I made a fairly big mistake with my company at the start, I tried to segment functions in the company too fast. Maybe it was my business education, maybe it was books like “The E-myth Revisited,” and certainly it was my lack of management experience, but I tried to keep my area focussed on business development and away from technology for which “I have a CTO.”

But startups don’t work this way and the entire reason for working in a team is that you share the work and hopefully create synergetic effects (1+1=3!) in the process.

And the truth is that even as for non-technologist like myself (I am a geek though) designing products is not so hard.

I had a discussion with an industrial designer (my all time fav. people to hang around with) concerning the term ‘a perfect product.’ Her field understands the term as a product that functions perfectly, I choose to add “for the customer” to that definition.

The start of product design is always to ask: “so is this cool for people?“, meaning will they like it, do they need it, will they pay for it? I don’t think all question can be answered from the start, except the one of “is this cool?”

A very big part of entrepreneurship is sales, and as they say: you have to believe in what you sell. Easier when you already have a product, I’d love to sell Apple computers for a living, but when the product doesn’t exist, you have one of two choices: one, you design the product yourself, starting with “is it cool?”; two, you trust that your CTO can design something cool.

That’s not a problem, except for one thing: is cool something we decide or the market decides? It is of course the latter and one bullet point in an entrepreneur’s job description missing from that of the CTO’s is keeping a close eye on the market.

Therefore, product design is absolutely something entrepreneurs cannot delegate! And on that short note, I’ll leave it.

All my entrepreneurship diary posts can be followed under the tag ‘Vincent’s eDiary.’ I don’t write about what we do as a company on purpose, but you can always ask in the comments or via the email address on the right. Picture courtesy of The Esoteric Church (of all places!).

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I’m always fascinated by business models, i.e. at how entrepreneurs and companies put together services in order to make money from them. I’d call it the source code of business if I hadn’t seen the other source code in Luxembourg —legal and accounting—but arguably that’s more like binary code, i.e. 99% unintelligible.

Sarah Lacy writes about SMSONE, a ultra-local news provider in India similar to Outside.IN, a Union Square Ventures funded US-only company that provides news updates via the web. SMSONE does it, as the name suggests, via SMS. And it spreads through a franchising model, working with local entrepreneurs that pay a franchise fee and also collect a share of the advertising revenue from locally focussed businesses. It is able to do this because of something that apparently doesn’t exist in the US (but does in Europe): receiving an SMS in India doesn’t cost the recipient anything.

When reading about this, I was immediately reminded of a similar business model employed by a Dutch entrepreneur in Russia, Ms. Annemarie van Gaal, founder of Independent Media, a company that distributed Russian versions of magazines like Cosmopolitan, Marie Claire en Good Housekeeping (source). When she spoke at the Star entrepreneurial seminar in Rotterdam a year ago, she told us about how she differentiated herself from the competition (paraphrased as I haven’t got my notes with me):

The trouble with getting your magazines distributed in Russia was that you had to pay quite a lot of money (some would call it bribes) to companies that would then take care of it… badly. Instead van Gaal decided to do it differently. She would hire street kids to distribute her magazines, similar to the gold days of newspapers: the newspaper boy.

If you read Sarah Lacy’s account on Techcrunch, you’ll see that SMSONE does it similarly, hiring local kids, often without much education, to take care of distribution. Doing it via official channels is likely a nightmare over there, and centralising distribution kind of defeats the purpose of micro-news.

It’s a different way of thinking, which many of us westerners don’t have. I mean, would you entrust your products to a beggar on the street or to a street musician? Not only is it probably against the law (except if the government does it), we pride ourselves on our super-organised infrastructure, where anything from temp-workers to interns are there to provide companies with a flexible workforce, and anything from printing presses to mobile internet exists to produce and distribute your stuff.

Of course, I wouldn’t just leave you with these two examples. In the beginning of 2008, Boston Consulting Group published a study of “local dynamos”— domestically focussed companies, which use creative business models to capture value from emerging markets that are filled with challenges, like lacking infrastructure and low-income consumers. The map below shows how widespread these companies are.

