Week 4!

Name your Hero Antipasto [3 grams]

Hero: a person who is admired or idealized for courage, 

outstanding achievements, or noble qualities.

In this section, I would like to challenge the idea of a single Venture Hero. Heroes usually gather the best attributes and idealized traits. Sometimes, this excessive focus on positive or desirable traits undermines the importance of seeing the whole picture. They are idealized for their achievements, without worrying too much on how a person got to be a hero in the first place. As a result, we often build a narrative around heroes that underestimates the value of partial failure, self-doubt, or even luck. 

Over the past year, I’ve dedicated my time to listen and read about pollsters’, consultants, and campaign managers personal and professional lives. From these stories, I could draw a vast set of traits that I think could help me become a respected consultant in Argentina. For example, in 2014 I had lunch with Stan Greenberg. Together with other employees at his company —GQRR—, we were avid for stories of how everything had begun. We were surprised to see that a basement, two phones, and two computers were the first polling setting they had put together. His book, Dispatches from the War Room narrates, in a vivid and realistic way, the challenges and obstacles he had to overcome. The professional relationship with other consultants, the role of friendship in such a competitive environment, the importance of not succumbing to “group-thinking” when you have a strong argument, were some of the lessons I drew from that lunch and his book. 

Similarly, reading James Carville’s book “Love and War”, I could understand his decision-making frameworks, and reduce the anxiety of creating a new firm in Argentina. Take, for example, a personal decision in his life. Early in his book, he mentions that after 20 years of living in DC, he moved back to Louisiana. This presented several professional and personal challenges to him and his family. I can see myself going through similar challenges when moving to Argentina in the middle of a year, and drawing on some of the lessons he proposes in his book.

I also look up to Steve Jarding. I admire the way in which he blends theory and practice. He shows deep vocation to his field and continuous dedication to his students. Throughout his classes, he has instilled —simultaneously— strong ethical standards, strategic vision, and helpful pragmatism. He has also given me key advise on how to move forward with this startup. 

Even by listening to young and emerging consultants, I could learn the importance of thinking about generational differences in the candidate-consultant relationship. 

As a result, I think of Venture Heroes as a set of people who inspired —and continue to inspire me— in different ways. With their weaknesses and difficulties, these are people the ones who started from the bottom and made it to the top, with hard-work and sacrifice. Through my venture, I would like to inspire other Argentine students to return to their country, to build something that lives up to the academic opportunity we had by coming to the Kennedy School, and that advance stheir fields in unimaginable ways 

Lean Testing Kabob Platter [8 grams]

So far, I have learned three lessons. First, I learned that the time elapsed between (a) the initial approach/first meeting with the client and (b) the actual closing of the contract should be short. After a first approach and if the client seems interested, the contract has to be signed without much further delay. Several preliminary approaches to clients have confirmed this. Our services addressed a need of our clients and there was interest in acquiring them, but we sometimes were so interested in selling the service, that we provided key insights of our products before closing the contract. 

Second, I learned that clients want simplicity. They barely have time to meet with a consultant or to look at long proposals, so the first meeting has to convey a persuasive and solid message around our competitive advantages. This is sometimes difficult, as we are trying to bring a new concept in the way of doing political consulting in Argentina.

The third thing I learned that selling a political consultancy service requires more than putting together a selling force. There is a need to design an incentive scheme and a training program. In this way the selling force can be motivated to join the mission of the company and can start thinking of transitioning from their current jobs to a full time job with i4 group. 

Given these lessons, we plan to keep the sense of newness and cutting-edge public opinion research techniques (e.g. a 24/7 dashboard showing social media activity for a candidate). The fact that the team is young helps bring this message across. 29 companies are providing polls in Argentina. 27 of them are headed by consultants of over 50 years of age, trained in traditional polling and providing services under a consultant-centered approach. However, while NEWNESS should remains a key aspect of our value proposition, we understand that the transition from classic polling to predictions based on big data will require a pedagogical effort on ourselves, to make sure our clients understand what we are offering in a way as simple and straightforward as possible (lesson 2). 

