Forget whatever they told you in school, at least the tech part

According to our guest speaker Pablo Larguía, founder of Bumeran and most recently La Red Innova, some of the stuff we've been talking about in this class and were proud of like choosing the right financing partner and that you don't always need that much of money, are all bullshit. Since this guy was able to sell Bumeran for a few pesetas, given that in Spain they really understand about bulls, and since he wants to do business in Brazil where I'm from (who doesn't wanna go there???) I think he's absolutely right.... jejeje

Before we ruin this 12 session course apart, let's comment on what he talked about and see if by the end of this post his comments still make sense. First he talked about how he comes up with ideas, where basically he thinks about how to link customers to what they need, making sure there's a revenue stream somewhere and using the right platforms to promote the idea. To have an idea of the model he draw on the board, please refer to my attached high resolution model prepared with advanced software that follows:

Interesting to see here is that Pablo seems to create his ventures based on models that already exist in the real world, and in the case of La Red Innova he is using the web as only a part of the business, as a channel that supports an event that occurs in the offline world.

Pablo gave us some recommendations, some shared by other speakers (don't throw everything away), in case we decide to become entrepreneurs. They were the following: to generate enthusiasm, and to be a good opportunity for all the ones involved; to look for alternatives to deal with uncertainty, and in startups be prepared for that; to be able to sell your idea in one sentence (the good and old elevator pitch.... wow stop, I wanna get out); to work in teams, he doesn't believe in an one man show (neither do I); and to respect your customers and competitors (my ex-employer used to say that, whether customers and competitors believed/did the same... that's anoooooooooooother question).

Last, Pablo talked about selling Bumeran to Terra and getting extra pesetas. After starting in 1998 and being the first job portal in Latam, yes, he believes in first mover advantage (so does my ex Strategy professor Luis Diestre), Bumeran was approached by Monster, a Bank and Terra. According to him he wanted to do the deal with Monster that was in the same industry and both were working together and learning (ops...CONTRADICTION... who said you don't choose your partners???) but his partners ended up opting for closing the deal with Terra for other reasons (that I will not mention, since I think you know enough already). Here he also gave us some advice when dealing with investors, such as creating a demo that they can see and give you feedback (if you pick the ones who add value obviously, GOT YOU AGAIN!!!!); allowing them to know that you're talking with others as well and give them a sense of urgency (read my post about Roberto Saint-Malo and toss a coin); remembering that in the end VCs are people with incentives behind (I also pray for them everyday); and not taking too much time to close a deal you think is good (they change their minds fast).

Well chicos y chicas, that's it. I think this was a good session to contrast with the last one. I hope Fabio Gastaldi doesn't write anything that disappoints our next guest speakers since we'll have our very last session this Friday, even though in Spitznagel's mind we will be managing Tech Startups in Semana Santa.

Saludos, tapas y vino a todos ;)

Finally I've met a VC

After 12 months in IE, I finally met a venture capitalist in flesh: Roberto Saint-Malo from Adara, Kibo Ventures. Actually, if once in a lifetime you intend to come to a MBA in some point you'll hear about angels, VCs and bootstrapping, which are just fancy names for either put your own money or get it from someone else. Of course there are other financing options for your business like going to a bank or seeking government aid but these three are the ones I've listened the most.

Roberto talked about the things he judges important in selecting the businesses he invests in. He mentioned about understanding what people have done in the past, and not only what they have done professionally but also their relationships with others. He mentioned that selecting a business to invest in is more an art than just science: "A 22 year-old can have more clarity on where to go rather a very experienced individual". Also, Roberto commented on how important is to the business seeking for investors to do their homework and look for someone who can add value. This is a very important point in my view, while you're giving away from 5-60% of your company when you get external equity funding you also have then running the business with you and that can be a powerful relationship that a bank loan wouldn't provide you.

Roberto commented about the selection process and the way he distributes his investments. One of the things that differentiates him is the deal time that he tries to conclude in 8 weeks versus a industry average of 4-6 months. During this time both sides should present their proposals; create a feasible growth plan for the next 6 months and reach a final agreement. He also invests not only in proven business models, but also in early stage businesses, and international opportunistic ventures as he gave us the example of a broadband company. The more the business is in an early stage the higher his share of the pie given his efforts to build the business.

