Leandro CaputoJournal #1
Two weeks of my summer internship have gone by thus far. Two weeks defined by contrasts.
- From the fancy offices in Tribeca where I spent the initial week setting my work-plan and objectives to the apartment in Bogota were I am currently based, which serves as home and office.
- From spending an entire morning with local shop-keepers to understand their everyday activities and issues, shadowing their every move, to speaking that same afternoon with the CEO of a major CPG in Bogota, or the head of a local investment bank.
- From seeking potential candidates for our pilot test among the shop-keepers close to our office, to defining Frogtek´s business model and future business relation with major regional CPGs.
Exposure to contrasts has thus been the defining characteristic of my summer with Frogtek, a social venture dedicated to creating business tools for micro-entrepreneurs in emerging markets. Using mobile phones as a cheap computing platform, Frogtek has developed management applications targeted to small businesses. These applications will be installed on phones distributed locally, and financed by Microfinance Institutions.
This software provides point-of-sales functionality and basic accounting and financial reporting. In addition, Frogtek will offer an internet-based service to provide the micro-entrepreneur with real-time reporting, analysis, and personalized recommendations to improve their business and increase profits. The end result is thus the professionalization of these micro-entrepreneurs.
Frogtek´s target market is the typical "mom-and-pop" shops that dot every street of the developing world. These individuals, despite selling well over 500 different items, can’t typically keep any manual accounts (too time consuming), and can’t afford costly full PC systems. As a result, most of these businesses don't know their breakeven sales point, cannot analyze an investment opportunity or their cost structure, can't trust family outsiders as employees, don't optimize their inventory or purchasing decisions, find it daunting to take out a loan and in general have a severe lack of clarity on the business status. All these combine to keep the micro-retailers operating in a sub-optimal manner, reducing their profits and limiting their growth.
Of course, Frogtek can´t expect to base its entire profits from local “tenderos”. Additional players need to get involved in the venture, subsidizing part of the cost of the infrastructure and thus, aiding the professionalization of this social sector. That is were I will play a role.
If Frogtek´s vision materializes, thousands of local shop-keepers will regularly input all their transactions (quantities sold, prices, etc) into the Smartphone. Such information will be geo-located and time-referenced. This represents a very valuable source of information for CPGs. Furthermore, once this technology is deployed to tenderos, a new direct channel of communications will be deployed between both sectors (direct advertisement, direct surveys, etc.).
Potential revenue can thus be derived from the Consumer Product Goods firms. We will be able to answer questions like: What are the selling patterns of its products? Are there specific differences among stores? Can they use the sales information to predict new product requests, and thus optimize replenishments? Can they use the input information to better target promotions, or test changes in price, product characteristics, line extensions, etc?
I will therefore have to understand the needs and limitations of these end-users of the information, and integrate their requirements into the developing application. It will certainly be a challenging experience, requiring the definition of a sustainable business model, with no pre-defined guidelines to guide my steps. And throughout the entire internship, I will be directly exposed to these extreme segments of the economy, from the informal business of the local shop-keepers to the structured procedures of the large CPGs.
A common statement emerged from most of our meetings with CPGs: “this idea is great, but it will be hard for tenderos to actually use this technology: they are afraid of technology and are not ready for it”. Hopefully we will probe them wrong, and add value to their business via the professionalization of tenderos across the country.
Journal #2
We have been in Colombia working for Frogtek for 7 weeks now. Life at a social venture start-up is certainly quite different from my previous experience as a Management Consultant employed by Accenture in South America. As I mentioned on my previous blog entry, contrast has been the most defining factor of this summer experience. For example, on a single day we met a presidential candidate during the morning (former Colombian ambassador to France, and minister of defense), who wanted to discuss our project since tenderos were a fundamental part of her presidential platform. Additionally, we met mobile-content developers in the afternoon (informally), who show-cased their many cool animations and designs.
More importantly, during these weeks I really got to understand and witness the potential impact of Frogtek. Talking to tenderos, understanding their many needs and the difficulties of their working conditions, made me understand the extent of the social impact of our stay in Colombia. It is a great satisfaction—and an even greater responsibility.
During these weeks we have explored numerous potential business partnerships—meeting with Micro-Finance institutions, content-providers, government organizations and non-profits. We have also continued presenting Frogtek to potential clients. In fact, one major global CPG is apparently very interested in executing a pilot project with us in Colombia. If the pilot is successful, they plan to roll-out the solution internationally.
Good panorama ahead, thus far…let’s just hope we can keep the momentum.
Journal #3
At this point in my internship, I will be in Colombia for just one more week. We’ve experienced some of the expected set-backs of any start-up. To further clarify, a major sponsored pilot of the application (with almost 50 tenderos) was cancelled on the last validation meeting by the CEO. That was a major disappointment. Luckily, we managed to negotiate a second pilot project with a global CPG, with great perspectives. Fortunately, definitive authorizations should arrive soon enough.
Additionally, two major breakthroughs rose during the last two weeks. Firstly, a casual e-mail sent to a major non-profit organization resulted in a round of very successful meetings and the potential addition to Frogtek of a vital business partner. Furthermore, a casual conversation from one of the founders with a former employer resulted in a very interesting commercial opportunity. Basically, we initiated negotiations with Colombia’s major flower-growing firm, which is very interested in adapting our basic application to their operations (7000 potential users…a nice number!). Things have been moving fast with this potential client. They have the drive to make this happen fast, and the money to finance the pilot. This is certainly not the kind of client we had originally envisioned, but this contract will help us guarantee the sustainability of Frogtek and further perfection of the application.
All of this was great news as I finish up my internship because Frogtek´s viability in the medium run seems assured now.
