29
oct

Author: Jorge García-Luengo

(The second part of this post will be published next week)

Product Validation can take many paths; some can exhaust your cash and kill your project, extenuate the teams’ morale, or take too long to accomplish making you lose momentum. To avoid this, start-ups must be smart, they must challenge some aspects of what is often considered “common sense” in corporate management, adopt a scientific approach to business development, and follow a business sequence.

When your product finds “fit” in the market and you have finally Validated your idea, you will then have another challenge, to Grow. It’s important to understand there is a logical sequence here: first validate your product, and then make it grow. Accepting and respecting this process requires patience, which might be hard to find in a very dynamic and passionate environment. We will discuss how trying to achieve validation and growth simultaneously will end up confusing the entrepreneur and obscuring the learning process.

Some of these aspects of how you manage resources on this early phase are counterintuitive and surprise many entrepreneurs: don’t search to be profitable, don’t put your whole business model in place, don’t spend on marketing, and don’t try to serve the whole market. If you come from the corporate environment some of these statements might surprise you, but a start-up is not a small version of a big company, it’s something else, it’s an experiment, a laboratory.

Why should you be doing things this way? Well, limited resources is why. You can’t really know how much time you’ll need to achieve Product Validation. It could take years, like for the Nestlé guys with Nespresso, or months, as for the team behind Twitter. You really can’t tell, but if you play the game long enough, you might get lucky.

You don’t need to be profitable

“What? I don’t need to make money with my start-up?” Yes, but not with your MVP. Its purpose is not to make you rich, its purpose is to test your product or service, guide you through the process of discovery and innovation that will hopefully take you to the promised land of greater utility for your customer.

You do need to design a Business Model that will be profitable once all the pieces of the puzzle are in place. But that is different from creating a profitable MVP. Your MVP can very well serve its purpose even if you lose money with every product you sell.

This means that it is ok to have a non-profitable product to test with, as long as it helps you learn and validate your product, and as long as it is profitable once the complete Business Model is in place.

You don’t need to be scalable

Some products or services can serve many people at no extra cost, and some need to be scalable if they want to be competitive. These ones will want to be able to scale, and their foundations should include those principles when possible. The question here is: Does your proof of concept need to be scalable to do its job?

For example, the usual dilemma for tech companies, especially if they are in cloud computing, is: “If I make it scalable right away I’ll have the job done. If I don’t I’ll have to redo lots of stuff.” Here you must do the maths and be honest with yourself. That’s very much all you can do. When doing your maths think of three things: how much does it take to make a non scalable version, how much does it take to make a scalable version, and most importantly, how much time do you have left. These three factors, if taken into account with honesty, will tell you what’s the right path to take.

Lets see all this through an example. We’ll use an imaginary start-up called Web Diamonds. They sell diamond jewellery online. It might look like the kind of product no one would buy on the web, but we’ll give it a try.

Their business model is based on a few principles:

  • Not having to own “brick and mortar” stores on expensive locations, having few security overheads and insurances, and needing less human resources will save on production costs, so they can sell at a 30%-60% discount compared with competition
  • Partnerships with designers to create jewellery for them, imitating the big players on the industry, very much like Zara does
  • Partnerships with financial institutions that will help finance these expensive products (even a low-cost diamond is an expensive product)
  • An attractive return policy, “no questions asked” on the first 20 days, and adjustments in size are free

If Web Diamonds wants to be profitable they must buy their own raw materials. To create their own products they must partner with designers and other craftsmen. That requires lots of negotiation, volume in purchases, lawyers, etc. Doing all that is time demanding and expensive, and Web Diamonds doesn’t have time or resources to waste. For now, they just want to validate their idea so, what do they do? They find a contact that works in jewellery and they ask him to let them take some pictures to the products. They need the pictures for the website, right? They also need the web, but hopefully today it’s quite easy to open a store online, and you don’t need programming skills to build one.

Here are some of the unknowns they want to figure out: Are people willing to buy jewellery online? What is a good discount when benchmarked against traditional jewellery? Do people want jewellery that resembles the kind of product that luxury firms are doing (like Zara does for clothes)? Or do they want original designs (like Ikea does). Will they trust the certificates handled by Web Diamonds on the products quality? What’s the price range that will sell well on this channel? Etc.

