In fact, the techniques on which neuromarketing research is
based make it possible to verify with greater precision the variation of the emotional
condition determined by marketing stimuli thanks to the analysis of psychophysiological
indicators correlated with emotional states, assuming that this can help companies to
determine a greater involvement of their target audience.

How can it be exploited by an innovative startup?

It can be the basis of any marketing and communication choice. The design of a website can
integrate user experience processes with neuromarketing measurements. Images and texts
are undoubtedly more effective when verified with these techniques. Not to mention the
entire Customer Experience, which becomes more relevant in terms of channels and modes
of engagement. It is precisely an innovative startup that should forget the usual marketing
methods and start from its customers and design and reason around them – or rather, their
brains.

What are the first steps in approaching neuromarketing?

There are many courses and books. To get a general idea of the techniques and
specificities, one book above all needs mentioning: “Neuromarketing, communication and
consumer behaviour” by Vincenzo Russo.

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Lots of articles and guides for learning to be a leader, in life and at work appear. There is probably no one way, no one answer for everyone. In order to get what we need for those who are leading a startup in a global context like the current one, we interviewed Judith Eberl, Managing Director of JuPantaRhei, who in the coming weeks will hold a mentorship session on the same topic, reserved to the fintech of our community.

What are the essential soft skills to lead a business?

Leading a business is tightly connected to leading yourself and leading people. As a business leader you need to have a vision, think strategically, evaluate risks and drive performance. But you cannot grow the business if you are not able to manage yourself and that starts with self-awareness which means having a deep understanding of your own feelings and emotions, of your own weaknesses and strengths and of your own values and capabilities. But a business leader needs also be able to lead people, to motivate them to work towards the organisation’s vision and to grow and develop them.

Three things a leader should never do

1. Leaders often times say very quickly when something does not go the right way. But when it comes to expressing recognition and gratitude, they forget to do so. Leaders should never forget to give praise, also publicly, to someone that has made a contribution to achieving a certain goal. If a leader does not show gratitude, people feel forgotten, ignored, pushed to the side, and they resent it.
2. A leader should remember that emotions are contagious, so are negative emotions. When someone gets angry, he/she is usually out of control. That’s when a leader should not make destroying or cutting remarks or act in a negative way. Behaving like this, people will start avoiding the leader and are less willing to support and work alongside.
3. Leaders should not jump to conclusions too quickly. We often judge others or grade what they say very quickly, even when they try to help us. When leaders want to impose their standards, people get hesitant and defensive. A leader should therefore be open and seek for different perspectives and diversity in their teams. A leader should actively listen, trying to understand the perspectives of others and be open to different approaches.

How can you foster the growth of your team: examples/practical actions?

When approaching our teams, we have to remember that each team member comes with his/her own background, experience, capabilities, skills and competencies. Furthermore, each individual is driven by different motivational factors. A good leader has to address each team member, having clarity whether the person has the necessary competencies and the motivation to perform the specific task/activity and adapt its leadership style.
When we have team members that have the necessary skills and a high motivation, leaders should focus on coaching them. Coaching really aims at unlocking a person’s potential to maximise their own performance. It is helping them to find their way to reach the objective, based on their natural talent and strengths. Coaching is a two-way-communication, based on trust and mutual respect and the role of the leader coach is to create the right context for each individual to grow and succeed. Listening and questioning are some of the key elements of coaching.

What techniques can help to better identify strengths and areas of development for those leading a business?

Self-awareness is the starting point and it means being conscious of the effect that our feelings and emotions have on ourselves and on others. We cannot change our emotions, but we can decide how to go about them. But it is also crucial for a leader to understand how others see them. This is where open and continuous feedback comes in. In organisations where there is a feedback culture, direct communication and open conversations are happening on an on-going basis. Business leaders should seek for feedback being open-minded, curious, self-reflective, willing to change and adapt.