An interesting question that someone asked was if VCs intention is to make the business grow and sell it. Roberto replied and said that while this has occurred many times there are ways to avoid it. According to him, being open about it and putting in the table your intention not to sell it is the best way to avoid this kind of situation and there are other options such as being paid dividends for example. This must be a really tough decision, from the VC side I'd prefer to take a good valuation opportunity and cash it all in at once but from the business side I might have so many opportunities to go and the resources in place that selling might not be my first option.

Well, that's it, another sunny Sunday in Madrid, last week of classes and with all those classes I wonder whether to start my tech startup or keep looking for a job. I'd better stop going to these classes the more I go the less I wanna look for any jobs....lol

Getting Customers and the Product Lifecycle @ ReviewPro

Last Wednesday we talked with Ronald Friedlander from ReviewPro, an online reputation management software for hotels. In this lecture that focused in getting customers and the product lifecycle, Ronald talked not only about this but also about his motivations to become an entrepreneur, the opportunity he saw, the idea, and its implementation.

Ronald has been involved in other startups before and even though he has friends running new ventures he says that becoming an entrepreneur is not as easy as you might think and that many have good ideas but are not prepared nor take the steps required to implement them. This is very true since if you want to make some money in the beginning you better do most of the things yourself and smartly, also execution is what makes your plans come true.

Ronald took a step that most of us in a MBA have thought of which is to leave the corporate world and start your own business. While not every time this is necessary like we've seen with the guys from Todotaladros, who still act in the large enterprise world, this sometimes is the only way and Ronald asked us: have you guys seen a social network owned by a big organization? Well, even though Google and Facebook are big now they still try to keep the startup atmosphere alive. For how long they will sustain this, oh that's another question.

I was talking to some colleagues here at IE, and most of us agree that the idea to create an online management reputation tool for hotels was really powerful. People not only book most of their hotels online in tools such as Booking.com or Agoda, but most importantly read what other visitors have to say about their experience and are willing to also provide theirs when they come back from their trips. On the other side is in the hotels interest to manage their reputation and to improve their capacity utilization with this information and that's when ReviewPro comes in. I know everybody is gonna mention it but I couldn't avoid putting here a quote by Warren Buffet, Ronald mentioned:

"It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently" Warren Buffet

Since in 2007 there was no tool able to show in one place what people were saying about the hotels they went to, Ronald joined two more guys and started ReviewPro. Apart from investing on his own they also obtained external funding and even funds from a government grant. This was actually the first time someone mentioned about getting funds from the government since mostly we talked either about bootstrapping, angels or VCs. Personally I was giving a look at the Brazilian National Development Bank, BNDES, and they offer very interesting funding opportunities compared to traditional banks.

Ronald talked about his obsession with the product and how that helped ReviewPro to get their first clients and still helps them today with constant product innovation. For that he guaranteed from the beginning that there would never be lack of resources to manage and develop the product. Here I think it's important to balance both marketing trends, your competitors and what you do internally to make sure you're adapting and creating value. A article that I like about this topic is Theodore Levitt's Marketing Myopia, that discusses the mistakes some large corporations did in the past in product development by looking only internally.

About client acquisition Ronald mentioned that they never gave anything for free since in his opinion that destroys the value of the product. There's a lot of personal effort from him in getting in touch with large accounts that have account managers and they use telemarketing for smaller accounts. One thing that helps here is that for being an online tool in as much as 5 minutes anyone in the company can show you what the product does and mainly that more than just showing how your hotel is rated, the software does semantic analysis what allows hotel management to understand what their problems really are. According to Ronald the real value is not in a business plan, but on what you can do for your customers, and here they can show it clearly.

Well folks, that's it for this class, unfortunately it's all coming to an end and tomorrow I won't be able to go to class but I hope these memories can help you readers as much as their helping me on my potential venture thoughts.

