Giorgio Tinacci, Founder of Casavo (Masterclass Edition)

Listen on

Today we’re talking about how to scale internationally with Giorgio Tinacci the founder of Casavo. Casavo is the proptech scaleup launched in 2017 that simplifies the process of buying and selling homes. Buying or selling a home can take up to 6 months and the aim of Casavo is to reduce this to 30 days. Casavo is now present in Italy, Spain, Portugal and France, it has raised over €700 million between equity and debt with an international team of over 400 people. Fun fact Giorgio actually started his career at BCG. 

TRASCRIZIONE EPISODIO

Camilla Scassellati (00:00:02) - Welcome to MadeIT podcast. You're hearing our voices in English because we worked with a group called Italians NVC to produce a series of masterclasses with some of the most influential Italian investors and entrepreneurs on a series of topics that we think will be invaluable for any startup founder. These sessions were conducted live for a select group of Italy based startup founders, but now we can all listen to them on mated podcast. So let's go.

Inès Makula (00:00:30) - This masterclass was powered by BCG. Unlocking the potential of those who advanced the world is crucial for BCG, and this purpose has been leading the firm for 60 years now. Over that time, BCG has supported companies and organizations in their process of growth and strategic transformation. BCG supports startups with the same care to help them develop sustainably and innovate. If you're a founder and are interested in working with them, you can email Emily the seeds at BCG, all the details in the show notes.

Matteo Romano (00:01:03) - Okay. Good afternoon again to everyone. Welcome here in this office in Milan. For the one that doesn't know me, I'm Matteo Romano, partner in the digital technology practice and I'm super happy to have here with us today, Ines and Giorgio. Many of you may not know it, but Giorgio was one of the first people that I work with seven years ago here in BCG. So for him, it's really a welcome back. So super happy to have you here. And I just wanted to know that in BCG we started one year and a half ago a project called The Seeds, which aimed at increased the collaboration between consulting and the startup ecosystem. So startups scale up ecosystem, VC and that's it, and corporate capital as well. And so we are super happy to have all of you here today and so many people connected online. Thanks a lot to you.

Inès Makula (00:01:50) - Thanks, Matteo. And welcome back, everybody, and welcome to the ones who just joined us online to another and final actually, masterclass in collaboration with the Italians. We are recording today from the BCG offices in Milan. And a huge thank you again to BCG for having sponsored this initiative and for having hosted us here today. Today we're talking about a super important topic which is scaling internationally, and we have the founder of Casavo here with us.

Inès Makula (00:02:17) – Casavo, for those who don't know, is the prop tech scale up launched in 2017. That simplifies the process of buying and selling homes, buying or selling home can take up to six months and think your aim is to reduce it to 30 days because that was now present in Italy, in Spain and Portugal and in France. And it has raised over €700 million in both equity and debt with an international team of over 350 people. And we're really honored to have you here today to discuss this very important topic and to also have your experience in scaling Casavo internationally.

Giorgio Tinacci (00:02:49) - Thanks for having me.

Inès Makula (00:02:50) - A pleasure. And before we get started, as usual, we'll leave the last 15 minutes for Q&A. So please, if you're watching online, write your question in the chat box and we will select them at the at the end. But now let's get started. So when you were opened, when you first opened Casavo, did you set up the company to be international from the get go, or was it something that you thought about after? And if so, if you if you did it from the get go, what are some of the things that you did?

Giorgio Tinacci (00:03:14) - So no, I would say that the I mean, when I started this this company, the ambition was already international from the start, might have been a naive ambition or not, but that that was the ambition. So I remember the first, let's say, precede and proceed was not really a market back then, but that was there. So there was this ambition of revolutionizing the way people send and buy homes across Europe. At the same time, there was at least from my end, a pretty strong thesis that this was a game of very local penetration at the beginning. So it really started from three neighborhoods in Milan, not even Milan, so three neighborhoods only. And so there was the ambition. But at the same time, I started in a very, let's say, focused way, really test dynamics at a hyper local level in a few areas only Milan. So that's a bit the path. So we were not structured, let's say, to have an international, let's say scale up from the beginning. And so we had to go through a lot of changes when we started to have a presence in two countries or from Italy to Spain back in 2020.