Web Diamonds doesn’t need diamonds to validate most of its assumptions. They don’t need a payment gateway; they don’t need designers or financial partners for this purpose.

If they want to test further, lets say they want to test the return policy or the distribution channels, they could even buy the products from their contact in the jewellery industry at retailer price (for example 1000 $), even if their selling price on their website is cheaper (e.g. 700 $). They would lose 300 $ on each sale, but that would still be cheaper than investing on building all the value chain and waiting for everything to be in place to start the tests.

I hope this illustrates why you don’t need to be profitable to validate your product, and also that trying to be profitable from the start, even if it makes sense in mature industries, can be counterproductive when you are testing value innovation.

You need to own your core competencies

Some assets and skills you’ll need are easy to acquire, to replace or to learn, others are not, and these might be essential to develop your business model. If this is the case, the start-up must find a way to own these core competencies. The classic example is business people with an idea that needs technical expertise.

Web Diamonds, for example, might need someone in the organization with the necessary skills to purchase diamonds, someone that knows where to find them, how to assess their quality and negotiate their price. This is the kind of competence that can be purchased at a high cost and that is key to this business and should not be externalized.

If your value proposition is supported by some competency that is expensive in the market, you need to find a way of owning it. If your website has a complex and dynamic customer experience you need a web developer and a U.X. expert in the core team, if you’re selling diamonds you need a certified expert. If you don’t own these competencies your Value Proposition will suffer.

29
oct

Venture Network @Madrid Fintech

Escrito el 29 octubre 2014 por entrepreneurship en emprender

28
oct

Customer service, support, care…. or love?

Escrito el 28 octubre 2014 por entrepreneurship en emprender

Author: Martina Cusano, General Manager at Groupalia Srl

Dear lean startuppers, you’re working on business model canvas, bootstrapping and growth hacking ….Ok; you’re all doing it right. But, have any of you ever stopped to think about customer support?  If you hear successful entrepreneurs speaking the topic comes up quite often. It seems though that none has still found a word to make it sound catchy. And as first time entrepreneurs go through the process of building businesses, they tend not to even think of customer support until they get that very first customer contact or, most probably, until they receive a large enough number to start thinking of it as a problem.

Certainly, you all lean startuppers, are focusing on building a great product and looking for customer feedbacks. You should consider customer support as an intrinsic and important part of both processes, if not the most important. More than building a great product you should actually be thinking at building a great brand. If you just build a great product, anyone could beat you at any time with a better or cheaper product. If you rather build a great brand, you are after building value for the long term. Building a great brand is difficult and requires time. The good news though is that it requires mostly attention to small details rather than big marketing investments. Think of your product as an overall experience and aim to make it magical.

It’s not the product that should be insanely great, but the experience of being your user.

Cit. Paul Graham, founder Y Combinator.

Every interaction with the client should aim to be surprising and unforgettable, but the customer support is where the magic happens. This is when the company and the product become “humans”, can listen to and talk to the client….it’s the beginning of a great relationship. In fact, this is when value truly gets created. Your customer support you should not simply listens and answers to the client but also be able to pass client’s feedback over to the rest of the company, that in turn should be able to act upon it.

In words it all sounds easy but in reality the only way to make it work is to focus on it since day 1 of the company, while you’re still building the product and even before there is any client. Giving a great customer support should become part of the company’s culture and values.

I want to share a short story of my experience with Groupalia. We started off the company in a very atypical way: very well funded, with a product and business model that proved to work amazingly well in many other markets. We got a great team of advisors who was telling us that succeeding was just a matter of winning the run for the market. We started in growth mode, with everyone in the company only focusing on growth, sales, active customers, gross revenues, margins. For the customer support, we simply hired young and willing people, which for a while worked well.

We kept growing at a pace of over 200% monthly. Yet, our customer support tickets were growing at an even bigger rate. Unfortunately, because of the poor investment we made – we basically used a gmail account at first and then a freemium ticketing tool – we were blind. For a while we kept scaling the team by hiring new people and using standardized emails on the most common issues. We were managing to close all tickets within 48h and that seemed reasonable.

