Yesterday we had Jesús Encinar, one of the most famous and successful entrepreneurs in Spain. His speech was very interesting because he faced critical issues related to found raising, value proposition, network effect, and international expansion.
Found raising
When Jesús decided to start idealista.com his name was unknown among VCs and entrepreneurs. As such he encountered a lot of scepticism on his ability to implement his idea. However, when he hired Anderson Consulting for the implementation of the technology he noticed that VCs were more willing to invest on the project. He finally was totally unsatisfied on the Andersen's performance and he had to rework completely the technology implemented. However, without the Anderson's name included in the business plan he probably would never have convinced a VC to invest on his project. The take home from this story are that (i) technology is core and you should keep the development in house, (ii) sometimes in order to achieve a goal you have to be flexible, give away something and go for a suboptimal solutions.
Value proposition and network effect
Jesús told us that we should not be discouraged on the fact that an industry has already a lot of players. It is normal to have a fierce competition in an attractive market. You should think what you can do in order to differentiate your service and make it better than the others. When Jesús started idealista.com he knew that the issue was on how to create a database of offers. He could copy advertisements from the other websites but doing this way he would not differentiate his service. Moreover, he noticed that the advertisements had very poor quality and were mainly generated by intermediaries such as real estate agencies. He decided that idealista had to offer high quality ads generated by a good mix of privates and agencies. Then he started filling the database of idealista with real street ads all around Madrid. This allowed idealista to offer a unique and high quality set of real estate ads. Also in order to create a high quality service, idealista started its operations only on Madrid and slowly expanded in the rest of Spain.
Internationalization
Not for all countries international expansion is a good idea. In some countries you can encounter more difficulties than others. Idealista decided to invest two years of its revenues from operations into the expansion project in Italy. Unfortunately Italy became a place with the toughest competition for real estate ads websites. When budget is limited a decision to expand in one country prevents the company to expand in others. As such, it is very important to asses in which country is more convenient the expansion in term of profitability, competition, and likelihood of success.
Jesús also stressed the concept of the interface. It should be extremely easy to use and designed for someone that pays only partial attention to the website. Simplicity is difficult to achieve; it should be carefully designed and constantly pursed during the whole website lifecycle.
Thank you Jesús for all your ideas listas!
No comments:
Post a Comment