in Innovation

Startups Vs Big Internet Companies and the mass theory

Lessons learnt

We’ve just closed down Recuperon, an Internet project I’ve been working on for some months, and when I look backwards and ask myself what is the most fascinating thing I’ve learnt, this is the answer:

On the Internet the mass of a company looks irrelevant, there must be other rules that determine how fast the organisation can move.”

That explains why Eric Ries doesn’t mention the size of the “institution” when he defines a startup, something that I actually wondered many times. So it seems that the size of an Internet company doesn’t matter to determine how fast it can move. Here is the story and my observations:

Everything began in Seedrocket Weekend (same concept as Startup Weekend), we were 5 great people in the team and pivoted 7 times in 2 days before Sunday’s presentation. We found a promising niche in the coupons market and got the 2nd prize.

seedrocket-weekend

We perceived that coupon sellers were taking advantage of customers and local businesses and therefore had unoptimized processes because of their own interests. For instance, they didn’t notify customers when a coupon was about to expire because if the customer didn’t redeem the coupon then the coupon company earned 100% of the deal and didn’t share it with the local business. It took us a month to design a brand and launch the product (working part time), and its key feature was “we notify you before your coupons expire”. 2 weeks before the launch we received an email from Groupon, “You have a coupon about to expire”. A few weeks later other sites like Letsbonus started doing it too.

When you bought a coupon, the coupon seller got your money instantly from your credit card, but it could take months until the corresponding part of that money was in the local business account. Then we thought we could share immediately at least some of the corresponding part of that money with the local businesses. Then Groupalia started doing it.

We thought the key features had to do with bringing real value to local businesses, but every product we came up that could empower local businesses processes, Groupon already had a great one.

OK, coupon sellers don’t target very small local businesses to be profitable due to their spending on sales force. So we thought we could target small businesses using a long tail SEM strategy. We did an experiment and got 10 people who downloaded a coupon by using a very specific long tail search that had less than 200 searches per month on Google and we spent just a very few Euros. That was an interesting and affordable way to start targeting small local businesses. Then Facebook launched their coupons at a derisory cost so any business with more than 200 likes could benefit from it.

Then we were told that Google is about to launch their own coupons and deals product.

Then Groupon started selling iPads 100€ cheaper than the official Apple Stores, they were selling very high quality products at a very good price. Just a few days later Groupalia did exactly the same thing.

None of the names above are startups and it looks we were all the time one step behind them even though we were being super lean – we were able to pivot 7 times in a weekend! This is crazy, every spot we found then suddenly a big Internet guy was beginning to piss there. I never thought that big companies could make decisions and execute them that fast. But after all as Eric Ries says in his book about the Lean Startup, even government can utilize the Lean Startup methodology which is the “slowest organization” I could think of.

Challenge

In the coupons market 20% of the coupons that are bought are not redeemed. People who buy coupons and later on don’t use can’t get their money back.

Solution

Recuperon was a tool that let users manage their coupons and discounts more efficiently so they didn’t miss the deals they already bought and they could also sell them in our marketplace in case they were not able to redeem them.

recuperon-home

Recuperon home page

 

My work

  • I advised the team on the need of removing waste and we tested complex features very fast by simulating them using similar technics to the Amazon Mechanical Turk. That let our software analyze coupons and make “smart” decisions.
  • I organised the project management, roadmap and milestones. We did our first product launch in just one month.
  • I executed the features implementation in both frontend and backend using Symfony2, Doctrine, MySQL, Lesscss, CSS3, Backbonejs and Requirejs.