Inès Makula (00:04:33) - And from obviously it was part of the so the bigger vision was to European. But like in terms of just like little things like drafting up your term sheet, your page deck and all of the documents, the team like, were you doing things already? Like set it up, set it up in English or was it an Italian company from the from the beginning?

Giorgio Tinacci (00:04:51) - No, on that end was in English simply because some of the very first investors were not Italian. And so things were set up in English on that regard. So now on that point, let's say the fact that some of the very first investors, even small ones, were not Italian, helped us, let's say, to have already that kind of mindset, but not when it comes to the business and organizational setup from the outskirt. Okay.

Inès Makula (00:05:19) - I think that's an important thing to underline because you had obviously you did it because of the international investors. But if you start with only Italian investors, there is a chance that you don't do it and then it becomes a little bit more difficult. That's what we've heard on from other masterclasses that we've done.

Inès Makula (00:05:34) - If you if you start in English already, then your future investors can look at all of the documents and they have all of it and they can understand it. If you're doing it later, you have to kind of catch up a bit. But now in terms of when you actually started, you went international quite fast because the company is very young. How did you pick the first market outside of Italy and what were some of the things that you did to consider like, you know, before opening that that was the right market?

Giorgio Tinacci (00:05:58) - So I think that our business is quite peculiar when it. Comes to understanding. Okay. Should I internationalize or not? Because if you look at it, I mean, in Europe, more or less, the residential asset class is worth trillions of transactions every year. And out of that, more or less Italy's 20%. So we're talking about a huge market. There are 200 billion of homes on the residential side being transacted every year. So you don't really need to internationalize to become a huge company. At the same time, I mean, we saw opportunities, so we were growing very fast. And so the way I would say to drivers in understanding which was the right market to go and whether that was the right timing or not, first market fundamentals. So in residential markets, you have to look at whether there are some factors that are in fit with your playbook. Okay. And so on that regard, we were looking at market that had a high degree of inefficiency in the transaction process in the form of brokerage fees, closing process, timings and steps, how the brokerage market works in each single country. And at the same time, we were looking for markets in which there was a high degree, a higher degree of inefficiency, so for which we would have brought more value to our customers. And at the same time, we're looking at markets that somehow had similar sociocultural dynamics when it comes to home ownership. So and when you look at it, I mean, Spain, that was the first market was quite in fit with that vision and was very similar in terms of most of the common denominator dynamics on the fundamental basis.

Giorgio Tinacci (00:07:41) - And I think the second factor was question, okay, why should you internationalize or not? And that choice was mainly driven by looking at the competitive landscape and understanding whether there was a, let's say, right to win. Let's say there was a first mover advantage, because otherwise, I mean, you better, let's say, stay in your market, continue penetrating. And that case in Spain, where I remember back then 2020, roughly six prop tech companies that we would consider as directly or indirectly competitors that were very small. We thought we had a moat on several fronts. And so we entered the market really to make sure that we wouldn't, let's say, lose a competitive advantage later on. And indeed we entered the market was long process, let's say, to get there. But I would say today, if you look at next generation property companies in residential sales, we are probably the first one or let's say at par with another player. So this was the rationale.

Inès Makula (00:08:39) - What strategies did you employ to adapt your business model and product offering for that market? Did you have to change a lot of what you were doing here to adapt, or did you use the same business model?

Giorgio Tinacci (00:08:50) - So I would say that it depends on the phase, right? So when I look when we entered Spain, it was still early, right? Because our first year of business activity was effectively 2018.

Giorgio Tinacci (00:09:01) - So the company was very small still. And so one of the advantages of internationalizing sooner rather than later is that you can build a more scalable product because you haven't, let's say, already developed all your product in a sophisticated way. And so you are able to evolve that product on a multi market basis so that you factor in by design all those market differences. And so in Spain it was so early was on a greenfield basis that we could essentially replicate almost in full, let's say, with very small adaptation on the commercial side. ET cetera, our business model. And that was very helpful because today, I mean, you have a very scalable and centralized setup. Then if you do it later on, maybe through brownfield, let's say means, as we did in France, for example, last year, then that is way more. Let's say you have more effort on that regard because you have to adapt, you have to converge things. You have to understand how you want to localize certain product. So that's a bit the trade off.

