In this episode of The Venture, we share a conversation with Jakob Angele, CEO of foodpanda APAC, the Asia–Pacific business of foodpanda, part of Delivery Hero’s global network of food-delivery services. Angele sat down with McKinsey’s Andrew Roth to reflect on building a business based on delivering a restaurant meal to someone’s home, which at the time of foodpanda’s founding was something new to consumers and restaurants alike. Angele describes foodpanda’s emphasis on speed, scale, and brand to build market share, even as competitors entered the market. At the close of the interview, McKinsey’s Dilip Mistry offers his insights.
An edited transcript of the podcast follows. For more conversations on venture building, subscribe to the series on Apple Podcasts or Spotify.
Andrew Roth: From Leap by McKinsey, our business-building practice, I’m Andrew Roth, and welcome to The Venture, a series featuring conversations with legendary venture builders in Asia on how to design, launch, and scale new businesses. In each episode, we cut through the noise to bring practical advice on how leaders can build successful businesses from scratch.
In this episode, I’m excited to share a conversation with Jakob Angele, CEO of foodpanda APAC, a leading food- and grocery-delivery platform in Asia. You’ll hear Jakob tell us about how foodpanda, under Delivery Hero, grew into a company with a $30 billion market capitalization, the new challenges it faces with COVID-19, and the culture of rock star–fast execution that helped them adapt to constant change in the early days. We also discuss how opening new markets in Asia can be like starting from zero for many start-ups, and how foodpanda approaches a launch campaign in strategic cities.
Jakob, thanks for joining us. Your company, foodpanda, and its parent, Delivery Hero, are such large organizations now, but there were some initial growing pains and problems to solve when you first joined. Tell us how you got involved and what were some of those initial problems.
Jakob Angele: I joined shortly after foodpanda was founded, roughly nine years ago. It has been quite an incredible journey. We started as a very small company, and food delivery back then was not really a hot topic. There was not much general interest by the media, there was not much money flowing into this industry, and we really had to do a lot of groundwork—not only educating potential investors but also educating business partners on why somebody would like to order food online. We encountered a lot of confusion around that, actually.
So in those early days, we did a lot of groundwork, especially here in Singapore, which was our first market. We, including myself, went around knocking on doors of different restaurants and signing them up. Even today, it’s really a one-by-one process. We signed up some restaurants that were interested in technology, but what we were missing were the really big brands like McDonald’s, Burger King, Pizza Hut, and so on. It was really challenging back then because those bigger companies didn’t really see online food ordering being a thing; they also didn’t really see the need for us.
Andrew Roth: Knocking on doors—I would imagine you’re not doing that today, but that must have been very formative to have gone through that experience when you started.
Jakob Angele: We do this much less today, but there are still aspects in our industry around signing restaurants one by one. In the meantime, we found scalable solutions for those nonscalable processes. But in the early days, restaurants weren’t as supportive of technology at all. It was a very manual process.
Andrew Roth: When you started to sign merchants up and they started to onboard and got through month one, month two, month three, were there moments where you thought, “OK, the data and stories we’re hearing from merchants are extremely positive”? When did you feel you had that product–customer fit?
Jakob Angele: For the first couple of years, I think merchants mainly signed up because they were interested in technology—maybe they were a young restaurant owner, a bit innovative, and so on. And to be honest, in the first couple of years, foodpanda wasn’t really a very sizable business line for them. They did probably 150 transactions a day in their outlet, and then maybe another three to five with foodpanda. It didn’t move the needle for them.
For us, I think there were many “making” moments, but one of them was definitely when we first started to break in and deal with the bigger brands. Here in Singapore, I still recall the first of those that took a leap of faith with us and said, “OK, we’ll give you guys a chance,” was Burger King. We started with one outlet as a test. With them, we also saw that, almost from day one, we picked up very decent orders and decent business volume, and then they expanded very quickly to market.
