Education business case — SuperNanny.kz
This business case was written within the Entrepreneurship course in FTMBA program. My team( Yerlan Uteulin, Darmen Amanbayev, Danara Chugirova, Kalamkas Sagimbekova and me — Yerlan Meirbek) chose local startup — SuperNanny.kz. Enjoy:)
Baurzhan Kankin, one of the founders and CEO of SuperNanny, started his early morning from the meeting with his employees after going to the swimming pool that had helped him to stay tough-minded, energetic, and fresh during the whole day. His motto is — better action than inaction.
The meeting was concerned with a quite substantial growth of the company and future steps. The venture had already won several start up competitions on the country level, had about 300 clients and 300 nannies per month, and a branch was in another city. Thus, Baurzhan and Assel, the second founder of the company and Baurzhan’s wife at the same time, were pondering about the future strategy that would be beneficial for both the company and customers. Therefore, they decided to negotiate some ideas with the personnel.
History and Background
In 2010 Baurzhan successfully graduated from Suleyman Demirel University, very honorable educational institution in Kazakhstan, receiving Bachelor’s and Master’s degree in Economics. Moreover, he was awarded as the best student according to the results of his study progress and contribution into the university. However, it was a great challenge for him to enter and study during the first two years as the main language and requirement of the program was English. Baurzhan knew only one word in English People. He persuaded the dean of the faculty to allow to study in that university as he explained how it was important for him and how he would like to be a part of such a great community. The dean laughed at him but allowed to have an opportunity to study there.
During the university years he actively tried to obtain professional experience in different fields. For example, his initial job was a promoter for National Business magazine during about 9 months being in charge of marketing research, journal sales, participation in various exhibitions, and negotiation with advertisers. This was interesting experience which influenced on Baurzhan vision regarding communication with people from different spheres, company management, relationships between employees and an executive.
Then, he received very profound experience in banking system working for ABN AMRO Bank Kazakhstan, Temir Bank, Kazakhstan Development Bank. As a result, he had gained a very prominent understanding of how banks work from the ATM and cash till world bank system processes. Furthermore, he worked as an auditor for Deloitte & Touche, private banking, commerce, and national companies. All these different companies, positions, spheres have created synergy for him to start his own venture utilizing his background experience.
Baurzhan’s entrepreneurial story has begun from the founding of Coffee In in different entertainment and shopping centers in Astana. For example, Keruen, Azhar, Astana Mall, Mega Aktobe. They estimated the number of visitors of such mall, sunk costs of construction of small kiosks, and other expenses. There were some advantages to open such business. Firstly, this model of selling coffee to go was quite popular in European countries, therefore he and his partners expected it to be popular in our culture.
Secondly, the costs of construction small kiosks were not relatively high. Thirdly, the quantity of guests of the shopping centers was quite appropriate for successful development.
Nevertheless, they failed due to high constant expenses on restoration of kiosk as the quality of the construction was very poor. The second problem was high rent. Thus, they sold their business which is still in utilization by another owner. However, it was a great experience of negotiation with landlords, suppliers, and, what is most important, clients. For example, initially Baurzhan worked as a barrister and tried to implement personal approach to the customers by just speaking to them, asking them about their day being very polite and open. This definitely worked and attracted customers as they did not want to be served by the other personnel except him. Baurzhan realized that personal customer approach is very important especially in Kazakhstan market due to high context culture. Taking into account that this business was a lifestyle type, it has become evident to him that people choose to spend their spare time in places where they have emotional connection, personal sense of belonging to the friendly atmosphere.
His next “business child” is SuperNanny. When he got married to Assel and their first kid was born they faced a challenge. Assel could not leave their flat during the time when Baurzhan was at work. They started to look for a nanny through the newspapers and the Internet. However, it was not easy and took much time. So, the family have recognized opportunity to create a platform where parents and nannies could be connected to each other ensuring relative safety and comfort of getting appropriate and reliable information about nannies.
When they started they did not have a particular strategy and a traditional business plan. They were very excited about the idea and opportunity to bring real value to people experiencing the same problems as they did. Neither Assel nor Baurzhan had IT skills and experience, therefore their first challenge was to create an effective IT specialist team which took considerable time. Secondly, financial issues were also important. Assel had to sold her Mitsubishi Outlander for $18,000 which were spent on the venture. Finally, they needed to promote the project, to negotiate their value to customers, to educate people to use such service.
Financing
Sources of financing
As it was mentioned above the project SuperNanny has been launched by a young family couple and was supposed to be a family business respectively. In this regard the initial and subsequent investments were made by the family fund received from selling a wife’s car. This allowed the founders to avoid a bank loan, VC funds, or angels’ investments the in the future would have taken a part of the revenue and influenced the development and strategy of the company. These money were enough to create a website, hire appropriate personnel consisting mostly of friends, rent an office, buy equipment and furniture, promote project in Astana and then in Almaty city and support the venture during the first year.