Giorgio Tinacci (00:10:02) - The sooner you do it, the more you are able essentially not to have a scalable centralized product approach. The later you do it, let's say you have less risks, but you have to go through more effort in terms of localization and adaptation.

Inès Makula (00:10:15) - It's actually very interesting to put it that way and to see what the benefits of pros and cons are. Did you encounter any regulatory or legal challenges when expanding internationally and how did you navigate them and what does one need to think about before going international? Like, for instance, you have to open a subsidiary company, trademark your brand. Like what are some of the things that people need to think about?

Giorgio Tinacci (00:10:35) - I think it's highly depends on the sector. I hope it's not a consulting like it's Gaspar. But I mean, jokes aside, I mean, our business is not that regulated, frankly. But at the same time you need the local presence. So it's not either a software house that you can sell out of one legal entity globally. So we had to sit down.

Giorgio Tinacci (00:10:56) - Local entities understand a bit the market dynamics and one of the very helpful things for us was. Always to have local partners or investors in the Cup table that could support us through that journey. So that was very helpful. For example, when we entered Spain, we let one of the main VC funds in Spain with a lot of expertise in the sector, invest in Casavo, and we almost literally set up a local board from the very start. And so they really helped us understand those dynamics. It's a bit of effort, but is not is not a huge thing. I would say some startups or some businesses on the other side have a even more scalable setup. You don't maybe even need to have a local subsidiary or anything else.

Inès Makula (00:11:44) - And how do you balance like the need for standardization with localizing your product or and offering?

Giorgio Tinacci (00:11:50) - Like I would say that the best thing is to have a fully scalable product so that by design factors in all those, let's say, local dynamics. In the end, if I look at our business from a product and technology standpoint, you have the consumer facing applications.

Giorgio Tinacci (00:12:07) - So as long as your product offer and the sociocultural dynamics are somehow in line, you don't need those many adaptation. And then you have more, let's say what we would call the internal products, which in our case is, okay, the workflow management to hold the data pricing and joints and all of that. And so in that case, this is where you need more adaptation. But if you have built something that is very modular and is able, let's say, just to have taxonomic sort of to say calibration then is way more, is way more scalable on that regard. So ideally, you always avoid to have, let's say, a product dedicated team for a specific market. But yeah, again, it depends also when you enter that market.

Inès Makula (00:12:50) - And what metrics or indicators do you use to measure the success of your internationalization efforts? Like did you look at certain things?

Giorgio Tinacci (00:12:58) - So you would usually look at what's your traction compared to your first market? So to really understand whether you are you are actually getting to product market fit at the same level.

Giorgio Tinacci (00:13:09) - So in our case, I mean you look at volumes in our case volume of transaction, you look at customers and you really compare, okay, how this is performing with, let's say, the first market from launch to date essentially. So that's the first thing. So you want to look at whether you're getting the product market fit more or less with the same dynamics or otherwise you might have some red flags. That tells you, okay, there is something you need to adopt from a commercial proposition in that market. Second thing you look is how you are performing on unit economics because you want to make sure I mean, markets have some specifics and so you might have higher costs or you might be able to have actually lower revenue. And so you want to look at what's your level of capital efficiency allocation, because at some point, otherwise you might end up in a situation in which you realize that allocating your capital to one market versus another is highly lucrative in relative terms. And so it's very important to understand those trade offs and align and trying to have convergence to avoid having those choices in the future.

Giorgio Tinacci (00:14:13) - I think the third thing you look at, especially if you are in the consumer industry as we are, you look at metrics such as NPS or brand awareness and how is that developing over time. Also to calibrate the level of marketing or brand investments you want to you want to allocate from one market to another.

