The story of Mitula Group: the company behind the largest IPO by a Spanish tech company of 2015

Interview with Mitula Group’s co-founder and CEO Gonzalo del Pozo. Mitula is one of the largest online classifieds websites in Spain and recently went public on the Australian Stock Exchange.

From left to right: Gonzalo del Pozo, Gonzalo Ortiz and Marcelo Badimón.

A lot has been written this year about the acquisition of La Nevera Roja or Akamon. However, one of the most significant exits of 2015 for Spanish technology companies took place Down Under, on the Australian Stock Exchange. Mitula Group, a vertical search engine and classifieds aggregator founded in Madrid in 2009, went public on the ASX in July, raising A$45 million.

Without making much noise, Mitula Group has become one of the largest -and most profitable- internet companies in Spain. The company had revenue of $16 million in 2014 (+53% YoY) and a net profit of almost $4 million (+153% YoY). Its stock price has increased by +18% since the IPO and the company is currently valued north of $140 million.

Impressive numbers that have gone unnoticed by many in the country. That’s why in October I took a trip to Mitula’s headquarters in Madrid to interview its co-founder and CEO Gonzalo del Pozo. What follows in an edited version of our conversation.

You started early in the classifieds sector. How long ago?

We started in 97, with a real estate portal called Globaliza. Gonzalo Ortiz were the co-founders and at its peak we had 70 employees and the support of important venture capital firms.

We were pioneers, in the sense that not a lot of people had built similar companies back then. Be it in Spain or anywhere else in the world. Newspapers had 20 pages dedicated to classifieds and it was a huge source of revenue for them, but that didn’t last long.

I remember those years as a constant struggle, especially because we launched right before the burst of the dotcom bubble. In the years 2000 and 2001 we tried to raise funding but it was impossible to do so. Those were tough days. We also made several mistakes along the way, like opening multiple sales offices when we didn’t have a good enough product and when not a lot people were yet online in Spain. It was a great way of making mistakes and learning from them.

When we saw that we wouldn’t be able to raise additional capital we decided to call it a day and start decreasing the size of the company. Dissolving a company in Spain is very tough, and we saw that firsthand. For many years we were using any capital we had to lay people off.

What we did obtain in those years was a lot of expertise in online marketing (SEO, SEM) and in the classifieds business. More so for being the first ones in the space than for being the best at it. To take advantage of this expertise, we built an internet agency called Trazada Internet Marketing that we would end up selling to QDQ.

At the same time, we also started a startup incubator, Tadium, thanks to the resources obtained via Globaliza, which was doing much better and making money. One of the first businesses that we incubated at Tadium was Mitula. We were interested in vertical search engines and aggregators because we’d seen that they were working in other countries. Indeed was a great example for us.

Given the fact that we were good at online marketing, we were tech people and the idea was a good fit for the team we had, we decided to test it in 2008 and we launched a year later. Idealista was one of our first clients.

Globaliza is still in business today. We’re proud of that.

What did Mitula look like at the beginning?

When we launched Mitula we were already focused on three key verticals: real estate, jobs and automobiles.

The strategy was to look at the market and see where we could fit in. Two of the biggest players back then were Nestoria and Trovit. We liked them both and we thought that there was room for another player if we were able to position ourselves somewhere in the middle between those two.

In terms of traffic acquisition, which is the more technology-centric part, we saw ourselves closer to Trovit. In product and sales, closer to Nestoria. In retrospective, launching Mitula was a natural step for people with our experience and a model that we identified ourselves with.


“Launching Mitula was a natural step for people with our experience and a model that we identified ourselves with”

We launched simultaneously in three countries, which wasn’t the case for most Spanish internet companies at the time or even today. Spain, Italy and France were first and the rest of the countries came later.

Our strategy was to grow horizontally, and by that I mean launching the same product in as many countries as possible. We also quickly understood the importance of time to market. Trying to position yourself as a company on Google nowadays is tough, and with a vertical search engine like ours even more. In 2007 or 2008 it made sense, but I wouldn’t even try today. I think we were one of the last companies of our nature to join the space.

You mentioned that Trovit and Nestoria were examples for Mitula. What were the main differences between your product and business and theirs?

I think the differences depend on the market and country, but, in general, conversion rates are very similar regardless of the aggregator. It’s tough to differentiate yourself from competitors but one thing still holds true: classified portals need one key thing, which is traffic. But in the end, you’re just another one.

We never thought that we were competing against each other. You might compete in prices, but not in terms of volume or in trying to win a fight. Because Google has won that fight and they’re the real competitor.

Traffic to these sites is finite. It’s growing, but it is finite. The more traffic you want, the higher the cost. That’s why Google Adwords is such a great business.

Mitula Group’s sites throughout the world.

Now that you mention Google. How dependent are you on the search engine and what kind of relationship does Mitula has with Google?

It’s a love-hate relationship. We’re dependant on them, but they also slightly depend on companies like us.

Google is two different concepts: Google organic search, which everybody depends on, because even if you spend millions of dollars in TV ads, most people still use Google to try to find the hotel or car they want.

Then, Google is also a partner, a client. Google Adsense is Mitula’s biggest client in terms of revenue. Traffic wise, 30% of our traffic doesn’t come from Google.

Google is also synonym with “online search”. If you want to be in that space, you need to be in Google and you have to realise that they set the rules. These can affect you or not, but that’s reality.

On the business side of things. Are you also trying to reduce the influence of Google on Mitula’s bottom line?

Adsense is a great source of income for us. Following the acquisition of Nestoria, we now have two very different products on our portfolio. Nestoria doesn’t rely on Adsense and doesn’t follow a freemium model, it’s only for paid clients. And that’s how it’s going to continue to be in the future.


“Google is our biggest client and 70% of our traffic comes from them”

Mitula is more focused on growing horizontally. For example, we just launched in Vietnam and Adsense helps you make money from day one. Google helps you sell your ad space in Vietnam, it collects the money, it applies currency exchange rates and then you just simply have to invoice them. This is wonderful and most people don’t think about it when they criticise Google.

What do you see as your main source of growth in the short term?

Right now we’re extremely focused on the Asia-Pacific region. We just opened an office in Singapur and this will allow us to be near our clients in countries like India, which is a huge market and one that requires you to be as close as possible to it.

Markets like Indonesia or the Philippines are also very attractive. These are markets with low internet penetration that, however, are growing very quickly thanks to smartphones, countries with a large population, with a growing middle class and with increasing disposable income.

The markets where we decide to launch also need to have an ecosystem of online advertising and classifieds, because we need that content to provide value.

If I’m not mistaken, Simon Baker was key in the development of Mitula as a company and in its IPO. How did someone with so much experience in the classifieds business decide to invest and become a significant part of the company?

From 2001 to 2008 Simon was the CEO of REA, one of the biggest classifieds portals in the world. After Newscorp bought it, they launched a very aggressive expansion plan and they came to Europe in 2005 to buy complementary companies. They acquired companies in the UK and Italy and in Spain he came to saw us when we were running Globaliza. They didn’t acquire us, but this is how we met.

We kept in touch with him and when we launched Mitula we told him that we wanted him to invest in the company, and in 2010 he joined along with another shareholder. Since then he’s been very involved in the company and a member of our board of directors.

Was that the only outside investment Mitula received in its history?

Yes, it was a strategic investment for us. Simon has a name in the classifieds business and people associate him with the industry. In fact, he was really important in our IPO on the Australian Stock Exchange.

We believed he could be big for us and that has been the case.

Talking about the IPO. How or when did you decide to go ahead with it?

The company was growing fast and we needed to make important decisions that would affect its future.

Then, in October of last year, Next acquired Trovit for €80 million and we thought: damn, something is going on here. Back then we were half the size of Trovit, but they launched the company three years before we did.

We looked at the possibility of selling Mitula, but the fact of the matter is that it’s very hard to sell a company like ours. What Trovit achieved doesn’t happen very often.

Mitula's HQ in Madrid.

Why is it hard?

There are very few companies where our type of business model fits in. Then there’s also the issue of setting the right valuation for companies like ours, which grow very fast and have a very large EBITDA margin. It’s not like we’ve been losing millions of euros every year; in fact, we’ve paid dividends to our shareholders for many consecutive years.

We didn’t spend a lot of time looking at potential buyers. Not because we were not interested in that possibility, but because there’s only 5 to 10 companies that could complete such a deal. We talked to them but we decided to go for the home run.


“It’s very hard to sell a company like ours”

Going big meant trying to acquire Nestoria (we had complementary businesses) and then taking the company public. I went to see investors in New York and London, but in the end we saw that Australia had the biggest concentration of investors who understood the classifieds businesses and the opportunity for vertical search engines or aggregators.

We knew that in order to acquire Nestoria we needed to raise capital. We did so, we bought Nestoria and now we were more prepared to reach a higher valuation and IPO as Mitula Group.

Did you ever consider other stock exchanges?

We talked to people at the Alternative Investment Market in London but it wasn’t a good fit. We never considered an IPO in Spain, since only 5% of our business comes from here.

What’s the process of taking a company public like?

It’s tiring, very tiring. But it’s just work. You get told that you need to meet a certain number of requirements and the only option you have is to meet them. It took us a few months to do so.

Simon often says that we were also a company that was ready for the challenge. We had been following strong accounting principles for years and producing quarterly reports on a regular basis. The road show went very well and in June or July we’d decided our stock price and the amount we wanted to raise. In the end it was A$45 million combining the round raised to acquire Nestoria and the IPO. It was an adventure.

Is an IPO a distraction for employees? Are they constantly obsessed with the price of the stock?

I don’t think it is. Only a few of us were actually involved in the process. Simon, our CFO and myself.

Some of our early employees who are also shareholders obviously do pay attention to the stock price, but I don’t think that this happens to the point that it becomes a distraction. Internally we held various talks with our staff to tell them that everything was under control.

What’s your take on the current state of the classifieds industry? Lately in Spain we’ve seen the acquisition of Milanuncios, Trovit or idealista.

I think that in the last 5 years we’ve seen the development of an industry at a global level that didn’t exist before. It’s a large industry that moves billions of dollars every year.

I believe that we’ll see more and more IPOs , acquisitions or large rounds of funding in the next few years. There’s an industry now, there are a lot of investors that actually understand this business.

And on the mobile side of things? Are companies like Wallapop or Letgo poised to become threats to established classifieds businesses?

If you talk to Schibsted you’d see that these are the type of companies that they’re actually worried about. I think they represent a great opportunity for everybody.

However, I still don’t know how they’re going to be monetised. The classifieds sector hasn’t changed much in the last 20 years, in the sense that those who want to publish an ad need to pay for it. It’s a great business.


“Mobile encourages local and in-person transactions, and that’s also hard to monetise”

I’m sure mobile classifieds companies will be able to find a way to monetise their platforms, but I don’t know how. Mobile encourages local and in-person transactions, and that’s also hard to monetise.

20 years ago most in our business didn’t know how to build a scalable business model either, and look at where we are now. I think it’s just a matter of time.

Where would you like Mitula to be in 3 to 5 years?

I think there’s still a great opportunity in front of Mitula Group. Being a public company allows us two things: our current shareholders can sell some of their stock to make some money; and we now have the ability to raise capital on a steady basis to not only grow organically, but also through acquisitions.

In terms of growth, I think we’ll continue growing at a 50% rate year-on-year and we’ll reach a higher valuation than the one we currently have. How big? I have no idea.

Do you see yourself as the captain of the ship in 5 years?

That, I don’t know. It depends on the company, on the board of directors. I will do whatever is better for Mitula Group.

It’s not the same to lead a company that’s valued at $150 million than one that has a valuation of more than $500 million. Those are different companies with very different needs.