It took incredible effort to sign this one brand—like 20 or 30 meetings over one and a half years’ time. But then once we had this one flagship brand on the platform, all the other bigger brands were looking at foodpanda all of a sudden and thinking, “Are we missing out?” Then progress came quickly on the restaurant acquisition side.
Andrew Roth: So for Burger King, it took 20-plus meetings and more than a year to get them on. What happened when you did onboard them and they started using the platform?
Jakob Angele: Their expectations were quite moderate at first, but then after a couple of weeks, they were telling us, “This is really interesting. We are now live in one outlet. Can we maybe onboard another ten in two weeks’ time?” At that point, we understood that the revenues we provide to them are actually relevant for them. From there, the word spread, and then things started to move much, much quicker.
Andrew Roth: There’s also product–customer fit. Before you decide how to scale it, first of all, does your service or product solve the problem? With Burger King, you won them over once you were hitting these moderate targets that they had for you.
Jakob Angele: What’s interesting is, if you would have looked at foodpanda or the whole industry in 2014, you would have analyzed for product–market fit, and the analysis probably would have told you that it’s not a fitting product and the market doesn’t make sense. Years later, it would have still been a bit iffy.
I think the first problem was, while you may have the right product, you do need the right content. In a marketplace that includes top brands, beloved restaurants around the corner, it turns out for food delivery that the depth of restaurants you need is not only ten, it’s not only 20, but it’s hundreds and thousands. You need a lot. So that was the first challenge.
The other challenge, which kept us away a long time from this industry really taking off, was service experience. When we started out, delivery times were around 60 to 90 minutes, and the restaurants mainly did the delivery themselves, which sometimes worked well, but sometimes didn’t. It was very inconsistent. And back then, if you had looked at product–market fit, you would have said, “People just don’t want delivery in 90 minutes, and that’s a niche service. Maybe you do this once a quarter if you have a birthday party.”
To be honest, over a longer period of time, we were able, from a technology standpoint, to create a holistic product–market fit, which we have today. That also propelled the business growth over the last couple of years.
Andrew Roth: You’re saying that it can take time to get to predictable revenue, and you have to focus on the experience, the journey, and getting your content right—or, for foodpanda, the number and quality of restaurants onto the platform.
Jakob Angele: Exactly. It’s always important to reevaluate your business, especially your new ventures, if you’re a big MNC [multinational corporation] and launching different streams. It’s always important to keep a close eye on it and reevaluate if this business makes sense—and then to cut your losses fast if you have to.
At the same time, I think often you also need a vision behind it. And even if the numbers don’t make sense today, if somebody has a deeper belief in it and doesn’t look only at the numbers today but has a bit more imagination on where those numbers could lead to, that’s also very important. A lot of good ideas sometimes get killed too early.
Andrew Roth: This is a key topic, because incumbents, large MNCs, sometimes don’t even look at unit economics; they’re just looking at P&L. You’re not going to be cash-flow positive in month three or month four. You’re in this beginning stage, and you’re looking for product–customer fit; you might be looking at things like month-over-month user growth or month-over-month restaurant onboarding. As long as that part’s growing and you’re onboarding new merchants, onboarding new customers, then you can get into “OK, is the business profitable? Do we have predictable unit economics?”
Jakob Angele: I would agree with that. That’s important when looking at very early start-ups or business lines and the P&L still looks terrible. How do you evaluate if this is a good business or not?
One thing here that’s really important is that you don’t look so much into absolute numbers, but you look more into progress. The KPIs [key performance indicators] don’t look as good as they need to be, but are they moving slowly but surely in the right direction?
One metric we started to look at very early on was, for example, customer reorder rate. If a customer orders this month, how much is the chance that he’ll order again next month? In the very early days, this number was extremely low. I don’t want to disclose how low it was in 2014, but over many years, we gradually moved it up to higher than you would see on an e-commerce standard basis. We were able to move this up months on months, year on year, very consistently.
Andrew Roth: That’s a great example of a number and tracking progress on that number. What typically happens in a start-up or an incumbent when launching something new is they measure things like registrations or subscribers, but not something a few layers deep for measuring if the customer is happy with the service, like reorder rate.
