Managing Tech StartUp - Wrap Up

Well here we are, finally at the end of our last semester at IE Business School and this means of course the end of Enrique Dans pilot class "Managing The Tech Startup". Its been a very unique classroom experience and one that should be emulated across the IE curriculum in order to drive more practical experience and access to decision makers throughout the MBA.

As a wrap up to this course, I will be providing an overview of me, Jan Willem and Nir Yeshaya's new business concept, "Battle Chip Poker" and try and give a clear and resounding explanation as to why this course e

nabled me to change the way I view start ups and how I think Batt

le Chip Poker will change as a result.

First of all...here we are...the picture of health, creativity and entrepreneurial spirit:

Battle Chip Poker (BCP) is essentially an onine poker platform for the undergraduate college market. Now I hear the criticism already, "why poker? that's a crowded space!". But BCP isn't your average poker game. Our business begins with three simple concepts:

1) Human beings (and especially college students) are by nature competitive

2) Online poker is enormously successful when their is an incentive to play & this incentive is usually cash prizes - currently illegal in the US

3) Social gaming companies like Zynga are phenomenal at user acquisition -the have acquired over 300 million first time sign ups - but terrible at retention - only 2%.

Ok, so now you have 3 relatively smart MBA students who want to solve a problem: How do you create a highly competitive online poker game for the college market that incentives players to play without cash prizes and is able to attract and RETAIN users more effectively than the competition. Our answer is simple.

Team Play

"College students are at a fundamental stage in their growth and maturation. Psychologically, the need to identify with a group is strong, thus the massive turn out for college sporting events, pep rallies, fraternity pledge weeks and social gatherings. Previous attempts to build “social games” have missed the mark because their products target individual users. By offering a team based poker game, in which players enter tournaments as individuals, but win prizes and score points ON BEHALF of a team or society, players become an integral part of a unique online group comprised of their own friends and colleagues. At BattleChipPoker students are playing for themselves, and their team, giving them a stronger incentive to win." -Extracted from BCP Business Plan, April 2011

BCP & Managing High Tech Start Ups

When I first began this course I was focused on raising money for this new venture. I felt the internal drive to sell, succeed and conquer and I wanted to make it happen fast. However, having listened to numerous entrepreneurs, venture capitalists and start up gurus throughout this course, I began to shift my long held perception that "cash is king".

Now don't get me wrong, I still love the power of Mr. Green and I fundamentally believe that raising money successfully is ultimately a key step in the growth of most businesses. But my idealogical shift occurs not with regards to whether raising money is a good thing (it is!) but when to raise it. The concept of Smart Money, given by investors who can provide you with more than just the money itself, is critical to me now. As is the idea of going our and building this business ourselves (without outside cash) and then raising funds once the concept has been tested in the outside market place.

So now the question goes like this, "ok Simon, if someone hands you a check tomorrow, will you turn it down?" and the answer is NO! However, I will think long and hard about the amount of time that is going into fundraising for the business versus time spent actually building it.

Thats a wrap!

Enrique pulled of a great coup in offering this class and I sincerely hope that IE Business School uses this as an opportunity to provide the budget needed to get more international business leaders into the classroom. This kind of hangs on advice is critical and important.

Best Regards,

Don Simon

Rodolfo Carpintier: Internet Investment Guru

Saving the best for last, blog master Dans introduced today's class to internet investment guru and founder of Spains only incubator, Rodolfo Carpintier. Going well beyond a standard presentation, Mr. Carpintier laid out a clear strategy for analyzing potential internet investment opportunities. This blue print for investment success looks as follows:

Y1) List the owners / key personnel and equity stakes / Revenue / Traffic / Marketing

Y2) Repeat

Y3) Repeat

Y4) Repeat

Y5) Revenue / countries / users

SMART MONEY 3/6/3 Month Strategy

DAD uses a unique oversight strategy that involves a complete business review at the 3, 9, and 12 month mark during year 1. By leveraging this strategy DAD aims to be a strategic partner and advisor to their portfolio companies without becoming an additional burden to them. Effectively working out the kinks without killing the magic. Love that.