Sacha Michaud talks about the future of Glovo: growth, logistics and business opportunities

We recently sat down with Glovo co-founder Sacha Michaud to talk about the current state of the company and what the future holds for the Barcelona-based logistics platform.

From left to right: Miguel Vicente, Gerard Olive, Oscar Pierre & Sacha Michaud

We’ve previously written about Glovo, the Barcelona-based startup that following Postmates’ model has created a platform for consumers to request the physical delivery of products in less than an hour in large Spanish cities.

When we first covered Glovo the startup had been in operations for less than a year and had yet to launch in Madrid. Now it’s available not only in the Spanish capital, but also in Valencia and seems to be growing at a healthy pace: according to the company, deliveries have been growing 50% month-on-month in recent times.

To know more about how things are going for the startup, we recently interviewed co-founder Sacha Michaud about the current state of Glovo and what the future holds for the young company.

First of all, you recently announced that Wallapop co-founders Gerard Olive and Miguel Vicente would be joining Glovo and integrating Just Bell’s technology. What will they bring to the table and what will their role be?

From the very beginning, Oscar (Glovo’s other co-founder) and I saw that the involvement of Gerard and Miguel in this project could be very productive for us. They have a very international mindset and we know that they clearly believe growth is a key component in the life of a startup. Look at what they helped achieve at Wallapop.

We also believe that Glovo needs to grow fast. Very fast. If we don’t move and grow fast we have nothing to do.

This is a very interesting sector for all kinds of players, which are trying to come to market from different points of view. There’s Postmates in the US, but also giants like Amazon, Uber or Google that are slowly but surely entering this space.

Gerard and Miguel will help us a lot in achieving this. They won’t be in our offices every day, they will serve as non executive directors, but we talk to them constantly.

First it was Barcelona and now Glovo is also active in Madrid and Valencia. What’s Glovo’s current status? How is the company doing?

It’s going very well and we’re growing pretty rapidly (50% MoM). Madrid has been growing at much faster rates than Barcelona over the same period of time since we launched in both cities, and we recently opened shop in Valencia as well.

And when I saw that we’re growing fast I mean on all fronts. The number of glovers -the people who pick up and deliver the goods- is also growing at similar rates compared to deliveries and this is key in the market we are.

Couriers are super important if we want to grow our platform in a healthy way. We can’t make one side of the marketplace grow much faster than the other if we want to grow the right way. If we do this right, we’ll have a much more scalable business model than some of our competitors.

The more liquidity on both sides of the market, the better it works. Network effects are key here: the more users on the platform, the more useful the platform becomes for new users.

Since glovers are so important, has acquiring new ones been hard for so far?

Not really, we’re seeing that there’s a lot of people out there looking for this type of jobs, which can provide extra income and are flexible enough to do it on a part time basis.

We have a large waiting list of glovers who want to work with us.

And let’s be honest, the fact that the Spanish economy is not in its the best shape ever also helps us.

Lately there’s been a lot of talk about the fiscal situation of these type of workers and the requirements they need to meet to be fully legal under various laws. What’s the case with glovers?

We’re not worried about that and we believe we meet all requirements under Spanish law. All of our glovers are autónomos (legal independent workers or freelancers) and they simply invoice us for their work. We force them to work like this if they want to partner with Glovo.

Glovo charges a delivery fee of €5.50 to consumers and glovers get to keep 70 to 80% of this fee. Given these circumstances, how scalable is this model? Is it just a matter of being very big in order to make money or what’s the formula behind it?

We firmly believe this is a scalable and profitable model in the long run. We don’t think the majority of our income will come from the delivery fees; don’t get me wrong, these fees are important to cover business needs, pay glovers and build a healthy marketplace, but our intention is to work with premium partners and make most of our income there.

Postmates is a good example of this. They recently announced that before the end of the year they’ll reach 1 million monthly deliveries and more than $60 million in annual sales, with positive margins. There’s money to be made in this market.

As I said before, delivery fees are important but we believe there’s a great opportunity in working with premium partners and ecommerce businesses. We’re already working with some that are integrating our API to offer consumers the possibility of having goods delivered to them in less than an hour in certain Spanish cities.

If you think about, in a way we’re already indirectly working with more than 1,000 retail stores when we send our glovers to pick up stuff there. But, until very recently we haven’t held talks with these stores, we haven’t had a formal relationship with them. This is the next step in our growth, to talk and establish partnerships with them. We think we can both benefit from each other.

Of the 1,000 physical stores we’ve worked with, 90% don’t offer the possibility of delivering goods to consumers. This is fantastic opportunity for us. We add value, there’s incremental revenue to be generated and we can charge businesses for the services we provide to them.

Glovo has only raised €140,000 to date and it seems as if you’re clearly focused on growing fast. Are you currently raising more capital and do you plan on launching Glovo outside of Spain?

Yes to both questions, we’re closing a new and larger round of funding and we expect to announce it over the next few weeks. Spain is a big enough market to try things and learn. Once we think we’re ready, we’ll quickly launch Glovo in other European cities.

The story of Odilo, the Murcia-based startup that powers content lending systems for libraries and universities

Interview with Rodrigo Rodriguez, co-founder and CEO of Murcia-based startup Odilo, which powers the content lending systems of universities and libraries.

odilo interview

Odilo is a Murcia-based technology startup that has ketp a low profile within the Spanish startup ecosystem. While most of the attention is focused in cities like Madrid or Barcelona, certain companies that are born in smaller and less hyped areas are building what look to be like strong businesses with an international mindset from day one.

Odilo is a example of this. The company works with libraries and educational institutions in Spain, Latam and the US to power their content lending systems with Spanish made technology. A not-so-sexy industry when compared to others, but a solution that seems to be fulfilling the needs of libraries at both sides of the Atlantic Ocean.

To know more about Odilo, which raised $2.8 million in 2014 from Active VP, we recently sat down with its CEO and co-founder Rodrigo Rodríguez. This is an edited version of our conversation.

What’s the story behind Odilo? After various years at Telefonica and BT, why did you choose this industry?

Prior to starting Odilo I had worked in the cloud computing industry and I had previous knowledge of the technology most libraries use.

When we saw that ebook readers were becoming popular, we knew this would bring new opportunities to the book industry but mainly to libraries and the education sector, transforming these industries by creating new ways to access digital content. 

Our idea was then crafted around creating a service that could allow any institution to easily offer digital content to their users. Based on my experience in the Infrastructure-as-a-Service (IaaS) market we decided that the best way to do it would be to create the concept of Content-as-a-Service (CaaS), where we could follow a similar path to Amazon’s with Amazon Web Services but applied to digital content of any kind.

At first sight, it seems as if Odilo has various products. Some aimed at libraries and educational institutions and some others for publishers. What is it like to combine all of these products and its various business models?

All of our solutions are based on our core CaaS model in which we offer our technology and we establish partnerships with content providers of all types.

This core service/technology is the underpinning of all of our products and we build other layers and new functionalities of the service on top of it, to adapt to and serve the needs of other sectors such the leisure market, K-12 schools, universities, public libraries, special and corporate libraries, etc. 

We also have several companies licensing our technology to create their own products on top of it. This way we can be flexible enough to commercialize our services in different markets and territories while at the same time keeping our focus on our core service.

You’ve followed an interesting model that is often seen in Europe, where startups decide to keep the tech talent in a low cost region (in your case Murcia, Spain) while moving sales and marketing operations to bigger cities like Madrid or even the US. What has it been like to build the company out of Murcia?

I am from Cartagena (Murcia) and our city has a good university and a very good quality of life, so I thought this would be a great place to build a technology company. We have an agreement with the University in Cartagena whereby professors recommend their best students to work with us. This would be something very difficult to do in bigger cities with more companies competing to attract quality talent.

We are also able to convince technical talent to move from other parts of Spain to Cartagena to fill other roles within the company. Last year, we had to set up an office in Madrid for our new sales and marketing teams as most of our customers are based there. At the same time, we also set up an office in the US and Mexico to better connect with international publishers and customers.

If I’m not mistaken, your team is quite distributed: you are in Miami, your COO is in Madrid and the CTO in Murcia. What are the main challenges of working this way? What’s your experience been like at building a distributed team while being ‘small’ (less than 50 employees)?

We also have a North America & Australia COO in Colorado so I that can spend more time in Madrid, but it is quite a challenge for us to manage such a diverse and distributed team of 46 people from 6 nationalities.

My idea was to bring the best possible talent to the company independently of their nationality and location. We use technology and team collaboration tools and methodologies to be as efficient as possible, but based on our experience the key aspect about this is that everyone understands and shares our vision and company culture so they can be independent in their responsibilities and not lose agility.

Also important in regards to work culture is the fact that everyone has a deep sense of commitment and shows a trustworthy attitude. From our experience thus far, distributed teams can work very well if all the team members completely trust each other and keep things really simple.


According to the the Spanish official registry, in 2013 Odilo had sales of between €300 to €600k and more than €1 million in 2014. That year you also raised $2.8 million from ACTIVE VP. How’s the business side of things going?

Odilo was founded as a bootstrap company and so we tried to be profitable from the the very beginning, combining R&D initiatives with customer projects. We have been consistently growing every year and at the same time incorporating new products and partner agreements. 2015 has been a great year for us: we signed our biggest contracts this year and that will lead us to increase the number of users that can receive content through our platforms from 9 to 107 million people by early next year. 

What’s the sale process like? Is it hard to convince large institutions like libraries or universities of what you bring to the table or are they aware of the necessity of improving their current (and I’m guessing old) systems for their own and readers’ benefit?

Institutions know that their users and students demand to have access to content at any time and from any place, and that they need to include digital content as part of their services to be relevant in the future. 

Our work is not so much to convince them to adopt the technology, but to help them with this transition from physical to digital and so our challenge is to speed up the digital lending adoption process. In the US, more than 90% of libraries and the majority of schools offer digital lending to their patrons and students; and the market has been growing exponentially. However, in Spanish speaking countries we are 5 years behind but we estimate that the market will grow at the same pace like the US market did. 

With significant presence in Spain and Latam, is the US the next big frontier for the company? How is the US market different from those in Spain and Latam? Are libraries and customers there more forward thinking and understand your value proposition better or has that been the case in all other markets where you are currently active?

Yes, we have a unique value proposition for the US market with a business model that has been very well accepted in that market with some success cases in libraries and schools.

Since digital lending penetration is so high in the US, our focus is on demonstrating the benefits of CaaS as a great way for institutions to offer great collections of digital content and only pay for what their users and students actually use. In this case, our sales strategy is focused on key differentiators of our business model and technology, while in Spain and Latam our focus is to speed up technology adoption as we are strong market leaders there.

What are Odilo’s short term goals and where would you like to see the company in 3 to 5 years?

Our short term goals are to increase our market share in the US. We want to build a strong sales team in the US for this and we want to maintain our leadership position in Spanish speaking countries as institutions gradually increase their budgets for digital content.

We also want to increase the number of companies that use our CaaS platform for creating their own products to serve different verticals. In the midterm, institutions of all kinds will offer access to digital content to their users, employees and students the same way they currently offer WiFi access. To do this they will follow a CaaS model and we want Odilo to be the company leading this transformation.

Q&A with Softonic’s CEO Scott Arpajian: from desktop software juggernaut to ‘mobile first’ restart

Interview with Softonic’s new CEO Scott Arpajian. Topics discussed include the company’s mobile first approach, what they’re trying to do to regain users’ trust and brining up morale company-wide after going through massive layoffs.


Softonic, once one of the largest technology companies in Spain, went through a bit of trouble in 2014. Well, ‘a bit of trouble’ is a way to put it mildly.