Outside of numbers, let’s talk a little bit about culture. Share with us how you’ve built up the culture and a few stories on how you been able to do that from your regional headquarters in Singapore.
Jakob Angele: The foodpanda business model is quite interesting in that regard. On the one hand, it’s a 100 percent technology play. You have all those technology aspects, like conversion on the website, online marketing, machine learning models, but, at the same time, it’s also a very, very heavy brick-and-mortar business with hundreds of thousands of restaurants, hundreds of thousands of riders. Between those different parties, a lot of things can go right and can go wrong.
Very early on, it was clear to us that, despite all the technological efforts, it’s a very heavy operational execution business model, so this rock-star speed of execution was very important. This is really important for a lot of start-ups, to execute fast. Companies often say they want to execute fast, but they are not 100 percent willing to buy into that, because every strategy you choose, every direction you go, always has a trade-off. So rock-star execution, of course, comes with the trade-off of excellence, perfectionism, fully thought-through solutions, and so on.
Of course, being a bigger company today, we changed a lot in those aspects of excellence. Some have become much more important for us, but, particularly in the early days, it was all about speed.
Andrew Roth: How did you enable that? Everyone talks about speed being important, but what were some of the ways you enabled speed?
Jakob Angele: If you have an early-stage start-up, fundamentally it’s a small company. People under- or overestimate how you create a culture and a mindset in an early-stage start-up. In a big MNC, what you do, of course, is you have a very structured process, you build a vision and values, and then you put those values in every meeting room; you include them in your performance review framework. All of those things are super important for bigger companies. But if you’re an early-stage start-up, it’s about getting senior leaders with the right mindset into the organization, getting them hooked on the right idea and the right approach. Then, because the company is so small, just by them living those values as an example for everybody else in the company really enables the right cultural mindset. In a bigger company’s incubator start-up, for example, they often underestimate the importance of the cultural mindset of the first couple of people they hire.
The other thing that helps to put start-ups on overdrive is to hire correctly. Many companies want to play it extremely safe when they hire people—especially if it’s a start-up and there’s a lot of money behind it already. So for, say, the head of sales, they hire somebody who was the head of sales for 25 years at a successful company. And the start-up might have a sales team of only ten people, but they’ll hire somebody who had a sales team of 80 people in the past. It looks great on paper, because that head of sales was excellent where they were before, but their past experience doesn’t help you to move your start-up company to rock-star speed.
What can work much, much better is to hire somebody who’s tremendously more junior but in whom you see a lot of potential. If you hire them as, in this example, the head of sales, the role will be a complete stretch for them. But if they have the right mindset, they will take it up as a challenge and somehow will make it work. Maybe a lot of things will break along the way, but that young head of sales will be very stretched and therefore more able to execute toward speed.
Andrew Roth: They’re hungrier perhaps to prove themselves.
Jakob Angele: Exactly. If you want to set up the perfect system and the perfect processes, then this inexperienced person would be a terrible choice. But if you’re optimizing execution speed, it’s important to take the chance on the less experienced person. If you’re talking about bigger companies incubating start-ups, that’s where those incubations often go wrong—where they make very safe choices on the people side and also move a lot of seasoned people from the headquarters organization into that incubator, where they have a lot of experience but not a lot of hunger and execution drive.
Andrew Roth: It’s the difference between hiring those first few key hires based on their CV versus the potential, as you said, you might see in someone.
Jakob Angele: And it becomes very different over time. What I’m describing was very much true for foodpanda in the first couple of years, but nowadays, with foodpanda being a very sizable organization, with thousands of employees across 12 countries, all those aspects I just described shifted. We are shifting much more toward structure, stability, planning, et cetera. It’s really about understanding where a company is at a given point in time.
Andrew Roth: Are there any principles you’re following to maintain that speed despite being a larger organization now?