Inès Makula (00:14:30) - And in terms of opening a new market, in terms of hiring, what key figures did you first hire? Did you start with did you open a market with junior hires or do you recommend senior hires?

Giorgio Tinacci (00:14:42) - Yeah, I think that was one of the mistakes we made, frankly, when we first opened in Spain, for example, we were I think it was something that also in the previous masterclass was discussed at the very beginning. I mean, you, you only can only afford to have very, let's say, junior people that are really into that purpose and mission. And so you're not really you don't really have the DNA of hiring from the beginning very senior and seasoned people. So this is what I did when I when we entered Spain.

Inès Makula (00:15:13) - But Junior went.

Giorgio Tinacci (00:15:15) - Very junior, very junior. But the problem is that in your first market as a founder, you are there with the team. So you have that kind of degree of control that you cannot have in another market. And it was a big mistake. So I had to change the team quite significantly after the first month because we made a mistake. Why? You want to have very strong local empowerment. You want to make sure that the culture and let's say the value set is the same across the company, but you want to have local empowerment, otherwise this is not going to work. And so I would suggest usually to go for there. I mean, at least one key senior person that you can really empower a lot to run things in an independent way in that in that market.

Inès Makula (00:15:58) - In terms of your investors, what were they thinking about internationalization? For you. Like, you know, they obviously maybe out of you because sometimes you hear you know, conquer your local market before you even thinking about internationalization.

Inès Makula (00:16:09) - And sometimes, you know, in this world right now, you know, there's no borders. You have to, like conquer many more markets from the start to compete with international companies.

Giorgio Tinacci (00:16:19) - Well, I would say that it depends on the which cycle of the market you are as well. So when we entered Spain, we were really or at the start of the of Covid, which was, let's say, golden age for the entry system. And so let's say the idea of becoming a champion in Europe was really attractive in terms of, okay, you position yourself in a certain way. And even if, let's say it was I think it was early from a fundamental standpoint, right, we could have stayed in Italy way longer. So it really depends on the market which phase of the market you are. Right? Because if you are in a market in which it's an upmarket you, you know that you can have a lot of quantum of capital in order to position yourself then is the right thing to do because you are going otherwise to be out competed at some point.

Giorgio Tinacci (00:17:09) - While if you are in a bearish market then it's way more, let's say, savvy, let's say, to stay in your, let's say, first market, penetrate that because on average, then it depends on the industry, you are way better off in terms of allocating your efficiency there. So if we were just to perform our transaction volume just in Milan only, which is possible, then the company would be in a different shape. So that's the kind of trade off. I think it really depends on the market. So at the time we were the emerging, let's say, leader in the in the space, it was early and we were it made a lot of sense. And so indeed that was the goal. Make sure that we were positioning ourselves as the first generation player also in Spain. And indeed we managed to outcompete the others that six, seven players that were there when we entered the market.

Inès Makula (00:17:59) - And what were some of the biggest challenges that you had to face when internationalizing and something that you may maybe wish you had known before you did?

Giorgio Tinacci (00:18:09) - I would say first people, as I was saying before, so go for at least one key senior person that you can empower a lot locally.

Giorgio Tinacci (00:18:21) - Second, I would say big transition when you go from being a single market company to a multi market company. Yes, we had the documentation in English and all of that, but I mean, we were used just to speak Italian. We were used to certain local dynamics in Italy. And so we have to change a lot of things. And so it was very important to let's say at some point we did it later and I think we should have done it sooner to make sure that the goal of the local market. So Spain in that case was not just a Spanish team goal, but was a corporate goal so that you get really the whole support and you enable that change across the organization. But it took some time. It took some time, especially on the cultural side, to adapt those dynamics, especially the managerial level.

Inès Makula (00:19:08) - Yeah, sometimes you have to make the mistakes to learn, right? Of course. As long as it doesn't kill you. Can you share any specific anecdotes or even success stories from this international expansion journey that highlights some important lessons?

Giorgio Tinacci (00:19:21) - I think maybe I'll pick the second big internationalization move, which was in France last year.