Meanwhile, the Christmas season hit, we hired a few more people, we got the team to work on weekends and told them not to take holidays because after the 25th we would still had a big pile of tickets to reply back. Instead of seeing a sharp decrease in activity after the 25th, we were shocked by the actual number of tickets almost doubling daily. It was the chaos; and the most tragic part of it was that it took us weeks just to figure out why that was happening, and how to solve the situation.

Since that incident, we spent lots of time and money on building a strong customer support team but reality was that the culture of the company remained one where sales was the king, not the product experience.

Here are few things I learned through this (painful) process:

  • Make customer support part of your product building
  • As founder, make sure to dedicate at least 30 minutes daily to customer support activities (ideally you should initially take care of it entirely)
  • Get everyone in the company participate in customer support
  • Never outsource your customer service as a startup
  • Empower customer agents to take key decisions on development, marketing and sales
  • Make it a revenue center: customer service is not just a cost, it is a driver of sales
  • Always monitor closely customer support KPIs
  • Make it scalable by investing in software and processes

In fact, the list could go on and on. This is the kind of things you don’t study at school and no book can teach you. The secret is just to learn by doing it, always stay focused on it and make the entire company care for it. Just love your customer and let them know.

28
oct

VENTURE DAY 13th NOVEMBER 2014

Escrito el 28 octubre 2014 por entrepreneurship en emprender

23
oct

The press loves our startups! Alterkeys on TV and online newspapers

Escrito el 23 octubre 2014 por entrepreneurship en emprender

El confi

22
oct

AGENDA VENTURE NETWORK WEEKLIES, Oct. 23rd

Escrito el 22 octubre 2014 por entrepreneurship en emprender

The Venture Network is a weekly pitch slam is an invaluable resource for early stage entrepreneurs, a forum for engaging the entrepreneurial community, promoting your startup, and at best securing an investment from our Investors in Residence. The Venture Network is unique in that it is a very informal gathering where startups can meet investors in an informal setting over beers and snacks and focus on what’s important; building relationships. The Venture Network is a great way to perfect your pitch, get feedback on your product, and meet the local startup community.

The Venture Network´s resident panel of startup experts include:

. Peter Bryant, Professor of entrepreneurship
. Dieter Staib, Business Angels
. David Almazán, Impact HUB Madrid

The three startups that will present their project in 7 minutes will be:

Ignacio Ballesteros, María Gálvez Enseñat y Eduardo González Arias, TheLeague.run

TheLeague.run is a running league between companies composed of already existing popular running races; a new concept of enterprise coaching, focused on instilling in companies the ethics and values that can be learned by doing sport on a regular basis.
There will be 2 prizes: one for the best team and another one for the best Runner. TheLeague.run will provide with personalized equipment for each team, networking events after the races, daily activity monitoring bracelets and an online platform.

Amelia Wix – Hadar Barak, Q-Jump

Q-Jump, is developing an app platform for small to medium sized food and beverage to-go providers in order to help customers avoiding queuing bottlenecks. Q-Jump will bring together a comprehensive purchasing solution, significantly decreasing the time required to order, pay and pick up your order by enabling customers to order and pay in advance.

Ignacio Pino, Xtresia

How to destress your life? You will not be stressed anymore since the new XTRESIA ® is natural herbal remedy that beats stress and anxiety.
The natural product is a pocket spray that has been developed by XTRESIA start up, as a therapy to relief stress and anxiety.
More information
http://xtresia.com/en/

Want to pitch your venture in the upcoming events?

Register your attendance here!   www.IEVENTURENETWORK.co

 

15
oct

Meet the startups in Area 31: Pupa Planet

Escrito el 15 octubre 2014 por entrepreneurship en emprender

Pupa Planet: Insect Meal as a novel protein source for feed

Pupa2 Due to increasing global meat demand, rising prices and the environmental impact of today´s protein components in animal farming feeds (fish-meal and soybean meal), less price sensitive, more sustainable and highly nutritive new protein sources are needed.

Insect (Flies) meals have shown to comply with these requirements, by using organic recyclable sub-products and by developing fly-mass rearing technologies.

