Pilot Test (Part II)
What’s new, reader?! How are you doing? I hope you’re doing great. In the previous column, we told you about the variables we wanted to validate during our Resuelve pilot test. The main goal was to understand if our Unit Economics were profitable.
Resuming that story, it was September 2009, and we had 2 million pesos to work on a pilot test until December/ January. Part of the primary variables to estimate failure or success that we agreed with the shareholders were:
- Find a scalable acquisition channel.
2. Create a savings method for our clients to save each month.
3. Secure 112 people who would hire our services.
4. Negotiate and clear some of our clients’ debt
However, the most important thing for us during the test was to sell, sell, and sell. Everything else took place in the background; that’s something I always tell to starting entrepreneurs. As Peter Thiel says in his book “From Zero to One”: “Us, nerds, would love to think our products are so amazing that they’ll sell themselves.” Nevertheless, even the best idea needs a great sales force.
Sales
From the crafting of our business plan in Stanford, Zorro and I knew that we’d need to get clients, but we didn’t really think how.
In our financial model, we considered: salespeople, wages, and marketing expenses, but we didn’t think further. I’d never, ever, sold anything, but Zorro had worked, for a long time, selling investment funds for Prudential, so I blindly trusted in my partner’s experience.
The main challenge was to find the people, who were living in hiding, because they couldn’t pay off their debt, and bringing them to Resuelve. When we shared this with the bankers, they gave us a pitiful look.
Step 1: Building our website with a section where people interested in our service could leave their contact information.
Although we studied in Silicon Valley, Zorro and I had no fucking clue about building websites. So I turned to the most unexpected source: Jeronimo, my middle brother.
Him, together with Luis Suinaga, and Rodrigo Barrodo (“Chancla”), founded the company Acero BSV (“The BSVs”), which deals with handling and recycling scrap metal, and does steel distribution. Today, they’re some of the most successful, and “undercover,” entrepreneurs I know. They started from scratch, no investment, no one had a pretentious MBA (at the time), and they’re now much greater, by any financial measure, than most entrepreneurs appearing in magazines (such as the one whose name rhymes with LONOL hahaha).
At the time, the BSVs were around 25 years old, and they’d been entrepreneurs since they finished university (I’m not sure if all of them graduated, or at least they compete for the record of more semesters studied to get a bachelor’s. They’re like Anahuac’s Mosh).
I really had no clue of what my brother did for a living, and I really believed he was playing “entrepreneur” with Luis, and Chancla. His office was in a crumbling golden building, probably built around the 50’s, which was next to the Torre Mayor, and they called it “Torre Menor.” They had a view of Chapultepec’s forest that any investment banking Prince would envy, and they were, almost, the only tenants in that 12 story building (because, again, it was falling apart). Earthquakes there were only for the brave. More than once, people would leave the building crying whenever it had to be evacuated (they’re now building a better one in its place).
It was decorated by a potpourri of furniture, old things from my mother’s house, and things they’d “borrowed” from Luis’ and Chancla’s homes. It resembled more a mobster lawyer’s office of the 60s, than the office of three, 25-year-old, kids. Their biggest pride was a big bar they had right in the middle of their office, they loved to brag about it with anyone who visited.
Much to my surprise, when I told Jero I needed a website, he said: “We’ll build it!” My first thought was: “What would this guy know if I, having studied in Palo Alto, have no fucking clue?” I didn’t tell him, but he perceived my hesitation and insisted on making me look at BSV’s website. To my surprise, it was better than I expected, and it was similar to what we needed to get.
Since we still doubted, we requested a quotation from a professional agency. That damn agency quoted it around 100,00 pesos, while the BSVs said they’d make it for $5,000, and contributions for beer for the developer.
Looking to save, we decided to cross our fingers, and ask the BSVs to help us. In no time, we had a website, with a place to “catch” leads. Years later, we realized that the whole website’s back end was coded with words like steel, beam, aluminum, BSV, etc… Which means that the damn developer, just copied, and pasted BSV’s website, and changed the pictures. For those who know, this is terrible when ranking in Google. But, at the time, it worked wonders. Good, pretty, and cheap!
Step 2: Moving out from CrediConfia to our own office.
Once again, the BSVs helped us get an office space in the Torre Menor with a friendly price. After a massive makeover by Zorro (who is a frustrated interior designer), a tough negotiation on furniture rentals, a call center telephone switch, and an old dining room table from my grandma’s, that we stole from the BSV’s, we were ready to hire. Zorro even brought some plants from his place!
