Fritz Simons, global managing director and co-founder of Carmudi, is regarded as one of the world’s leading authorities on competitive advantage and go to market strategy.
Mr. Simons recently spoke with Babar Khan, the entrepreneur in residence turned managing editor in the Dubai office of Ephlux Insights and the former CMO of Application Services with Ephlux in the MENA region. They discussed strategies to detect and develop ideas that have the potential to impact how companies think about competitive advantage. Edited excerpts of the discussion follow.
What are the key drivers of successful innovation-driven entrepreneurial (IDE) ecosystems?
We operate from our global Headquarter in Berlin, Germany. In fact, one of the reasons why we do this is because this city has developed into some sort of ‘European Silicon Valley’. A historic city, lots of free time activities and low living costs have attracted many young international professionals. They tend to be more innovative and hence we have seen an incredible growth of small and medium sized tech firms.
People are one of the major drivers of innovation if they get the right environment to work and foster in. What also helps are flat hierarchies. Many established companies have failed to reinvent themselves because the same people that have been there for years have been trying to control and manage progresses too tightly. Only if it is part of the company culture that going against the stream is worth a try, it will lead to innovation. In conclusion: Bringing together the right, young and ambitious people and motivating them to try and make mistakes will give an innovative edge over your competitors.
What digital capabilities does Rocket Internet focus on?
Over the last years, Rocket Internet has gathered significant experience and best practices especially in the eCommerce sector all over the world. Particularly from a technical perspective we are able to do things right the first time by looking at what Rocket ventures have done before. This includes scalability of the platform but also other important topics such as security.
Beyond that, Rocket has established an enormous global network of brilliant people. We as Carmudi benefit from this as we ourselves operate all around the world. Hence, there we have access to a large pool of first-hand knowledge and experience that we can utilize in all of our markets. For example in Pakistan we have direct connections to many of the major online players in the country.
What data is most critical to your people’s ability to work smarter?
For us customer data is absolute priority. We use a variety of tracking tools to gather quantitative data but also a lot of qualitative feedback to constantly reevaluate what our users like and don’t like about Carmudi. Of course this data needs to be 100% accurate. Only then it allows us to get a clear direction on what we want to achieve as a company. By channeling our effort on what makes a difference to our users, we work smarter and more efficiently overall.
How do you derive value from business complexity while keeping that complexity manageable?
Business complexity has never been something we are trying to achieve in any way. However, rapid growth and expansion automatically increases the complexity of operations. We counter this through clarity and simplicity in hierarchies as well as direct and to-the-point communication. We operate in Asia, Middle East, Africa and Latin America. The only way we can keep this young but global operation manageable is pulling it together as much as possible. This means communicating with each country at least once a day. Global calls also do not require a set meeting time. We are always reachable and mostly only a click of a button away.
What metrics do you use to track whether you are delivering customer satisfaction on a daily basis?
Although we are not an eCommerce business in the classic sense, we use very similar metrics. One of the KPIs we look at is the conversion rate of how many users that come to our website actually inquire with our sellers for any of the offered vehicles. Furthermore, we measure the engagement on our site, i.e. metrics like how long do people stay and how many pages do they view in one session. Furthermore, we gather qualitative feedback from our users. This is made possible for example through direct dealers (or more generally speaking, sellers), events but also through e-mail questionnaires we send to our valued users. We appreciate any feedback and we also spend a lot of time evaluating and acting upon it.
How have you gained a competitive advantage in the digital economy?
We benefit greatly from international synergies. With our global headquarter located in Berlin we have access to world class resources and people with a lot of international experience. We couple this with local talent in the countries we operate in, such as Pakistan. This a somewhat “glocalised” approach, which comes down to combining synergies from experiences and learning around the globe with localized knowledge in the countries we operate in. So far we have found that this is one of our greatest strengths in delivering outstanding value to our customers.
How does Rocket Internet create, identify, and evaluate new venture opportunities?
In our case it is actually remarkably simple. Car classified websites have been super successful in many of the developed markets around the globe such as the US and Germany. In combination with Rocket’s expertise in emerging markets, we are convinced that we can provide a great offering to our clients in Pakistan and other countries around the globe.
In your experience, how has the process of starting new ventures varied geographically and culturally?
Of course differences between geographies and cultures are huge. Our approach is one of Glocalisation. We identify international best practices to maximize synergies between different markets. With these best practices we enter the market in a relatively standardized way. However, as we continue to learn more about a specific market and regions within it we continue to localize our approach. From our experience this gives us a great competitive edge. We keep the speed up but build something our local customers want.
What’s your advice to aspiring entrepreneurs on navigating the venture capital investment process?
Unfortunately, I cannot share any details on this. However, one advice I can give to other entrepreneurs is that being convinced yourself of what you do helps a great deal in convincing other people that your venture has a great future ahead. Hence, always question yourself whether you are really on the right track.
How should aspiring entrepreneurs start enhancing and expanding their networks?
From time to time, networks can be incredibly helpful. Always remember that if you want something from someone you must always be willing to give in return. Approach people with an open and helpful attitude. Don’t think of it as building a network but rather as getting to know people. This way your relationships will be more personal and hence way more fruitful.
Thank you very much, Mr. Simons, for sharing your perspectives with us.