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If an Italian fintech startup wants to face the process of internationalization, it must also think about what will happen at the taxation level. This is not an easy topic we chose to address during a session of our mentorship program for community startups with the contribution of Antonio Vitali (Tremonti Romagnoli Piccardi and Associates), an expert who gave us a picture of the current situation. Here it is.

From 1 to 10 how much do taxation issues affect the speed of internationalization of an Italian startup and why?

It depends on a series of factors that vary from case to case, but I think that tax issues have a certain influence. In general, we can say that these issues are often relevant and the tax system tends to be very complicated. The complexity increases when you move into a transnational context. Startups may not always find it easy to spend time and resources on tax issues during the internationalization phase. This may result in a slowdown in the process.

Do you think startups give the right weight to this or underestimate it?

These aspects are certainly taken into account, but the complexity of the tax system is now very high. Moreover, during the startup phase, there may be no incentive to look at the tax variable as an opportunity. These two components can lead to an underestimation of some important financial aspects affecting the internationalization process.

Are there more or fewer difficulties for an Italian startup starting a process of internationalization, in terms of taxation, compared to the situation in other countries?

Generally speaking, I would say the situation is quite similar, at least if we compare it with other EU countries. The main tax issues affecting Italian startups engaged in the internationalization phase are basically the same as those affecting ones resident in other EU countries. The rules, always in the EU context, tend more and more to be shaped according to common evolutionary lines.

How can the situation be improved? Are there any countries to take as an example?

Stability, simplicity and reliability of the tax system are important values. This also applies in general to the rules and procedures to be applied in the process of internationalisation. It would, therefore, be helpful, for example, in the short term, to speed up the procedures for reaching an agreement with regard to transfer prices, such as APAs. In the medium to long term run, it would be important, at least at an EU level, to adopt a common tax base between the Member States, as provided for in a Directive which has been under discussion now for some time. This would give advantages in terms of simplification and could allow the overcoming of the complex rules of transfer pricing in relations between group subjects operating in the different Member States. This would reduce administrative costs and, of course, tax risks. Moreover, the approval of the proposed EU Directive on “significant digital presence”, with a multilateral amendment of the treaties against double taxation between member states would make a contribution in the direction of clarity in the taxation of the digital economy in general.

As far as the taxation issues you deal with are concerned, do you see any peculiarities in the fintech sector?

There are many special features in all areas of taxation, including VAT. There is also no lack of direct intervention by the legislator, who, for example, has regulated peer to peer lending from a fiscal point of view, with the introduction of a withholding tax applied directly by platform operators, on the income from this activity received by natural persons.

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How can you monitor your business plan and what are the best ways to do this? We asked our mentor Daniele Testa (Partner of U-Start) who also gives us, in this interview, some good and bad examples. Read his tips and discover our mentorship program HERE

1) What does it mean to monitor your business plan in actual practice?

It means being capable of aligning all functions in the business, because in this way all efforts become evident in the business plan, like updating last month’s sales, the products costs related, the logistics and payment commissions, the marketing effort put in place to realize the revenues, and all the FTEs’ salaries down to the EBITDA level. Most important of all, especially in early-stage businesses, monitoring your own business plan means understanding and owning your cash flows, realizing how much the company is burning, and how many months the company can keep going at this burn rate. Ultimately, in order to establish the amount of money the company needs to raise, it needs to be able to create and monitor a business plan.

2) With which tools you can do this both today and in the future?

I’m agnostic with respect to the tools utilized. From the basic Excel to the tools provided by Electronic Invoicing, up to very expensive and complicated business planning tools such as Oracle Hyperion, or the e-commerce intelligence suites. As long as it’s being monitored, every business has its own effective way to do so. When speaking to potential investors, the best way is probably an Excel file, that shows P&L, Balance Sheet and Cash Flow Statement and groups Actuals, Budget and Forecast. In my opinion, this is the simplest way to show control over the financials of a business.

3) What risks do you run in not monitoring your business plan? What are some examples of failure to monitor?