Giorgio Tinacci (00:19:28) - So in France at the beginning we said, okay, let's start let's start with a greenfield approach. As we did in Spain. We realized that the market was. Very large, but very complex as well. A lot of competition. We have to localize the offer to start in that market. And we were pretty aware that we were starting, let's say, the market entry journey at the beginning of a downturn from a residential market standpoint, from a capital market standpoint. And so we almost by accident, we got, let's say, a lot of M&A opportunities on the table. And in the end we pivoted quite fast and say, okay, it's much better to acquire another business. I mean, of course the price needs to make sense, that it needs to make sense and the synergies need to make sense. But subject to that, there was a very, let's say, risk of approach to enter a new market, because I'm pretty sure that in this market environment would have entered greenfield would have taken way more risks, way more cost while we took an asset, another company that was, yeah, maybe not the best business in the world, but it was a good distribution asset that we could converge and take it as a, let's say, solid basis to then expand, to then expand in, in a very significant market because it's the largest residential opportunity out of Europe.

Giorgio Tinacci (00:20:57) - And that also allowed us to, let's say, have a very strong entry versus the competition in the market. And so that was that was quite helpful, I would say.

Inès Makula (00:21:09) - And obviously, I think you mentioned this touched up on this a little bit before. But when you expand internationally very quickly, obviously your resources may maybe not as big as a company that's very established, that's been in a local market for a very long time. And so you might have just a certain marketing budget. No. So let's say now, because you're in foreign markets, you have €100. How do you how would you spend them? Because you're taking off money from Italy, right, to spend it on other markets?

Giorgio Tinacci (00:21:31) - I would say that you would. I mean, personally in this phase, I mean, you would look for market efficiency 100%. So you would it's not a gold seek function in a very septic way, but especially when you talk about performance marketing. And so what generates business in the very short term, it's much better to look at efficiency.

Giorgio Tinacci (00:21:53) - So you really look at, okay, what's my ally on my marketing investment in each even in each at each single city level, essentially at the same time, there is another component of intuition which is connected to brand, right? And so you need essentially to have that kind of ambidextrous approach. So maximizing for net return on, let's say, short term lead generation marketing investment, and at the same time understand, okay, where you want to go in the market versus the long term potential. And so how you want to establish your brand in that specific market. So at the moment, for example, we allocate more or less 30% of our budget or even less in Italy because we have strong organic traction, a lot of brand awareness, etcetera. We allocate slightly more in Spain on the brand side, for example, because we are still not there at the same level of awareness. And so although in the short term it looks, let's say, less efficient, we think is the right thing to do from a potential standpoint.

Giorgio Tinacci (00:22:55) - And in France, I mean, we allocate the rest of the money also because it's a very new market. We acquired another business. We had to go through a rebranding and so on. So these are the these the kind of, let's say, ambidextrous approach we take.

Inès Makula (00:23:08) - And what advice would you give to the audience here who might have startups, you know, looking to internationalize their business?

Giorgio Tinacci (00:23:14) - So I would say that first. Start from the why. So why do you want to internationalize? Because if it's just for, let's say, putting a flag somewhere, it's a very, let's say, myopic choice, right? So start from the why. There needs to be a very economic reason, which could be which could be because I want I see a competitive, let's say, positioning because this could allow me to prove that I can scale in different markets and it's an important thing. So this will allow me to raise more capital or otherwise. I mean, it's like M&A right on in general.

Giorgio Tinacci (00:23:48) - It's the creative in terms of value. So you should really challenge yourself whether it makes sense as opposed to just penetrating your core market. So that's the advice. I would I would I would give to the audience.

Inès Makula (00:24:02) - Okay. Now onto some rapid fire questions. How do you stay motivated during tough times?

Giorgio Tinacci (00:24:07) - Well, always been very focused on what's the end game, right? Because there are good times, there are bad times. And so you need to be always literally focus. Okay, on what's the purpose, what's the end game? And always remind yourself every day why you're doing that essentially.

Inès Makula (00:24:26) - So what's your why?