Full customization of our products is one of our value proposition assets. However, when considering the need to close contracts in a reasonable amount of time (lesson 1), we understand that we will not be able to start from scratch with every new client. As a result, we will have to design pre-established frameworks to manage campaigns that combine cutting-edge research techniques with local political dynamics (particularly at the subnational level).

Finally, we will have to design a training program for our selling force (lesson 3) and discuss an incentive scheme (with finder’s and referral’s fees) to promote a targeted approach to the market. For example, we are in the process of analyzing the electoral calendar in Argentina and Latin America, to find a person that could potentially help us get into that market. 

More information on the strengths and weaknesses of our venture will come soon. 

Thanks! 

Week 3!

My takeaways from the simulation

The simulation was a unique opportunity to blend theory and practice. The activity was absolutely worth the time and preparation, since it allowed us to apply some of the concepts from Entrepreneurial Finance, but also from negotiations, entrepreneurship, management, and leadership courses to real-life situations.

I’ll start with the sour spots, because they are few and improvable in years to come. For future editions of the simulation, it would be helpful to have a few more minutes to debrief. At the same time, the system for uploading deals was a bit confusing. 

On the positive side, the organization and logistics were excellent. The guidance that was provided to students before the simulation was key to the exercise’s success. There is always a sense in this class that someone is looking after the students. 

I was assigned the role of founder of secondopinion.com, a company that provides medical advise and health counseling through an online platform. My task was to scale an ongoing pilot program. One of the things that was really interesting is that the students could seat wherever they wanted in the room —as opposed to having pre-arranged seating by roles—. As a result, when the simulation started, looking for funders and employers was particularly challenging *just like in real life). Another interesting feature of the simulation was that investors had specific preferences and interests to allocate their money, and employees had different priorities and needs. This added complexity to the process of building teams and finding the right source of financial support for your venture. 

During the simulation, I was talking with more than one VC simultaneously. I soon realized that they wanted exclusivity and to “feel special”, so at different points they left the negotiations abruptly. Once I learned they had specific interest to allocate their money I let all the VCs leave the table and re-focused on strengthening the team. I hired an IT Director and a Marketing director that would help us raise money. Eventually the VC came back, with less expectations, seeing a stronger team and willing to join. 

As I looked for funding and building a professional team, I realized that the trade-off between retaining control and scaling up was real. I was lucky to find a Marketing Director that would work for free, but when the time came to look for funding, the venture capitalists were anchoring high in terms of requested equity. There was a moment in which I thought I would have to give away more than a third of the company. I eventually raised the upper-bound goal assigned to the role, but I had to build a board of directors and gave away 27 percent of the venture. 

A very helpful thing was to hire employees early on and communicating the vision of the venture to them, so they could join me in the task of raising money. While I closed a deal they were looking for the missing funding, so the team worked in a highly coordinated manner. 

One of the things I would add to the exercise to make it more realistic is a limit on the amount of equity founders can give away. Not having a limit allowed founders to give away a large part of the company for money, even a higher share of what would perhaps be reasonable for a startup. 

If I did the simulation again, I don’t think I could add much more value. Things turned out really well for secondopinion.com, in terms of the team that we built and the amount of money that we raised. Perhaps, on a second round, I would be able to handle things in a less chaotic way, and add more planning to the negotiations, following some of the suggestions by Feld and Mendelson.

Scaling my venture

The process of looking for money has already started for i4 Group. We currently have three main sources of funding. With my partner, we requested a loan of 200,000 pesos (the equivalent of USD 15,000). The loan we requested has already been approved by the lending bank, and will be disbursed in two stages over the next 6 months. The repayment period is 10 years with an annual interest rate of 5%. 

Another source of funding are 2 VCs in Argentina, that will provide us with the money to have our campaign management platform designed and hosted in a server. They know the project, know the team, and are willing to invest. Although one of them is not well versed on the activities of a consulting firm such as ours, his successful career in the private sector could potentially put us in the path of getting to know several new clients in a brief period of time, including from Latin America and the Caribebean. Discussions about equity still haven’t taken place, but we expect to raise approximately 200,000 additional pesos, 100,000 from each VC. 