For further investment Baurzhan utilized a smart investment framework that was far more efficient and beneficial for the project. After the first success of business, Baurzhan capitalized the Project through Musan Group and promoted following partnership with Radio station Love and TV channel GAKKU.
Revenue management
The success growth of SuperNanny has been reached through customer base
acquired mostly from Vkontakte and Facebook networks. Revenues are received and measured from the sales of subscriptions by the customers to obtain services of the company.
Currently on the SuperNanny platform there are about 1000 nannies and round-theclock homemakers are registered. The rate for each nanny is individual from 500 to 2000 tenge per hour. Furthermore, the price for the services can be rated per hour, per day, and per month.
Sales
The idea and business model
It is essential to note that the business model of SuperNanny is quite simple without any sophisticated schemes and processes. As a platform, it works with two types of users: young parents on the one side, and nannies and babysitters on the other. The platform ensures that parents are able to choose a qualified and certified nanny for their needs judging from the information provided on the website.
Nannies are segmented into different categories with some overlaps among them depending on the needs of clients. For instance, there are nannies who work hourly, or night-time nannies, or living with a family (see Exhibit 1 for more details).
According to Baurzhan, they carefully review all the prospect nannies’ profiles and test them scrupulously. For example, they see whether the nannie has past experience dealing with kids or how they psychologically fit for such a job. However, the service does not take responsibility for them.
Pricing model
Customers, e.g. parents contact nannies by buying their phone numbers on the site.There are different payment options (see Pictures below for more details). Since the start, the company became to sell single nanny contacts for a fixed price. There was an interesting method that Baurzhan used to determine the price. As the market were relatively new in Kazakhstan, there was not any example in the industry to rely on. Thus, Baurzhan estimated a price that he personally would pay for similar services in other industries.
For example, how much he would pay for a haircut, utility or laundry services? This method gave him clear vision about the value and price that frames that value to customer. Another option as suggested by founder was that he analyzed similar projects, that sell their databases to end users.
Eventually, according to founders, this price-per-contact strategy did not work as expected. Soon after time, they switched to subscription model with different pricing plans. As we see now, it worked. Among the factors of the success there is a peculiarity that Baurzhan and Assel constantly monitor the feedback loop to learn from their clients in order to improve themselves and customers’ experience.
Website Development
On the early stages of the product, SuperNanny was developed by a single developer with the help of an open-source php framework called CakePHP. It allowed to quickly start an MVP with a minimum working functionality: only the list of babysitters’ profiles with “Buy contact” button. However, this version was not attractive and comfortable for the customers creating a poor image for the company.
After about half year, Baurzhan founded a team in Almaty that agreed to partner and develop a website according to business requirements. But after some time, they refused to proceed and founder again faced a problem with the website development. After some search, he finally came up with a single freelance developer, Yevgeniy Gavrilov, who made an early 1.0 version of SuperNanny.kz.
By the time when SuperNanny attracted investment from Musan Group venture fund, Baurzhan had worked closely with technological expertise that the company provided. In collaboration with the fund SuperNanny closely worked with Chief Technology Officer Darmen Amanbayev who led the process of website development and provided other technology solutions like call-center system.
Darmen was responsible for managing the process of gathering business
requirements from SuperNanny management and subsequent implementation of technological solutions that satisfy those requirements. While working with Darmen directly, Baurzhan as a result could raise project’s revenue by 15% in 3 months.
In September 2015 Darmen entered Nazarbayev University Graduate School of Business to do his MBA, and Baurzhan started to work with a new Musan Group’s CTO — Yevgeniy Gavrilov who had developed the first version of SuperNanny website.
From now on, Baurzhan have had problems working with Yevgeniy. It seemed that communication between Baurzhan, Yevgeniy, and Dmitriy (website developer) was not clear and sufficient. Thus, Baurzhan made a decision to invite Dmitriy to SuperNanny
office to work closely and directly with him.
This decision was right. It had great impact on overall productivity of website
development process and the team was able to move very quickly: involvement to the business processes, ability to communicate with the team face-to-face, more control of Dmitriy’s work progress made the process of website development more efficient.
Human Resource Management
“…and she has to be mother”
Baurzhan Kankin
Any business starts from people and depends directly from people. Almost all
businesses has their HR Departments, whereas new ventures usually do not have enough finance to have it. In most cases entrepreneur is CEO, CFO, COO, CMO and HR Manager in one person.
Baurzhan faced the same situation at early stage of his project. He hired his first fulltime worker only 18 months later. His past experience showed that right selection is core of the successful sales, internal atmosphere of the company, CRM and the growth of the company itself. That is why he always talks to his workers and gathers feedbacks about work conditions and problems they face. Baurzhan tries to make all conditions and fulfill their basic human needs. In return his staff has to follow some basic rules. They don’t have to:
a. Be late
b. Be ill
c. Ask for leave
Every company has its own philosophy, vision and mission to future. Baurzhan believes that he is helping people and wants to build sustainable business. He pays special attention for recruitment of his team and now he has employee turnover of 0%. He developed his own criteria for potential workers. They have to:
a. Be passionate about work and ready to work for not so high salaries
b. Leave near office
c. Married, and the most important
d. Be mother.