In this context, Pupa Planet is implementing and developing new technologies to produce a cost effective maggot (fly) meal, for fishmeal and soymeal replacement in aquafeeds. The product will be developed in a fly mass rearing facility in Southern Spain.

Quentin Werrie, founder of the company, telsl us more about this innovative project.

Where did you get the idea?

It’s my wife, Stephanie, who put a fly in my mind! The idea came while doing the IMBA in 2012, I was looking for a sustainable business idea when Stephanie read an article about insects as a solution to feed the planet.

I had always dreamed about setting up a company which could bring a significant impact for society and the environment, it appeared very clearly that the insects potential had been unexploited and that it could be a powerful change maker. Thanks to a friend, José Luis Ruiz de Munain who I met through the Net Impact Chapter of IE, I could explore the insects ecosystem in Thailand (supported by www.changefusion.org), and later meet with 3 highly experienced scientists in Spain (Félix Fontal, Leticia Martinez de Murguía & Delia Márquez González) who are now making part of the core team. The project truly accelerated and changed thanks to those latters. Indeed, they combine a high experience of Insects (Entomology) and Aquaculture expertise.

How does the business work?

Pupa planet will use flies to upcycle subproducts (feedstock), starting with vegetables from Horticulture sector (ex: Almeria has 1,7 Millions Tons vegetable sub products every year, as 25% of the horticulture production is simply trashed before reaching consumers). Through successive processes, larvae from flies will “bioconvert” the subproducts into highly nutritive proteins & oils (“Insects Meal”) for the Aquaculture, Poultry and pigs sector. Due to a more favourable EU legislative environment for insects a feed for Aquaculture, we will first target feed meals for the Aquafeed Industry (both a global and fast growing market).

What is the business model?Pupa

Revenues are generated through the sales (B2B) of our core product: “Insects Meal” to Aquafeed producers (those latters sell feed formulations to the Aquaculture farms). Our insects protein will be a component of the final feed formulation (and substitute to unsustainable and expensive Fishmeal). Next to protein meals, revenues can also be generated through sales of fertilizer (which is an output from the digestion of subproducts by larvae) and other chemical components (like Chitin), but this is a medium-long term objective.

What kinds of investors does the company have?

So far, the company counts on seed capital (FFF) and we received some subsidy for preliminary market research.

What is the stage of project now?

We are now looking for first rounds of Angel Investment to boost our R&D and develop first product prototypes.

What are the most excited about the project at the moment?

To see that we have identified the right strategy and that we are getting very positive feedback. We have contacted some feed companies who are open for trial of our products in the future. Also, we met authorities in Southern Spain who see insects as a powerful solution to solve the massive subproducts issue (i.e from horticulture). Last, it’s the satisfaction to see that insects are a new born industry worldwide (not only in Spain but on every continent), which could bring food security, and many jobs at the same time!

What are the most difficult of entrepreneurship

Accept the uncertainty and lack of visibility. You need to stay very patient to accept that your first idea can change perhaps 20 times before you start to have a coherent idea and product strategy. People around you don’t necessary understand this and feel embarrassed asking what you are doing after a while. In a sector like insects, where everything is so new, it’s even more true. Hopefully, our efforts of last 2 years are now becoming rewarded and recognized. Therefore we keep faith in the big potential of the project, which for sure will require a big load of efforts and hard work.

What have you learned from your experience as entrepreneurs?

  • To be extremely flexible and open minded: our story started with the idea of selling healthy protein bars in ThailanPupa3d, now we want to feed fish by rearing insects in Spain! You know where the story starts but don’t know where it can end, this is what makes it so exciting!
  • You cannot do everything yourself and you should for sure not do what your not good at: surround yourself with people with higher expertise in their respective fields
  • Transparent and frequent communication with the team is very important to keep the mood high and build a strong team spirit, which is critical. People want to see you are a strong team. As we learned during the MBA, better to have an A team, with a B idea than the opposite.

What new understanding since you started has had the most impact on your original plan?

  • We took the time to define our focus, which is very difficult especially in a new sector where applications are limitless like insects. Had we known from the beginning we would target Insects for feed, and for Aquaculture, we would have saved a couple of months. But this is part of any entrepreneurial path, I believe.

What advice would you like to give to potential entrepreneurs?

