SHOW ME HOW YOU DRESS AND I’LL TELL YOU WHO YOU ARE

Sorry for the long silence, Mr. Blog! Looking for a job takes a lot of time, and at the moment it is my strict priority as I need to find out what I am going to do in a month, when I finish the MBA!

Last week, in our “Managing the Tech Startup” elective, Gabriel Aldamiz – Founder & CEO of www.chicisimo.com - came to visit us. His web is definitely one of the most original ones I’ve seen recently and I have big faith that it will succeed. Why? Because we’ve seen with Facebook and with other social media platforms that people are everyday more open to share their pictures and private details about their lives. More than open, they want /need to be able to send as quickly as possible details about their selves. So how could a site that offers you the possibility to show how you dress this day or how good you looked on Friday before you went to your best friend’s party, wouldn’t work? In addition the site is very simple and has a very good look. This concept will (and by the way, already is!) attract also men, that want to see good-looking girls all dressed up! ;))

Gabriel told us something very surprising… For him it is important not to have much money when starting a new venture. As he said “it obliges you to think everything twice, to really understand what you want to do”. If you have one million Euros you will spend it, if you have two millions you will spend them too… and you will probably not get better results than if you had spent half of the amount…  Think about it…!!!

The success of this kind of “social media sites” relies on the capacity to create a community around them. For this you need a good product. In other words you need a good, easy, good-looking and relevant tool to help people interacting together around a common interest. If your product is not good you will never reunite people around it. Gabriel’s secret to achieve this is to work and think everyday on how he can improve his product and offer new options to the public. He also strongly believes in the necessity to start from the bottom, little by little, so when you send information to your users you know you will be sending relevant information to people interested in what you want to send them. 

3 GUESTS SPEAKERS IN ONLY 7 DAYS… THANKS ENRIQUE

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…. 

MANAGING THE TECH STARTUP

Here I am... writing on this blog again!!! For people that know me well this might be surprising, as they know I'm not a good writer and I don't like to put ideas "on paper"... But I decided to follow Enrique Dans' elective in the 5th and last term of my MBA at IE... and, as he wanted us to do in his course about Information System we took in 1st term, Enrique wants us to experiment technology, the web 2.0 and the blogosphere,... he wants us to interact with other bloggers and see what creating a community means. After taking his course and learning so much in it in the first term of the MBA, I knew I needed to take this course to keep developing my "internet skills",... So here I am... writing on a blog again. Let's play the game and learn with it!  

In the next 3 or 4 weeks many amazing guest speakers will visit us in Enrique Dans "Managing the Tech Startup"'s elective so, I will be posting article about their presentations. 

Please feel free to comment, ask, answer or anything you want on this blog. This is the whole point of it... interact with all of you.

Guest speakers that will be visiting us in the next weeks: 

Julio Alonso (Weblogs, S.L.)

Jorge Mata (MyAlert, Berggi)

Pedro Jareño (Minube.com)

Jesús Encinar (Idealista) 

Bernhard Niesner (Busuu.com) 

David Blanco (Tractis)

Roberto Saint-Malo, Adara Venture Partners 

Rodolfo Carpintier, Digital Assets Deployment (DAD)

Zaryn Dentzel (Tuenti)

Bernardo Hernández, (Google, Tuenti, Flores Frescas, StepOne, etc.)

TESCO - WHAT IS ITS IT's ADVANTAGE?

When TESCO introduced its Clubcard, many competitors thought that it was just replicating the “green shield stamps operation” it had launched in the 60’s: a commercial operation that leaded to interesting discounts for the customers. The British media reported it was a “nostalgic step backwards”... But time proved they were wrong. Six months after the Clubcard introduction, Tesco’s market shares increased from 15% to 18%.

It is true that TESCO’s clubcard was also a loyalty program, but the big difference, and here comes Tesco’s IT advantage, was that it was accompanied and supported by a good CRM (Client Relationship Management) platform.

Thanks to its CRM platform Tesco managed to compile important information about its customers habits, preferences, wishes etc… that it used to adapt its service and serve its customers in a better way.

I wanted to finish this post by citing Lord MacLaurin, former Chairman of Tesco.