Two Types of Businesses

1) Innovative: Young managers with good brains and NO experience

2) Copying Business Model: Experienced manager who can grow something themselves

"I don't look at the figures (business plan) they are never right...."

"When they ask about the competitors, do they know who the competitors are?"

"I want to see how they get to the Sales figures."

"Show me WHY people will pay."

"I haven't found anything the reinvented e-commerce.That's what I'm looking for."

Minube Rocks!

Now here is something I feel uniquely qualified to comment on...a new alternative to trip advisor and other travel recommendationsites. For years I have struggled with the lack of relevant information on tripadvisor and have had to sort through thousands of reviews on hotels, restaurants and night clubs that were posted by people that have nothing in common with me, and are not qualified to provide recommendations on the type of restaurant and lodging that I am typically searching

for. Minube intends to change all that by developing a new kind of site, instead of helping travellers to answer questions about a trip they have already planned, Minube seeks to INSPIRE travellers and provide informative suggestions about where they would like to go.

To understand how Minube's "inspirational" platform works, founder Pedro Jareno starts by taking us through the process of the typical trip planning lifecycle:

1) Inspiration 2)Planning 3) Comparison Shopping 4) Booking 5) Travelling 6) Sharing Memories.....

And its these memories that ultimately inspire the next cycle of travellers to go to a particular destination!

Targeting

Next Jesus walked us through the difference between a "Tourist" and a "New Traveler"....we all know the tourist, our moms and dads, who go to a travel agent and have a "vacation". I don't do vacations, I want a life time of experiences and I search them out....I'm a new traveler.

Business Model

Ok, back to MBA mode, lets talk about how these guys make money. So you have a site where people go learn about new inspirational travel destinations. They research where to go, what to see and what to do when they get there (accommodation/restaurants/bars/clubs etc). All of these unique segments provide extremely targeted promotion and advertising opportunities for local partners. The company builds agreements with partners and then in the sponsored section of the website, provides its own "minube" travel recommendations from which they then receive a commission.

[The following screenshot advertising Minube's quality programme acts a registration page for new partners.]

Technology

So what else, well the company is doing most of its development in house, and (as is clear from the website) has a strong in house designer.

So the BILLION DOLLAR QUESTION:

Does this site fix my problem with Trip Advisor? ....not yet. I still cant find recommendations for people like me. But its taking another shot at influencing my buying behaviour in a comfortable and unique format that I find appealing.

Idealista CEO & Founder Jesus Encinar

Straight talk from a guy who knows where he is going....and has learned from where he's been.

Idealista, one of Spains largest and most well known real estate search engines has become a major player in Spain's online marketplace. Founder Jesus Encinar spoke at session 5 of Enrique Dans compelling "High Tech Startups" class and provided valuable insights pertaining to setting up and launching a new startup online.

1) How did Idealista build their initial database - inventory build

a) Went through the newspaper and called 25000 prospective sellers offering them a free listing on idealista.

b) Used initial 25K ads to create a highly niche solution to search for real estate only in Madrid. Their idea was to offer a high quality search experience. Restricting initial development to the Madrid market and then expanding slowly city by city allowed them to grow at a rate that allowed them to maintain a high quality experience.

2) So now that the initial inventory was built how did they continue to build traffic from both buyers and suppliers?

a) The company invested in a unique advertising campaign in newspapers, making clear that using Idealista was better than traditional classifieds and poking fun at this antiquated real estate selection process.

3) Designing a website is like building a road sign, you only get a users partial attention, so make sure they GET THE MESSAGE! An image from Jesus' recent trip to India shows that having too much information and mixed messaging severely curtails effective messaging on your site.

Apologies for the poor pic quality...I need to buy an ipad2!!!!

Chicisimo: Wife inspired / Women approved!!!

Gabriel Aldemiz has beens searching for the right idea to start up a company for many years. Chicisimo isnt his first entrepreneurial endeavor (in fact its his third) but its certainly the one with the most sizzle.

