Lalafo marketplace was founded in 2015 and started with just two people working at the same desk. Today, this project’s team spans five countries and speaks eight languages. In 2016, Lalafo users placed goods and services with a total value of over $10 billion with the service’s growth rate at 20% per year. In this article, the co-founder of Lalafo — Anna Polischuk shares project story and gives advice to help your business expand beyond your borders.
Step 1. Determine if your business is scalable
There’s a big difference between growth and scaling. Growth is expanding the business by increased use of resources while scaling is expanding the business with no additional resources. There are many successful unscalable businesses out there — McKinsey, Moleskine, etc. If you ever thought about scaling, the first thing to do is to figure out whether or not your business model is capable of it. Marketplaces are easily scaled by their nature as the content is user-generated and costs that come with each new user are minimal.
Step 2. Don’t be afraid to make mistakes
Startup development is a try-and-fail process meaning that many of your assumptions will turn out to be incorrect. Initially, we launched in three countries (Azerbaijan, Kyrgyzstan and Tajikistan) by making separate mobile apps, web sites and brands for each country. Three months after the launch of large-scale TV campaigns, we realized that it would be better to focus on mobile apps. As a result, we launched a global brand and a single app for all countries. This produced an expensive rebranding and merging users from multiple platforms into one.
Step 3. Analyze the market
Nowadays you can find anything online. In order to analyze markets (Nepal, Afghanistan and others), we use publicly available data from such sources as World Bank, WMF, UN, analytical centers reports, etc. They help us create a shortlist of four countries where citizens might be interested in Lalafo.
Step 4. Determine key criteria of your business
Rapid growth is essential for a marketplace which is why it’s important to have the means of attracting large groups of customers: massive TV audiences, great internet coverage, absence of strong competition, low user attraction costs, etc. If, after the analysis is done, we see that at least one of these points can’t be accomplished in a country, we remove it from the market shortlist.
Step 5. Test your hypothesis
Do not put all your trust in information found on the Internet; it needs to be thoroughly checked. Fifty meetings with local experts will give you valuable insight into market peculiarities that will help you see the whole picture. This way, after the analysis, we have discovered multiple markets, but not all of them have given us the scaling we need since the tests have shown that some of those markets are not suitable for us. For example, it turns out that mass marketing is impossible in Tanzania as the TV audience there is rather small. And despite decent levels of 3G/4G coverage and number of smartphones in big cities, in this country people do not use Google; their Internet usage stops at Facebook.
Step 6. Get to know your target audience
In the beginning, we used to go to car markets and talk to the people selling cars while taking pictures and posting them with “for sale” ads on Lalafo. Not only did this help us gather the first batch of content for the service, but it also told us a lot about the people that would work with it in future.
Step 7. Look further
Local experts can only tell you about what’s already on the market. Thath means if your product is brand new to this market, it’s only logical to take what they say with a grain of salt. When we launched in Azerbaijan, we went to Baku and had over thirty meetings with ad agencies, TV channels and so on. Almost all of them said that we wouldn’t be able to work there as the citizens are unlikely to buy and sell used goods. It’s not customary for them to do so, and all such things are usually given to friends and family. Our own research said differently, and now Lalafo has been successfully working in Azerbaijan for over a year.
Step 8. Find out as much as you can about the country you’re starting the business in, but expect the unexpected
Lalafo has no fixed assets which is why we rarely have legal issues in countries where scaling is possible. However, it still happens to us. For example, just two weeks after the release in Tajikistan, a law was adopted prohibiting the running of ads about online projects on TV. This caused us to put this market on hold.
Step 9. Expand the team only when it’s necessary
When the project started, there were only three of us, and we did everything ourselves. We found native speakers for localization (Azerbaijani, Nepali and Swahili) in Kyiv. They helped us with translating the texts, marketing pieces, and some of them even appeared in our ads on TV. We wrote the script for our first ad ourselves and filmed it in on a regular camera in a garage. That ad turned out to be one of our most effective ones. All of that was done from Kyiv. Local teams started appearing only after we tested the markets and were sure of them.
Step 10. Start acting!
We started our business in 2015. Within two years, Lalafo became the most popular C2C marketplace in four countries. We weren’t sure it would be this way, but now we can say: If you want to set up your own business, the most important thing is to overcome your fear and start acting! Launching a startup is in a way similar to what Richard Branson once said, “If someone offers you an interesting job, but you’re not sure if you can do it — take it and learn as you go.” The fact that today so many people can be reached via the Internet makes it that much easier.