Lack of control over the business plan has significant consequences on a company’s development. Not being able to foresee a significant cash outflow can result in the need to raise an emergency-bridge-round, where a founder must give away a significant % of equity at a discounted price. Even if the founder manages to raise it (there were cases of companies being flat for 6 months due to lack of cash), this outcome is a rookie mistake that can be easily avoided. Moreover, miscalculating short term financial needs can also result in having to down-size the organization, letting go of talented professionals. This has a direct effect over the mood of the office and will impact a company’s ability to attract talent in the future. On the “positive” side, not controlling your business plan can also result in missed opportunities: noticing unexpected savings might give the founder additional leverage to compete against such as cutting price, whilst still reaching the goals agreed with investors.

4) Let’s move on to best practices: any examples of effective business plans and their evolution?

In terms of best practices, the first example is a story from a founder. He used to work at Yoox, reporting directly to Marchetti. He told how Mr. Marchetti used to be obsessed by the Business Plan, and that he would call in the middle of the night, to figure out why there was a 3% discrepancy from the monthly budget. This founder is convinced this was one of the keys to Yoox’s success, as it kept everybody focused on the objectives to deliver. A best practice that I personally appreciate, is that of giving detailed financial monthly reports to investors, to check the ability of the company of meeting its financial goals. Investors paid the company a certain price based on the upside that the founder promised to generate. This kind of transparency is crucial to establish trust and to get the best out of the smart investors that everybody is claiming to look for, the people with knowledge of the Industry KPIs. How can they be of value, if they can’t see the numbers? Would you hire a mechanic, and then not let him see the engine of your car?

5) Are there any particular “alerts”/advice on the business plan that you think you should report for fintech?

With a degree of simplification involved, we can say that fintech companies, at the end of the day, manage money. From a FinTech startup, even at the seed stage, I would expect greater control over business planning and cash flow than I would from any other startup, because of this. A specific alert to FinTech businesses is that of trying to make their Unit Economics as understandable as possible for a potential investor, especially if it is not an investor “from the industry”. This will help in terms of potential exits, making it easier to communicate their upside with respect to existing solutions to an incumbent of the industry.

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It is not always easy to listen, even if we start doing this with all good intentions. This is why it is worthwhile to learn and practice active listening, an activity that maximizes the understanding of concepts and messages that you hear
We have chosen to propose this theme in a session of the mentorship program we are offering startup members of our community. Marco Imperiale, Lawyer an Innovation Officer at LCA, spoke about active listening.

“In our language, as well as in English, French or Spanish, we use two different terms to define hearing and listening. It is no coincidence that between these two actions there is a big difference “, explains Imperiale reminding us that in school we learn to read, to write, sometimes even to create, but never to listen. “Yet listening is one of the activities that takes most of our time and is also a key element of our working and personal life“.

How important is this for a fintech and how difficult is it to listen? Communication is one of the problems that Imperiale finds most frequently in the startups he meets. “It is difficult to find startuppers who are used to putting themselves in the shoes of others or who consider listening as a key point in the success of their business. Misunderstanding is very frequent “according to our mentor.

Lack of listening can create problems both within a startup, in the team, and outside, in relationships with investors or customers, for example. Instead of blaming others, as is often common to do, Imperiale explains that we must think that “ten people receive the same message in ten different ways so it’s up to us to intervene by improving our way of listening and becoming better communicators”.

Here are three exercises to get straight to work and become “active listeners”.

• Starting from the basics, then learning over time to synthesize, paraphrase and repeat a speech or concept.
• Learn not to interrupt and focus on those who are talking avoiding external stimuli (mobile phones, email, etc.)
• Manage body language in a way that is consistent with our way of thinking.

Confronted with the topic of listening, the startups involved in the session immediately understood the importance and, above all, the impact it could have on their daily activities. Here are some comments, after a morning of “active listening”.

