Managing the Tech Startups Series - No.5 Jesus Encinar

Be prepared to get your hands dirty.

On a previous post, I mentioned that rare is a project that generates enough revenue to attract VC’s. Therefore it’s somewhat unique what Greylock and Draper, Fisher and Jurvetson are doing. As they have social entrepreneurship in their portfolio.

What has that to do with “Managing the Tech Startups”? Well, as I'm are trying to find patterns and best practices, or lessons to be taught that can be applied in social-impact entrepreneurship, the visit of Jesus Encinar from idealista.com (and founder of 11870.com, TopRural, Rentalia, Rockola o AsesorSeguros) proved to be very insightful.

I’ll quote a Twitter conversation to begin with: 

•  “- @pabesteves: “Idealista.com is a perfect example of how a non-tech start-up uses tech for business. Lessons for @foodiesquare at #ietechstartup @guerson" 
• “- @alvarocasado: @pabesteves how did they do that?? #ietechstartup”

First of all, worth noting is the fact that idealista.com is an example of how non-tech start-up (offering real estate adverts is not a tech start up) used technology as a business model. But also remarkable is the value of doing “ground work”.

When most people were talking to different real estate agencies and brokers, asking for their databases and leads, Jesús and his team had a different approach. Back to basics, baby. They walked 10.000 km around Madrid, made more than 25.000 calls, spoke to more than 5.000 proprietors and were able to launch Idealista.com with 5.000 high quality listings on day one. That proves the value of “being in the trenches”. So that how they did it @alvarocasado.

Secondly, Jesus mentioned that Idealista.com was not a starter, nor number one in the market, nor two, in fact there were over twenty websites offering the same service (real estate listings). That offers another valuable insight. “Don’t be scared when you talk to VC’s; you don’t have to be the first one in the market”.

And finally the importance of having a disruptive model. Idealista.com at an initial stage decided to go niche: only Madrid, no agencies and no new apartments, on a fee & commission free model. That strategy proved to be very valuable as they could become leaders in that specific niche and scale out. See, the importance of scalability.

From the conversation with Jesus Encinar, like always here are 5 points I consider relevant either for a tech start-up or a social-entrepreneurship start-up

1. Get your hands dirty. Especially in non-tech startups (most social entrepreneurship will fall into this category more often than not) that use technology in their business model, it is important to do ground work and “to be in the trenches”.
2. You don’t have to be the first (nor number one). If you have a good business model, attractive, scalable and you are passionate about it, don’t be afraid of the VC’s. Remember coches.com? They were not the first, and are not number one, nevertheless they are growing and succeeding.
3. Be disruptive. Offer something unique, focus on the opportunities, target niche, think long-tail, anything that will make people talk about you in a good way. Make noise.
4. Keep it simple. Simplicity can be a competitive advantage. Especially when you think of user experience and business operations. Back to basics.
5. Keep a long-term focus. If that means growing from niche to niche so be it. Business model replication, perfect. Changing a mindset or a culture, go for it. Anything that you have envisioned in the long-term keep it mind, and don’t get discouraged along the way.

If you are looking for a minute by minute recap of the session you won't find in this post. For a very thorough analysis of the session with Jesus you should go here.#ietechstartup

Managing the Tech Startups Series - Social Dilemma

"Social start-ups" vs. "Social start-ups"

Upon returning from South Africa four weeks ago, many things have changed; it has been a hell of four weeks. Geopolitically Middle East is revamping and redefining; economically the world is trying its best to crawl out of the hole, there are corporate merges, new startups popping everywhere; we have earthquakes, tsunamis, nuclear meltdowns, revolutions, riots, old wars, new wars and yet, life continues every day.

And interestingly, in these modern times of almost instant news, “prosumer” wiki-content, where technology has become an enabler, and mobility + social networks had led to changes in the mindsets of people across the globe, we take too little time to value the real important things.

Through a series of really remarkable guest speakers, a group of few MBA students, we have been given the opportunity and privilege of listening first hand from the experience of a tremendous group of entrepreneurs (thanks to Enrique Dans). And it’s my firm belief that with this unique opportunity responsibility comes to share the knowledge and try to use it to better the life of people.

Efforts to solve some of the issues that affect people (e.g.ducation, improving housing, ending hunger, curing diseases and lifting people out of poverty) in the most challenging parts of the world are critical. Those who venture are special and indispensible. Sadly, by design, they are seen as philanthropic options.
 

Colors app. They got $ 41-million dollars from Sequia Capital. They are a “social start –up” based on the premise their app builds a platform for sharing photos with anyone that has the app within a radius of 150-feet. It’s fine, kudos to Color Labs Inc. But the sad part is that “social start – up” will remain a term for geeky (side note: I'm quite geeky) technological innovation, rather than social-minded innovators working to solve issues of the world.

Yet after hearing the likes of Julio Alonso, Iñaki Arrola and Gabriel Aldamiz-echevarría, all successful entrepreneurs but most importantly, conscious leaders, I have the impression that valuable lessons can be taught to “social start – up’s" (please read: social impact entrepreneurship).

The issue of scale and funding

Scalability is the name of the game. Investors will be looking for realistic business plans that scale up. And since all funds like to support specific projects (based on scope and mission) rather than organizational structure, it is important to create business plans that consider the development of organizational capacity. Thus scalable. 

Social impact entrepreneurship needs to learn from tech start-ups. Rare is a project that generates enough revenue to attract VC’s. Odd case: Greylock and Draper, Fisher and Jurvetson that have social entrepreneurship in their portfolio. Or the likes of Ashoka and Tshikululu.

So there’s the first lesson that real "social startups" like Enke and Emzingo should learn from the best practices in tech startups. Build business models that scale and are for profit.