Less than a year after selling 30% of the business to Partners Group for €82 million and amidst the talk of a possible IPO, Softonic had to lay off 200 of its 450 employees due to “changing market conditions that had a considerable impact on the download desktop business”.

In other words, the advertisers (Google) that were responsible for a significant portion of Softonic’s business withdrew their financial support, leaving the company with a desperate need to shift to mobile and regain the trust of users, which was partially lost during many years of bad practises with its Softonic downloader, toolbar and recommended offers.

To reposition itself as a mobile company, Softonic acquired San Francisco-based Appcrawlr last year and hired Scott Arpajian, the founder of, as CEO.

What follows is an in-depth interview with Arpajian about his new job, the challenges the company faces and what they’re doing to change Softonic’s focus and transform it into a mobile first entity.


So you’ve been at Softonic for 7 months?

I formally joined CEO in late February, but I was here a little bit ahead of that as a consultant, getting up to speed on the business.

It’s long enough that I can’t use the ‘hey I’m not here’ excuse but short enough that I’m still learning.

What attracted you to the company?

I have a special relationship with the business, as I founded in 1996 in San Francisco. It was the early days of CNET and what we wanted to accomplish at the time, which I think it still holds true, is to democratise the way software is distributed online.

And it does sound kind of funny talking about it in 2015, when software distribution is just normal, but back then when both and a year or two later Softonic and many others portals entered the space, there was a real challenge and opportunity around how software was being distributed.

I stayed at CNET for 10 years and I left in 2006 to go on some new ventures. I had an itch to return to the startup world because CNET had grown so much.

Was born inside of CNET or was it an acquisition?

It was born inside CNET, which had some real amazing and smart people that were literally figuring out how to build websites while at the same time covering the space. But we also had the most incredible collection of domain names:,,, and many others.

My second day on the job I found out that the company owned, and on a white board in the CEO’s office I sketched out how we should use and he allowed us to go build it.

To get back the question of why I joined Softonic, I had the background of building a business like and growing it for 10 years. I left it in pretty solid shape: big business, lots of users, etc.

But I left to join the startup world and got quite into online gaming, so my startup was related to kids online virtual world games. I went to Disney after that, as part of the mobile and social gaming division.

When I left Disney I was approached about this (Softonic) opportunity because I had the background, albeit in the desktop-software world. Having spent so much time in gaming and especially in mobile at Disney, I saw this enormous opportunity in Softonic: a large set of assets when you look at its size and scale and a company that despite going through quite a bit of struggle adapting to a wide variety of changes, still had a very cool group of very talented people.

I hadn’t been closely following the download portal for a while, but I was surprised to learn that Softonic has global reach and is so large, with over 100 million unique users every month.

The company does have a desperate need to head into mobile and really figure out a way to do it. Despite all of the challenges the company faces, we have an incredible supportive group of investors and board of directors that were very serious about doing the necessary work to evolve the company. So for me it was an amazing opportunity and the right timing.

So now that I’m six months in, I’m getting a good understanding of what needs to be done and moving pretty aggressively to try to make it happen.

So what needs to be done?

scott arpajian softonic ceo

If you look back to 2014, the company was going on a very solid revenue growth but with a business model that, let’s just be completely candid, wasn’t healthy. Ultimately it wasn’t really going to scale, and the recommended offers business that was tied to the Softonic downloader grew revenue but was under the microscope as far as the industry was concerned, in particularly Google.

This also caused confusion for users, and when your business is to serve users and to help them find products that can help them solve problems or fill a need, you want to be focused on serving the users. I think with recommended offers and the way the Softonic downloader was being used, it was incompatible with the company’s real mission.

And now you’ve got rid of that?

That was one of the first things I did. I joined as CEO on February 24th and on the 28th we shut down Softonic Downloader, recommended offers. They’re gone for good.

You can’t successfully grow and run a business when you’ve got activities that confuse or provide a less than great service to your users. And since one of our chore assets is our user base, you really have to think about that.

How has the company changed over the past year?

We’re undertaking a pretty dramatic shift in terms of our business model. We’re no longer as dependent on the previous business and search engines (Google sends us a lot of traffic) but the model has shifted and we’re under self-directed pressure to diversify our business. Not just the revenue, but also the way we acquire and retain users.

How is Softonic making money these days?

We’re still largely advertising-driven, we make our money through a variety of advertisements, primarily display and performance. But the big change is that we no longer participate in the bundle of software and previous things.

Do you think you can still regain users’ trust?

I think absolutely yes, but trust is an interesting thing which you have to gain or earn through your actions and through consistency, not by talking. So the answer is yes, but we also know that it will take time and it’ll only happen if we put our users’ needs first.

Time will be our guide on whether we’re able to regain trust from people who lost it.

That said, I do think there’s another thing to recognise. Softonic has had, for better or for worse, a lot of brand visibility in Spanish speaking countries, but as a brand it’s relatively known outside of those markets. We have a huge opportunity to grow our brand presence outside of these regions.

English speaking users is our larger audience, but in key markets like the US we’re still underrepresented with less market share than, but gaining quickly. It’s in those markets where we see the bigger opportunities.


“Users’ trust is an interesting thing which you have to gain or earn through your actions and through consistency, not by talking”


Although you were not here in the past, do you think the Softonic of old took users for granted?

When you look not only at Softonic but also industry wide, there was a whole bunch of things going on, whether it was the toolbar move, the bundled offers, etc.

Inherently there’s nothing wrong with those, but it’s the fact that it facilitated bad behaviour amongst third party vendors which ended up harming the user. And nobody was overseeing this activity.

All download portals, including Softonic, failed at the opportunity of exercising more control over what was going on. I think, ultimately what happened is that Google finally stepped in last year.

Did Softonic’s prior management do anything wrong? I don’t think so. Maybe from a purely business standpoint they were not able to diversify the business quickly enough. I do think Softonic didn’t apply enough focus on its users as it could have and that’s something that we clearly recognise now, first and foremost.

Appcrawlr and your mobile focus. What’s Softonic doing right now to position itself as a mobile company?

A bunch of things. Interestingly enough, all along we’ve had a pretty significant mobile presence. We have a pretty large directory of mobile apps, from feature phones to smartphones. About 20% to 30% of our traffic is actually coming from mobile and those are people that are looking at app catalogues. So in one way we’re already a mobile company with nearly a third of our traffic coming from these devices.

What we’re seeing is that the only way to be successful in mobile is to be in apps. A recent report from Yahoo said that 90% of mobile minutes in the US are spent in apps, so only 10% belongs to a web browser. I think any effective strategy for mobile right now has to be focused on what’s going to be needed in an app experience.

On that front we’ve done things in the past. Years ago there was a Softonic app for Android and iOS but I think the challenge was that it was trying to replicate the web experience in an app, which doesn’t actually fulfil a user need.

Are those apps still available?

No, they were taken down a while ago. We’re clearly focused on things that create real user value.

Are you going to bring them back in some form?

softonic interview

What we’ve done instead is that we’ve launched a series of products called Softonic tools. What we’re doing here is we’re positioning Softonic as a trusted guide and a company that wants to deliver value to users in the space, and one of the best ways for us to participate in that is to actually deliver an app that users want. It’s still in the early stages but they are a series of tools that are focused on optimising or improving your experience on the phone.

The very first app is called Softonic turbo booster and it’s an Android only app that optimises your phone. It competes directly with Cleanmaster and a few others in the space, but I think that with the audience and reach that we have, we can get a head start in distribution by promoting it to our audience.

Although the app won’t turn your old phone into a new Samsung Galaxy, it does provide user value and, once you do that, you get into a position where you can make recommendations of other apps that you might be interested in and they can be highly targeted based on the apps that you’re using.

And yes, app recommendation is a space that both Google and Apple are paying close attention to, but we think there’s a big business opportunity.

With Softonic tools and turbo booster, are you trying to build an app constellation following the model of others like Dropbox, Foursquare or Facebook?

Rather than building one giant app that tends to do it all, we’re really focused on clarity of the value that we provide.

We’re still working the specifics of the strategy. This is the first app we’ve launched and we’re experimenting in Spanish speaking markets a second app called Trybe which does person-to-person app recommendations.

We believe most app recommendations are made through word of mouth, in the physical world, but we think with Trybe we can translate that into the online and digital world. App discovery is still a very large problem that nobody has really solved to date.

Has someone else done it successfully?

I haven’t seen anybody do it just like that. Certainly there have been plenty of app recommendations applications in the past, like Appgratis, which ended up running into business model problems.

The challenge with Appgratis and Apple is that it was more of a broadcast model instead of a targeted sharing model. They were openly marketing their services to developers as a means of gaining and advantage in the rankings, and Apple and Google had to protect the integrity of their charts.

Apple at the time took a very hard stand but they’re starting to open that up.


“Appcrawlr gives us a great way to show commonalities in apps and to highlight and draw out patterns and help you”


What’s Appcrawlr’s role within this strategy?

Appcrawlr is really technology that at the most abstract level examines large amounts of information, mostly unstructured data, and puts structure around it. In fact, what’s exciting about it is that it’s a platform and technology that could be applied to a wide variety of things.

Essentially what Appcrawlr does is look for commonalities in data. So on the website what it looks at is user opinions, which are very unstructured, and what is neat about is that it looks for common patterns and extracts semantic meaning from recommendations.

So if lots of people are expressing a common sentiment but in different words, it puts them together and it can provide scoring and look for trends in the way that people are describing apps.

Appcrawlr gives us a great way to show commonalities in apps and to highlight and draw out patterns and help you, as an end user or developer, connect and get more apps into the hands of more people.

I recently landed on and was surprised to see that the homepage looks a lot like a media publication and less like an app or software catalogue. Are you becoming more of a media company?

No, we’re still a tech company. But the media content and components that we have do help users make decisions and add context.

From a management point of view, what is it like coming into a company that’s been through some very times? How do you bring morale up?

The answer is that it takes a little bit of time but we’re very well underway. When I arrived the company had just laid off a significant part of its staff, but I’ve been through this before.

Anyone who has been in tech for a while has been through the process of layoffs. You take a little time to recover but ultimately it’s all about focus and having a clear path to reconnecting with the purpose, which is to ultimately help users discover apps and downloads.

The people who joined Softonic did it because they want to help people and see ourselves as trusted guides. We know a lot about this industry and we think we can help others.

Most of the work coming in has been to come back to our main purpose: why are we all here and how are we going to go about getting it done.

Scytl: how a Barcelona-based company transformed the global elections industry in just 15 years

In-depth interview with Pere Valles, CEO of Barcelona-based and electronic voting juggernaut Scytl.

pere valles scytl

Innovating democracy is no easy task, but that’s precisely the main objective of Barcelona-based Scytl. The electronic voting company, which was founded in 2001 by the late Andreu Riera, has transformed itself into a global leader of electoral solutions under the leadership of Pere Valles.

Valles joined in 2004 when the company was formed by 12 researches and, as its CEO, it has grown its business and staff to $64 million in revenue, $24 million in profit (2013 figures) and 600 people, respectively.

To know more about Scytl, which is planning to IPO on the Nasdaq in 2017, we recently sat down with Valles in the company’s offices in Barcelona for an hour-long conversation.

Topics discussed include the development and growth of the company, how to sell software when your main client is the public sector, how to overcome the tragic loss of a founder and how to manage the culture of a company when you’re trying to IPO and when you’ve received more than $100 in Venture Capital.

This interview has been edited for clarity, length, and content.


You’ve been here for over 10 years, how has the company changed since you joined?

