The General Managers of TicketBis, Hawkers Co and We Are Knitters, speaking at ESADE, agree that the key to their success is scalability rather than the idea behind their businesses
Traction: "The power that is used to pull something". This is the Merriam-Webster Dictionary’s definition. It is a term commonly used by Finance specialists but that is beginning to catch on in the rest of the business world — especially among start-ups. However, as Sonia Pacheco (member of ESADE Alumni's ICT and Digital Business Club) put it, in the case of start-ups, it means growing on slender resources. The club held a Round Table titled "Gain Traction or Die: Growth Hacking". The three companies at the Round Table — TicketBis, Hawkers Co, We Are Knitters — all exemplify this approach in Spain. The companies' General Managers, speaking at ESADE Madrid, agreed that the key to success lay more in 'gaining traction' or growing (also termed 'model scaleability') than in the business idea itself or even the company's funding and structure.
Luis María Lepe, the club's director, asked what the key success factor was. Ander Michelena, co-founder of TicketBis answered "Our idea was not original, it was just another market-place but we had seen what worked in The United States and did not exist in Latin America, so we took the leap. Growth was more important to us than the product itself. The key is that the business must be scalable", he said. His start-up grew from a million Euros in turnover at its inception in 2010 to €130 million today.
Francisco Pérez, Director for Business Development and Head of Business Products at Hawkers Co also said that his business idea was not new. It was, he said, "Just an e-commerce formula but the innovation lay in the business format: buying glasses and selling them through social networks and digital marketing. To succeed, you do not necessarily have to be the first to try it but you have to be the first to pull it off“. He also pointed out that in Hawkers' case, success did not lie in the product but rather in the brand. "We do not sell glasses, we sell attitude", he stressed. With regard to growth and landmarks, his firm was the first Spanish company to sponsor an NBA team — the Los Angeles Lakers. Pérez insisted this trait was part of the company's DNA from the outset.
Her fellow-speakers' experience rang a bell with María José Marín Rey-Stolle, CEO and co-founder of We Are Knitters. In her case, she left the consultancy in which she worked to replicate a craze that was already sweeping The United States five years ago but which back then in Spain was the preserve of old women and pregnant mothers. The craze was knitting. "What I saw in the US was that men and women of all ages knitted on trains, in cafes, in fact everywhere. We returned to Spain and workerd hard to replicate the US craze in Spain. We did so by tapping social networks. In our case, it was not the idea that was innovative but rather the way it was put into action. Gaining traction was a matter of necessity.
Funding and different structures
Traction is more powerful than the idea but how does one achieve it? Those at the Round Table held by ESADE Alumni in Madrid agreed that there were two key aspects of the business model: (1) distinctive funding; (2) lean organisational structures that meet the needs of the moment.
The first point was the most important in the case of Hawkers Co. “We began without funding", admitted Francisco Pérez. "We funded ourselves by designing other e-commerce web sied and from the competitions we won. We have not stopped investing and taking risks. We have a turnover of €40 million a year because we spend €39 million. Taking risks is the key to a start-up, he added. Speaking about the company's structure, he said that it was born out of chaos and necessity. "One of the first jobs we created was that of cook. Now we have a cook who comes up with marvelous menus every day to keep us all happy and help us work better. He stressed: “In our case, the organisation stems from basic needs".
TicketBis' Ander Michelena said his firm adopted a different financial focus — we started with €400,000 stumped up by 'friends, fools and family' but there were risks from the outset. It was a Roller-Coaster ride — we were always hanging on by the skin of teeth for the next dollop of funding. The same applied to staff, at least in the beginning. He admitted that "We were clueless when it came to recruiting staff. We only knew that we needed people who would complement us in technological and marketing terms. Here Michelena highlighted another feature of start-ups: sheer enthusiasm. “It is impressive how much interest we generated. Many people are willing to earn less because they like being in a young firm that is changing the whole time.
The passion for change also characterises the staff at We Are Knitters. Here, María José Marín Rey-Stolle noted: “In the beginning, we didn't seek this trait but now it is part and parcel of our selection procedures. She also said that the labour force was configured "in a top-down fashion, depending on our goals".
Ending the session, the CEOs of We Are Knitters, TicketBis, and Hawkers Co said that although their businesses were digital ones and their staff were 'digital natives', the off-line aspects had also played a key role in their companies' success.