Sharing your travel experience @ Minube.com

This Monday we talked to Pedro Jareño from Minube.com, a website that explores the social aspects of travelling and that believes that a trip doesn't begin with planning but has to take the inspiration and sharing experience into consideration.

Pedro compared Minube with other travel websites such as TripAdvisor, where indeed you don't see people talking about the places they've been and liked and the first thing you see are the tools to get your flight and hotel. Moreover, he said that nowadays is all about conversations and you're most likely to trust a recommendation from a friend rather than from a travel agency. Well, I agree that most of my last trips were extremely influenced by what others have said to me.

He commented about the business model, saying that revenues come basically from three streams: contracts with government tourism offices; commissions for sending leads to other sites such as hotel and flight booking; and most recently contracts with the private sector in promoting hotels, apartments, restaurants, etc. Relating to the expansion to Brazil I wonder what they plan to emphasize there since given the World Cup, getting money from the government right now is a tough thing to achieve.

The guys at Minube strongly believe in the importance of their content to differentiate themselves. With a small but growing team of 20 people they have a community manager that helps to make sure that the content provided by users has good quality and that's key since users generate great part of it. Talking more about content Pedro mentioned about how interested they are in having a tool that can bring content from users social networks to Minube that can add to the content they already have.

I found the concept really interesting and I couldn't resist to post a destination that I really like to visit in my city when I'm there: Parque Estadual da Cantareira. It really adds value when you can get tips from people who have been in the place before. They're really different from the kind of thing you'd get from a travel agency since most travellers have no incentives to support their opinions, they just say what they think. In the end I think websites where you get price quotations are all the same, actually even the quotations are the same everywhere, and the content like you get in Minube was mostly in travel forums only, in my opinion they had a great insight in putting things together.

And I thought nobody would buy a tool on the Internet

Chicos y chicas, this last Friday we had a conversation with Alberto Torrón who created the website Todotaladros.com where you can buy drills, vacuum cleaners, meters and all sorts of professional tools that some really need and know how to use and others just find sexy to have at home and show off to their neighbours.

The idea came from a necessity, when the wife of one of the founders needed to get a job and contribute to the social insurance to get her retirement. Coming from a small village in Spain and seeing how expensive professional tools were, two guys then decided to create an online store in April 2010 after testing the model in eBay for a while. I have two comments here: first this reminds me of the Latin America culture where most of the business actually come from the necessity to get a job, my grandfather for example immigrated to Brazil and started selling fruits and then bought a gas station that he runs still today. Second, tools in Spain are really expensive, another day I had to buy some new light bulbs for my apartment here and while in a ordinary ferretería (where they sell this stuff here) one bulb was EUR 5 in the next store, a Chinese one, it was half the price (where do you think as a poor MBA student I got mine?)

Another thing that I liked about Alberto's approach was how specific he is. He has four different websites for selling tools and is very specific in each one of them. While this might sound a little bit weird since you have to analyze each store separately in the end the customer knows exactly what to find in each one of them and another lesson that I have from my web media class is that the more specific you're in Google Adwords the less you have to invest given the lower competition for your keywords. If you don't have a clue on what I'm talking about look for a Google Adwords Tutorial on Google search, if you plan to open an online business you'll end up having to use it one day.

Alberto commented about his purchasing approach that in my view is his most strategic element. He goes all over the Internet looking for the cheapest tools to buy, including international stores and resells them through his website. He is not only price competitive but fast, reliable and keeps things simple in his website using a open source platform that has the functionality that he needs and it's for free. According to him most physical stores in Spain don't have a website and buy only internally what makes them sell for more. He also commented about their approach of saying "Sorry, we don't have it" instead of the British approach "We'll look for it doesn't matter what" that he personally follows. Actually in my search for the light bulbs, besides having a higher price, the store I went to had only two bulbs while I needed four (guess what they told me?).

Well folks, this is a bit about the lecture that we had. I have many other things I wrote down in my paper notebook (I guess I'm the only one taking notes in a piece of paper in this class) but since it's a Saturday, and tomorrow will most likely rain, I'm now leaving to Parque del Retiro to debate by the lake the other take aways from this session, nos vemos allá!