It has changed a lot. The company was born as a spin-off of the Universidad Autónoma de Barcelona (UAB), stemming from the work of a great group of researchers​​. When I came in 2004 it was a very scientific and academic-centric company, formed by cryptographers who for many years had been developing cryptographic protocols to provide security in electronic voting processes. They were 12 people. A small company with a very powerful technology and with a very ambitious objective, which was to transform a complex market like elections.

Since we were small and from Barcelona, for a foreign government anywhere in the world to trust you and buy your solution, you need references. The commercialisation of the products at the very beginning, when you’re just starting, is complicated.

We have clearly passed that stage and we are growing very fast, we have a staff of about 600 worldwide and 21 offices of which 7 are software development centres (Barcelona, ​​Athens, Toronto, Oklahoma, Tampa, Lima and Brasilia). The reason we have so many development centres is partly because we have grown through acquisitions. We’ve bought 6 companies in the past four years: two in Europe, three in the US, one in Canada and one in Brazil.

Acquisitions that complement certain parts of your strategy and business?

Initially we were an internet voting company, which we believe is the most disruptive technology in the electoral industry and the one that has the potential to change how we are going to vote in coming years.

In internet voting we have a very dominant position. There are 21 countries in the world who are using internet voting in their elections in the public sector, and of those 21 countries, 19 are doing it with Scytl’s technology, so we could say we have a market share of 90% .

What we did to expand and continue to grow is to develop an end-to-end solution that allows governments not only to automate the voting process, but also any processes within an election. The creation of the voter census, the management of that census, the management of the logistics of the election, the recruitment and training of all the people who have to be in the electoral center, consolidation of results, publication, etc. This product expansion was made in part through internal developments and via the acquisition of companies that already had the technologies we were looking for.

Now we have a complete portfolio and end-to-end solution.

For us this was an interesting strategy because although internet voting is probably the most disruptive of the technologies, it is also the most difficult to sell because it requires legislative changes and there is a fairly high risk perception by some governments. Therefore, when we want to enter a new country or market, what we do is start by offering one of our other solutions that is not as critical as voting, and from that point on sell more complex products.

How many people worked at the company when you joined in 2004?

We were 12. Almost all of the staff came from research and scientific backgrounds, but we were lucky to have a person who was outstanding, Andreu Riera, who died in 2006, who had the perfect mix of a strong technical mind but also very business oriented.

Andreu was the original founder of Scytl, right?

Andreu was part of the research group at UAB and in 2001 he founded Scytl because he saw that what they were doing at a university and academic level had a practical application and could become a business. The catalyst for this was what happened in the US elections of November 2000.

He thought that if one of the leading democracies in the world went through such problems, it was the right time to start modernising voting systems.

He had this vision, he was the founder of the company and he had an extraordinary mind when it came to building businesses. Scientists and business profiles are not easy to find. He was also person who would have become a serial entrepreneur, he had great concerns, ideas and what he liked the most was to create new projects instead of making them grow.

When I joined Scytl he already had in mind his next venture and I joined to professionalise the company and start selling our products. Short after I started, Switzerland ran the first elections where online voting was allowed and they chose us as their provider. And once you have a reference in the public sector, other governments find it easier to buy your solution because they are not the first ones to try.

We are currently working with governments in 42 countries around the world with elections. In some countries at a national or federal level and in others at a more regional level, depending on the competences of each administration.

Surprisingly, in a country like the US which is our main market, a presidential election is not managed by the federal government. Of the 50 states, there are 12 in which the elections are managed by the state itself, and in the remaining 38, counties take care of it.

And each of those states and counties are clients or yours? Or do you work directly with the federal government?

The counties and states are our clients. There are 3,200 counties in the US and 1,400 work with us, including important ones such as Los Angeles, Miami or Dallas. As for states, of the aforementioned 12, New York, Virginia, New Jersey, Alaska and some others are also clients.

We have a very significant presence in the US but it is a very decentralised market that requires actions at a regional, federal and even local level. But this is not the same in all countries. For example in France we work with the Ministry of Interior and of Foreign Affairs because they are the ones who control and manage elections.

A surprising thing about our company is that while for many technology companies the US and Europe account for 70 or 80% of their business, ours is an absolutely global one. We work with super developed countries like Canada, UK, France, the US, Norway and Australia, but we are also working in countries like India, Brazil, Nigeria or Bangladesh.

This is an industry where there is a clear need for technology but those needs change from market to market. For example, in developing countries the main thing to solve are problems of electoral fraud and transparency, and where our technology is often used to prevent or mitigate the possibility of fraud.

Election fraud does not occur during the election, but at the time when the polling stations close and in those boxes containing the ballots, when they are transferred to centres for counting purposes. The key for everything to work right is that the recount of ballots is done at the polling stations and controlled by observers, who can then complete the secure transmission of results in two or three hours to know who the winner is, thus avoiding the three weeks that it often takes in developing countries.

And that is just one of the technologies we provide.

Does the market understand these innovative solutions?


Our sales system is not very complicated because our customers (governments) are very receptive when we talk to them. If you are the president of an electoral commission, if you are in a Home Office working on these processes or if you are associated in any way to them, you want to know what other countries are doing and what you can do to modernise your elections.

Governments and parliament members often come to us, so getting a high-level meeting is relatively easy. What we do is present our credentials using references from other regions that are relevant for those countries (France to Spain, the Philippines, India or Bangladesh to Indonesia, etc) and the next step is to organise a work shop with them in which we both bring technical people to try to identify the major -and faster to solve- problems in that country’s electoral process. The key at this stage is to provide a quick win solution.

It is a very consultative sales process, especially at the beginning. After that we enter into a negotiation and there is obviously a public tender, but if you get to that stage and you have a clear advantage over your competitors, you are in good shape.

Given the nature of your clients I can imagine these are very long sale cycles.

Yes they are, but we have an advantage over other industries in which sales process are also long: our clients are forced to buy. The worst thing you can have as a business is a client that maybe wants to buy your solution but is not in a hurry and negotiations can take months.

But in our case there is an election, on a particular day, which forces the customer to accelerate negotiations and the whole buying process. That said, any business where the public sector is involved is slower than usual, so in general we face long sales cycles.

It is not common to find large Spanish technology companies that have their origin in university spin-offs. Normally these spin-offs have very technical and research backgrounds but little commercial components. What was the process like of taking all that research and start selling it?

In Spain there has been a boom of technology companies and today there are more startups than ever before. However, I believe that people talk about ‘technology startups’ in a very generic way, which means that companies that use the internet as a medium (for example ecommerce) are included in the conversation.

These are technology companies that are relatively quick to create, and if you find your niche you can have a brutal, fast, immediate growth, but these tend not to have developed high entry barriers, which is why some grow and fall so quickly. They are companies that are difficult to defend and might even be vulnerable.

These are internet companies, and I believe the vast majority in Spain have these characteristics. I don’t mean to say these are without merit and we shouldn’t celebrate them, because they are very important when it comes to attracting talent and creating new entrepreneurs.

But then there’s also a group of technology companies where there is a very important scientific basis behind them and the business is kind of protected by patents and intellectual property. These businesses take longer to build and they need a lot of investment, but it has many advantages if you are able to establish yourself as a market leader.

We started in 2001 but it wasn’t until 2004 that we started selling our technology. It’s a slower way of growing, but more sustainable and defensible, because you have intellectual property that gives you a competitive advantage in the market. This kind of companies may be less spectacular but in the end I think they are stronger.

In Spain I believe we have more companies in the first category than in the second. Research in this country at a college and university level is good, but the key is in how that is transferred to the private and business sectors.

In the case of Scytl all merit goes to Andreu Riera, which had the technical and business vision to make Scytl a big company.

Do you think the fact that there’s less of the second kind of companies you mentioned is due to a lack of commercial or entrepreneurial spirit in universities?

What I think is that it is very difficult to find people who combine these two aspects, research and business vision.

I am optimistic because the opportunity cost of creating a technology company in 2004 was high, both for people from the business world and for researchers, but since then everything has changed dramatically and more people are willing to take the risk of creating new companies.

Before you spoke of patents as barriers to entry. How important are patents for Scytl?

There are areas where there are so many patents that is difficult to distinguish between them. There are many that are defensive and that do not provide much utility to the ecosystem or to society.

I believe our case is different, especially because in our field when we started applying for patents there were none, so we could patent fairly broad things since there was no prior art. Those early patents have become powerful barriers of entry.

Patents for us are critical and one of the aspects investors have paid special attention to. In the end it all depends on how you want to use your patents. Scytl has never ever sued anyone for patent infringement and we are not a litigious company.

Does Scytl have much competition?

This is a very fragmented market and in each country there is a company that has developed some kind of technology for electronic voting, so our competition has two main characteristics: it is very local and niche.

We have 24 solutions covering the entire election process and our competitors tend to focus on a particular part of it. We are the only player in the market that has a global ambition and customers around the world and the only one with a complete product portfolio.

Among the 24 solutions we sell, there are some niches where we are clear leaders and others where there is more competition, especially in those that have been heavily commoditised. This is the case for polling e-learning solutions.

In an earlier interview you said that 20% of your budget is used in the development of electoral cryptography. What is exactly electoral cryptography?


The electoral market has a series of security challenges that are very specific to this sector and that are not easily found elsewhere.

For example, if you are an ecommerce company what you have to do is to know very well the user that’s buying your product. We have to go even further: to identify the user but also to ensure voting is secret and to protect it from external forces and also from the system administrators themselves.

So authentication becomes very important and this is in opposition to privacy, which is also very important in this field.

Another distinguishing feature of this sector is that when you make an online transaction, for you as a user it is very easy to verify that the transaction has been done correctly. But when you vote via the Internet and you click, electoral cryptography becomes essential so that you can then check that your vote has been counted as yours and that it has been issued without compromising your privacy.

The cryptography systems we have developed are specific to the needs that are found in this sector. Our competitors use more basic security systems and they are not as powerful as Scytl. And this is precisely the distinctive technology that we have been developing for over 15 years.

You’ve grown from 12 to 600 people in 10 years. As CEO, how does one manage such explosive growth?

It is difficult and there is always a sense of semi-controlled chaos. We’ve grown very fast and the company’s size has changed every year, you have new people, you also have people from acquired companies that need to be integrated and that they work in different regions, etc.

We do our best, but the reality is that in this type of hyper-growth, there are many problems. Maybe from the outside it all looks quite idyllic and easy, but when you see it from the inside you find problems and challenges on a daily basis.

In this kind of companies you have to learn how to take very quick decisions, quite continuously and without fear of making mistakes but knowing that is likely you will make them, so it is very important to rectify fast when you’re wrong and to swallow your pride.

The second thing that is difficult in high-growth companies is that people who are completely valid and very good when you have 30 employees, may not be so when you become a company of 300 or 400. You suffer When you have to make a decision of this kind because it’s usually people that you have worked with for many years and in a close way, and as humans we all have feelings.

And perhaps the hardest thing to control is the level of commitment, of employees wanting to be in the company and feeling part of it. This is something that is easy to control when you start and have fewer than 50 employees, but that becomes quite complicated as you grow.

Last year you raised $100 million from a wide variety of investors. Why so much money?

Mostly for acquisitions, R&D, for the company to grow faster and especially for our IPO.

When do you think Scytl will IPO and become a public company?

We’re not in a hurry but the idea we have is to go public in 2017 on the Nasdaq. We have hired a CFO that comes from the US, a financial controller with experience in IPOs and we are preparing the company at an internal level for that kind of event, which means changes in accounting, reporting and in other areas.

Now that you’ve began the process of becoming a public company, is the process as expensive (monetary or not) as you first anticipated?

What’s expensive is to create the internal infrastructure to start trading, such as reporting, which is very complex. The Nasdaq is very demanding when it comes to internal control systems, much more demanding than other markets such as Alternext or MAB.