Some very interesting examples are mentioned, like:

• Shanda, a Chinese gaming-company, that, in order to combat software-piracy, focusses on providing interactive services through gaming, services that are impossible to pirate. And to overcome a lack of a financial infrastructure to pay for online services, they work with pre-paid cards.
• Indian CavinKare, which sells cheap sachets of shampoo through small local retailers, while using educational marketing to teach customers how to use their products.
• Goodbaby, which targets the many 1-child families in China, who are both willing to spend more on their child than multi-child families would, but are also in need of education.
• Amul, an Indian food-and-beverage-marketing-organisation, which collects and pays for milk locally, while tracking all operations via satellite and uses ERP solutions to make analysis based on the data and gauge whether future supply needs to be increased or decreased.
• Wimm-Bill-Dann Foods (Russia), which works extensively with local partners, and has devised leasing schemes for expensive machinery to boost their production and is able to serve 280 million consumers nation-wide.

The BCG, of course, takes the stance of its customers, Western companies, and the study is mainly aimed at how multinational companies (MNCs) can replicate 6 of these dynamo’s advantages, in order to compete with them. They are:

1. Customising to local needs – which involves first understanding these needs, and then meeting them.
2. Devising innovative business models that overcome local challenges – a logical follow-up to the last point, how to make money from the info you gained.
3. Leveraging the latest technologies – meaning that these emerging economies are less burdened with traditional infrastructure and quicker on the uptake of more affordable, newer, and easier-to-spread technology, e.g. mobiles.
4. Benefiting from low-cost labor and overcoming shortages of skilled labor – there’s two ways to look at this; a local workforce will be better equipped to interact on a local level, a highly-trained workforce will be better equipped to run a business. Tough call.
5. Scaling up fast – Russia, India, China, Brazil, etc. are all giants with the promise of huge rewards when you capture them. Many of these dynamos grow quickly through both through acquisitions and building up their network of suppliers and distributors.
6. Sustaining long-term hypergrowth without imploding – this kind of follows on to the last point

Some of the Western companies mentioned, which have managed to compete on a local level, include:

• General Motors, which has adapted its luxury-liners to meet the demands of its Chinese customers, who are usually sitting in the back;
• LG, in China, which has learned that the audio-quality of its televisions is more valued by its customers, who often reside in noisy environments;
• Carrefour, which has started to work with local municipal governments in China, as these don’t meddle in their operations like local dept. stores would, and are able to provide access to prime locations;
• Perfetti Van Melle, in India, a candle/chewing-gum manufacturer, which has found local means to advertise, interacts frequently with local partners, and has adapted its products to local tastes;
• and Yum! Brands, which owns Pizza Hut and KFC, and has adapted its menus to meet local Chinese tastes, started a new food-chain aimed specifically at the market, and uses its international expertise to integrate IT, lean supply chains, and a higher level of food standards into their offering.

It shows the value of out of the box thinking in terms of reaching people, and I believe that traditional “Western” thinking should long ago have been thrown out the door anyway, particularly in light of the troubles that media-, automotive, and financial industries are going through. We are in the flux of disruptive innovation and only those quickest to grasp new technologies and ways of thinking are able to survive another day.

No shortage of lessons on that from entrepreneurs in emerging economies…

Vincent out

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I had wished very hard my sharp-minded friend Sébastien Blanc joined me as a partner when I founded environmental management software company Verteego, almost two years ago. Instead Séb accepted an offer from online collaborative tools Yoolink, which makes me think that either I’m very bad at convincing people on joining me in projects, or that Yoolink is a very special startup. Although both options are still wide opened and not exclusive at all, I like for some reason to consider it’s Yoolink that’s an amazing company and felt it would be just fair play from me to interview Sébastien on what actually Yoolink is doing for its enterprise customers.

Hello Seb, could you please introduce yourself?

Hi Jeremy. Well, my name is Sebastien Blanc and I am the Business development director for YoolinkPro, a Paris-based start-up developing a micro-sharing Platform for professionals.

