- Jordi Ber – CEO of Habitissimo
- Alfonso Villar – CEO of Playspace
Faraday: When and how did the business idea come about? How much time did you spend and how did you use it from the conception of the business idea to the first sale?
JB: The idea came from my own personal experience and from the problems I encountered when undertaking renovations on a personal level. After completing a Master’s degree at MIT, I returned to Spain with several business ideas. I created my first company in 2006, due to lack my of experience I made many mistakes. A few years later I co-founded Habitissimo, this time with an equally committed partner. With our savings of € 20,000 we created a prototype and bought the first databases. It took us 6 months, from the moment we had our first working the website (in 2009) to our first client. If I were to start over I would apply the Lean StartUp methodology (by Eric Ries) to be more focused on the client from the very first day.
AV: I personally am a big fan of video games. I realized that there are many people with an interest in traditional games such as parchís or the oca and at the same time interested in online and social games. The idea of moving these traditional games to an online and social platform like Facebook or Tuenti arose from my desire to help users play in multiplayer mode and thus play with several friends at the same time. When we founded the company it took 6 months to launch the first game. It has been a very rewarding experience, with continuous learning.
Faraday: Were you focused on a possible sale from the beginning?
JB: From the moment you decide to let investors enter your company all your decisions have to come back to the profitability of your company. In other words, the final sale of your company. Investors want to invest, but they also want to exit that same investment at some point. At the beginning we opted for bootstrapping (i.e. using our own means and very low levels of external financing), we have progressed through stages slowly, solving unknowns and identifying the financing needs that are appropriate at each stage. With less money you tend to think better.
AV: When we founded PlaySpace we wanted to have a project that demontrated high and sustainable profitability. As we’re currently enjoying very positive traction signs, of course, we consider a possible sale to a multinational such as Zynga or Electronic Arts. We understand that investors are not NGOs and seek profitability. Our business needs a lot of volume at the user level but once the volume was obtained we started to monetize our investment accordingly. However, in the beginning stages we needed a extensive funding to attack the market with force. Another important factor was the frequency and speed in taking games to market.
Faraday: Which metrics are the most important for your business? What kind of control and actions do you take based on them?
JB: Our growth originates from the application of various online marketing strategies, especially SEM (Search Engine Marketing: paid traffic in search engines). Our business on the one hand is aimed at individuals and on the other hand at professionals. For both groups we take into account different metrics related to the cost of acquisition, the margin on the work in question, the value of the client during their life cycle (customer lifetime value), etc. We also take into account that the measurement of metrics can be very tricky, since changing a tap is not the same as building a chalet, so we try to study the metrics broken down by geography (province) and the type of work, among others.
AV: We too, constantly study the metrics of our business, broken down by geography (i.e. by country) and game type: This is related to our recruitment policy through Facebook and can be considered equivalent to Habitissimo’s investment in SEM. The study of these metrics allows us to direct marketing towards those games and geographies that work best. We also pay attention to users who spend the most (we call them “whales”) and try to offer them preferential treatment, providing them with certain advantages and encouraging them to invite friends. In our sector it is common to use viral growth engines (for example, each new user can invite new users to X to continue playing for free), but these are losing strength as users are asking for more and more quality. Despite the opinion of many people that say that Apple and Facebook charge high commissions, equivalent to about 30%, we consider them our business partners because they allow us to scale more easily. This is how we managed to test our games in 22 Latin American countries in 2 months without any effort in terms of payment gateways, legislation, etc.
Faraday: How did you initially approach international expansion? And how has that strategy changed since its inception?
JB: The first country we entered was Italy to follow other Spanish startups that had entered the country and were succeeding. The reasons why we decided to go to Italy was on the one hand, the size of the country and despite what we thought in the beginning, it has proven a very difficult country to enter, both at the level of national legislation and its competitors. Our internationalisation strategy was to enter large cities within countries that we considered “second division”. That is to say, countries that had less mature markets in terms of internet penetration and less competition. We always hire a native team for each country and have them work from our offices in Mallorca. From January 2012 to November 2012, we went from a turnover of € 50,000 to € 150,000. We currently have more than 30 employees and operations in Spain, Italy, Brazil and Mexico as we continue moving forward with our expansion plan.
AV: Our strategy is to enter as soon as possible in the largest number of Latin American countries, as it has a greater growth effect at the level of users who play and currently user acquisition costs are significantly lower than in Spain. We conducted a study on the profitability and acquisition costs of users from 22 countries in Latin America and Spanish-speaking users in the United States and decided to enter those that showed higher profitability per game and per country. We are currently still filtering through the results of the study so as to be able to continue following the same strategy and keep growing. We have gone from a turnover of € 500 in January to € 30,000 in December and have a team of 20 people on staff.