Although the cost is high, we believe the Nasdaq will be the market where we will have a better valuation for various reasons: because we are leading a worldwide market (we are a category leader) and because we believe that software businesses are often better understood and valued in the US than in Europe.

How’s the business doing? Last time Scytl disclosed any numbers you had $63 million in revenue and a profit of $23 million.

Since we completed our latest round we have been asked not to publicly disclose any figures, but the business is solid and going well. This does not mean that we don’t face any business challenges, because we do.

But what we have in front of us is a huge market opportunity, with rather weak competitors and very significant growth rates. The average historic growth of our business has been 70% annually.

If you look at software companies that have gone public on the Nasdaq in recent years, you see that most do an average of $80 million in revenue per year -which is not that much-, with growth rates of 35% and not profitable. We will be much larger than that, we have a greater average growth rate and we are also profitable.

And then there is another thing that the market values greatly: that we are the leader in our industry.

When a company receives an investment of such size, does it change internally and does it affect its performance or culture? And if not, how do you control that?

The truth is that no, that Scytl has hardly changed internally since the latest funding came in. What you have to do as CEO when you receive so much money is to maintain financial discipline and to control the level of spending.

One of the reasons why we have received so much money is because we grow very fast and we are profitable, and we want to try to maintain these two things.

Andreu Riera: how does a company overcome the tragic death of one of its original founders?

From a personal point of view it was a traumatic event. I had been working with him for two years and we had become good friends and coworkers. He was an extraordinary person because he was also very down to earth and it was very hard to disagree with him.

He died in a car accident on a Friday night when he was driving to Manresa after work. I remember I got a call on Saturday morning and it was a huge shock. He was a young, vital, energetic, and for the people who were in the company at the time it was a brutal blow.

At company level the fact is that Andreu was already building his second company, because he had a very entrepreneurial mindset. This does not mean that he was not linked to Scytl in any way, because he was still the chairman of the board.

It was a great loss at a personal and even at a country level. Finding a person of his character and abilities is not easy.

You’ve been involved with Barcelona’s technology sector for more than 10 years. How has the industry changed and what’s your opinion on the way it has grown?

I look at it with great optimism. In 2004 there were very few technology companies in Spain, perhaps less than 10 with real potential.

I remember telling people that I was going to start working at a startup and people thought it was a very exotic and different thing, which still holds true today to some extent.

Fast forward 10 years and in Barcelona alone there are over 300 startups, some of them very interesting, and there is more money than ever before. We are creating a very powerful ecosystem and Barcelona has the potential, if things are done well, to become a technological hub in Europe. Maybe not at the level of London, but it can compete head-to-head with other cities.

Since you’re a company deeply involved with elections and electoral processes. What’s your take on the 27S elections and the possible independence of Catalunya?

Assuming that businesses and entrepreneurs are often reluctant to share their opinions and look to avoid at all costs to hurt anyone, the problem with this question is that if we were a company that sold goods to other parts of Spain or the world I could have a clear opinion that I could share from a business point of view. While being cautious, I could share my opinion.

But when you’re in the business of elections you can’t. We have an internal rule that is ‘zero politics’ and we can’t say anything in favour or in opposition to these kind of topics. We provide the technology for this kind of events and we have to be extremely neutral. And we are. Not only in Spain, but also in the US and in other markets where we operate and are leaders.

Hot Hotels joins Techstars Boston: Q&A with chairman Joe Haslam

Spanish startup Hot Hotels has joined Techstars accelerator program. In this interview, chairman Joe Has explains why they made the decision to join an accelerator at this stage.



Only a handful of Spanish startups have been through Techstars, one of the most well known and respected accelerators in the world.

Started in Colorado by David Cohen, Brad Feld, David Brown and Jared Polis in 2006, the program has expanded quite aggressively over the past few years and it currently has 9 programs in the US and Europe, as well as partnerships with corporates to run specific programs focused on verticals like sports, robotics or fintech.

Shuttlecloud, Proximus and Novicap were the three first Spanish companies to join Techstars, in New York and London, respectively.

The latest one to join the program is Malaga-based Hot Hotels, the mobile hotel booking startup led by Conor O’Connor.

Hot Hotels, which has raised more than €1 million from Axon Partners Group and other investors, is currently part of Techstars Boston summer batch and will be in the city until September 1st, when the program ends.

To know more about the application process and why a startup with significant revenues and €1 million in funding decided to join an accelerator at this stage, we sat down with Hot Hotels chairman Joe Has.

This is an edited version of our conversation.

From my understanding, 2014 was a good year for Hot Hotels and to date you’ve raised more than €1m. Why join an accelerator and TechStars now, at this stage?

Almost every time we have spoken with a US VC they have included the question “when are you coming to the US?”. If you are a serious company, then you are expected to have a presence there.

We looked at opening an office but that´s no guarantee of anything except an increased burn rate. With Techstars we get to adjust our pitch for a US environment and also the access to whomever we want to see. It’s not easy to get into Techstars and particularly Techstars Boston. But once you are in, almost everyone will take your meeting request.

How important do you expect the US market to be for Hot in the near future?

Hot is a technology company more than it is a travel company. The value of the company is in the platform we have created and Boston is the home of travel technology e.g. Kayak, ITA Software, Trip Advisor etc. For instance, we do some really clever regression analysis to determine our pricing which is perhaps not fully appreciated in Spain. Also we have over three years of mobile first, mobile only booking data that many companies would love to get their hands on.

How do you see yourselves competing against the likes of Hotel Tonight or Groupon (Blink)?

As Martin Varsavsky once wrote, most startups don´t compete against other startups. Instead we all compete against indifference. Our competition is getting our customers to make a booking over something else (like diving home or not travelling).

Hotel Tonight was great to break ground but Booking Now (from has been even better for us as it has clarified for everyone the great opportunity that is in mobile. Even Amazon does hotel booking now.


Since you’ve raised quite some capital prior to joining TechStars, I’m assuming the valuation of their investment is lower than that of Axon’s and others. Is this the case? If so, did you think twice about it?

Joining Techstars did give rise to valuation issues, but by using a US subsidiary we can separate these for the moment. We expect to do a Series A round later in the year with a U.S. investor. Once this is done at a higher valuation, then everybody wins when the cap table is cleaned up.

So there is a risk to the founders but we have deliberately kept the valuation low so that the hurdle rate is not too steep for future rounds.

What was the application process like? Any tips for startups that might consider joining TechStars?

Step one is always to find the decision maker. Then find out more about what makes that person tick. Were his/her parents Irish? No way! Does he/she speak Spanish? No me digs! Does he/she play poker? Texas Hold ‘Em!

The Skype calls need to transmit a unique selling proposition as much as the business model of your company. This will get you on the short list. Then to get an offer you have to show you know exactly who and what TechStars is. The history, the objectives, the requirements. You need to show you know exactly what you are applying for and that you will hit the ground right from day one.

In September of last year you dropped the last minute restriction and moved to seven day bookings. What’s been the reaction to those changes from a marketing and business point of view?

The big thing is we get lots more price watching. Starting seven days out and checking every day until the night customers are looking for. We also notice that some customers start as seven days out bookers but then become same day bookers once they see how painless the whole process is. Conor O´Connor, the CEO of Hot, insisted that we build from day one to have full calendar availability. He knew that last minute wouldn’t just mean same day forever.

Q&A with Iñigo Juantegui: La Nevera Roja’s exit explained by one of its co-founders

We’ve interviewed Iñigo Juantegui, co-founder of La Nevera Roja. In this Q&A Iñigo explains why they decided to sell, the importance of media for equity investments and gives some tips to founders who are in the process of selling their companies.

la nevera roja interview
La Nevera Roja’s founding team: José del Barrio & Íñigo Juantegui.

There have been quite a few startup exits over the past few months in Spain, but none bigger than La Nevera Roja. Trovit matched LNR’s reported €80 million price tag, but as we’ve already explained, there are significant differences between the way both companies grew and got acquired.

To know more about La Nevera Roja’s path to exit and why they decided to sell to Rocket Internet, we sat down last week with co-founder Íñigo Juantegui. What follows is an edited version of our conversation.

It’s important to note that prior to the interview, Íñigo said that he wouldn’t confirm nor deny the numbers that have been published in regards to La Nevera Roja’s acquisition by Rocket.

Were you actively looking to sell?

Not at all, but as you’re probably already aware of, La Nevera Roja’s deal was part of a much bigger movement within the food delivery industry, with acquisitions in Asia, Germany and in other parts of the world.

Did you feel like this was an opportunity you couldn’t reject?

We’re currently leaders in Spain. We could have opted to continue to grow in Spain and in other Spanish speaking markets, because that was our ambition from day one.

However, we saw that the sector was moving towards consolidation very quickly, and we couldn’t compete at an international level with big players and multinationals. In Spain we totally could and can, and we’re still bigger than our main competitors here. But as you can imagine, we’re very happy with the outcome.

When the opportunity presented itself we realized we couldn’t dismiss it. First and foremost, because we’re now part of a group that backs La Nevera Roja’s current team and vision. Which is motivating.

And second, because we’re now part of a company that is present in 64 countries, and we believe we can still learn a lot from our partners.

So now you’re going to just focus on Spain or are you still planning on expanding internationally?

La Nevera Roja stays in Spain and the brand won’t leave the country. Our main objective is to establish our position as market leaders here and to have a monopolistic-like market share.

It’s not uncommon to see market leaders with an 80% market share when it comes to Internet economies, and we want to achieve that. Spain is currently one of the biggest markets for the group, and it’s also one of the most promising ones in the near future.

This is something that the whole company shares, and it’s being reinforced in the past few weeks with Rocket’s acquisition. We don’t expect many changes at the company and our employees will now be able to do things that were not possible before, like spend a few weeks or months at other Food Panda or Rocket subsidiaries to learn how things are done in different cultures and markets.

la nevera roja interview

In terms of fundraising, how important was your father’s support? Was his experience in running a similar company like Telepizza important for LNR’s development?

My father helped us in two main ways: with his support at the beginning, when we were starting the company and we didn’t know much about the industry, but also to make our other shareholders believe that this project was a serious one. When we went to raise funds from business angels and VCs, the fact that we had the support of Telepizza’s CEO helped us. No doubt about that.

But he never got involved in the management of the company and he only helped us when we really needed him.

Media for equity seems to be the talk of the town and more startups are starting to show interest in it. How important was your deal with Ad4Ventures (Mediaset) in terms of growth?

I don’t know the details of other media for equity deals in Spain, but we were lucky to run into Toni Moreno -the person who manages Ad4Ventures- at the right time. I’d say he’s a very reasonable and sincere guy, and he helped us a lot in the process.

The most important thing for us was to separate both concepts: equity fundraising and advertising agreement. I think those two things should always be differentiated in this type of deals. When Mediaset invested in us, they did so by injecting capital (€2.5 million) in La Nevera Roja. It was a proper round of funding.

And then, we also signed a media contract with them. We had to negotiate the deal in a way that would benefit both parties involved; as in, “by letting you invest in the company and giving you a board seat, give us a discount or some other type of advantage”.

But as I said, at the end of the day the key thing is two separate both concepts and to have someone on the other side that understands your business and shares your same values.

Do you think media for equity will become more important for startups in the near future?

I think so, mostly because it represents a clear competitive advantage. Not because you’re on TV (you can always pay for that), but because you’re talking to great media entities and you can take advantage of their knowledge in the field. It’s as if you were hiring a media executive to have him or her in the company. It’s great.

And I have to say it also helped us raise more capital, as many investors saw it as a sign that we were serious about what we were doing.

When you hear people complain about the deal or say that Rocket paid too much for La Nevera Roja, what crosses your mind? What are your thoughts on this?