Giorgio Tinacci (00:24:28) - My why is to build something completely new that is disrupting the paradigm for one of the most important financial decision in consumer lives. So we really believe that we are having an impact on people's lives. And so for us, this is the most important driver.

Inès Makula (00:24:45) - And what is the most valuable lesson you've learned as an entrepreneur?

Giorgio Tinacci (00:24:49) - I would say that there are many, so I'm trying to rank them probably that your team and it's believe in the long term vision is the most important driving force because when you go especially through a very ambitious entrepreneurial projects, there are a lot of changes.

Giorgio Tinacci (00:25:10) - Good times, bad times. ET cetera. Yes, it's a technology business, but technology is built by human. And so the most important thing is to have that, let's say, missionary commitment, because that's the most important driving force you can rely on.

Inès Makula (00:25:23) - And how do you manage risk and uncertainty in your daily assertions?

Giorgio Tinacci (00:25:29) - I would say you need to be, let's say, very driven. I think it's an important value for for our culture, meaning that you need to understand scenarios very well and you need to take decisions or assess, let's say, potential outcomes of your choices in a very, let's say, fact driven way, because I mean, decisions can be wrong. You might make mistakes, but if you have a very, let's say, structured decision making approach in, for example, assessing risk or uncertainty, in the end it pays off, right? Because you constantly iterate, you have the right methodology and so it will work out.

Inès Makula (00:26:08) - So you're more like fact based than gut based.

Inès Makula (00:26:11) - Yes.

Giorgio Tinacci (00:26:12) - I think I think you need to have both. But I would say on average, 90% of your decision needs to be death driven and then there are some things which are just based on intuition. Right. I we're speaking with some of the former, let's say, Amazon executives. And they told me there were some choices. We were very PNL driven. So the Amazon culture is very, let's say, on the nitty gritty of analyzing the PNL, the inputs that is driving every outcome. And then they told me that there were some moments in which there were some decisions, like, for example, the decision to launch Prime or whatever, that on a financial standpoint from an MTV base, they were negative, didn't make any sense. But there was an element of intuition that usually comes from knowing your customers and your business very well that sometimes you need to follow. But these are very special cases that you should be no more than 10%.

Inès Makula (00:27:04) - Okay. And what excites you the most about the future of Casavo?

Giorgio Tinacci (00:27:08) - I think what excites me the most is that there were some dynamics that five years ago were just crazy.

Giorgio Tinacci (00:27:18) - So if I look at certain, let's say adoption rates of certain feature from a digitalization standpoint, it was just crazy. So today we don't visit homes, we don't go there. Sellers are able almost to sell convert on our platform for selling a good which is very relevant and and so I'm seeing this acceleration in certain dynamics that are really going to, let's say, catalyze our process to make selling and buying home as easy as selling a stock. It looks crazy, right? But that's the most exciting things. I'm seeing certain things which are happening very fast. Like 20 years ago when property portals started, it was the main innovation, let's say in the sector. Before people thought it was crazy that people would just scroll on lines homes to look for them. And so now it's not crazy anymore to think about that people will transact homes online at some point.

Inès Makula (00:28:11) - And now we're opening up the floor to questions.

Speaker 4 (00:28:15) - Giorgio, thanks for being here. I'm Nikola co-founder. That of the startup from the last batch of Vento.

Speaker 4 (00:28:23) - And my question is about you enter you said that you enter the new market with around six competitor and so how did you manage to outplay them and actually be faster to conquer the market?

Giorgio Tinacci (00:28:36) - I would say three things. Capital was a moat, definitely. So we had more capital than them and so we could invest more. And sometimes I mean I mean in upmarket capital, it's, it's a very good driver. Second is we had a way more streamlined value proposition for our customers and I was way more disruptive in terms of impact. And I would say, third, we had a different technological approach compared to other players, which was in the end resulted in a better customer proposition and user experience as well. So I would say capital brands and also customer, customer obsession approach. Thank you. It really depends on the on the sector and on all of that and which kind of competitors our competitors were that we were all very, very tiny. So it was a it was a fight among very, very tiny players.