Because we want to know exactly what to expect when entering negotiations with the VCs, my partner and me have scheduled separate meetings from the regular weekly Skype meetings we have been holding since January 2015. Given the lack of time we face (Presidential elections, as well as most subnational elections will take place October 31st), we have prepared a plan to be able to handle to combine the potential advise of the investors with our pre-existing scheme to use the money. This involves explaining and providing information to the VCs. 

The plan to allocate the money to the development of products is key, as the two VC will most likely want to have a saying on the purpose of the money. The money we received should be earmarked for specific processes and goals, regardless of unexpected needs that may come up. In the words of Feld and Mendelson, “the single biggest mistake people make during negotiation is a lack of preparation. It's incredible to us that people will walk blindly into a negotiation when so much is on the line. And this isn't just about venture deals, as we've seen this behavior in all types of negotiations” (p.130).

Human capital

Several times throughout the startup creation process, my partner and I have discussed the retention strategy for the two programmers and two IT coordinators that have joined i4 Group . They joined us trusting that the company would grow and would be able to integrate everyone. Handling this issue from the United States is challenging though. 

Broadly speaking, there were three alternatives: salaries, equity, and a combination of salary and equity. So far, we have issued payments to the two programmers but only for the completion of the projects (as opposed to monthly and regular payments). 

With the money we raise, we expect to consolidate the team and face the upcoming elections. We plan to have a small working place or office. The following milestones will be followed this year:

I am currently writing the responsibilities of each one of the team members, including my partner’s and my own. Up to date, we have been working and advancing at a fast speed, under a chaotic approach to assigning responsibilities. My prediction is that this style of work won’t allow us to scale and face the upcoming elections in a organized and coordinated way. For such purpose, I also intend to write the compensation scheme and tasks for a part-time selling force that could potentially join us. 

Week 2 with Special

Experiment time

During April 2 and 3, the event Thinking Argentina 2030 took place at the Kennedy School, organized by the Harvard Argentine Society (which I preside). The participants of this 2-day seminar were 30 prominent future leaders of Argentina under 45 years of age, from several areas: private sector, public sector, non-profit, and academia.The main purpose of Thinking Argentina 2030 was to analyze and reflect on the international and regional scenario that Argentina will face in the next 15 years. This event had the ultimate purpose of identifying the main opportunities and threats to the national development process and outline a national strategy. 

Public leaders from the three levels of government participated in the seminar. During breaks and informal contact with them, I could exchange visions on the role of consulting, particularly with officers from the subnational level. Direct contact with them provided me with more information on their needs, their financial capacity to buy our products, their paying constraints, their timeframe to work during an election, etc. I had the chance to speak with 4 people: a national candidate’s campaign manager, a state-level public officer, and two mayors.  

Regarding the first hypothesis I stated in my first post (customer segment: whether mayors and governors could find in i4 a valuable service for which to pay a monthly fee), I could confirm that subnational public leaders would be able to make a monthly payment for a personalized, high-quality consulting service. However, I could also sense that selling our products would involve providing more visual information to our potential clients regarding the competitive edge of our offer. 

One of the things I learned was that they would be willing to pay more for an exclusive product, as long as they had the guarantee that we would not sell the same product to an opposition candidate. For example, our social media analytics tool provides insights, not only on how to increase and expand online engagement of our client, but also on the potential flaws and pitfalls of other candidates' social media strategy. This tool, according to what 2 of the people I contacted said, would have to be of exclusive use within a certain constituency. As a result, we would have to bear in mind the need to incorporate the cost of opportunity of signing exclusive contracts. 

Finally, I also learned about the need for criminal justice services and how victimization surveys could work as a good product in the intersection of public opinion research, consulting and criminal justice (my second hypothesis). This is a source of information they would not be able to get from the administrative data and would provide them with the dark figure crime, i.e. those crimes that haven’t been reported to the police. 