Step 3: Hiring our first salespeople.
We turned to Manpower for this task, they would bring us candidates, and then we’d outsource. Nowadays, this is one of our core tasks, and we moved it all in-house but at the time, Manpower signified simplified things in case the pilot test didn’t work and we had to shut Resuelve.
Among those first candidates, there were Sergio Guevara, “El Serch,” and Javier Amat “El Dr. Amat” who, after almost 10 years of dealing with Zorro and me, are still in Resuelve. Serch is our “spearhead” salesman because we put him to sell anytime we need to try a new product. Dr. Amat (named so because he’s a self-called Dr. of sales), who is now the commercial director for Resuelve in Spain, the same who, during the first interview, asked Zorro how much would he earn.
Let’s take a moment, here’s some advice for those just starting their professional career. This is a horrible idea for the first interview! Not because money is irrelevant, but if you start with that, you’ll give a wrong impression. Today, we’d kick out any candidate who does this, but at the time we decided to take the risk and hire the Dr.
Our third salesman, who is no longer in Resuelve, is called Jose Guadalupe Chaves (“Pepe”). We weren’t going to hire Pepe as well, because it seemed he’d worn make up for the interview, but just like with the Dr., we decided to take the risk… he was in.
Serch, the Dr., Pepe, Zorro, and I had the goal of getting 112 clients. While Chaparro, and a girl named Tere, would be in charge of following up with our users and negotiating with the banks. We were starting the Resuelve team.
Step 4: Find people interested in Resuelve tu Deuda.
Here’s where we were fucked up. I think we never really thought about how we’d get leads until this moment came.
During the infamous meeting, where the pilot test was chosen instead of funding the company for the following 5 years, the idea of renting some billboards had come up, and we also thought about placing ads in newspapers; but during breakfast with a friend, Sebastian Tonda, he suggested trying Google Adwords.
Our first reaction was: “No one uses the internet in Mexico. This isn’t the USA.” However, Tonda insisted, and said:” If your budget is 40,000 pesos, get 5,000 in Google, and use the other 35,000 for whatever you want.” We took the risk, and we divided our marketing budget by two: 5,000 pesos for Google Adwords, and 35,000 a half-page ad in Publimetro.
We were so proud of our ad in Publimetro, I think we bragged about it with everyone we knew, hahaha! Google’s outcome was of 100 leads, and Publimetro’s was only 2. One of them was an old lady who came to the office asking if we were “Resuelve tu DUDA!” (Clear your doubt).
If we analyze the marketing cost for both channels, we spent 50 pesos per lead on Google, and 17,500 pesos on Publimetro (that’s right, we counted the old lady as a lead).
From that moment on, we spent 4 months mainly talking on the phone 14 hours a day. We couldn’t stop! Let alone Pepe, the Dr., and Serch. We’d remind them, every day, that we only had 4 months of life, and that it was up to us for the project to live or die.
That feeling of uncertainty and urgency seemed to be the key to our success. Now I know that, if we had funded Resuelve with the originally intended amount, maybe we wouldn’t have had such intense beginnings.
By the end of December, we managed to get 343 clients signed up to Resuelve: 306% above our goal. This took us to negotiate again, and raise capital, with our original partners (which we aced).
This time, we raised the 2 million USD we wanted. Some partners decided to quit, believing it would take much more capital in the future, but we won some valuable new ones ( The BSVs, and Jose Oriol Bosch). Yes, much to our surprise, the BSVs had money to invest in our project. Yet again, when you least expect it, life gives you a reality check.
To summarize, one of the main things we learned from our pilot test was that executing, fast and clean, is very important. You must launch, even if your product isn’t perfect. Like our CTO, Jordi, would say “Fast and Dirty.”
You must understand ASAP if your product or service has the famous Product-Market Fit, and the best way to know this is if people are willing to buy it even if it’s not perfect. Zorro always points out how, during those first months of Resuelve, people still hired our services in spite of us, our improvised office in Torre Menor, Dr. Amat’s singular sales techniques, and, in spite, as well, us being just kids who had never done anything remotely similar to what they were selling.
See you! If you have any comments, questions, complains, or suggestions, nag me on Twitter. Find me as @Javivelop.
P.S. Never in your freaking difficult and bitchy life surrender!