Jakob Angele: Execution speed is always tied very closely to decision speed. If you have fast decision-making speed, it translates into faster execution. At foodpanda, at one point we reached a relevant size, and we were operating in eight markets, but those eight markets were extremely different—Bangladesh, Singapore, Thailand—they couldn’t be more different. We were asking ourselves, “How can we be successful in Bangladesh and Singapore with just one headquarters?”
We really pushed the decision making and the strategy downward in the organization, from the regional headquarters down into the country organizations. We saw that this was working very well, and so we did this across all aspects of the company, where we always try to have the decision making as closely connected to the execution part as possible. With that, we are able to make decisions much faster, which then also leads to much faster execution.
Andrew Roth: The scope of those decisions—are they decisions around budgeting, customer journeys, standard operating procedures? If I’m a salesperson in Thailand, do I have the freedom to do lots of things?
Jakob Angele: It depends, of course, on the decision. If you have a decision that, if it goes wrong, will cost you $50 million, obviously that cannot be made by a single person on a very junior level. But every decision has an average place where it sits in the hierarchy of the organization. In organizations that are slow moving, decision making is probably a couple of layers higher, and in faster-moving organizations, decision making is a couple of layers lower. For every kind of decision there is, we always try to have it at the lower end.
Of course, this comes with trade-offs. If you have decision making on the higher end, you have more thorough decision making. You make significantly fewer mistakes, probably, but you also make far fewer decisions, and the decisions take much, much, much longer. Also, if you make the decisions at a higher level, maybe they tie slightly better with the company’s strategy. But if you make them on a lower level, they tie better to the exact needs you have in that specific market or in that specific function.
For us and for myself, it worked really well to move decisions as low as possible in the organization, to really gain the speed. On paper, it probably looks like you would have higher-quality decisions if you move them upward, because the CEO is the best person to be making decisions. But more often than not, the decision-making quality is at least equally good if you make decisions on lower levels—and much faster.
Andrew Roth: I heard another CEO describe it as “Fast makes good before good makes fast.”
Jakob Angele: Exactly. And that’s a good thing, right? I’d rather have a very fast decision that gets executed at lightning speed and then two weeks later find out it was complete nonsense and doesn’t work at all, rather than simmering three months on the same decision and then deciding not to do anything.
Andrew Roth: I would imagine things have changed a bit because of COVID-19. Take us through how you were able to manage this question of central versus local empowerment or execution during the pandemic.
Jakob Angele: COVID-19 has been very challenging for all companies, and foodpanda is no exception. We definitely didn’t come out on the worst end of it, but it’s been a crazy, busy time, with huge amounts of challenges. When COVID hit, we had very diverse situations in all the different countries, with very different reactions from the regulators.
What we see a lot of, especially in the tech industry, is global headquarters churning out global guidelines: “Across all our offices around the world, on Monday we’ll work from home, because COVID is serious and everybody needs to stay safe.” This sounds very good on paper, but we believed it didn’t fit the needs of many countries we are in. So here again, localized decision making comes into play. Already the countries were empowered to make decisions by themselves. Without myself and the regional headquarters guiding or interfering much, all the different countries—and also different cities within the countries—made very different decisions on how to react to COVID, from a team perspective, from a business perspective, and so on. With that, we found a good reaction for all those different markets.
It was really a second step when my original team and I asked ourselves, “How can we support the countries in a structured way from the regional team side?” A lot of points came back to technology, which we run in a centralized fashion. We decided, for example, to churn out a no-contact delivery feature, which we churned out within one and a half weeks. A bit more strategically, we were somewhat in the process to launch our grocery business, so we decided regionally to put this on overdrive and launch groceries and our pandamart business across all those countries even faster than we were originally planning.
Andrew Roth: That’s incredible speed—for contactless delivery to go from ideation to deployment on the platform in just a week and a half.
Jakob Angele: From first discussions to going live in the first market, I think it was less than two weeks. The teams did an amazing job of churning this out as fast as possible. Our success with it really came down to (a) just making the decision very fast, and (b) we also brutally “de-spec’d” the feature. We created a very simple, functional feature, which served the needs of the market at that point in time and therefore contributed very fast.
