We are thrilled to announce that we have signed a contract with a major new partner in Colombia. Carvajal Tecnología y Servicios is a well-known Colombian company with operations in 15 countries that is already working with both shopkeepers and their suppliers to develop innovative technology solutions. To give just one example, they are working with the Colombian government to offer financial services to lower-income communities via a payment network installed in small retail stores. Their other products include business intelligence, e-commerce platforms, and Business Process Outsourcing (BPO) and Information Technology Outsourcing (ITO) services, among others. Carvajal Tecnología y Servicios is part of Grupo Carvajal, a Colombian company founded in 1904 with seven different operating units and nearly $2 billion in revenues.
As part of our alliance Carvajal will be deploying Tiendatek in shops throughout Colombia and together we will be developing and commercializing new products for consumer packaged goods companies, financial entities and others. In a small world twist, we worked with shopkeepers involved with the Carvajal Foundation several years ago to test and refine the first Tiendatek prototype.
The goals of our partnership are ambitious, and we’ve already gone public with the announcement, so stay tuned for exciting operational updates.

Frogtek Wins Major Competition For Mobile Startups in Europe

In dramatic fashion, we learned in September that we had won first place in Vodafone Mobile Clicks, described by the New York Times as the biggest competition for European mobile start-ups (we are a global company but our main technology office is in Spain). Our CTO Guillermo represented us at the finals in Amsterdam and later collected the prize money of €150,000. More than anything we were humbled to be mentioned in the same sentence as so many impressive companies.

You can see our presentation for Vodafone here and an interview with Guillermo immediately after the awards ceremony here.

Frogtek Mexico Reaches the Finals in the IniciativaMX Contest
We are also proud to announce that we were chosen from over 50,000 applications as one of the 50 finalists for Iniciativa MX, a TV show in Mexico that highlights the best social initiatives in the country. This unique program brings together the leading television channels to create awareness and support for social entrepreneurs through a reality-show format. Fortunately we didn’t have to live in a camera-covered house and received over $100,000 in support as well as a very solid stamp of approval. Moreover, all of the finalists were recently invited to have breakfast with the President of Mexico Felipe Calderon!

New Operational Strategy in Mexico

We are preparing to implement a much more aggressive sales and deployment strategy in Mexico and to help prepare we have created new sales roles as well as convinced a seasoned entrepreneur (see bio below) to join our team. As part of this planning process we are now riding in the delivery trucks of a key partner visiting over 40 small stores per person per day and at each stop we are testing different sales pitches and pricing models in order to refine our value proposition. We will have much more to report here in our next newsletter.

New Web site at Frogtek.org

It was well overdue but we finally have a new Web site. The new Frogtek.org (or Frogtek.com) has new information about our products, activities and awards and we will continue to add content in the coming weeks and months. Check it out!
Team in Mexico Grows

We have grown the team in Mexico in order to accelerate deployment, mostly recently with a very experienced entrepreneur in his own right.
Marcos Eshkenazi. We are extremely excited to have Marcos join our team as he is already a successful entrepreneur with a long record of building companies from the ground up. In total he has founded 15 different companies and accumulated more than 18,000 “flight hours” related to building start-ups. Among his companies are: Digital City, the first distributor for Movistar (Telefonica) in Mexico; Avizpate.com, an online travel comparison service; and Chikabum, the first company to bring custom content to mobile phones in Latin America. Marcos is also an investor in Frogtek so we want to give him a double welcome. Welcome Welcome Marcos!

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.

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!

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:

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!

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!