Every single price is established based on supply and demand. If someone is willing to pay a certain price for something, and the seller is willing to accept it, an agreement is made and the price should be considered as fair.

I have no idea if there’s a bubble in the online world or not, but I do think that no buyer should be disappointed with the purchase of La Nevera Roja, regardless of its price. Mostly because they’re buying a company and product that people like, people want and that is working.

It’s been proved before that this type of companies can have EBITDAs of 40%, and there are not many online businesses that can reach those very same levels.

Yesterday Uber revealed that they’re launching UberEATS in Barcelona, which goes on to show that the food delivery sector is red hot right now. It took many people more than 15 years to realize the potential of this industry, but I don’t think anyone can say that there’s no money to be made in it.

Two years ago, Sin Delantal was acquired by €3 million. Now, you’ve been acquired by much more than that. Did the sector mature that quickly or why do you think there’s such a big difference between both deals?

When Sin Delantal got sold they had six or eight times fewer orders than us. I don’t think our size can be compared to theirs.

This is a business characterized by small purchases but with a very significant degree of recurrence. I think that’s one of the main reasons why it took VCs a long time to back companies like La Nevera Roja and others.

There’s still money to be made at a global level, and I think we’re going to see many more acquisitions and deals in coming years.

trovit la nevera roja acquisition
La Nevera Roja and Trovit’s €80 million acquisitions compared.

Where do you see yourself in five years? Does the investment world attract you?

I have no idea where I will be five years from now.

I do know that I’m not really interested in the investment sector. I’ve thought about it a lot, but I don’t think it’s my field. I don’t think I would be good at it.

I’ve heard from various sources that Rocket was not the only company interested in acquiring La Nevera Roja and you were in negotiations with various players. Looking back, what have you learned from the sale process? Is there anything that surprised you about it?

If you’re selling your company, these are the two main tips I’d give to anyone: hire a good lawyer and hire a good consultant or advisor who has experience.

In our case it was Antonio Sánchez Montero, from Ramón y Cajal, and Axon Partners Group, respectively.

It’s key that those who manage the company are not the ones who have to negotiate with the buyer. Mostly because it’s a very emotional process, with a lot of tension, and I believe it can lead founders or managers to make bad decisions that can hurt the company and its employees. Any small detail might affect the founding team in the wrong way -at the end of the day, they’re the ones who created the company- and you need to realise it’s not only about you, but also about your shareholders, employees, etc.

So if you can have outsiders help you, do it.

Q&A with Jordi Miró, CTO of online movie streaming service

Although Netflix is probably the most famous online streaming service in the world, Barcelona-based is quickly expanding its service at a European level. To know more about the company we sat down with CTO Jordi Miró for a short interview.

jordi miro wuaki

On-demand streaming service Wuaki announced at the end of 2014 that it had almost reached 2 million users (which isn’t exactly the same as customers or paid subscribers), signalling significant growth since its acquisition by Japanese ecommerce juggernaut Rakuten in 2012.

Although terms of the acquisition were never disclosed, Wuaki’s core team is still in place and it’s been quite aggressive in its international expansion (France, UK, Germany and Italy) over the past few months.

To know more about the company, how it’s changed since the acquisition and how it plans to compete with Netflix, HBO or Amazon Prime Movies, we sat down with CTO Jordi Miró for a short interview.

Two and a half years since the acquisition of Wuaki. How much has the company changed since then?

Undoubtedly Rakuten’s acquisition was a tipping point in our business development since it provided us with a financial strength and an international scoop that enabled us to compete head-to-head against the main industry players such as Netflix or Amazon. In this sense we have increased the seniority of the staff by hiring the best available professionals within the industry and, on top of this, we have also implemented new processes and mechanisms to smooth up the leap from a small startup to a multinational company.

France, UK, Germany, Italy and Spain. Is the international expansion over or is Wuaki going to continue expanding all over Europe?

We’re planning to operate in 15 countries by the end of 2015 so we’re not done yet.

From the outside it seems that Wuaki’s situation differs vastly from country to country. While in Spain there’s not much competition, in countries like the UK or Germany competition is much stronger. How are the company’s day to day operations affected by these differences in competition?

It’s a fact that the position we have in Spain –where we have attracted up to over 1,4 million users- give us a predominant role in terms of relationship with providers and rest of stakeholders. However, since we set a pan-european approach when reaching different deals across international markets, it enabled us to compete in similar conditions as our competitors and to get the best content available through the most suitable devices.

Obviously this feature in our international expansion allows us to stand out quickly within these crowded markets.

With the new LPI law it’s now riskier to download and distribute ilegal content in Spain. Do you think these laws will affect VOD services such as Wuaki?

Certainly any fight against piracy has a positive effect on a legal streaming service like However, our position on this issue is pretty clear: our objective is to build a product better than the pirate one, so the user can easily see the advantages of using thanks to some enhanced features as usability, safety, browsing, etc.

I’m sure there will always be users that only focus on cost, but we’re sure that most of them would shift to a better position at the right price.

Is piracy a solution to the problem or is it the problem itself?

Piracy just reflects that users are demanding for some changes within the industry.

When consumers rate VOD services they always tend to complain that ‘the movies or shows available are not up to date’. How frustrating is it for Wuaki and other companies to not be able to show everything you’d like to?

It’s pretty frustrating indeed. People should know that we’re very limited by the distribution windows but this is something we’re pushing forward to change, but we are unable to do it without the support of the audience.

If instead of 1,4 million users we would have 14 million, I’m 100% sure that we would have enough arguments to lead the revolution of internet on TVs. This is why we need them to reverse the current landscape.

How do you see the European VOD landscape evolving over the coming years? With Amazon, Netflix, Wuaki, HBO and indie services like Filmin it seems like the market is already saturated.

I foresee a market with a few global players and some niche services as the ones you mentioned.

It seems as if the titles (movies and tv shows) available and pricing are the two clearest way to differentiate from one another. However, can differentiation be achieved in other ways the public might not pay attention to? Technology, customer service, etc.

We have recently implemented a new user interface in our app for smart TVs in order to achieve what you’re asking for. is really fond of its technology soul and the clear evidence is that 50% of our staff comes from this field. We care a lot about the product and the technology involved. In this regard, we have developed an app that improves the customer journey when browsing throughout the different service’s features.

This was a strategic project for us and it’s aligned with your statement about finding other ways to differentiate ourselves from the competition.

When it comes to Spain, a lot of people are talking about Netflix’s probable landing in Spain as a milestone for the sector/country. How do you see this possible scenario?

It’d be really exciting for all of the current players, since it will undoubtedly push up the number of users in Spain. I’m pretty sure that all players involved will benefit from it.

Luis Cabiedes Q&A: the past and future of an iconic investment firm, Cabiedes & Partners

2014 has been one of the best years in the history of Cabiedes & Partners. To know more about the past and future of the investment firm, we sat down with Luis Cabiedes for a two hour long interview.

luis cabiedes interview

2014 has been a significant year for Cabiedes & Partners, one of the iconic investment firms in Spain. The firm saw three of their portfolio companies get acquired (Trovit and Ducksboard) or raise massive rounds of financing (Blablacar’s $100 million), resulting in one of the best years in the history of the angel fund.

As we’ve previously noted, Luis Cabiedes has very strong opinions about the current state of the Spanish startup ecosystem and in order to know more about it, we saw down with him at the offices of Europa Press in Madrid. What comes next is an edited version of our two hour conversation.

You grew up in a journalistic and business atmosphere. What was your childhood like inside and outside Europa Press?

My father was an engineer and he worked at Talgo, one of the leading companies in the railway sector in Spain. Back then (50s and 60s) he had a very romantic vision of media but Franco controlled the present and future of Spain. Although not exactly a revolutionary person himself, he did fight to defend freedom of expression in a country that did not have it.

At the time there was this agency -the one we are in today- that was quite belligerent and even got shut down five times. In the 60s the company was a disaster financially and it was losing money left and right. People close to the company told my father that given his experience at a big company, he should leave his job and join the agency to lend a hand. He spent a whole summer at the agency and at the end of his stay Manuel Fraga took brutal disciplinary actions towards the agency. He held meetings with all the shareholders to intimidate them and to avoid problems in the future.

My father says that when that happened he was doing a study of how the company could become a viable business, and suddenly there was a stampede of shareholders. Fraga’s threats had the consequences he was looking for. However, my father decided to take over the company. The shareholders, who believed that the company was a wreck, saw in Fraga’s threats the perfect reason to leave and they all did.

That’s what turned my father into an entrepreneur. He went from being an executive at a train company (at that time it was often said that ‘España tiene algo desde que tiene el Talgo’) to stay at Europa Press, which he bought for very little money. He faced Fraga’s threats and despite the fact that the company was not a great business for many years it was a very romantic and nice business to be in at the time.

When I was 15 years old Franco was about to die and I remember every night my father would bring one of his children to spend the night in the office with him. We had to be here because we did not know when he’d die and that’s how we all got familiar with the business: from the inside.


“Our origin is in news and we can’t turn our backs to the place we come from”


So how did your family go from a media business to investing in technology companies?

Olé had a lot to do with that. I worked for many years at Europa Press but I’d been always interested in the business side of things.

In the mid 90s some companies were starting to show interest in the internet and many approached us to collaborate. One of such companies was Olé, founded in 1996 by Pep Vallés.

Pep came to see us and he told us that he had a company which was the largest search engine in Spain, but that his intention was not to grow as a search engine but as a content portal, and to do that he needed news.

Although now that decision may seem like a crazy one, the truth is that it made a lot sense given the circumstances. Yahoo had ceased to based its business model on search and would focus on content, launching Yahoo News and Finance. They made a lot of money with that. At Olé they wanted to do the same and we helped them achieve that.

We told them that if they knew the role played by Yahoo in its strategy, we could be Ole’s Reuters (Reuters owned 10% of Yahoo). We would give them content but instead of giving it to them in exchange for money, we would create a company where Europa Press would provide the content and Olé the traffic. That’s how Olé News and Finance was born, which was a huge success in terms of traffic.

Three years later, in 1999, Telefónica came and bought Olé for 3,000 million pesetas to launch Terra. With that deal we earned more money than what we had won in the history of Europa Press.

We quickly realized that Internet projects had a future and I left the news side of things to devote myself to them. One can say that we started, in part, by accident. News and content was one of the first industries affected by the internet and we were at the forefront. That was our big advantage.

Since then we have invested in content companies (news), ecommerce, banking and many other industries. But our origin is in news and we can’t turn our backs to the place we come from, which is Europa Press.

luis cabiedes interview
Luis with Jordi Durán, one of the founders of Olé, in 1998.


What came after that?

After Olé we invested in myalert and some other companies, closing our first investment cycle. Then the bubble burst and we didn’t do any deals for three years.

Up until then we invested our own money, and sometimes Europa Press’. It was a strictly personal and family business. However, in 2009 we started changing the way we invested because a lawyer that worked for the CNMV came to talk to us about the advantages of investing as a venture capital fund. He said it would be more comfortable for the family and it also had interesting tax incentives.

We initially thought that the CNMV would think it was all a joke because all of the investors and board members were from the same family. But the lawyer said that the CNMV would be delighted because its purpose is to protect minority investors and there was no one to protect from others. “You’ve been making venture capital investments for 10 years and there’s no need for protection”, he said.

So we launched a venture fund (Cabiedes & Partners) led by two Cabiedes as partners, my brother José and I. It was still a family business.

Once founded with what we had earned from Privalia, the European Investment Fund (EIF) got in touch. They knew about us and they wanted to participate, doubling the amount that we were going to invest in companies. But it all seemed a little weird, putting together a family business with a public institution.