Andrew Roth: Take us into one of those meetings. I’m sure it can get emotional on what you decide to de-scope. How did you arrive at decisions in these meetings? Was it a top-down approach or through voting?
Jakob Angele: In general, we try to avoid the top-down approach. The teams were excited because they knew COVID is something serious, the countries are struggling with it, and they were just excited that we could find a very quick thing where the product and tech team could support the country teams. And so it was really all hands on deck. I think everybody knew from the get-go that this will be a quick fix and after the fact will need some cleanup. As long as you’re committed to cleaning it up later, most people are quickly aligned.
Andrew Roth: You recently launched in Japan. What we’re finding across lots of organizations right now is that there is balancing required between awareness and acquisition, branding versus performance marketing. When you decide to launch in new markets, how do you typically balance these two things?
Jakob Angele: In Japan, we knew that we wanted to make progress very quickly, because other companies were also preparing to launch, so it was really a race to the finish line. At the same time, we also knew it would be a longer race, because there was already a sizable player in Japan, and it would take some time to catch up. We wanted to move very fast, but we had a long way to go, so it was quite a complicated situation.
Talking about this kind of trade-off between awareness of branding versus direct-impact marketing, what we did is, whatever our models and optimizing considerations spit out in terms of what split to take in terms of marketing, we just topped it up quite a bit on the branding side. No analytical model gives you the full truth, especially on aspects like branding and awareness, and we just wanted to launch in the market with a splash and really build our presence there. It’s hard to quantify, but there are very long-term benefits to building brand awareness as early as possible. If you don’t have many restaurants yet, you don’t have much geographic coverage, so whatever influencer marketing you do, it doesn’t really convert into orders, because you simply don’t have the coverage yet. So we signed up a tier-one influencer right in the beginning for the launch. We also went very early with out-of-home TV marketing. We were quite happy with the results.
For example, we launched outside of Tokyo first, in ten cities across the various Japanese islands. After five months or so, we launched in Tokyo. But even before the launch in Tokyo, we had higher brand awareness than some of the food-delivery players who were already present in Tokyo, because of the high investment in awareness early on. Then the great thing was, once we launched in Tokyo, it was a bit like, “Finally, you guys are here. I keep hearing about you.” So the money was not completely wasted. It helped us have a good launch right from the get-go.
Andrew Roth: Tell me a little bit more about the influencer. Was this person a social-media influencer or a celebrity?
Jakob Angele: It was a widely known celebrity, Naomi Watanabe. She’s quite prominent now also in the rest of Asia. She had a very good brand fit with us. She’s very funny, first and foremost, and also quite quirky. On top of that, when we analyzed the Japanese food-delivery market, one thing that stuck out was that the marketing was very traditional, focusing on standard attributes like speed, assortment, price, which all players do. So we tried to introduce a more emotional component, rather than just strict attributes, and she was really a perfect fit, because it’s easy to connect to her. That was one of our criteria.
Andrew Roth: What about attribution? Have you found other ways to drive attribution?
Jakob Angele: We are spending significant money in awareness marketing. And, fundamentally, that type of marketing is hard to track. We undertake all efforts we can to make the nontrackable trackable. Probably the biggest tool we use is recurring top-of-mind surveys with rather sizable panels, where we measure our top-of-mind performance, our performance across different attributes, like emotional attachment versus how they perceive speed, the price, and so on.
For TV, things are quite traceable and trackable. So we do see quite good correlations there for short and long term. And we also play around with different marketing strategies across different cities. We might run a TV campaign in five cities, and then we exclude one city and, with a bit more data science behind it, get the data out of it long term and short term.
Andrew Roth: On your last point, we’re seeing a trend toward trying to measure awareness-type campaigns, whether it’s offline or online, by turning it on in a few strategic locations, turning it off in one location, and then measuring the incrementality between those two locations to measure effectiveness.
