Rodrigo A. Sepúlveda Schulz

About to give a 45min keynote on entrepreneurship at INSEAD

INSEAD Amphi A, originally uploaded by rsepulveda.

Part of the Entrepreneurship & Private Equity class of Prof. Filipe Santos. Thanks for the invite !

"Hole in the wall" initiative

 

I very much enjoyed listening to Sugata's initiative, presented at Picnic'07.
More about it at www.hole-in-the-wall.com.

Basically, he's trying to understand whether Children can learn with a different educational model.
His empirical studies are really interesting.

I invite you to listen to him, and visit his site to learn more.

T-shirt blog reaches over 100K of revenues per month: making it a case study ?

We have mentionned LaFraise on this blog before. Patrice, the founder, has just reached the 100KE of revenues / month. Congrats! And including himself, there are only 3 people in his little company. It gave me the urge to modelize his business real quick in the attached Excel file. (not yet: I'll publish it after you get a chance to play with this model)

These are very very  rough numbers just to see the dynamics of his business. Try to figure out how I did it, or where I’m totally wrong in this. I did a 5 year very simple plan. T-shirts are sold through a web site. The store is only for visiting the goods (like the recent Wired store in NYC)

Revenues:

• I assumed he started by selling 10 T-shirts a day, so 200/month.
• I added a growth rate of 20% per month, with a deceleration of 5%/month. He stills grows at about 1%/month at month 60.
• I used French VAT of 19,6%
• price point is 19 euros/T-shirt. He never changes this pricing

Cost of good sold: (all excluding tax)

• I assumed he buys his white T-shirts at 5 euros /piece. If he starts ordering more than 5000/month, he gets a 20% discount
• stickers for logos are 3 euros a piece. no discount here.
• shipping are 2 french stamps of 0,53 euros. beware: no VAT on shipping in this country
• packaging and marketing material of 1 euro per parcel
• bank fees of 2,5% for payment by credit card

Sales:

• I assumed that he needs a sales clerk for every 1000 orders / month.
• Salary per clerck is 1500 euros/month. I forgot to give them a raise in my model.
• Salary overhead at 50%
• I assumed the only other expense are web servers. They cost 300 euros each per month, and he needs onr for every 3000 orders (redundancy, etc.)

General & Administration:

• I assume rent of 1500 euros per month (all included: electriity, internet, etc.). It starts on month 6.
• he gets a 1000 euro bill for decoration when he moves in
• he has a launch party when he moves in, and one every year at Xmas. I assumed month 1 = january.
• monthly expenses (including accounting, etc.) are set at 1500 euros.

CAPEX:

• I assumed he buys a truck for 15.000 euros on month 1. (shipping, delivery, etc.). Amotized over 4 years.
• I assumed he buys a print / hot press (whatever the name) to stick stickers onto the T-shirts for 5000 euros on month 1. Amotized over 5 years.

Cash management:

• I assumed he starts paying VAT only when the balance gets positive. 30 days delay
• Cash in by credit card is 0 day delay
• Cash out for rent, web servers, salaries + expenses, expenses, decoration, parties, shipping and bank fees occur at 0 day delay
• T-shirts, stickers, packaging get 30 days
• capex gets 60 days

It took me about 40 min to compute the whole thing. So my question to you all is what is the required capital this business owner would need to bootstrap his business ? (in other words, the minimum point of sum of free cash flow) ?

I simplified the model: no sales season, no season variation (Patrice confirms this), no discount on volume for some people, not taking into account the price he pays for designers submitting visuals, etc.

I know this post might sound weird to you, but I gave a 1h30 lecture the other day on the HEC Campus to PhD graduates studying entrepreneurship. And this is exactly the case I used on the white board to illustrate the rule #1 for entrepreneurs: CASH IS KING. Then comes market demand (or market PAIN).

Let me know whether this exercise is useful to you.

The stuff I like about video publishing online

We have all been sitting like couch potatoes for years in front of our television sets, passively watching what we were fed into our available brain time ( (c) Le Lay… – French joke).

It was time someone tried to rebel against it. About 3 years, Mihai and a small team of which I was a member set off to start glowria, an online DVD rental company. The goal was to take away that barrier to active and interesting content, and allow anyone to time shift their preferred movies on demand: choose the movies YOU want to see, WHEN you want to see them. The upcoming VOD offer will allow that demand to be further met by delivering content almost immediately.

Then another startup, by our frieds F. Pie and his team, vodeo.tv, decided they wanted to bring all old french TV shows to you, including documentaries. The kind of stuff you like but that you only get to see at 4am in an obscure channel on cable. I myself haven’t yet bought any program from them, because I tend not to have time to watch TV anymore (I cancelled pay-TV from canal+ with lots of pain, and rarely use my glowria account). But something else has happened in the past few months. I’ve become totally addicted to online video shows. Some call them vodcasts, videoblogs, vlogs… whatever. Video content, available online.

I fully understand that my computer screens are not exactly the normal size that you get, and my viewing experience is great. A bit lonely, as the family does not join in, but great. And what do I watch ?

