Start small and lean. Know your customer.
Before staring DILA, I was a serial entrepreneur always looking for new ideas and businesses. In 2002, the fever of the FIFA World Cup was heating up and I was, once again like every four years, in awe with how the Mexican Team created a passion like no other in Mexicans. The mere thought of winning a World Cup creates a vibe so special you can feel it in the air. All across the country people get together in harmony and tandem to watch the games and celebrate the sport. Mexican flags are sold in every corner across cities and towns and on game day, everyone is wearing the Mexican Jersey. We all forget about our differences and bond with our united passion of soccer and our nationality.
I knew that a market this powerful meant business opportunities. I had only seen this much passion in Mexico with the Virgin of Guadalupe. It hit me. What if I put two of Mexico’s strongest passions in one product? I designed and created the Scapulary of the Mexican Soccer Team. I pitched the idea to the Mexican Soccer Federation and obtained the license. I then pitched to corporations which I could partner with for distribution, and they all loved the product as well! So, I dove into my savings and decided to go all in: I made 500,000 scapularies.
After spending more than I could afford, I finally went to market. Several companies asked for products in consignment in order to test the market and I personally went out and starting selling them direct to consumers. The result was a total flop! Customers hated my product. They couldn’t stand the idea of having a soccer logo next to their sacred Virgin. While these two were huge passions, they were passions that did not mix well together.
Long story short, I’ve been trying to sell and give away scapularies for 5 World Cups now and I’m still not through my initial inventory.
While this is definitely one of my worst failures, it is also an experience that has given me tremendous insights and learnings:
- Start small. Be lean. I would have learned exactly the same about my product had I build 10 scapularies instead of 500,000. I would have saved a lot of money.
- Know your Customer. Study your target market. I made decisions based on my partners thoughts instead of my clients. It would have been a lot cheaper to have created a focus group and spoken to my target market.
- The impact you generate is as important as the financial result. There is one silver lining in this story. When deciding where to make the scapularies, I had many options, but decided to give the job to a group of indigenous people in the Sierra of Michoacan who were working with groups of women with special needs. They were the most expensive option, but I wanted to do good and be a socially responsible company.
These insights have a huge impact on how we invest in DILA Capital today. We have decided not to invest in companies that are pre-revenue, for example. We do not take on product or service risk. We like to invest in companies that have proven that their products and services can sell and that there is a market big enough willing to buy their products and services. We look for entrepreneurs who have already dug into their savings and assured the product market fit is correct.