Jakob Angele: It never really solves for the long-term impact. If I’m doing heavy TV today, what is the impact of this in one year? That is the crux of the problem. You can fix it to some extent, but then only one year later, when you have the data, which then doesn’t really help you much because everything changed in the meantime.
A great tool on a macro level is to track top-of-mind performance. If you see you’re trending slowly but surely in the right direction, you know you’re doing something right.
Andrew Roth: Especially for incumbents that are trying to launch and break into a competitive space, like Japan was for you, would a split between awareness and acquisition be 50–50 or 60–40?
Jakob Angele: Those are the food-delivery trade secrets. But to be fair, I think it’s business-model specific. If you run a property marketplace, this might be very different than for a food-delivery business.
Whenever we went a bit heavier on brand and awareness marketing, we hardly had a situation where we regretted that. Vice versa, if you optimize too much toward some short-term impact and ditch too much of your marketing just in conversion and chasing the next order or the next transaction, then there is a risk of missing out on something.
Andrew Roth: If we just focus on acquisition tactics and we don’t find those emotional hooks with the customer and the brand, then the dollars you spend on marketing are just competing with other clicks and your competitors. Whereas the awareness campaign, the content strategy, and the emotion around it are what can build that moat around your brand.
Jakob Angele: Especially for early-stage start-ups, if you don’t build an emotional brand from the get-go and you focus from day one on measurable, tangible attributes, it’s quite difficult to move away from that at a later stage.
Andrew Roth: Jakob, thanks for sharing about your early days creating rock star–fast execution.
Jakob Angele: Thanks for having me.
Andrew Roth: Now comes a segment where we invite experts from McKinsey to provide more context and to draw practical insights. Today I’m joined by Dilip Mistry, a partner and venture builder with McKinsey, based in Asia. Dilip is also a leader at McKinsey Digital Labs and co-leads our business-building practice, Leap by McKinsey. Dilip, thanks for joining us.
Dilip Mistry: Good to be here.
Andrew Roth: Jakob opens up in this interview on the topic of speed, and we talk about rock star–fast execution. What are some of your thoughts from your experience on how incumbents specifically can create this type of speed?
Dilip Mistry: Speed is a really important topic, and I think you can have the right speed at the right time. Jakob talked about the fact that it took him a little while to get product–customer fit, and it even took a while to do that big deal with Burger King—if I remember, it was something like 12 to 24 months. In the early days, it might take a while just to figure this out. But once you figure out the formula to win, once you figure out the business model, you do need to move fast.
And to actually move fast, I feel a lot of it comes down to leadership style. The leadership has to role-model pushing decision making down, which is what Jakob talked about. The leadership has to role-model that some of these risks can actually be borne by people closer to the field, so to speak. And then a healthy dose of a kind of paranoia as well—that if we’re not moving fast enough, then the competition is going to come and take over. I think the leadership needs to role-model the culture that you want so that fast decisions can actually take place.
Andrew Roth: There’s some trade-off there as well. When you push down decision making to the frontline team, they might sometimes make the wrong decision or not the most optimal decision, but you get speed instead of perfect.
Dilip Mistry: That’s right. There is a trade-off, but you also get multiple experiments happening. As long as you’ve created a culture of people thinking, “Let’s learn from these experiments, and let’s make sure we’ve got a feedback loop so that everyone can learn from them,” then I think you can move much, much faster.
And I think some of those ideas do come from people who are close to the ground. Certainly in the years that I’ve been helping corporates build new businesses, some of the best ideas come from people who are closest to the customer. They’ll come out with ways to reduce processes. You’ve also got people on the front lines playing with different tools as well. We all use tools such as Slack and Jira, and these didn’t come from corporate headquarters. They come from people at the coalface, so to speak; they come up with these ideas. So create a culture where people closest to the customer, closest to the engineering, can come up with ideas and then run with them.
Andrew Roth: That’s a good segue to Jakob talking about how foodpanda was able to adapt to COVID-19 by quickly creating contactless delivery, and pulling it off in just a few weeks, which would show that they have a product culture as well, where they can quickly adapt, ship new code, and get things into production.