Speaker 5 (00:29:33) - Yeah, It's Alessandra. I'm one of the co-founders of Grow. We are into urban farming market. You're actually the first person I can ask this in person. I've heard a lot of stories online, but I'm curious if you can share anything about your experience of having to let go a lot of like a big part of your team, like especially from a bureaucratic point of view in Italy. If you can share anything on this and like lesson learned from founders in tough times.

Giorgio Tinacci (00:29:58) - I would say that it's not easy. So it's not the US. As you said, there are choices of managerial responsibility that you have to take in the best interest of the company. And so you need to be, of course, a thoughtful leader about it. We're talking about people. We're not talking about canteen marketing, budget or other things. But you have you cannot pretend to be detached from economic reality because that could be very harmful for the company, the organization and the community to which you have. You are having an impact.

Giorgio Tinacci (00:30:32) - So these are not easy choices. But let's say you need to be objective and attached to an economic reality to make those is not easy. And one, these are one of the, let's say, most difficult decisions that you have to take as a as a leader. But it's part of the journey. So every company goes through those phases and through different market cycles. And especially in the tech industry, the reset has been very, let's say, very, very rough and very radical because from let's say we were living in a golden age and Wonderland until meet, I would say last year, but simply that was not the right environment. And then the market I mean, it's Adam Smith rebalance things because of the interest rate, etcetera, etcetera. And so you cannot, let's say, be blind to those, to those events and you need to react very fast from, let's say, process or even cultural standpoint. I think that everything can be done. I mean, there are loads that are processes and all of that.

Giorgio Tinacci (00:31:37) - I think it's more a cultural thing because it's the first time that there is a proper, let's say, scale up ecosystem in Europe and it's the first time that we go through a pre, let's say, tough down cycle versus the dotcom bubble, which was very different. And so there is still this cultural element. So I speak with a lot of entrepreneurs. We made the decisions right or wrong, to be very transparent internally and externally as well on our choices. There is this negative stigma, which I think it's not helpful from a cultural standpoint, and I think that there will be I mean, from my standpoint, from an ecosystem standpoint, there are decisions to be taken from simply a labor law standpoint because you cannot pretend that a startup or a scale up has the same, let's say, constraints of a very large and profitable corporation. You don't fire people because you are greedy, that you want to make more money here is because otherwise if you cannot raise capital in a certain environment, then it's a big issue and you have to reduce your cost basis.

Giorgio Tinacci (00:32:45) - So I think from a process standpoint, it's not easy, but it's doable. There are processes. It's more a matter, I would say, from culture then I think there is a that is not easy because you still have the negative stigma while in the US, I mean the last year, if you are saying that you are not fighting people, people look at you, okay, what's happening? What's wrong with you? Right? Which is which is not good either. But as long as there is a certain level of social amortization that needs to be in fit with. With an organization, with a startup which is losing money. So there is, let's say, a social support from the government and from the company as well. But there should be way more flexibility because this is just, let's say, creating obstacles for growth and for having sustainable businesses.

Speaker 5 (00:33:34) – Hi Giorgio, Tomaso from Plug and Play. Thanks for being here. I wanted to follow up on something you were talking about earlier, decisions under uncertainty, let's say.

Speaker 5 (00:33:44) - And it's actually I think it's Jeff Bezos who talks about two different kinds of choices, like some decisions being kind of one way doors and some decisions being two way doors where you can take the decision and then actually walk back. Whereas to seeing one way doors, you can't walk back, right? And you were talking about some being data driven, 90% of your decisions being data driven and some being gut driven. I was wondering if you can talk a little bit about kind of how you approach this one way decisions versus two way decisions, if there's any difference there?

Giorgio Tinacci (00:34:21) - Yeah, I think that probably there are, especially in times of uncertainty, market uncertainty, taking compromises is not usually a wrong path because you are not, let's say, going in one direction or another. This confuses the team, your customers or whatever. So my suggestion is, and I made a lot of mistakes on that regard in the past is to avoid compromises, especially if you're talking about one way decisions, right? So in that case, I mean, there is a clear rationale.