Their professional skills were not so important. For example: their first full-time worker Nurgul Sholahova had only college degree. But she was really passionate about this project and had fire in her eyes. She had structural thinking and didn’t afraid of making decisions and taking responsibility for her actions. Baurzhan claims that he trains his workers himself, that is why personality is higher than professionalism.
Marketing
As the business model is very simple, the marketing strategy is quite transparent as well. Before starting the new venture, the founders did not implement a thorough, sophisticated, and expensive research. They just identified opportunity and had same basic tools to promote.
The main challenge has been to create appropriate demand by negotiation with and iteration the clients, implement personal approach, help them to see and utilize the benefits of their services. They have been trying to cover all segments of the population offering different and flexible prices for the services which almost all people can afford.
That was needed to be explained to the potential customers. As Baurzhan says, it is not about the money, it is about the value. Thus, the company positions itself as an effective resource for quick and efficient finding an appropriate nanny or babysitter from reliable people whom they know very well and can help them at any time with any issue.
Implementation and demonstration of the relationship management is a core part of the marketing strategy of SuperNanny. For example, Baurzhan once tried to be a nanny for their clients’ children and attract attention in the news and social networks.
Baurzhan strongly believes that almost everything depends on the CEO and his own example. For example, he and his wife always try to become friends with their customers to win reliability. The employees of the company learn and copy Baurzhan and Assel’s polite and attentive way of communications with the clients.
Social media marketing and the website are also effective tools to promote the project. The founder family actively use Facebook and Instagram accounts to show the real work process of the services, positive feedbacks from the clients, some personal information about the employees. Furthermore, they always try to improve the website and track its analytics and site converse which is now 3%. There is no need to register or log in in order to look through nannies profile and other information on the site which creates a sense of open doors to customers.
The venture has already won some competitions in Kazakhstan such as Start Up Sauna (Finland), Atameken Start Up Competition 2013. Furthermore, due to the successful recognition of the company they opened their first brunch in Almaty. Nowadays, they have about 300 clients monthly still looking for new ways to promote the project. The average check is about 5,490 KZT with customer acquisition cost of about $7 ~ 2,415 KZT.
Future Plans
At the present stage of the development of the project Baurzhan is thinking about how to successfully evolve and progress SuperNanny as an interesting valuable project for the society. Currently, he has a few ideas for short and long term perspectives.
In accordance with the short perspective, the first step that should be done is to sustain growth inside the market. If they open a second office in Almaty they will show their real development and penetrate bigger share of the market. They forecast the first months will show cash flow negative. However, they expect future development of the context of the website and extensive advertising to make them popular and attract a vast majority of the customers as Almaty market is quite sensitive to state-of-the-art trends. It is a big challenge and Baurzhan is quite enthusiastic and ready for it. On the top of that, the developers are going to create a feedback-rating system for the website analytics. For instance, “Astana best Nanny”, “Astana best kindergarten”, etc.
Despite the fact that the project itself is not very profitable right now, the founders are going to continue to make partial investments in the business during in the long run. The reason is that they are more concerned about creation of a real value for the customers rather than money. Moreover, one of the main KPI is that revenue to cost will be at 70–80% level.
The last but not the least, it is creation of a franchise and selling it for expanding in other cities. It provides the company with more popularity, higher customer awareness, bigger market share and revenue.
Regarding the long-term strategy there are three options. The first is relatively the easiest one which is to sell the project. Despite the fact the today’s Kazakhstan economy is suffering from the oil crises and it would be quite challengeable to sell the business, it could pay back the family almost all their expenses. Secondly, the founders can attract additional investment for future fast sustainable growth and expansion. Baurzhan has an opportunity to find extra financial help to open new offices and implement better services becoming a big player on the market. Finally, there is an opportunity to drop
external capital investment but to choose gradual growth. It implicates to continue the same strategy capitalizing of the development of new types of services exploiting marketing promotion.
A lot of Baurzhan’s friends ask him: “Is your project profitable?”, but Baurzhan always answers that: “You ask the ‘wrong question, you should ask “Is it sustainable?”.
It is necessary to admit that the SuperNanny focuses on constant changes and
improvements of their work and services as it is always favorable when customer witness the company’s growth and grow with the company.
Exhibit 1
Nanny types
Percentage -Type
10.4% — Hourly
11.4% — Half-day
9.7% — Nanny for a Weekend
6.5% — Evening Nanny
4.0% — Night Nanny
14.9% — Childminder
3.7% — Nanny with Accommodation
2.9% — Rotational Nanny
1.9% — Auto-nanny
3.6% — Nanny-supporter
7.5% — Nanny at home
3.7% — Tutor
1.7% — Nurse-nanny
9.6% — Housework Assistant & Nanny
8.6% — Housework Assistant
Exhibit 2
Payment Option
1 Qiwi Terminal
2 Credit Card
3 Kaspi Wallet
4 Cash at the SuperNanny.kz Office