Looking for an apartment? Idealista.com

Well, my dear readers, another post directly from IE Business School! First of all, let me be careful with my comments since I realized our VIP professor Enrique Dans is a frequent reader of this blog and is closely looking at everything that is going on here, jejejeje (that's how you laugh in a blog in Spanish).

Unrelated ideas apart, last class we had a talk on business internationalization with Jesus Encinar the founder of Idealista.com a website where you can find and advertise real estate. Jesus talked about the opportunity he saw when seeing all those ads in the newspaper that had really poor descriptions of the things being offered. He admitted not being the first one to enter this market and in his opinion before getting in a market where there's no one, think twice!

Jesus approach is very customer driven and instead of promoting real estate all over Spain he decided to specialize in Madrid first, the largest city in Spain with a population of more then 3 million inhabitants in 2007. He started not charging anything as most online business do to create a brand image and then expanded into other regions in Spain, Barcelona and Valencia and after to other countries close by namely Italy and Portugal.

He talked about the challenges faced at that time when services such as hosting and development were not that developed with few players and he had to spend 1 million euros in a platform, something that you can rent today for as low as 250 euros per month. I must say here that in a business plan that I'm developing in another class for a web development agency we also decided not to offer hosting services since nowadays there are so many players offering this service and to add value in this market is almost impossible.

Talking about internationalization, Jesus strategy was to be in places where competition was low and that he could be close to the business. Italy for example consumed all the EBITDA for three years but since it's close to Spain didn't require a strong local presence. The same applying to Portugal where actually Jesus doesn't even has an office running everything from Spain. Another interesting thing that he mentioned was not having different companies and investors in each country, concentrating all in Spain where there's no need for complicated accounting and price transfers.

That's an interesting session and made me think about a campaign that I'm working on in another class that's for the Argentinian market and that we are running everything from Spain. It's amazing how with the Internet you can have a business in a country and run it from another but I agree with Jesus that you still have to manage the business locally and even though he travelled half of his time in the beginning he still travels once a week to the international locations where his business is.

Last, my question to Jesus was why to go to Portugal after working in Spain and Italy that are five times the size of Portugal. He replied saying that the question was why not to go given that there were clients in the border of Portugal that were looking for real estate there and given the proximity and extra cost not working out this opportunity would just give room for another competitor to take it.

Well folks, hope you enjoyed this post, I'll now prepare for my next lecture tomorrow with Alberto Torrón from Todotaladros.com. Meanwhile I'm leaving my apartment here in May, anyone interested? Or should I just tell my landlord to put it in Idealista.com?

Share your style at Chicisimo

This Monday we talked with Gabriel Aldamiz-echevarria, and I thought my name was long, from Chicisimo, a place where girls can share with others what they are wearing. Gabriel was a very technology development guy and it was when discovering Popsugar and SugarInc that he realized how services for girls were still unexplored, mainly in Europe.

He had no idea about the business model and this is still a problem that he faces on his website. He believes, though, that this is not an issue if you can provide value to the customer, in his case the girls. Well, between you and me we know that most Internet millionaires actually never had a business model and sold their businesses for millions and they were even a step back most times simply with an idea without providing any real value.

Our talk should be focused on PR so let's talk about it a little bit. He mentioned about belonging to a community, and starting from the bottom. You don't really have to go to the Wall Street Journal right in the beginning while without a brand you'll be competing with thousand others. He said that a good way to start is to get close to bloggers that like the kind of things you work with and once you become important and go to mass media, try to know not only the owner of the media but the people working for him. He gave us the example of the Wall Street Journal where he knew who was writing about fashion there.

Some of Gabriel's comments were similar to some I found in an article on Inc.com they say that it's critical that people know what you're doing but sending emails out to everyone won't help (look at what you read in your inbox). It's important not only to create a relationship and going to events and trade shows, but also to add value as Gabriel suggested. By that he meant knowing what journalists will be writing about, adapting your content and delivering value that would be harder for them to generate (don't you like when someone makes your life easier?).

I guess that's a summary of the main points discussed and keep in mind that PR if done properly can be as good as going to TV and in most cases: it's for FREE!!!!