Well new shows produced by people for online people, such as in the Tech field (commandN, diggnation, twit, NerdTV), occasional blah blah (Steve Garfield, Eric Rice, Clint Sharp…), interviews of people – I just love talk shows, I used to watch only that on TV as well – mainly the French guys lately (Loic Le Meur, Thomas Blard…), regular shows (Pierre Alexandre from Wall Street, MobuzzTV, Rocketboom, xolo.tv, etc.) etc.

TVs have had online content for a while, and they fit your purpose for time shifting and content filtering. But not everything is available online, it’s not available around the globe (some guy was ranting about not being able to buy Lost episodes in the Netherlands on Adam Curry’s podast the other day), and is expensive (Alex on diggnation was calculating that if he bough 2 shows at 2$ each every night for one month, it was way more expensive than his cable TV package!). Bandwidth will shortly not be an issue anymore (depending on your definition of shortly, but you can stream decent content at 750kbps easily or even less for smaller formats); mobile devices such as phones, PDAs and pocket-whatever are going all to be data-enabled and video-enabled. So that’s not an issue either.

There’s enough content online that you won’t ever need to turn your TV on again. Don’t know where to go ? try Peter’s mefeedia.com (great stuff aggregated there, and the man is a charm.), or DTV, or.. anywhere basically. And if it’s not there, create it !

The danger here is that a lot of crap is going to be produced, and you find that on a lot of video sharing services. I don’t even go there anymore. Just clips from TV, trailers, etc. Pooxi was warning everyone the other day about the intellectual property of videos you publish. He’s right. And in addition, I’m not (maybe you are) really interested in watching stories about your gold fish, or another joke, in video format. As in everything else, the good content will stand out, or find its niche, and bad content producers will eventually stop doing what they are doing. In any case you can yourself stop watching as well.

But what I’m really excited about, is that a whole new generation of people from many walks of life and interests will discover video as new medium of expression, and will start sharing their insights into their environmennts and theirs lives. You all know that I’ve been working on a new venture for some time. There’s been a lot of wrong predictions out there about what vpod.tv is. The other day, in front of Loic Le Meur’s camera, I gave a hint: vpod is a codename for Video Publishing On Demand. Nothing revolutionnary, nothing earth-shattering and disrupting as my VC friends would like to see. However we’ve only shown a small slice of it so far: just a way to enable people to talk and voice their thoughts. Rebecca McKinnon’s initiative with Global Voices would be similar in spirit (only text and audio AFAIK), although she’s way ahead already with her energy and success. She’s into great content, I’m into technology for great content. Technology today is a barrier and it shouldn’t be. The only thing you care is that the device that you have in your hand can create and/or watch video. Period. Or maybe, that its intrinsic quality is average, good or bad.

As an example, have a look at lebloggenealogie.com. It’s the sister blog of a great genealogy service called geneanet.org (disclaimer: I’m an advisor there). It’s just a collection of tips, tools, pieces of information about the hobby that many of us share: tracking our ancestors. Recently, the company’s GM has been testing the service with us. He went and bought a 16:9 camera just after our first meeting that same afternoon (BTW, Thomas Blard did too!), and started experimenting with footage and with video editing service. And we help him publish it online. What is totally fascinating to me is the result. Check this page: only 2 videos are online, but I know for a fact that many more have been shot. It gives an audience to many professionals and volunteers in genealogical circles, that would never have had the reach that they get in these videos. If you don’t like genealogy or don’t speak french, then bear with me .

But as a genealogical enthusiast, I’m thrilled to watch these “vlogumentaries” (vlog + documentary) brought to me by Christophe. And I will be thrilled when Pierre (another alpha user) starts interviewing for us the behind the scenes at tech companies listed on the NASDAQ. Or when Jean-Michel Billaut (scoop!) starts publishing all his 20–years archive footage from COMDEX shot with old cameras. Or when Versac starts publishing straight-talk interviews with unknown politicians, instead of the usual faces we *always* see on television. Or when you start creating fanstastic content.

Yep, you read it between the lines. The long tail of citizen media. Welcome to video 2.0 !

 

EPITECH is doing the right thing: going to China

Some of you might have noticed it on my LinkedIn profile (somewhere at the end ;): one of the things I do to give something back to the community is to sit on the Advisory Board of EPITECH, a great French technical school, a sister school of my engineering school alma mater, EPITA.

Apart of a splendid focus on building the right skills in computer science, of fostering very interesting projects (including taking over the the Videolan project from Ecole Centrale de Paris, or building a from-scratch real-time OS), EPITECH is looking into developping international mindsets for its students.

The latest development is that EPITECH has now signed 3 student exchange deals with top 10 Chinese universities. As a result, starting from this november, 50 students from EPITECH are going to China to study for 1 year: they are going to live with Chinese people, attend Chinese classes (taught in English though) with Chinese students, etc. This is a first, as normally foreign students just attend Western-style courses in special classes in China with little or no mingling with the local people.

Here the Chinese press release of the agreement signed with Dalian. Other topics we discussed last week was ongoing education for adults & professionals, and also how to improve the business acumen of students.

Have a look on Epitech's site. It's really an interesting and innovative school. Comments and suggestions are welcome: our next Board is in October.