Don’t be tempted in the beginning to do everything at once, try to keep your focus on one idea/product. Later, you can always diversify. It happened to us to consider different products in the beginning while forgetting that we always wanted to do Feed from insects.

15
oct

Startups in Area 31 showcase their products at our Product Demo Day

Escrito el 15 octubre 2014 por entrepreneurship en emprender

Author: Marta Carruesco, Founder of BeeBeeBabies

Last Monday, October 13th, was the 4th Demo Day for Start Ups incubated in Area 31. Three of the teams in the Area 31 program had the chance to show their products to the audience and get valuable feedback from them.

The first to presenBeebeebabiest were Iñigo and Eva from ALTERKEYS. They involved the audience in an amazing trip through their rentable properties. The motto “where will you wake up tomorrow?”invites you to dream of a new trip. They walked us through the five W´s of their product. Their presentation included a great video showing how easy it is to book a property in Alterkeys. As explained by Eva, they base their product on trust, reliability and good prices for hosts and guests.

Then it was BEE BEE BABIES’s turn and Marta turned our garden into a market with their products. She explained how some of the clothes grow with the babies and the main challenges they had to overcome to launch their first collection. Their proposal is cute, high quality and more durable garments from birth to 24 months that the audience loved.She got most valuable feedback from the audience about ways to improve their products and communication strategy.

The last turn was for Luis, co-founder of EVOLUFARMA. He struck the audience with a strong opening statement: “We are a platform that helps pharmacies to take care of their clients”. Then, he explained that their value proposition is to help pharmacies to know their customers and retain them, offer better services, increase the value of their brand, be in the 2.0 world and ultimately grow their sales. How they achieve all this? They have software that unifies the pharmacies’ databases and gives them a Balance Score Card of the client which allows them to launch targeted marketing campaigns.

 

14
oct

AGENDA VENTURE NETWORK WEEKLIES, OCT 16th

Escrito el 14 octubre 2014 por entrepreneurship en emprender

The Venture Network is a weekly pitch slam is an invaluable resource for early stage entrepreneurs, a forum for engaging the entrepreneurial community, promoting your startup, and at best securing an investment from our Investors in Residence. The Venture Network is unique in that it is a very informal gathering where startups can meet investors in an informal setting over beers and snacks and focus on what’s important; building relationships. The Venture Network is a great way to perfect your pitch, get feedback on your product, and meet the local startup community.

The Venture Network´s resident panel of startup experts include:

. Jose Antonio Vega, Alboran Corporate Finance
. Nicola Cencherle, Gin Venture Capital S.L

. Julio Pazo, Gin Venture Capital S.L
. Enrique Conde, Effice Servicios Para la Investigación S.L.

The four startups that will present their project in 7 minutes will be:

Kiko Magán , Wannaplan

Wannaplan is the ultimate hub to create, organise or attend casual leisure plans with people you share a common interest with. It’s an Android and iOS mobile app for smartphone that spots suitable plans around you.

Jose Manuel Rodriguez , STARTUP Paraiso

For all the changemakers in the world that feels that time is the asset to manage, vacations are something that others do and networking is as essential as the the project you are working on. STARTUP Paraiso is a programme in which today’s changemakers get together to UNWIND, get INSPIRED, CREATE & SHARE in what you consider a paradise. Mindfulness, balance & people are the benefits you’ll receive when joining STARTUP Paraiso community”.

José Molina, Trajesamedida.com

Trajesamedida.com is the most customizable online tailoring shop in the world. We provide high quality suits and shirts that fit you perfectly. You design from the comfort of your home, get measured in less than 10 minutes with the aid of our video guide and receive the garments anywhere in the world.

Yoav Schachar, Booksphera

Booksphera is a content-based communication tool for authors, a place to share and interact with readers around a book. Booksphera is about building communities around stories. It brings together readers with common areas of interests, and allows them to share their reading experience with each other and with the author.

Want to pitch your venture in the upcoming events?

Register your attendance here!   www.IEVENTURENETWORK.co

13
oct

Vuelve Comprometi2.0 ¡Participa hasta el 31 de octubre de 2014!

Escrito el 13 octubre 2014 por entrepreneurship en emprender

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