Things have changed and knowledge now is increasingly on-line. We all spend loads of time googling the Internet for information about customers, about markets or to solve work-based issues. Yet when we find an interesting document we rarely do anything with it.

YoolinkPro changes that. The service allows you to save, share, tag and discuss information you find on-line. It allows you to bring the knowledge you find on the web into your company to increase productivity.
– What’s Yoolink business model?

We are mainly targeting SME. So our business model is really flexible. You can subscribe to the service and pay a monthly fee depending on how many people are going to use the service. It starts at 34€/month for 5 people.

For departments or teams within large companies we offer special plans depending on needs and of course we offer tailor-made developments to ensure the product meets each customers’ needs.
– What is YoolinkPro’s market?

We are developing sales on different markets, the main ones being communication agencies, R&D fuelled companies and public organization. We have customers in Western Europe but France is our main market. Our average customer is a 30-40 person company but we are currently implementing tests in companies way larger than that. We’ll keep you posted!
- Is Enterprise 2.0 an evolution or a revolution? Let me ask the question differently, do you think large companies are ready to switch to Web 2.0, online services like Yoolink?

That’s a good question and I think many people are discussing it in depth: Dion Hinchcliffe or Denis Howlett to name but a few. Personally I don’t think it’s a revolution per se. You can’t get into a company – large or not – by saying everything they are doing is crap and they have to change it all. They were making profits way before you existed. So talking about revolution is not likely to drive up sales.

If you want to work with large groups, I think you have to start with a small team of highly motivated users and then use them as a base to spread within the company. It’s a one-step-at-a-time approach. And I think dropping the buzzwords is also a good idea. Or to put it differently, you solve problems rather than bringing in some fancy technology. People call me back a lot more since I started talking about operations instead of 2.0.
– What is Yoolink’s secret sauce? What makes you better than del.icio.us and Wordpress altogether?

Wordpress is not really a competitor. We are working with people who are using both YP and Wordpress. Wordpress is used to communicate with people outside a company and YoolinkPro is an easy way to share information within the company. Both services can communicate with each other.

As for Delicious there are of course some common features. But it is definitely a service for private users, not for professionals. YoolinkPro offers features a company really needs that private users don’t: privacy, guaranteed quality-of-service, support, storage, etc. When you address companies, you have to meet higher standards.
– What are you most proud of at Yoolink?

Our interface. We definitely have a good interface. We often have a “wow” effect from people during presentation. That’s something we really enjoy and that is critical in users’ adoption of the service.
– What will you be most proud of at Yoolink in 1 year, 3 years, and 5 years? In other words, what will be Yoolink’s next major landmarks?

Our next landmark is a business one: break-even. That’s what we are working toward. Bringing the service to companies, solving their problems, developing new ways to work. I hope my portfolio of happy customers is going to be what I am most proud of in 1 year!
– Do you find easy to get bloggers write about Yoolink Pro?

Well if you want me to be honest I’d say it is one of the hardest things I’ve encountered. From a more general point of view it is really difficult to get visibility as an IT start-up when you’re not US-based. It’s as if being American boosts both your product and your brand…
– Is blogging and twittering most useful when it comes to building a community around the Yoolink brand?

Definitely. We worked a lot on PR and media a couple of month ago. And then we realized that a single twit or blog post from a good analyst was worth more in terms of users than several articles in major on-line newspapers. Besides, with twitter and blogs we can actually exchange with our users and not just publish information…
– How does the Yoolink team look like today? And tomorrow?

We are a small but efficient team. There are 6 people, three of whom develop the service, 1 designs it and 2 develop the Business. Everyone is highly motivated and devoted and the CEO – Sunny Paris, former founder of Weborama, a listed company – is bringing loads of energy and vision to the team. I think the team is going to remain the same for a while, at least until 2010.
– How is Yoolink funded as of today? What are its capital development perspectives?

We raised 500k€ last June from industrials and BA and we have a really low burn-rate. So we don’t plan to raise money in the short term. Once again the focus is on business development.
– On a more personal standpoint, what is your next move?

