Annual Shareholder Letter #VisualFuel #VisualFuel
Dear Splento Shareholders,
On a hot summer afternoon nine years ago I queued up for two hours at the O2 Notting Hill Gate Store to get my first iPhone.
That day it clicked for me. Later that year I set up an iPhone app development studio, called RevelMob.
I wholeheartedly believed that smartphones would make not just information, but everything else instantly accessible and change the way we work and play. I wanted a piece of that action.
Admittedly, I was too late to the party and too inexperienced to create anything notable out of RevelMob, so I shut the business down after a few years of operation. However, that experience did not go to waste. It led me to another lightbulb moment.
While developing apps for some of the leading brands, I’ve started noticing that they are prolific users of something their less successful competitors are not.
With the rise of digital cameras – visual content (photos and videos) suddenly became an integral part of a brand, its story, and its products. However, when hundreds of millions of people around the world have top-of-the-range cameras in their pockets at the ready, getting a brand’s message across becomes that much harder.
- Companies that want to grow can no longer hide behind a website or a sales brochure full of stock photos.
- Lawyers, accountants and other professionals who don’t have professional portraits on their LinkedIn Profiles and About Us pages lose business.
- Event organisers who don’t have professional photos and videos from their conference delivered on the day won’t get as many walk-ins and re-bookings for next year.
- E-commerce outfits with no professional photos will struggle to sell their goods and services online.
- Accommodation providers won’t get as many bookings if photos are not taken by a professional with the right equipment from the right angle and edited accordingly.
- Food delivery companies will sell a lot more only if photos in their apps are as delicious as the smell in the restaurants kitchens.
In the past five years, #VisualFuel* stopped being a nice-to-have and became a must-have.
#VisualFuel – professional photo & video content that companies need to market themselves and sell their products.
Getting professional photos and videos used to be incredibly difficult: looking through dozens of photographer profiles, negotiating rates, coordinating shoots and then waiting for weeks to get the final product.
Despite all the hassle, the likes of AirBnB, Amazon and Deliveroo understood very clearly that great photos help them sell more. A few of these large multinational companies employed large in-house teams to deal with all their visual content, most smaller competitors couldn’t afford that or simply wanted to focus on what they do best – their own business models.
However, with the advent of the Splento business-model (tech platform with procurement process automation, supplier time utilization, and division of labor) any business, large or small, can now get professional quality photos and videos anywhere in the world on-demand at affordable rates and get their edited photos and videos delivered the same day.
It drives us crazy to see so many amazing businesses use sub-par visual content – and often none at all – to promote their products and services, so we have set out to change this!
In my annual letters, I will look inside Splento to show you how we will achieve our mission of helping the world move from offline to online by visualising it.
THE WINNING FORMULA
With time our understanding of the winning formula may change, but at the moment it consists of the following elements (the Splendid Dozen).
(1) Putting clients first;
(2) Clear strategy and vision;
(3) A well-functioning team of A-Players performing at their best;
(4) Growing market;
(5) Predictable, scalable, profitable growth;
(6) Above average unit economics;
(7) Financial prudence;
(8) Ever deepening protective moat;
(9) Healthy team culture and respect for all stakeholders;
(10) Measuring what matters;
(11) DNA of constant learning, experimentation and innovation;
(12) Standardizing procedures and operation for maximum efficiency.
LET’S GET READY TO RUMBLE
(1) Putting clients first
You build a business to solve a problem. It may start with your own itch, but no great business has ever been built around a problem that only one person on the Planet has.
Luckily for us – the lack of affordable and easily accessible professional photography and videography is a huge problem for millions of businesses around the world. However, in order to help these businesses, just building a great product won’t be enough. We need to listen to our customers and iterate accordingly.
Essentially, everyone needs to understand that our customers are the reason why we are doing what we are doing.
We are extremely fortunate to have a team that puts our customers’ interests and needs first. We never had to instil that customer-centricity into our team with any kind of processes, or training courses. On a genetic level everyone at Splento, from our R&D team to sales and customer support, to photographers and editors – first and foremost thinks about the client.
As we expand that may change and we’ll need to start putting processes in place to crystallise this Core Value, but to date, the team has been exceptional at Putting our customers first.
(2) Clear vision & strategy
Our long-term vision is to build a platform that will:
Empower businesses by providing them with professional visual content anytime, anywhere
Our strategic plan which will realize this vision stands on three solid foundations:
1) Standardized operations to maximize efficiency, low cost, and scalability.
2) Focusing relentlessly on promising little, but delivering a lot.
3) Constant data analysis to guide informed decision making.
In 2019 we will continue building upon these foundations and perhaps add new ones.
(3) A well-functioning team of A-Players performing at their best
Just hiring the right people with the right skill set (A-Players) for the right job at the right time for the right business problem isn’t always enough. We also need to learn how to get our A-Players to perform at their best. Otherwise, we risk creating a dysfunctional group of superstars who don’t work together at all.
a) We always had a team of A-Players, but as is the case with most cash-strapped startups, everyone was doing everything, thus we couldn’t fully leverage the talent we had. In 2018 we have finally got the right people in the rights seats onto the proverbial bus. Still, plenty of seats are empty, but we are getting there.
b) We have started implementing and experimenting with the principles of deliberate practice (a purposeful and systematic practice that is conducted with the specific goal of improving performance), which is very different from the bog-standard practice (mindless repetition). We are nowhere near to where we need to be, but we’ll get there in 2019.
c) We have developed our own effective cadence of regular daily, weekly and monthly team meetings and communications to help us build a scalable and cohesive operation. We are already functioning better with clearer communications, and intend to continue improving throughout the coming 12 months.