To balance this, we considered bringing other investors and friends on board. We talked to Felipe Oriol, the founder of Corpfin, and he convinced some friends to invest €8 million in the fund.

One third of Cabiedes & Partners’ money came from the family, another third from the EIF and the rest from friends and family. That was Cabiedes & Partners III, the fund that invested in Blablacar and in almost 40 startups.


Why did you decide to become an angel fund instead of continuing to invest as a business angel? Any particular reason beyond taxation?

Because we had seen, especially with Privalia, that business angels had one major problem. As in poker, when a full is played you need to have enough chips to continue playing. And when you receive a good chip you need to have money to continue to be in the game. In the startup world you need the capital to sit with Venture Capital funds and stop them from being too aggressive.

In the case of Privalia we saw that the company had tremendous growth and needed lots of capital. The typical foreign Venture Capital firm would approach us and try to be aggressive. But there comes a time when you have to be able to say ‘no’ to other people’s money and continue growing using your own. Because if entrepreneurs and initial investors offer no alternative, it’s like putting a red carpet to venture capital firms.

We saw that if we wanted to do this often we needed more capital than what the family could provide. So we went from being business angels to an angel fund, which is what we really are right now.


“We make money as investors, not as fund managers”


Many people don’t understand the differences between the two structures. What are the main characteristics of an angel fund?

An angel fund shares two characteristics with business angels and two with VC funds.

With business angels it shares the fact that it invests at a very early stage and that it invests its own money; in the case of Cabiedes & Partners a third of the total. This does not happen with most funds. With VC firms we share the fact that we don’t limit ourselves to early stage deals and that not all of the money is ours.

But in the end we feel like we’ve been basically doing the same thing for 15 years.


Has Cabiedes’ investment philosophy changed much over the past 15 years?

It hasn’t changed much, and maybe it should have.

In our fourth fund half of the money is not ours, and we make money as investors, not as fund managers. Our management fee is 2% and our carry 25%, which shows that our focus is on the latter, in the investment part. We make money with the part of the fund that belongs to the family, and that’s why we have an investors mentality.

Also, Cabiedes & Partners is a fund that hasn’t grown much. Funds III and IV are the same size, €24 million, and we have not changed our investment strategy. We’ve explained to our own partners that our strategy with our fourth fund is the same as with the third, with one exception.

It’s the same team, same investors, same amount of capital but with one difference: our target. For the past 15 years we have been investing in the internet field, in B2C startups, at the early stage and in Spain. Spain means Barcelona and Madrid, and this is what will change with the new fund.

luis cabiedes interview
Luis at the Mundo Internet conference in 1997


In what sense?

With our third fund we only invested in companies based in Spain (except Blablacar), although some have ended up moving their headquarters outside of the country. With IV we don’t have this restriction, so we will invest less in Spain and more abroad.

If market conditions change and we return to sanity, we will invest more in Spain. But if the market is as weird as it is right now, we won’t invest much here. The Spanish market is broken, and when a glass is broken, you’d better not put your hand through it or else you’ll get cut.

2014, for example, is the year in our history in which we have had more exits and fewer number of investments ever. We think 2014 is a very bad year to invest and that’s why we are not doing it very much.

We are going to start looking for companies elsewhere, from Latin America to Europe. We have been looking at Chile, Mexico and we are also doing some things in London and Paris, but we have not yet made a final decision. What we have decided is that the geolocation restriction is no longer there. In Spain we have made few investments in 2014 and we are going to look outside of the country for new opportunities. This is a challenge, because each market is different and what we know better than anything else is Spain.


“It’s important to note that what matters in this business are not valuations, but conditions and models.”


Why is the Spanish investment market broken?

Because there’s too much money and a significant part of that new money is not rightly prepared to invest in the tech space.

It’s important to note that what matters in this business are not valuations, but conditions and models. There was a time when there was very little money available in the Spanish startup market, and then Telefónica came along with Amérigo, which was welcomed because the market needed more capital. Then many other private investors from the real estate market and the stock exchange joined the party. And then even more money from the public sector.

These days it seems that anyone can be an entrepreneur, and if they can’t, they can become venture capitalists.

The problem with an excess of capital is not related to the valuation price at the time of investment, but at the time of exit. Investing cheaply is irrelevant. What’s happening right now is that investment conditions, terms, and agreements are not adequate.

When respect to capital is lost, companies start overspending. And we strongly believe in the efficient use of capital and in lean models. Being an entrepreneur is not about making a pitch to impress people, but to sit at your desk and move a company forward. We see no respect for capital and that causes companies to be very inefficient, for example when it comes to founder dilutions.

We are currently seeing some investment opportunities that we might have invested in previously, but given the current landscape they don’t make much sense anymore. If a company like Trovit was founded today, someone would back them with €8 million very soon and they would tell them that they’d have to move to Silicon Valley to grow the company; and what these kind of behaviors end up doing is ruining the model. That’s why I think it would be so difficult to replicate the case of Trovit right now.


Have we been in a similar situation before?

We have seen this before and it’s got a name: bubble.

For a long time I defended that a bubble did not exist, because for a bubble to exist you need three things:

  • For it to be general
  • The existence of feedback mechanisms
  • Creation of artificial supply

A few months ago it was just Facebook, Twitter and LinkedIn. But these days we’re seeing more IPOs than ever in Silicon Valley and other regions. Thus, it’s general.

What I’m starting to see more and more is artificial creation of supply, that it often manifests itself in two ways: via debt or derivatives, which is what more or less happened in Holland with tulips. There was a time in the XVII century when merchants were selling tulip options, later seeds and then even seed options. The problem is that, in the end, tulip options are infinite but tulips are not. What this represents is an artificial creation of supply to meet demand. A bubble is created, and when it bursts all of the artificial aspects disappear and what you have left are a limited number of tulips.

I’m very pessimistic about it. If you look at Rocket Internet’s IPO, its prospectus is incredible and defies any logic. Rocket has sales of more than €700 million, loses of €448 million and values itself at more than €6 billion. In other words, it loses 66% of its EBITDA. And those are just the ‘proven winners’.

It smells like a bubble, although it’s true that it’s a shitty bubble compared to the one we saw in the 2000s. There’s a time to make investments and a time to look for exits, and I think we’re at the perfect time to do the latter.


Is it a matter of a significant increase of capital but not of investable companies in Spain?

When there is a flood the first thing you need is drinking water, and that’s what’s happening right now. We had a dry garden with very little water and someone said “you have to add water”, and instead of watering it carefully they threw a ton of water on top. And when that happens what’s missing is drinking water.

I don’t want to say that Spain can’t reach a certain investment volume, but there has to be a balanced growth of supply and demand and that’s not happening. Proof of that is that the investors with the most experience are not investing as much as before.

luis cabiedes interview
Trovit, the Barcelona-based startup acquired by Next Co for €80 million. Cabiedes & Partners was their only backer, having invested less than €150,000 into the company.


On the entrepreneur side, what’s missing or what are the most common mistakes you’ve seen over the years?

It’s funny that many politicians are wondering what to do to fix entrepreneurship in Spain. What they need to do in order to achieve that is to, first and foremost, fix Spain.

The problem is that we have an unemployment rate of 26% and consumer spending is lower than ever, adversely affecting businesses and startups. Entrepreneurship is a product of a healthy, balanced and high growth economy and we don’t have one at the moment. With this crisis and high unemployment it is very difficult to find consumers and clients.

Many often forget how important the health of an economy is for startups: clients and consumers are key for startups, not investors. If there are no customers, investors can do very little. What is missing in Spain are customers, economic recovery, less corruption, banks willing to finance companies instead of black cards, etc. That recovery will lead to more jobs, economic development and thus consumption.

This environment has direct consequences for the startups currently operating in Spain. I recently spoke with other investors and we all agreed that the portfolio companies which are doing better are those that sell most of its products and services abroad.

I think that the health of the market is much more important than many consider it to be. Given the current situation, startups who are able to sell their products and services in Spain deserve a lot of credit.


“What politicians need to do to help entrepreneurs is to, first and foremost, fix Spain. Many often forget how important the health of an economy is for startups”


Before you mentioned that you mostly invest in startups based in Madrid and Barcelona. Do you see significant differences between the two markets?

Yes, many differences and very clearly in favor of Barcelona. Entrepreneurship is very viral and Barcelona was fortunate to have in the 90s and 2000s the Intercom group, which has produced many entrepreneurs. The same happened with Privalia, as many employees who left ended up creating ecommerce businesses.

Ecosystems feed themselves. This is like an anthill: in a garden you might not know where an anthill can emerge, but when there are a number of ants you know that’s the anthill. And in Spain we have a winner anthill and that’s Barcelona. A hub that we should take care of, instead of promoting the creation of pockets of entrepreneurship everywhere.

I say this because for me Barcelona has several major advantages:

  • Trajectory.
  • Business Schools: they have been fundamental to attract people from outside Spain.
  • A more sensible administration, because it is an administration more interested in supporting than intervening.

And we must also recognize one more thing: Barcelona has positioned itself very well. When you are recruiting talent outside of Spain, if you tell a person “come to Barcelona” there’s a good chance that they will. If you ask him or her to come to Madrid they will think about it, and if you tell them “come to Spain” it is even less likely.

Another factor contributing to the rise of Barcelona is that there is a lot less silliness than in Madrid. Silliness associated to politicians, to power, bullrings, ASCRI and lots of parasites. Madrid has a lot of parasites. Obviously not everyone in the administration are parasites, but Madrid has an overpopulation of people who do not contribute to the ecosystem.

One more factor is that Madrid has not been able to build a central district of entrepreneurship. Much of the entrepreneurial activity in Barcelona is concentrated in the 22@ district while in Madrid many incubators are in the outskirts or far from the centre. You can’t ask an entrepreneur to work from Vicálvaro while politicians have their offices in the centre of the city. These are details that make no sense. Politicians should go themselves to Vicálvaro and leave their offices in Castellana to entrepreneurs, which is where they should be to take advantage of the city and the urban environment.

In Barcelona there is less silliness and more entrepreneurs. We invest more in Barcelona than in Madrid, but many of the best projects are still in Barcelona.

However, it’s worth pointing out that there’s a lot more money in Madrid than in Barcelona.


You and your brother are not known to give many interviews. Why is that?

Partly because we are barely asked to speak and, as you can see, we love to talk. We love talking because we’re in a business where the key is in finding the best projects, and a good way to achieve that is by making yourself available and encouraging startups to approach you.

I don’t think investors add much value. What’s important is that entrepreneurs value your job and they approach you when they have a good project. That’s why my brother and I give talks, teach a few classes and we try to help every entrepreneur who comes to us. I don’t think we have a low profile. It’s just that we mostly focus on the part that concerns us the most, which is to get people with good projects to talk to the Cabiedes.


Startups often talk about the famous Cabiedes shareholders agreement and many complain that it’s very restrictive on the side of entrepreneurs and the startups. Is that the case?

Our shareholders agreement is one of the less restrictive ones in Spain. It’s the only one I’ve seen that clearly says that entrepreneurs should control the majority of their board. The government of the company belongs to the entrepreneurs and that’s one of the key aspects we defend.

This is not because we are very nice people with entrepreneurs, it is because it reflects the things we’ve been seeing over the past few years. For example, when you have to tell an investor: “I backed this project before anyone else, so if you want my money pitch me and I’ll decide if I want to give it to you. But the project belongs to the entrepreneurs.”

This happens because many investors want to back a company to manage it. In this sense we are much more open and flexible than any other fund I’ve been in touch with.

Our term sheet also includes two famous clauses: 3.1 and 3.2.