I have many in mind. The one coming the fastest though is to try running the semi-marathon in less than 1’30!

Many thx Séb.

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I once asked a friend how one of my clients should improve their sales technique for a technical product, knowing that his company is very successful at what it does. He, himself a “sales engineer” (i.e. a technical sales guy), found the question very difficult to answer.

I had to reshape the question to “so, how do you guys sell your technical products?” And then he was able, with full vigour, to tell me how they do it. It should be mentioned that market plays a strong role here; my friend works in a very niche business, while my client suffers from powerful competition.

I’m starting to loose my naiveté, as far as crowd-sourcing is concerned. This easy-to-communicate world we live in, sometimes makes me forget that, just because we can ask, doesn’t necessarily mean that we should. Technology may have changed, but people’s brains, psychology, and business principles have not, at least not at that rate.

My general stance these days is that, no matter what context you talk in with people, you should always assume a complete lack of imagination. Instead, by either spelling it out, or better, by asking the best interview-question in the world “tell me about YOU!,” and then extracting what you need from that, is much more effective.

It’s as Jeremy advised me to blog when I started here, Keep It Simple & Stupid (K.I.S.S.). Even though I have ignored that lesson at times, it’s a good one to follow in this all-too-unsimple world.

Apart from crowd-sourcing, the same, incidentally, applies to:

• selling people stuff: spell them out exactly how your product/service benefits them!
• applying for a job: spell them out exactly how you will make them money!
• and everything else.

Want to make the world a better place? K.I.S.S. it!

Vincent

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(I could have picked a more profound movie for this…). In the story of Sindbad, the animated Disney version from 2003, Sindbad and Marina go on an adventure together and fall in love. In the beginning of the film, you find out that Marina always loved the sea and… a little spoiler… in the end she chooses a life on the sea as her future as well. And, in the process, she chooses Sindbad over her originally betrothed, Proteus.

Watching this movie in bed this morning, recuperating from a very exhausting but great few days, I thought about the meaning of it all. And because this is a business and technology blog and I can’t exactly write posts about the meaning of life, I’ll write about what I think it means in a business context instead.

In sales, which by its nature of convincing people to spend their hard-earned cash on a product or service, has a bad reputation, you can either sell a widget (Sindbad) or you can sell a life (the sea). But really you should sell the widget, within the context of the life. So, in other words, the most convincing sales method is to sell an Experience.

Right now, I am sitting at a terrace in the Place Guillaume II in Luxembourg, listening to live music, and drinking my third tea. Had the context been, pardon my French, merde, I would’ve left after the first tea. Had the tea been bad, I would’ve left also. But because the context and the product/service are good, I have become a repeat-customer, at least for today.

I don’t think this is restricted to B2C only. In business-to-business, which is the area I operate in, we also sell services which have to either fit within the context of the customer, or create an entirely, new and better context for him. So, for instance, our financial trust manages certain financial affairs for customers who want to settle down their company or savings in Luxembourg and enjoy certain tax- and other advantages. The context/product combination is even more clearer in this case, as we are in fact offering a country as our product. Of course, we still have to do a good job, but we convince our “Marinas” to come here and work with us, through a big-picture sale.

I hate it when salespeople try to convince me about their product without having considered for one second what the financial or other benefit is for me. And there is an incredible amount of these negative experiences out there, which I think is the primary reason for why sales gets a bad rap. If you instead think of it as selling a cruise on the sea, or, better, an sea-adventure with Sindbad, I think you’ll generate much more positive returns.

Of course, this doesn’t always work for a cheap product like tea, where the margins are so low (actually, I think the margins are at about 70%, but 70% of 2 euros is not a lot) that you would rather sell more, more quickly, than spend too much effort on the context and in the process sell more slowly. The difference is perhaps that with a product like tea, the location matters a lot, which means that you have to spend more on rent and include that in the cost of your product.

End of thought for today. If you’re in sales, sell the experience, not just an expense, and I think your quality of working life will increase. I prefer a happy paying customer than just a paying customer, don’t you?

Vincent

(Picture of The SS Rotterdam returning home from her last voyage)

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