For incumbents that are working on legacy systems and with a different type of speed, we find that it’s hard to create this product culture. What can you share with incumbents that hear all these great things about how start-ups move fast? What are some specific ways they can think about it?
Dilip Mistry: People have this notion that start-ups are working 24/7 and just cranking out the code. The reality is they’re making smart decisions, such as buying before they build. A lot of times, there’s a lot of software available in various kinds of code repositories, and it’s sometimes quicker just to buy a piece of software. Certainly, if it’s a piece of software that doesn’t differentiate your experience, just buy that, use it, and get it out to market. You may want to build some of it on your own in future releases, but “buy before you build” is a key philosophy that I would encourage corporate business builders to think about.
Also, when you want to get stuff out to market, you might actually create a bit of technical debt—and you need to accept that. If you want to get something out and you want to test it, you might need to hold off on optimization and cleaning up some aspects of your software until later. That’s OK, as long as you accept this technical debt.
Andrew Roth: What is technical debt?
Dilip Mistry: Technical debt happens when you’re busy building software and you choose to take shortcuts that let you build the software quickly. What that means is that there are things that need to be “straightened out” in a future version. For example, you might be writing an algorithm to do a particular calculation, and that algorithm might have been executed in a long-winded way, but it allows you to release to market very quickly. The algorithm can be optimized and written a lot better, a lot smarter, but you might hold off on that for a future release, because you just want to get the formula around, as opposed to having the perfect algorithm. You just have to accept that technical debt.
Andrew Roth: What else should incumbents consider?
Dilip Mistry: The final thing I would think about is that you don’t have to do everything yourself. A lot of interesting software companies actually are able to create platforms and encourage communities to build on top of what you’ve done. If you can do that early on in your venture-building experience, where you make it easy and you publish an API, you publish documentation, and you can encourage the community to build on your behalf, then you can extend what is effectively your development team. There are many creative ways in which you can get stuff out faster and not have to do everything yourself.
Andrew Roth: I like what you’re saying about the developer community. If you build something that the ecosystem can leverage, whether it’s data through APIs or access to system functionality, that’s another way to grow a product, versus just the consumer side of it. You make it open enough where the developer community can interact, and that can help expand your product team as well.
Dilip Mistry: If you look at all the famous products, all of them get to a stage where they start talking about the word “platform.” But I think even before you become a platform, if you do a good job in documentation, getting your API correct, making sure the hooks are well defined, people will build on top of what you’re doing, because we all want to get to a better place. It’s an interesting approach, which corporate venture builders can take as well.
Andrew Roth: Then what about this third topic we spoke about with Jakob: branding versus performance marketing? There’s a lot of focus on performance marketing—understanding your click-through rates, your conversion rates from all the different platforms out there: Facebook, Google, and TikTok. And then there seems to be almost an overindex toward performance marketing. Now we’re seeing a shift back to branding, where advertising on traditional media is starting to go up because it’s just less expensive now than it used to be. What do you think about branding versus performance marketing?
Dilip Mistry: I’m big on data, and I’m big on accountability, so I’m a big fan of performance marketing. At the same time, there is a need for brand marketing. Maybe the pendulum has swung a little bit too far in the direction of performance marketing, but the brand is something that an incumbent—a corporate—already has. And that’s a huge advantage compared to start-ups in that space, so they should definitely use that.
There are lots of theories around what marketing is, but the thing about an incumbent is that there is often trust in a large entity. If you can play on that trust aspect of a brand, that’s a huge differentiator compared to a start-up, which may or may not be around for long, so you should play to that. Why not get your absolute strength?
When I speak to my corporate clients, corporate venture building is a never-ending experiment—constantly iterating and constantly trying to make use of the resources you have. And if you have that mindset—constantly experimenting, constantly learning, constantly adapting—you will be successful in the long run.
Andrew Roth: Dilip, thanks for joining.
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