“Customer loyalty is not about how customers demonstrate their loyalty to us, it is about how we demonstrate our loyalty to them."

Understanding this was TESCO’s main element of success.  

LA CASA DEL LIBRO

In 2001 La Casa del Libro was the 2^nd bookseller of the Spanish market behind El Corte Inglés (ECI). One of its main and strongest characteristics was that it was a “cult place for readers and bibliophiles” and proposed more than 3 million references in its 12 different shops in Spain… nothing less than double the number stocked in ECI.

La Casa del Libro started to sell books over the Internet in 1995 through a very simple platform that required important manual processing. In 2002, with the partnership of Grupo Planeta, the nº1 book editor in Spain, they decided to become first players in the emarket of books and created a new platform which was more complete, secure and fast.

Unfortunately the Internet crisis didn’t allow the project to reach its objectives and only 6 months after, they were forced to face a difficult tradeoff: keep developing the platform or switch to a new and cheaper one but that offered less quality and options.

What should La Casa del Libro do?

In business it is very common to face the difficult decision of choosing between quality and “low cost” so, to answer the question, it is important to take into consideration the economic situation of the company in those times. We know from the case that Casa del Libro’s sales in 2003 were over 50 million euros, so we can assume the company had some margin to stick to the plan and continue developing its platform, at least for a few more years.

Another important point to take into consideration is the objective of the company starting this initiative. Again, we know from the case that Casa del Libro and Grupo Planeta wanted to win the battle against El Corte Inglés and become leader of the book selling market. An ambitious objective that required important investments they had, for sure, planned when they took the decision to go on with the project. Actually, in order to reach this objective, they invested a lot setting up a modern platform that had the most expensive equipment and software available in the market and hired a prestigious consulting company to design the business plan.

Like we said before, one of the main characteristics of La casa del Libro was to offer an important selection of books to its customers (twice as big as that offered by ECI) so, to keep this reputation, it was important to offer the same options in their Internet platform. For this it was necessary to have a complete platform that could guarantee high performance, security, availability and scalability and this was only possible with their initial platform and not the new, simple but less costly one.

So my final answer to the question would be to continue developing its platform and not switching to a new one even if it’s cheaper. When starting a project like this it is important to have faith in what you’re doing and to not change to a smaller and less ambitious objective after only 6 months, even more so if you have the budget to keep trying for a year or two.

I believe that changing to a simple platform could even be dangerous for the company as it would break with its image of being the shop that offers a good selection of books and could even have bad repercussions on their core business: selling physical books.

KEEP YOUR FRIENDS CLOSE AND YOUR ENEMIES EVEN CLOSER…

Jeff Jarvis’ DELL experience... 

Jeff Jarvis is a journalist and a reputed blogger that was made even more famous in 2005 when he wrote about DELL on his blog. DELL was back then the nº1 computer manufacturer in the world and Jeff Jarvis had purchased one of DELL’s very best and more expensive PC’s with all possible premium warranties, at-home service and complete care, so as not to have any problems.

This was his third DELL computer and it turned out to be the worst purchase ever. His computer didn’t work from the very first day, and the after sales service offered by DELL didn’t deliver on its promises… and left Jeff Jarvis without a computer for weeks.

Very disgusted by the situation, J. Jarvis decided to write about it on his blog (Buzz Machine) and published a first post entitled “Dell lies. Dell Sucks” at the beginning of June 2005 and then followed that post by writing others under the title of DELL HELL, giving up-dates of the situation to his followers and asking people NOT TO BUY DELL.

The Blog era…

J. Jarvis’ posts where highly commented and created a strong trend against DELL on the Internet. Important medias such as the Financial Time or the NY Times covered this story and many other blogs also followed the trend of complaining about DELL; this giving DELL very bad publicity all over the net. As a result of this DELL’s sales plummeted...