Clause 3.1 basically says that in the case of fundraising entrepreneurs have to agree with investors; if they don’t, it can’t be completed. Majority with majority. Given the fact that Cabiedes never has a majority stake, this doesn’t imply that we can veto a deal, but it means that the income statement and balance sheet are controlled by the entrepreneurs. They have all the control except with the capital account, which to be changed by entrepreneurs they need to reach an agreement with us.

Clause 3.2 is a clause that entrepreneurs don’t understand very well. It’s not a clause against entrepreneurs but against VCs.

When you negotiate a deal it seems that it’s a negotiation between the entrepreneur and the investor, and that’s not true. What’s important is what will come after. 3.2 is a clause to be able to properly negotiate with the investor that will come in the future if things go well. Because if things go bad no one will come.

What this investor tends to do is to financially reward the entrepreneurs but not the investors. 3.2 says that you can’t issue shares and options for a partner if the rest of the partners don’t have equal access to those shares. 3.2 defends the political and economic rights that are acquired when an investor backs a startup and they own shares.

The other thing that 3.2 forbids is associated to related-party transactions. In a company money can leave in many ways, but it’s the investor’s job to make sure that this only happens in two ways: via dividends or by selling shares.

One more thing that characterizes our term sheet is that they are extremely egalitarian. What we have for Cabiedes, all investors have it too.

Other investors who have seen enough term sheets, such as François Derbaix, consider our term sheet to be normal towards the entrepreneur. But what happens is that some entrepreneurs, when they see the word ‘veto’, they think we’re going to cut their wings. And that’s not the case.


luis cabiedes interview
Blablacar’s co-founders: Frédéric Mazzella, Francis Nappez and Nicolas Brusson. Cabiedes sold part of its stake in Blablacar during the company’s recent €100 million round, earning €15 million.


Privalia, Trovit and Blablacar. Three deals you participated in that have become highlights of your career. What was the key in each of those investments and exits?

Those three went very well, but it is important to realize that successes are an exception. In fund III we’ve invested in 37 startups and we thought they would all become good investments. With this I mean that I didn’t see anything extraordinary in each of those investments that led me to think “we’ve got an exit in the making here”. I saw the same things in Blablacar as in Rockola, but one went very well and the other one not so much.

However, there are things that those three investments have in common. The use of capital in the case of Trovit was extraordinarily efficient. They barely needed any additional outside money to build a business and they’ve reached an exit while controlling 90% of the company. This is crucial because entrepreneurs often pay too much attention to valuations instead of focusing on what each of them owns and the sale price.

The case of Blablacar is a beautiful one. And it is beautiful because despite the fact that many people think that businesses are created from nothing, the truth is that it takes time to build a great company. Blablacar was born in 2007 and is a perfect example of working without making too much noise and reaching impressive growth rates.

One of the main problems that I see today on the internet is that many companies want to scale too fast, not realising that fame is costly and you have to work hard to achieve it. Blablacar’s founders spent three or four years working in a small room, in a humble way and not making any noise whatsoever. And now they are beginning to reap the rewards of that effort.

Blablacar came to Spain because French boys and girls used to come to the country by car and they needed to offer Spain as a destination. They approached me because they needed a Spanish partner and I decided to invest in them; by them I mean in the French company and not in the Spanish subsidiary. With Blablacar we’ve won €15 million and we still own 2% of the company.

What is nice about Privalia is that it was the first ecommerce success in Spain. When they first talked to me about Privalia I did not think it would work and I also didn’t think ecommerce business would grow so fast in Spain, but they executed perfectly. Lucas and José Manuel are the best entrepreneurs I’ve met in my life. The idea is not theirs and it’s not the most original in the world, but they executed with incredible precision. They did a fucking great job: they used capital very efficiently and they were able to scale well and fast.


“Many think that businesses are created from nothing, but the truth is that it takes time to build a great company”


You also invested in Ducksboard, which got acquired by New Relic very recently.

I don’t think bad exits exist and I think Diego and his team have done one thing extremely well: they realized that the company was not growing as fast as they would have wanted and they sought a way out. Chapeau for having done that so well.

But it was not the best deal in history and some people in the media have portrayed it as such. We are very careful when it comes to congratulating entrepreneurs and startups in public. It’s not that Ducksboard was a failure, but from time to time the media writes about deals as if they were huge exits, and this doesn’t make much sense.

Ducksboard has found a great company for them to grow and they are great entrepreneurs. Diego and his team developed a great product and, although they were not able to commercialize it as well as they would have wanted to, they were able to find a good way out. However, their ambition was gigantic and they were not able to reach the goals they had established.

I believe this kind of stuff happens because there’s so much noise in Spain around startups and entrepreneurship. I still remember the headline that said that SinDelantal was the deal of the year… and the investors lost money on that deal. How can it be the ‘deal of the year’?

The same happened with Saluspot, when it was suggested that the purchase by Telefonica was very good and the reality is that they did not fulfill what they had promised us.

luis cabiedes interview


I understand your concerns about what gets published but… isn’t this caused by the incredible lack of transparency in the sector?

Yes, it’s true. There’s lack of transparency, although sometimes it’s imposed by others and not up to us. I can tell you that with Blablacar we won €15 million, but I can’t tell you the valuation because I don’t control that part.

In this sector there’s too many secrets because people don’t want others to see that ‘they are naked’. And many of the things we want to sell as great successes, in the end, are not.


“One of the nice things about the internet is that you have to be prepared to eat your own words”


We’re at Europa Press, and I wouldn’t like to leave without asking you about the future of journalism and media. In the past you’ve said that Cabiedes & Partners will not invest in the content business. How do you see the future of media and the sector?

One of the nice things about the internet is that you have to be prepared to eat your own words. It is a very good diet.

I wish there was a future for media. What I have always argued is that one thing is that there is no future for content producers and a totally different one is that there’s no future for journalism entities. It’s like saying there’s a future for musicians but not for record labels. For decades the main fortunes in the world were media owners, and today it’s mostly the owners of technology companies. I think media companies are in danger, in the sense that many have given more importance to infrastructure instead of content. The same has happened with musicians.

More content and music are consumed than ever, especially live. There are probably more people making a living out of music than 20 years ago, but you won’t find many more labels with four private jets. Record labels were record companies, media were media companies and media is a base, a starting point. These were businesses based on the monopoly of the base, but the situation has radically changed with the internet and these foundations are disappearing.

I still think it’s very hard to build a media company, but this doesn’t mean that it’s not possible. When I talked to Privalia for the first time I told them that I would never invest in such a business in my life, but I ended changing my mind, investing in them and the rest is history.

There’s nothing wrong with making mistakes if you are able to be sincere and recognise them. And I think we’re good at that.

“In the IoT sector crowdfunding is mostly a marketing tool” Telmo Sexmilo, CFO of Wattio

Wattio has just raised €1.25 million from private investors. To know more about the IoT sector and Wattiot’s transition from raising money via crowdfunding to public VCs and private investors we’ve interviewed its CFO, Telmo Sexmilo.

wattio interview

Home automation startup Wattio closed a €1.25 million investment this weekfrom private investors.

This round of funding comes after raising more than €90,000 on crowdfunding platform Indiegogo in 2013 and an additional half million from the same public VC fund EZTEN a year before that.

To know more about the company, the Internet of Things (IoT) sector and their experience in raising money from two very different sources (local institutions and crowdfunding) we’ve interviewed its CFO, Telmo Sexmilo.

Many Internet of Things projects started off on crowdfunding platforms. What role do you think these platforms play today and do you think this role will change significantly in the next three to five years?

Personally and based on the experience with Wattio, I think that crowdfunding is mostly a marketing tool that is useful to validate ideas. Especially in the case of hardware projects where investment is not only needed in production, but also in building means of production.

Although we outsourced the production part, we still had to produce molds for plastic injection and systems for testing, elements that were necessary to ensure the quality of our first production batch. Despite the fact that it was just a crowdfunding platform, we couldn’t ship a low quality product and play with our users’ trust. With this I’m trying to explain that even though crowdfunding can cover variable costs through presales, there are many other elements that require additional funding if we want to build a scalable and profitable company.

As 3D printers become cheaper and more accurate and systems such as Raspberry Pi or Arduino mature, maybe in a few years we could see IoT crowdfunded projects that look more like industrialised products than prototypes, without risking the quality of the product or the prestige of the company. This could also lead to significant reductions in delivery times to the end the user, which right now are high given the constraints and developments I’ve previously mentioned.


Some public institutions and companies talk about Spain as one of the largest IoT hubs in Europe. Do you think that’s true or is there too much hype around the sector?

The truth is that I don’t know. We can ramble all we want, but I like to make assessments based on data. In my opinion we need to wait for results to be available in order to issue this kind of judgements. This should be analysed in a few years when we know how many successful IoT companies have come out of Spain in comparison to the rest of Europe. Or how many have been acquired.

I’m pretty sure about one thing: despite what many think, we have lots of creative and collaborative people in Spain, who are convinced that the path to success requires effort and sacrifice. And each and every year our universities and schools provide some of the best engineers in the world.


In Spain there are many public initiatives to promote IoT and smart things such as Malaga, Santander and Barcelona. What do you think about the public sector involvement in these areas?

I don’t know the initiatives run by these cities, but I do know what’s going on in Euskadi in terms of entrepreneurship and R&D. We’ve received lots of help from various local institutions.

I think the creation of infrastructures and networks that facilitate collaboration and mutual learning between new and historic companies, as well as institutions, is vital for the maturation of our projects and the professionals involved in them. In that sense, at Wattio we have been fortunate to have received the support of Bic Gipuzkoa Berrilan and to be located in the Technology Park of Guipuzcoa.

What’s also clear is that Spain needs to go through a new industrial revolution with wider and larger effects than previous ones, for example creating IoT companies.

And for this to happen it is important that the public sector continues its involvement, given today’s economic context and the nanny state culture that we have in Europe. However, the state should be selective and demanding. Prior to supporting certain companies, we should see the establishment of filters that help the state identify excellent projects aimed at high demand markets.

This means that not every single project should be supported. Public resources should be allocated to those that deserve them and who might be able to provide a return to investors (in some cases public institutions) by creating jobs or instigating consumption. However, before anything else, the public sector should pay attention to education in its most wide sense. Not by buying computers to every single kid, but by working on content, capabilities and values.


What have been the biggest lessons you’ve learned while building Wattio?

What we have learned in the area of IoT is the importance of hardware and software integration. At Wattio we worked on both areas from the start, building a strategy based on product and platform. This allows us to offer our clients a complete IoT solution for their homes.

The control of both hardware and software also allow us to either build our own gadgets or integrate those from other manufacturers in a short period of time, as well as make changes efficiently that might be requested by telcos or big companies. The importance of the platform and the hub can be seen in Nest, which was acquired this year by Google. Nest is a company with a great product but with no platform, and that’s why it recently bought multiprotocal hub Revolv.


You’ve only raised money via crowdfunding and from public institutions (EZTEN). Are Spanish business angels and Venture Capital firms interested in the IoT space?

In our case, crowdfunding was more of a way to validate our idea and get people to know us than a source of capital.

Regarding EZTEN, a fund that belongs to the Government of Euskadi, it’s the only VC fund in our cap table since 2012. In the latest round we’ve received investment from private investors with vast experience in the tech sector and who have been successful. We made this decision because they will provide not only capital, but also deep knowledge of the sector.

In terms of Spanish business angels and VCs, I’m not as familiar with the industry as we didn’t need them in our latest fundraising. The sense I have is that they are looking at the industry, but they are afraid of taking the big step and start backing IoT companies. In this sector, especially in smart homes, there have been multimillion deals and some see this as a threat instead of as an opportunity.