Launching your startup in another country: some advice from Gabriele Fadda @SmartBite
Why knowing your market is so important when you start a business? Insights from an Italian food-tech entrepreneur in Malaysia
Earlier this week, I was working on a new website at my place in Kuala Lumpur and I wanted to have some food delivered. It was late in the evening and I was searching for a great delivery service online, that’s when I came across SmartBite.
It turns out that SmartBite is not the average food delivery service. They can’t deliver to your home for a convivial dinner with friends. Actually, they can’t deliver dinner at all. What SmartBite does is deliver catered lunch options to your company’s office location, and they do it really well. Every day, they select a different local restaurant and send you a message with four new menu items to choose from. You select the one you like the most and get it delivered at your office between noon and 12:45 pm. It’s that simple, and it’s already getting big here in Kuala Lumpur.
Seeing as I wasn’t in an office building, and it was way past lunch time, SmartBite couldn’t bring me anything to eat that night. But for some reason I wasn’t hungry anymore… probably because their business model gave me plenty of ‘food for thought’. SmartBite is a promising startup that communicates well with their target market: working professionals. They aim at changing the relationship with F&B (food and beverage) suppliers using technology and big data. They already have traction here in KL with more than 70 deliveries per day. Compared to the main player in the area — FoodPanda — which is said to do a thousand deliveries a day in KL, that’s a good start. Most importantly for me, their model allows a reduction in many logistical costs typically associated with this kind of venture. I was impressed by how they were doing all of this at such an early stage that I couldn’t imagine them not becoming a big player in the food-tech industry in the near future. I needed to know how they got started and what their mindset and growth strategy to acquire new customers was.
Gabriele Fadda — the founder of SmartBite — kindly agreed to talk with me over lunch. We ended up having pastas at the Neroteca in Bukit Bintang… is there any better place than an Italian restaurant to discuss food tech with an Italian entrepreneur? — not to mention, our food was great and I totally recommend the place.
Gabriele emphasized many times during our talk about the importance of knowing your market when you’re starting a business; and when you’re starting up in another country, this aspect can become way more complicated.
To understand your market, you’ll first have to understand the culture. As Malaysian culture is very different from the Italian culture where Gabriele grew up, it took him more time to understand consumers’ behavior and, therefore, how to communicate with them the right way. And even as SmartBite continues to grow, Gabriele keeps acculturating. He said:
What you think that might work because it’s working in Europe is not always right here. You cannot think like you think. You need to let it go and really understand how the people think here.
When doing business abroad, keep in mind that culture is like an iceberg: there is always a part that’s visible (what people do, and their way of life) and a much larger part that’s hidden (how people think and interact with one another). Obviously, it takes more time to understand the hidden culture because it involves many complex systems, but both are necessary to succeed. For instance, Asian cultures are usually more focused on groups (community-based) than European cultures (individualist), so you’ll have to think about how to earn customer trust by soliciting their peers’ validation. It’s also said that Asian cultures try to avoid confrontation, so your customers probably won’t tell you directly that your product is crap, instead, you’ll have to understand their subtle hints.
Knowing your customers also means understanding their problems. When you’re able to grasp their issues in detail, you’ll be able to solve them and effectively communicate a solution. Gabriele separates his market into two categories that each have different issues. The first category is a top-management group who is less sensitive about the price of their food but does care a lot about their time and what they eat. The second category is basically an entry-level and middle management group. Around 80% of this group has never used food delivery because they care much more about the price and sharing a lunch with their colleagues. SmartBite tries to answer the needs of their first category of customers by being punctual (ensuring delivery between noon and 12:45pm), by focusing on decreasing the delivery order (one SMS with the letter of the menu item to be delivered) and by selecting new restaurants every day to vary lunch options. To answer the needs of their second category of customers, SmartBite only offers menus within a price range of MYR 9.90 and MYR 29.90 ($2.5-$7.5).
Knowing your customers and their potential problems really well is essential when beginning a startup, and you can only know their problems by asking them directly. As Gabriele said to me, “When you’re a cofounder of a startup, one big skill to have is the ability to get your hands dirty, to be active on the ground.” To me, it’s even a requirement.
Testing your ideas in the market will often make you realize that you need to be flexible and keep an open mind. You can’t just impose your ideas on your customers, so you’ll have to adapt to what people are suggesting to you. Specifically, you want to think about adapting your business to your target customers. Try to imagine you are one of them. In other words: care. Caring is what Pr. Dae Ryu Chang insists in his course “International Marketing in Asia” available on Coursera where he develops the concept of “noon-noopi”. Noon-noopi means “eye-level” in Korean. For him, your aim as a marketer is to match the noon-noopi between a seller and a buyer. Your marketing strategy should always be to step back and adjust your noon-noopi to that of your customers. For instance, SmartBite understands this concept in the way that they are using SMS technology to communicate with its users because some of them don’t have high-end smartphones. The same goes for their partner restaurants; instead of having to download an app to manage their delivery for just one day SmartBite makes their work simpler by going on the ground and meeting them in person every morning.
Things are changing really fast here in Asia so successful businesses will have to adapt quickly. Many companies often define themselves by their latest innovations and by updated features on their products. They limit their focus to what they are producing at the moment and it makes it more difficult for them to adapt in a time of crisis. A better strategy is to always define your business according to your customers’ needs. When you have an opportunity to change what you are doing in order to better satisfy customer needs, do it. Distinguish between your features and your vision as a way to communicate with your customer’s needs. For instance, instead of marketing Facebook as a website to communicate with friends and follow celebrities (features), we would market Facebook as a way to help you connect and share with the people in your life (vision). Importantly, marketing is not only for your customers, it should also help your company’s culture.
Launching your business in another country can be hard. More than in your home country, you really need to focus on knowing your market. That’s what Gabriele tries to do at SmartBite. Since they launched in January, they have completed more than 4000 deliveries and are now working with 8 towers. Their startup idea has been validated — they have clients and suppliers, business routines and acquisition techniques. Compared to a 24/7 delivery service, they also control a lot of the logistics by focusing on delivering a limited selection of meal options during a specific time slot, in specific areas. Having more control allows them to decrease their logistic costs by five times compared to a classic food tech company. To continue optimizing their profits and to manage their growth, they now need to raise funds from angel investors. SmartBite aims at expanding in Kuala Lumpur in the next few years before going to other places soon. You can follow them on Facebook + Instagram and — for companies in KL — start ordering lunch at your desk today from here (10% off on your first order with my code YLIAS10).