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> We could not be more thrilled to announce that we are the 2011 winners of the biggest competition for European mobile startups, Vodafone Mobile Clicks. A special congratulations is also in order to our CTO Guillermo who represented us both in Spain and at the European finals in Amsterdam.
More details about this competition and our business model in general can be found in a (very) recent article on the New York Time’s Web site (copied and pasted below).
Metric for Microshops: Frogtek Wins $206,000 to Help Shopkeepers in Emerging Countries
By CIARA BYRNE of VentureBeat
Published: September 16, 2011
Spanish-American startup Frogtek just won the biggest competition for European mobile startups, Vodafone Mobile Clicks, with its app to help small shopkeepers in emerging markets run their businesses.
According to Frogtek, a Mexican stall-like, microretailer stocks an average of 1000 products from 25 vendors and it is often managed with nothing more sophisticated than a paper notebook. Frogtek wants to change all that with the help of the $206,000 (150,000 EUR) prize.
The product consists of a bar code reader connected to a mobile application running on an Android smart phone. Every product sold is scanned and tracked by the application. This means that shopkeepers can, often for the first time, track inventory, calculate daily sales, identify best and worst selling products and order online from vendors. Access to these simple metrics can be nothing short of revolutionary for shopkeepers.
The inspiration for the product came from micro credit agents in Columbia who, 5 or 6 years ago, started using PDAs to record data from credit rating interviews with applicants who ran shops. “For many of the shopkeepers this was the first time they had seen their numbers” says Frogtek CTO Guillermo Caudevilla. “And they said ‘I want something like this for my business’”. Founder David de Ser heard about this project and saw that since Android phones had become available he could make an application accessible to these shopkeepers.
The first market was Columbia, where Frogtek has run pilots for 2 years and the startup hopes to be in 500 shops by the end of the year. Mexico is now also a focus with 120 shops already up and running. According to Caudevilla, 1 in 100 people in Mexico runs a shop and microretailers are responsible for 5 percent of GDP. Worldwide there are more than 40 million microretailers.
Microretailers are of great interest as distribution channels to large vendors like Coca Cola and Procter and Gamble as well as banks, mobile payment companies and micro-credit institutions. However, because of the owners’ informal or non-existent accounting systems, accurate data on their activities can be hard to come by. Frogtek’s business model is based on selling that data as well as getting a commission on online orders made via the application. Big companies will also often purchase or subsidise the phone and bar code reader. “We are starting a trial in Mexico with Coca Cola.” explains Caudevilla. ”We just signed an agreement with the third biggest company in Columbia to have another pilot and the second phase of that would aim to reach 120,000 shops in Columbia within 5 years”.
Subsidization is certainly necessary since the cost of the equipment, $100 for the bar code reader and $200 for an Android smartphone, is still prohibitive for most microretailers. The big challenge for Frogtek in the future is therefore to create partnerships with large companies who reach thousands of microretailers. Frogtek will use the prize money to help grow the network of retailers and partners.
Most of Frogtek’s competitors make applications on PCs for larger retailers like minimarkets. “We are the only people doing this on a phone which is 2 or 3 times cheaper. The application is completely tailored to the needs that they have in emerging markets” insists Caudevilla.
A big issue for all social enterprises is how to measure their social impact. Often they use a combination of breadth, the number of people reached, and depth, the impact on individuals. When it comes to gauging depth, Frogtek has an advantage. “We are making a measuring tool.” Caudevilla says. “At some point we can measure if they are selling more, reducing expenses, increasing margin, whether they have given up selling bad products. What we are doing is giving these people the power to make the best decisions.”
Frogtek was founded in 2009. The 18 employees are based in Spain, Columbia, Mexico and the United States and the company is current angel-funded. One of the investors is Josh Mailman, the first investor in Grameen Phone, the biggest mobile operator in Bangladesh.