“Listening is a fundamental part of a business. Without doubt all the advice received today will help me better understand the needs of our customers “. (Paola Pacchiana – Europass)

“Meeting the Walliance investors on a daily basis and knowing how to correctly interpret their requests is the key to success. Thanks to the tools that Marco has made available to me I have been able to identify the errors that are unknowingly made in a dialogue “with the other person. I understood that, with dedication and perseverance, one can greatly improve one’s listening skills. At every level”. (Leonardo Grechi – Walliance)

“With the techniques we have learnt we are able to improve our communication and value proposition and I am convinced this initiative will help us to bring SalaryFits into the Italian market as soon as possible”. (Moacir Giansante – SalaryFits)

“I was struck by the quality of the teacher and the number of participants, that were suitable for an interactive session, but I was also struck by the choice of a “difficult” topic. Listening is a very important topic for everyone’s activities but is often dealt with in a trivial way. I found the session of the highest quality, much higher than the typical educational offer “. (Christian Miccoli – Conio)

“In this meeting, it was very clear how difficult listening is, due to” technological “and cultural distractions. I learned that listening is hearing what has not been said. In fact, there is a non-verbal, emotional language that can be “heard” only if real empathy is created and if there is enough openness to “learn”. (Francesco Viceconti and Nunzia Russo – Metoda)

“It was an acute and practical mentorship session; to be aware that we only listen to what we already know, is the first step to understand and actively listen to our interlocutors: all of us”. (Mattia Zara – GaiaGO)

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“Being a mentor is not for everyone. It is necessary to have an open and empathic mind to provide useful methods and tools and communicate feedback with transparency and honesty”. This is the sum up of what Raffaele Mauro, Managing Director at Endeavor Italy, told us in the following interview.

What does mentor mean to you under a practical point of view?

It means becoming a point of referral and generating a positive impact that goes beyond the circle of those directly interested (family, company), aiming at improving the entrepreneurial ecosystem.
-) The culture of “giveback”, and in particular of mentoring, is crucial in areas where innovation and creativity are the driving force of the economy.
-) One of the most interesting aspects of being a mentor of young people is the “reverse mentoring”: the opportunity to learn from those who have fresher perspectives even though with less experience.

What characteristics must a mentor have to be effective?

-) Mental openness: A mentor must be able to identify with their interlocutor’s current situation, which can all be very different from person to person: from their income to the socio-demographic background, or facts related to one’s personal life.
-) Empathy is fundamental in this context.
-) Provide methods. Often the best mentorship does not give immediate answers to specific issues, but instead provides methods, tools and approaches to effectively solve the problem. The mentee will not receive a simple answer but the best strategies to apply in the future.
-) Transparency and honesty. It is often better to provide long-term very clear perspectives by being critical of certain assumptions, strategies and behaviors, despite the risk of hurting the interlocutor’s pride in the short term. In this way, their perspectives can truly evolve whereas the same effect would not be obtained giving a “watered down” feedback

Endeavor supports “high potential” entrepreneurs. How are they selected?

These are the selection criteria:
-) Business. The success of the company in the past and its potential future impact
-) Timing. An “inflection point” in which the company can potentially take off
-) Person. The ability of the entrepreneur to be a leader in his field and to be an example for others. The most suitable mentality for giveback and a network context

What particular characteristics do the entrepreneurs identified in Italy have compared to those of other countries where Endeavor is active?

As of today, we have selected 28 entrepreneurs in Italy. The characteristics we look for are the same for all the countries Endeavor operates in: entrepreneurial skills and a company that has the potentials to scale on a global level. Right now, we are focused on selecting women entrepreneurs as they are not present in our network, while they are in many other Endeavor’s local networks.

What would the Fintech sector need to grow and become more competitive internationally in Italy?

-) Compliance facilitation and, in particular, reduced timing, alignment of interlocutors, light regulation for small fintech structures
-) Larger investments in venture capital and facilitation of exit strategies in the fintech sector (e.g., with tax credit)
-) More academic training on key skills: data science, machine learning, software infrastructure, user experience.

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