(4) Growing market
We have a tech-platform that can process thousands of orders around the world each and every day. We began with photography, but the plan has always been much more extensive.
This year we have softly launched our videography offering. It’s still in its early stages and not as automated and efficient as our photography offering, but videography already constitutes a large part of our business.
With video widely predicted to be the main medium of information consumption within a few years, we are transitioning from push to pull with many of our clients.
Partially it’s due to our growing brand recognition and better marketing strategies, but mostly it’s because, with every passing month, more and more businesses realise that professional photos, and especially videos, help them sell more.
Clients no longer need to be persuaded or educated about the importance of professional visual content.
The pendulum has swung. From “Educate First > Provide Service Later” we have entered an era when a large share of our clients clearly understand the need for our service.
To win business we just need to continue providing a simpler and better service at affordable rates – exactly what Splento is all about.
(5) Predictable, scalable, profitable growth
Business growth doesn’t have a silver bullet. It’s a mix of dozens of various traction channels. In 2018 we undertook numerous experiments to refine our marketing-mix.
We are nearing our goal of achieving a profitable Average First Basket, but for the time being, we still lose money on the average first order and recoup our CAC (Customer Acquisition Cost) on subsequent orders.
(6) Above average unit economics
#VisualFuel industry, while not as large as Fossil Fuel industry, is as fiercely competitive.
In Visual Content space we don’t have VisualFuel “Oil Majors” just yet, due to our industry’s infancy, but within a few years, behemoths will arise.
We don’t expect any company to have 80% of this $100bln per annum (and growing) market. Instead, a handful of companies will share 90% of the market. We will be among the largest and most successful of those companies.
To thrive in such a competitive market, one must keep a watchful eye on unit economics.
We will continue to excel at delivering the most reliable service at affordable rates while keeping healthy gross margins. 2018 has been good – our gross margins across all segments increased by 11%.
(7) Financial prudence
Even if we weren’t in a perpetual bootstrapping mode, our instinctive financial prudence would prevent us from spending on trendy offices and expensive parties.
We focus our financial resources on building the leanest and most forward-looking company possible. We invest significantly in R&D. With the new round of financing, we will spend 35% of our budget on cutting-edge technology. We will also devote significant funds to marketing experiments, and plan to acquire the most talented personnel available.
(8) Ever deepening protective moat
High customer retention, strategic partnerships, loyal supply-side, network effects – all these competitive advantages help us protect our castle.
However, our deepest moat is our technology. Our business model goes by many names – some call it a platform, others a managed marketplace. Regardless of the definition, at the heart of our business model lies technology.
Developing new technologies in order to automate our services is essential to efficiency and profitability.
Technology helps us reduce friction and risk for customers, whereas curated and quality-assured services lead to high retention, repeat behaviours and strong network effects. Great tech also helps us build communities around specific verticals.
Having an international co-founding team, allows us to attract exceptional tech talent based outside of the UK, which means we can build 10x faster 10x cheaper. In a business heavily reliant on technology for operational excellence and scalable client acquisition, that is the best moat we could have wished for.
(9) Healthy team culture and respect for all stakeholders
“Culture eats strategy for breakfast.” (P. Drucker).
Putting customers first is an integral part of Splento. However, growth at all costs is unsustainable. We are in it for the long term and in our opinion, achieving industry dominance can only be done by caring deeply about all our stakeholders, including photographers, strategic partners, employees and investors.
In 2019 we plan to launch a series of events, newsletters, and video podcasts that will benefit not just our customers, but also a wider stakeholder community.
(10) Measuring what matters
If we don’t know where we are going, how will we know if we got there? If we are not measuring the progress, how will we know how far away from the finish line are we?
To help us navigate the rocky road through the Startupland, this year we’ve started implementing OKR (Objectives and Key Results) methodology.
For those not familiar with OKRs, this approach helps organisations:
- focus and commit to priorities;
- align for teamwork;
- become relentlessly accountable;
- religiously track progress;
- work smart and stretch beyond what’s considered possible.
It’s not easy and requires management’s full support (which we have), but we still have a long way until “all systems go”. We are progressing and can already see the benefits.
The goal for 2019 is to perfect our OKR approach and make it fully operational throughout Splento.
(11) DNA of constant learning, experimentation and innovation
Commitment to continuous improvement, one of Splento’s Core Values, motivated us from Day 1.
In order to delight our customers and deliver the best possible service, in 2019 we will continue to concentrate on refining all our processes and improving as a team and individuals.
(12) Standardizing procedures and operation for maximum efficiency
Business is a balance between people and systems. We invest heavily in both.
In 2018 we have considerably improved “The Book of Splento: a How-To-Manual and step-by-step instructions for all things Splento”.
As we expand worldwide, “The Book of Splento” is our main tool for delivering consistently great service.
Furthermore, we have launched Splento University – a portal with short videos for our team and photographers. Currently in its’ infancy stages and only with a handful of videos, but it has already proved incredibly useful at standardising certain procedures and keeping our quality uniform.
THANK YOU AND A HAPPY NEW YEAR!
I would like to thank all of you for being a part of Splento’s quest to empower businesses around the world with #VisualFuel.
Our simpler, faster and more affordable photo and video solutions have already helped thousands of businesses in 200 cities around the world present their events, teams, products and services in a more professional light, thus helping them generate more sales with lower costs.
We will help millions more.
It’s not going to be fast and it’s not going to be easy. It’s going to be a hell of a journey!
Thank you and a Happy New Year to you all!
A short celebratory video from our X-Mas party can be found HERE.
31 December 2018