>Two Years and Counting…
There are different ways to measure the age of a company — for example, from when the founder had the original idea, the first dollar spent or the date of legal incorporation. However, the definition we use most is when we received investment because that is when we ramped up our learning via hiring a team, turning protypes into market-ready products and spending every day with our customers. That date was two years ago this month.
While many challenges lie ahead, we’re proud of our accomplishments so far. First and foremost, our product Tiendatek has repeatedly and demonstrably helped our users to improve the profitability of their businesses. As a social venture this goal is core to everything we do. Second, by demonstrating value to companies and other organizations we are deploying phones more quickly and efficiently via new collaborations. As a for-profit company these partnerships help us scale in a repeatable way. Third, our team, culture and processes have fostered any environment where we continuously innovate. As people this makes Frogtek an exciting place to work.
Of course, none of this would be possible without friends and supporters like you so we want to thank you again for the last two years and the many, many more to come.
Tiendatek in the Top 15 of the Ashoka Changemaker’s Competition
We are thrilled to announce that out of nearly 900 entries from 83 countries, we have been selected as a top 15 semi-finalist in the Changemakers competition co-hosted by eBay Foundation and Ashoka’s Changemakers. The top 10 solutions with the most votes will go on to compete for five cash prizes of $50,000 USD each to invest in scaling their idea.
Collaboration with FEMSA Coca-Cola in Mexico Kicks Off
We are now working closely with FEMSA, the largest bottler for Coca-Cola in Latin America, to deploy Tiendatek in Mexico City. FEMSA regularly visits their best retail partners to provide a range of consulting services and negotiate prices and as part of this program they are now offering Tiendatek as a value-added service. To date the feedback from shopkeepers has been enormously positive and we are delivering phones with our software every week to new users.
Customer Spotlight: Using Information to Give More Power to Shopkeepers
Nearly every day we get feedback from our users about how Tiendatek has helped them to improve their businesses and we want to start sharing more of these stories.
In the case of Sara, a shopkeeper in Mexico, one anecdote in particular illustrates how Tiendatek has given her more power when negotiating with suppliers. A couple of months ago a salesperson was pushing a group of products so he could make his own quotas but through the Tiendatek reports Sara noticed that one of these items was not selling well. When Sara decided not to buy this product, the provider got upset and stopped his visits entirely, leading Sara to call his supervisor. The supervisor was so flabbergasted that he came to Sara’s store personally to apologize and assure her that sales visits would re-start immediately (and we hope he scolded the salesman).
This example about the democratization of market data not only empowers the shopkeeper, it also improves the supply chain by better aligning supply with demand and ensuring that products do not simply sit on a shelf collecting dust.
Operations Team Grows in Mexico and Colombia
We have grown the Operations teams in Mexico and Colombia to help roll out Tiendatek as well as provide additional training and support to our users.
Diego Velasquez, Sales Associate (Colombia). Prior to joining Frogtek Diego worked for 12 years in the sales group for Bavaria, the largest beer company in Colombia, where he sold a range of products to micro-retailers in Bogota. Welcome Diego!
Alberto Quiroz, Sales Associate (Mexico). Prior to joining Frogtek Alberto was a technical support engineer for Apple Computer in Mexico City where he worked on a range of customer service projects. Welcome Alberto!
Roberto Carlos, Sales Associate (Mexico). Prior to joining Frogtek Roberto was a Web and database programmer for InterMexico in Mexico City where he worked on numerous client projects and technologies. Welcome Roberto!
>We just made it to the semi-finals as one of 15 projects selected. From that pool, the 10 most voted will make it to the final, where 5 prizes of $50K will be allocated. So please help us win all this support and recognition for our shopkeepers! It only takes two clicks, using the widget below, or if you prefer it, you can also use this Facebook application or go straight to Changemaker’s website.
Alan Haberman did not invent the barcode but was the chief responsible person for its wide adoption in its current form. He passed away recently and the New York Times dedicated him a glowing obituary:
Today, trillions of beeps later, what was once a novel technology with uncertain prospects is so widespread as to be almost invisible. It informs nearly every aspect of modern life, providing a means for people to buy and sell things, couriers to track packages and airlines to locate (in principle, anyway) lost luggage.