Testing Tureen

On this vein, apart from my three previous hypothesis, I plan to test two additional ones, namely one regarding the time needed in advance of elections that is usually taken to hire a consulting firm and the role of election "seasons" on the revenue stream of the company. These question arise because this year Argentina will have presidential elections, but I will be returning to Argentina in June, and would like to know whether my predictions are accurate with regard to the potential contracts we could sign between June and October (I may have overestimated or underestimated). I would also like to test wether the market is as cyclical as I proposed on my revenue projections, or whether there is continued demand for public consulting services in between election season. With this information in mind, I will be able to design a scheme of pains and gains of my services.

The following table summarizes my hypothesis, my proposed research plan, and intended information to be surveyed.

Hypothesis	Area of research	Activity involved	Contacts
1. Mayors and governors would pay a monthly fee for a high-quality product	Customer segment	Interviews	Interview with Mónica Tomei, Omar Abdo, Jorge Macri, and Monica Fei, Mayors of Argentina.
2. Mayors would be interested in a specific product built around the need to respond to rising crime levels.	Value proposition	Research / Interviews	Conduct research on the types of products could be innovative in the field of criminal justice and public security consulting (crime mapping tools). Interviews with Mayors of mid-size cities of Argentina.
3. Graduate students from Latin America in graduate school are potential clients.	Key partnerships	Interviews	Have semi-structured interviews on when they want to run, what kind of services would be of value to them, possibilities of association, etc.
4. The average time needed before an election to close a contract is 1 year.	Market research	Research	Analyze media articles, poll results, TV shows of political analysis.
5. The election consulting and campaign management consulting field is highly seasonal.	Managing growth	Research / Interviews	Interview specialists and practitioners: Prof. Chase Harrison (Graduate Practicum in Survey Research), Prof. Steve Jarding (Running for Office and Managing Campaigns), David Axelrod (contacted his office), Jamil Mahuad (former president of Ecuador) and 3 consultants from Argentina.

Simulation Sundae

During the simulation game, as a Founder I think I could encounter two dilemmas. The first one, about scaling in a context of uncertainty. In other words, on whether to scale up with a lot of risk or continue with the current size and potentially lose an important opportunity. The second dilemma I could face would be about a difference with my partner about a strategic turning point of the startup and in a context of rapid change. Finally, an issue I would probably have to deal with is hiring and working with the right team, drawing on the strengths of different profiles and potential employees. As an investor, I know I might face driven and energetic teams, but would maybe have to deal with very chaotic founders, or very raw projections on the financial performance of the startup. As an employee, I would have to face the tradeoff between belonging to the founding team with low wages and the promise of a successful career as a shareholder of the company, or simply earning a salary for my work. Moreover, in the context of high competition with other ventures, I would have to chose between different companies with uncertainty. In my case I would prioritize expansion over control, with the possibility of building a longlasting innovative company. 

i4 Group, a passion for political intelligence

A note on the Total Addressable Market (Appetizer!)

A political consulting firm specialized in campaign management and public opinion research would have a very dynamic addressable market. The full potential of the addressable market unveils every 4 years, or 2 years in the case of midterm elections. This does not mean that there will be no demand for the company services during non-electoral years, but we will have to struggle to keep existing clients after elections (by shifting our consulting services from campaigns to public sector consulting) and that we will have to find countercyclical markets, for example in other countries of Latin America. Until 2020 elections will be held successively in Perú, Colombia, Ecuador, and Brazil. The short and long-term addressable market assumptions are important, but they should be looked at with the seasonal effect of election years in mind.

Despite these considerations, the TAM for i4 group is divided between campaigns or elections, and public leaders in office. When measuring the TAM for my venture, I consider the three levels of government and the two branches that hold elections, namely the executive and legislative. This involves mayors, city councilors, governors, state legislators, congressmen and women, and the president. The following table summarizes the findings:

The sub-set of the TAM that we will address are subnational governments. We recognize there are existing and established consulting firms that are already working with big candidates during this presidential election year. As a result, rather than looking for big and well-known candidates though a top-down approach, we will adopt a bottom-up strategy, starting with mayors and governors, and subnational house members. This would allow the team at i4 to gain experience before the 2019 presidential election, and get to know the role of provinces and cities in determining national elections. Naturally, this would entail lower pricing to our services because of the lower fundraising capacity of mayors and other subnational leaders.