Who would have thought 10 years ago that blogs, and by extension bloggers, could have had the power to influence a multinational company such as DELL? This is a revolution. Now everybody has the possibility to talk and be heard… “Individuals are now empowered to not only voice their dissatisfaction, but will also group together to amplify their impact” (Dell Hell - Public Relations Today). This has changed how companies work on their goodwill. When in the past they only had to gain the confidence of the most prestigious journalists of specialized magazines and important papers, they have now to be as close as possible to the web opinion leaders, the bloggers. It is now vital for them to consider the “blog power”. As Jeff Jarvis said: “Now the time has come when it's the seller who must beware. A company can no longer get away with consistently offering shoddy products or service or ignoring customers' concerns and needs”, “...the customers can talk back where they can be heard”,  “can gang up and share what they know and give their complaints volume”, “they can use their reviews and complaints to have a big impact on a company's reputation and business”. 

  

What should DELL have done…

It is always simpler to give advice afterwards… and I think that not many people could have anticipated back then how a case like this affected so negatively the sales, reputation and brand image of a company of the size of DELL (again, let’s remember that in 2005 it was the world leader in PC manufacturing!)

I think that the first thing DELL should have done is to properly monitor what was said about its brand on the Internet. In this way they could have seen much sooner what was happening on Buzz Machine and other blogs (“Dell hell: nearing the end” - words of Dwight Silverman, tech guru of the Houston Chronicle) and could have solved the problem without it making so much noise. The solution was easy, replace a computer and compensate in some way the disappointed customer…

Once the problem got bigger and was commented in the media I think that DELL should have tried to get closer to their attacker. “KEEP YOUR FRIENDS CLOSE AND YOUR ENEMIES EVEN CLOSER…”. I love this expression and I think it could have helped DELL a lot. After the case was made so public imagine if DELL had reached an agreement with Jarvis to compensate him, and then asked him to help them improve their service by providing them with information compiled on his blog and then get good reviews on his blog, etc… This would have cost them very little, would have avoided this strong “massacre” and could also have benefited the brand’s image showing that DELL was concerned about its customers and how much it wanted to improve its service.

It sounds very simplistic but sometimes easy solutions are the best to big problems. The funny thing is that the same Jeff Jarvis talked about it on one of his posts: “You know what: If Dell were really smart, they'd hire me (yes, me) to come to them and teach them about blogs, about how their customers now have a voice; about how their customers are a community -- a community often in revolt; about how they could find out what their customers really think; about how they could fix their customers' problems before they become revolts; about how they could become a better company with the help of their customers. If they'd only listen”

So maybe I’m not so wrong in the end…

FACEBOOK… WHERE WILL YOU BE IN 2 YEARS TIME?

Seeing the growth of FACEBOOK in the last few years going from 0 to more than 400 million users in only 5 years it is difficult to put a limit on it. Until when and to which level will FACEBOOK continue to grow? At the moment, they’re already talking about 600 million users in 2011… and, as I heard recently in a marketing meeting, it is now impossible not to include Facebook in any media plan, or marketing campaign you elaborate for the release of a new product… Incredible for a platform that is only 6 years old!
(more stats in http://www.facebook.com/press/info.php?statistics)


At the beginning Facebook was a platform created to find old friends from school you had lost contact with… Today it is a web platform in which you can also become the friend of friends’ friends, follow social initiatives, become a fan of music bands, play games, chat or watch videos, etc…

Where do I see Facebook in 2 years? Well, even bigger I would say. Even if some privacy issues where pointed out recently, Facebook has shown that users are, like for Google, its main concern. Straight after the criticism it received, Facebook directly updated its platform to allow more privacy and to block the information you don’t want to make public…

Like Google, Facebook manages an amazing amount of information from its users… Age, sex, nationality, address, or religion… How many friends you have, from where… Also, from what you upload on your account, Facebook can even know what you like in life, how do you like to dresss, if you like going to the beach, if you’re a big partier… I could continue for hours!

This information is worth millions. With it Facebook could perfectly address very targeted advertisement to its users and, why not, become a huge commercial platform where products can be exchanged, where services can be offered, everything in a very direct and targeted way. In different words I believe Facebook could become an Amazon, YellowPages, Monster or Ebay… All in one!

Facebook has the information, the financial capacity and definitely the ambition to grow to unimaginable levels… Let’s wait and see.

I’m dying to meet Facebook Spain’s MD in out next Information Systems class… He’ll probably tell us more about it…