This transformation, industry experts say, is largely because of the work of one person, a supermarket executive from Massachusetts named Alan L. Haberman, who died on Sunday at 81.
Barcodes underpin our prosperous society by injecting efficiency in so many different ways. They have spread worldwide and can be found on almost all the packaged products consumed anywhere.
We take barcodes for granted but there are still millions of shops who fail to benefit from them. Almost 40 years after the standard was set by Mr Haberman, the vast majority of small retailers in emerging markets don’t have scanners. It is a bit of a tragedy, as 80-90% of the products they sell could be scanned and thus better managed.
Hopefully our Tiendatek and other systems from competitors will help bridge this gap and quickly spread the joyful beeps far and wide!
>As you can see in The Economist’s chart below, a gargantuan amount of wealth will be added to the economies of the emerging markets in the next few years. China will be responsible for the largest growth but Russia, Brazil and India also make the global top 6. Further down the list, Mexico will be adding a very impressive $200bn by September 2013.
Breakneck growth in these economies is clearly drawing attention from the world’s economic actors. Many of the largest multinationals see it as their next big source of growth. For instance, Coca Cola’s 2020 Vision calls for a doubling of revenues by that year, which would mostly come from emerging markets.
Safaricom, of well-deserved mPesa fame, has started promoting Android aggressively in Kenya. They teamed up with Huawei to distribute their Ideos phone, which is an entry level Android phone selling for $100 bundled with 600MBs (we’re jealous here in Mexico, both phones and data plans are more expensive…)
Apparently the phones are selling out as the demand has outstripped expectations. 2000 Ideos are being sold per day, with 50,000 sold so far. Kenya has thus become a hot market for smartphones, in some ways surpassing South Africa.
Let’s hope other mobile operators decide to tap this market and turn the smartphone into a mass consumer device!
>Accounting gets a bad rep for being dry and boring. Fair enough. But if you dig into its purpose and history, you can find a fascinating story. With the proviso that I am no historian, I wanted to offer a glimpse at how many innovations have been spurred by the need to account properly.
Let’s start at the very beginning. Human populations have always traded with their neighbors but when they settled down in growing villages, their trade routes lengthened and the amount of goods exchanged grew. The solution was to craft pottery jars that could hold and preserve the goods while on transit. But when you had 100 jars, how did you know what each of them contained? Traders had to invent writing to account for their wares. Believe it or not, accountants were the ones that invented writing systems (poets were still memorizing their verses).
Of course, numbers and other mathematical constructs had a direct application to ac-counting from the very beginning. Trigonometry can be handy while calculating how much grain a given plot will yield. Algebra apparently received a powerful impetus from the complexity of the Arabic inheritance laws. Even the hindi-arabic numerals came to Europe through accountants: Fibonacci wrote the Liber Abaci in 1202 to show how bookkeeping would be enhanced with the new numbers, advocating for their introduction.
Double-entry accounting took a bit longer. While already in use by Venetian traders in the 1200s, we had to wait until 1494 for Luca Pacioli to write the first formal treatise on bookkeeping and thus formalize double-entry accounting as we know it today.
To keep this post short, let’s fast-forward to the computer age. Initially, programmable computers were huge and designed for the military and big universities. But guess what, the first company to take the invention private was J. Lyons, a British catering company that built the LEO I to manage payroll and inventory.
As the price of computers dropped, there was a quick evolution and all the major corporations purchased mainframes to help their bookkeepers. SAP, Oracle and other huge companies are still innovating in this industry. Later, with software like Intuit’s Quickbooks, even small businesses and individuals with a PC could get the benefits of someone dumber but faster doing their numbers.