Here is a professional who understands the old adage - if at first you don't succeed, try, try again! He's building a new way for us to connect with the latest in fashionable trends, online. Today during Enrique Dan's "High Tech StartUp" course, we hear from Gabriel about how he became inspired to build this business and what it took to launch this fast, up and comer in Spain's online technology market...

Lets find out what Mr. Aldemiz had to say! Read on to learn more.

1) Initial start ups focused on music, blogging and everything in between. He cut his teeth in Silicone Valley, working with top startups and raising money from well known VC's like Sequoia Capital.

2) His wife makes him aware of a new trend...young women who take pictures of what they are wearing and post them online to share with friends. Opportunity spotted, Gabriel jumped into high gear and began to analyze this bizarre but interesting new trend. He found a large audience of people going online to see how these young women were dressing and decided that this was the perfect place for an internet entrepreneur like him to jump in and build a business around this online fashion phenomenon....and Chicisimo was born!

Tips and tricks from one of the lords of global capital raising....

Jorge Mata - Serial Fund Raiser and Entrepreneur

Mr. Mata provided a practical and realistic review of the curren

t money raising eco system, defining specific requirements for successfully funding ventures and detailing the pitfalls of getting into bed with new partners. The following is a brief review of this professionals key points made during the second installment of Enrique Dans IE Tech Start Up class:

-Give away 30% of the company in angel round

-Try to control at least 60% of the company

-Valuation has to double or triple but pre-money valuation has to be on target to get the founder a strong a worthwhile exit

-Don't invest your own money

-Investable companies: Scalable / strong management team / real commitment / disruptive / process driven is more exciting than another platform....updating 19th century processes for the 21st century

-"Grow them, make them big...and then do something else."

-"Money is green everywhere, I don't believe in the smarts of investors...its all pretty much the same."

-The recent world economic crises has led investors to think again about the benefits of investing in the unregulated world of technology startups....they like what the see! Expect an uptick in tech startup investment from angels...(ok I paraphrased:)

-"I like my lunch with wine...and I don't want a sandwich...I want at least two plates." Yes...by far my favorite quote of the day.

-"The web is a lot of know how and a lot tools. But they are mot connected."

-Selling a company is like opening a watermelon....if you open to early its tastless, too late and its worth nothing as well.

-Its little to do with the technology, its how well you solve the problem.

....Thats all folks ;)

Tesco's Competitive Advantage

Tesco, one of the worlds largest retailers with 1878 stores worldwide, achieved market dominance through a series of technological and business differentiators.The Tesco competitive advantage lies in one simple truth....innovation through technology. In a nutshell, the company has a long tradition of installing the latest procurement practices, investing in better ways to retain customer loyalty (via the club card program) and investing in one of the world's leading online retail stores via the 60M (GBP) http://www.tesco.com/. These differentitiating factors have helped to ensure Tesco's market dominance in the UK supermarket and grocery space. Today's blog entry will analyze each of these competitive advantages and look at ways that they have used them to combat and compete with other supermarket chains both in the United Kingdom and beyond.

WEB PRESENCE

The Tesco web presence is among the most profitible in the world, generating over 360 (GBP) on the 60M invested in it. Tesco.com is used to buy a variety of goods that move well beyond grocery items. One can now use Tesco.com to purchase electronics and home goods in addition to traditional perishable products such as groceries.

BI - Business Intelligence & Loyalty
The Tesco club card program is among the most well regarded loyalty programs in the world. The program is essentially designed to analyze consumer buying behaviour and then offer custom deals that meet the specific unique needs of the consumer. The program works as follows:

1. Customer signs up for program in order to recieve discounts on goods
   
2. Consumer buying behaviour is analyzed using sophisticated business inteligence software
   
3. An email or letter is sent to the consumer containing discounts on the goods that consumer typically buy and SUGGESTIONS on other products the BI system believes you will like given your buying habits as compared to other like buyers in the market.

This kind of sophisticated system adds RELEVENCY and VALUE to the consumer loyalty program. These factors are key for low margin businesses that require innovative ways to retain customers and keep them shopping at Tesco as opposed to other competitors.