I knew that taking Enrique Dans’ elective “Managing the Tech Startup” was a good idea. First of all because it obliges me to do what I hate the most… Write! I am not a bad oral communicator but when it comes to put idea on a paper, I always have troubles… This is probably the reason why my writing style is so informal… I write literally as I talk!
But let’s go back to the real reason why it was smart for me to take this elective… After a year of MBA learning a lot, I felt the necessity to start doing more practical things in my electives, subjects that bring me nearer to the working world… In this direction, “Managing the Tech Startup” is a complete success. Up to now we have already received the visit of 3 VIPs in the startup world:
- Julio Alonso – Founder and CEO of the site www.weblogssl.com
- Jorge Mata – Web 2.0 Entrepreneur and expert in fund raising
- Iñaki Arrola – Founder and CEO of the site www.coches.com
More than presentations, those guest speakers came to class to share their amazing experiences with us and give us direct advises of how to do things. They all started their own company, made different mistakes in the process and now are trying to help us avoiding to do the same ones. What can be more practical than this?! Now, let me try to summarize and share with you in only a few lines the most interesting points I learned from them. More than describing their businesses (something you can do by yourself) I want to talk about the advises they gave us as entrepreneurs.
- From Julio Alonso:
Julio did one of the bravest things you can do in life… abandon your career, your work, in other words give up your confort zone to build a dream. He was a successful consultant in one of the top 5 consulting companies in the world and decided to leave everything behind and create his own startup... He remembers now that everybody thought he had “gone nuts”, that he was going to regret his decision… 7 years later he made them all wrong with the success of his ventures: first of all Xataca and then his WeblogsSL.
I hope to become an entrepreneur in the near future, so it was very motivating to hear that from an actual one.
Finally I really enjoyed one comparison he made during his speech.
“Our goal is to turn parachutists (one time visitors) into church goers”. This is the challenge every website or Internet business should aim to. In the past creating traffic was the main objective. Now it is everyday more important to cultivate the loyalty of your visitors in order to get to know them better, understand their tastes, habits and priorities so you can adapt your offer and service and also maximize the value you get from of each of them.
- From Jorge Mata:
At the age of 36 years old Jorge decided to become an entrepreneur after working in companies such as McKinsey, Banco Santander among others. In 1999 he created MyAlert and managed to raise the “small” amount of 45 million euros with venture capitalists and business angels.
Jorge Mata is now an expert in fund raising and gave us different tips:
· “Don’t give up too much of your company too soon”. It is a very common mistake young entrepreneur do. In order to get financing to develop their business they agree to give up a high percentage of their company. It is important not to accept money at any price, so you keep the control of your “baby”.
· One of the most important aspects an investor will look at in a business is its scalability. Your business idea could be very good, the team very well prepared and managed by a charismatic and talented CEO but if the business is not scalable, investors won’t be interested. It is logic… They invest in a business in order to make money (usually they want to multiply by 3 to 5 their initial investment) so its scalability is definitely the first thing they will look at.
· An investor will also look at the team. A very motivated entrepreneur is not enough; they like to see a committed team, with well-divided tasks in each key area of the business (CEO, sales, finance, marketing…)
· Jorge Mata disagrees on the fact that you need a revenue stream to be able to get money from investors. A good idea can be good enough to convince investors.
· When developing a new business a new idea, Jorge Mata recommended us to think about the process behind it, more than the idea itself. Internet is full of knowledge. You find a bunch of sites and applications that provide multiple services. But most of the time they are not interconnected. Jorge thinks that new businesses that try to link those different services together will be successful if they manage to create a process that help consumers to get a real value added with it. In other words a process that would help solving a real problem in an easy way. This is what the customer want.
· “A good board is there to protect your investors from you”. Jorge believes that it is important to have people that have invested in the company in the board. The passion of an entrepreneur could also be his end, so having “colder” people in the board, people that want results and won’t believe anything you tell them, is sometimes necessary. If you want in your board people with knowledge (experts in your business) or people with interesting network in the industry, but that they are not willing to invest in your business, you can always create an advisory board.
- From Iñaki Arrola:
“Don’t start a business with a friend! You may loose him in the way”. This is how Iñaki started… just to give the tone… ;)
For this young entrepreneur, the idea of the business is important but the most important thing is how you execute it. Again, like Jorge Mata also told us, the process behind the idea is what is going to create value for the customer and what is going to differentiate you from your competitors.
Something very important I learned from Iñaki is that you don’t need to be alone in the market to succeed. It is true that being the only player or the only firm satisfying a need is a dreamed situation… but it is not a sine-qua-none condition to succeed in business. When Iñaki launched Coches.com he had since the very beginning different competitors, but he believed he could do things differently and offer something else to the customer.
As this elective is about getting advises from real entrepreneur, I would like to share with you one advise Iñaki gave us. When forecasting annual results of your new venture, always divide the total you get by 10!!! Even after an extensive marketing research, your expectations will always be far away from reality…
I would also like to share an aspect of coches.com’s strategy that I thought was very interesting. When individual sell their car on the website they are not charged. They can advertise their car on coches.com, find a buyer, sell their car and all this service is completely free. I thought this was a mistake… but Iñaki explained that it generated traffic on the site and also helped advertising coches.com… Of course! The guy that sells his car will want people to go and check it… And the visitors will then know it and keep it in mind for when they sell their own car… This will increase the site SEO, as Google will consider the site relevant if many cars are advertised on it…
Conclusion: you cannot make money from every little piece of your activity. Sometimes giving up one part for free helps you increase and develop another one much faster…
Tomorrow I will post about one of the most interesting site I’ve discovered recently… Chicisimo.com….
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