Today, accounting is fully democratized among the businesses in the rich world. However, that’s not true with the informal businesses in the developing world: the micro-entrepreneurs. Lacking computer applications, the best of them struggle with paper-based methods that are less powerful than Luca Pacioli’s. That stymies their progress as it makes their operation harder to manage and less likely to get financed.
Luckily, all micro-entrepreneurs already have a computer in their hands: the cell phone. As soon as their interfaces improve and their power grows, their phones will turn smart and will be put to work as accounting tools.
Our belief at Frogtek is that it will take another computer paradigm shift through a combination of mobile phones and cloud servers for these informal businesses to adopt accounting . That is the reason we are building Tiendatek on Android and with a connection to the cloud. Hopefully millions and millions of micro-entrepreneurs will become our happy users in the next few years!
Ben Horowitz is one of the smartest tech bloggers and investors around. He posted today about his views on whether we are currently experiencing a second Internet bubble or not. For the record, he believes we are not and provides very sharp points backed with financials. The main ones are that building software today is much much cheaper than in the past and that there is now a 2bn market to distribute software over the internet.
He then goes on to explain his understanding of the current technological shift:
One thing he does not mention is that the shift to cloud/mobile will soon grow the software consumer market by another 2bn or so by adding all those BOP mobile users as they upgrade to smartphones. This will bring huge developmental benefits as those “new companies that solve important problems” increasingly focus on the BOP.
Back in the mainframe paradigm that Ben discusses, the beneficiaries of technological innovation were the government, the military and the large corporations and universities. As the industry moved to client/server, rich-world consumers started reaping the benefits of venture investment and start-up innovation. Today we are at a point where most activity focuses on them and corporations play catch-up with their employees.
It then follows that the shift to cloud/mobile will re-focus innovation towards BOP consumers. Not only they are legion and will be connected to the digital marketplaces. They’ll also produce the innovations themselves, given the astounding drop in capital needs to build software and the imperative to understand the end-user.
Now, that’d be gargantuan for sure. We can’t wait to see it happen.
>Our management team got together for a week in Bogotá. We had a number of strategic topics to discuss and we spent two full days visiting some of the 70 shopkeepers that are using our product there. We wanted to know how they’re liking our current version. And we took the opportunity to do some usability testing of our web portal with their performance reports. You can see a few pictures in the slideshow below.
The first store we visited was Damaris’. She was profiled in our video for the Mobile World Congress competition and was very happy we had won the award. She was positively beaming when we showed her a news clip from a Spanish tv channel where she appears.
But more importantly, she and her husband Diego explained to us why they like Tiendatek so much. Before they started using it, they would track all sales in their notepad and then spend 3 hours in the evening updating an Excel spreadsheet with their inventory! That shows their discipline and we’re happy they can save so much time with our product.
Tiendatek has also helped them secure a micro-loan and guide its deployment. As a result, the shop has grown significantly and the reports on the phone have helped them understand which products to keep and which ones to let go.
Damaris and Diego are two exceptional people that are using our product to its fullest advantage. It was very moving for us to realize how Tiendatek can help them translate their hard work into an opportunity to move ahead in life. Now we have to go out and find more shopkeepers like them!
Geneva, Switzerland– The World Economic Forum has announced its Young Global Leaders (YGLs) for 2011. The honour, bestowed each year by the Forum, recognizes and acknowledges up to 200 outstanding young leaders from around the world for their professional accomplishments, commitment to society and potential to contribute to shaping the future of the world.
For 2011, the Forum has selected 190 Young Global Leaders from 65 countries and all stakeholders of society (business, civil society, social entrepreneurs, politics and government, arts and culture, and opinion and media). The new class represents all regions: East Asia (50), South Asia (18), Europe (42), Middle East and North Africa (13), sub-Saharan Africa (14), North America (37) and Latin America (16). This year’s selection has more gender parity than ever, with 44% women.
You can see the list of all the nominees here. We are very excited about the great opportunity this represents for Frogtek. Getting connected to such an amazing community will surely help us bring our innovation to more and more shopkeepers.