A brief description of the Business Model Canvas (Entree)

The difference that i4 group wants to bring to the Argentine public opinion research market is the constant search for great human capital and the latest available tools to analyze big amounts of data. That is why our value proposition relies on newness, high performance as well as a notion of getting the job done, and customization. We would the use the most advanced tools (e.g. social media analytics) tools and customize it to local needs and running candidates. Customization, in particular, is perhaps the largest flaw of international research companies landing in Latin American countries with low to non-existent knowledge of local party systems, political traditions, and electoral dynamics.

To achieve such purpose we have already been partnering with local vendors and companies that could provide us with different services and products that would enhance our research, including mapping and geolocating voting patterns, conducting social media sentiment analysis, and processing large datasets from previous elections to predict current elections. We also recognize that my experience at the Kennedy School could provide a unique opportunity to reach out early on to current students - future candidates throughout Latin America.

Our customer segments would be divided by level of government and their current role in the public sphere (running for office or in office). Our first customers would receive a completely tailored and dedicated service, partly due to our excitement about the endeavor, but also because we decided to provide candidate-centered public opinion research and dedicated personal assistance through an online platform that gathers all the data relevant to the election. The team we are currently putting together has that idea in mind, and has a very productive equilibrium between academic excellence and experience as practitioners. 

The hypothesis I want to test about my customer segment is from subnational elections and government. I want to test whether mayors and governors could find in i4 a valuable service for which to pay a monthly fee. My intuition is that local and state-level is guided mostly by traditional politics and policymaking and, at the same time, big consulting firms are not interested in small and medium clients. As a company we would try to bridge this gap by bringing in the latest research techniques to customers that are not frequent consumers of these products. I would like to see under what conditions they would be wanting to hire our services, what would be the gains for them, what are the pains that they are trying to overcome, and what value they would see in a cutting-edge consulting firm landing in subnational districts.

The other hypothesis I want to test is related to our value proposition. I want to help design a specific product around the need of mayors in office to respond to rising crime levels. The product could contain strategic advice on how to manage local police forces, mapping crime techniques, CCTV location, victimization surveys, etc. This is currently the main concern at the local level, both for citizens and public officers, as shown by private and public statistics. 

Finally, I would like to test a hypothesis about the key partnerships i4 will establish with prospective candidates that are currently attending graduate school. I would like to understand what they would need, what are their requirements, and under what conditions they would hire a consulting firm such as i4. I would also like to learn more about the early

A note on our brand (dessert!)

We created i4 with the intention to be the best consulting firm in Argentina in the course of five years, and the best LATAM company in 10 years. We want to change the way in which political consulting and public opinion research are conducted in Argentina. Through our mission we want to outperform existing firms that offer traditional products (e.g. survey research) with technology and rigorous statistical analysis. At the same time, we want to provide customized services and a sense of “getting the job done” with deep knowledge of local politics, something international public opinion research firms often lack.

i4 Group would work with a combination of permanent staff but would also be a hub of the best young consultants with expertise in different fields (communications, education, health, criminal justice, technology, big data and data visualization, etc.). My partner has been Secretary of State for over 8 years, and has been appointed to other national offices throughout his career. Together we have built this company to develop the most accurate and reliable political analysis. Our ability to gather relevant information in a timely manner and from multiple sources will allow us to make the most comprehensive assessment of our clients’ strengths and weaknesses, identifying their biggest opportunities and threats.

We assume disruptive innovation as a necessary condition for success in the existing market. The acceleration of technological change requires constant reinvention of communication tools to build identity, message and audience. Our commitment to this approach allows us to bring our customers the latest findings in the fields of artificial intelligence, natural language processing, data mining, and behavioral science. The products we designed, including social media analytics, microtargeting, rigorous impact evaluation schemes, big data visualization, smart cities design and prospective analysis, reflect this.