Giorgio Tinacci (00:34:56) - There is a road. You will have to leave something out of the table, that's for sure. And so my suggestion is to approach one way decision in a very, let's say, radical way, removing any compromises that otherwise would create some areas of gray. And this is not helpful when it comes to reversible decisions. So to way kind of bats, I think on that regard, you need to be more tactical, right? So you need to understand, is it something for the short term only then yes, it might make sense and assess. Usually what you would want to do is really to assess, okay, what's the sunk cost or what's the reversibility cost moving forward? So I think it's a very different decision on the one way ones, I would take a radical approach making sure that the decisions are in fit with your core from a structural standpoint and leaving out compromises on the two way decisions. I would rather focus and understanding what's the cost of reversibility and why now versus later usually, right? So for example, kind of these choices are I, I know that in my vision I have this ancillary service that makes a lot of sense.

Giorgio Tinacci (00:36:09) - Should I do it now? Or maybe I started at service, but I might consider to drop it because it's draining to many resources. And so in that case, you should you should ask yourself, okay, is there a specific reason why I should do it now or can I postpone it? Because then if I can postpone it, it doesn't make much sense. Or if I have to drop things, then you should ask yourself, okay, what's the cost of reversibility versus draining resources today? So that's in general how well I would approach them. Thanks.

Speaker 4 (00:36:40) - I actually have a question when I leave the first two to the others. So coming back maybe to the start of your experience at let's say, but even at so what, which was the kind of trigger event that, you know, made you say, okay, fuck it, let's go and let's try to build Casavo or something, right? What was the trigger event that, you know, convince you to quit your job and start like an entrepreneurial path.

Giorgio Tinacci (00:37:03) - The initial capital.

Speaker 4 (00:37:04) - Yeah.

Giorgio Tinacci (00:37:05) - No, I'm enjoying that. That was the, let's say the most specific trigger. I would say that in my case, I always had the dream to build something. I was really passionate. Even when I was starting at university. I was born in a small, very small entrepreneurial family. So I used to work with my mother and my father since I was a kid and helping them in the small company. And so I had that passion. This doesn't mean that everyone starts with that kind of let's say, but that was the case for myself. So I knew that I wanted to do something on my own at some point. And I saw, let's say, the consulting experience as a way to meet a lot of great people, grow professionally as a human as well. And at some point I knew that I wanted to do something. So for me, it was a matter of first to really find the idea or the space that I liked. And I was really passionate about the intersection between very traditional industries and technology.

Giorgio Tinacci (00:38:10) - So I was not really a tech guy that would have built a SaaS business way easier. Mighty way, which is what we are doing. And so I was really interested in that. And for me it was super exciting to see something that had such a big potential in terms of market and consumer impacts such as real estate, which is probably one of the most traditional things in the world, combining it with technology. And the second thing, I mean, jokes apart, I was penniless. I had tank from my savings at BCG. And so this is what I could put in the business and I needed more capital to start. The preceding ecosystem was not there. I was lucky enough to meet through a friend and investor that gave me the first, let's say, money to start. And so that was an important point. So I really see the role of Pre-seed Capital as a sort of a social elevator on that regard, because not every business can be bootstrapped. Let's be let's be very clear and not everybody has family and friends money to kick start something.

Speaker 4 (00:39:12) - Great. Thanks, Ben.

Giorgio Tinacci (00:39:14) - Hi, I'm Andrea from BCG.

Speaker 6 (00:39:16) - I already asked this today, but I would like to know when you start scaling up where you start, put some structure, what processes you structure at the beginning, what were the challenges in and if you could come back then if you would change something?

Giorgio Tinacci (00:39:37) - It's a good question. I think first thing to start from is the organization. So I think one of the responsibilities of the CEOs or founders is first to have the right vision and be able to cascade it properly. So I'm the right strategy to get there. Second, you want to make sure that you have the right talent and that talent is well organized and enabled to to execute. So the first thing is the organization. I think the second thing is about, let's say still people, I would say people processes are very important. The quality of talent you attract depends on how you hire those talents. At some point you cannot interview everybody. And so you want to make sure that those processes are in place.

Giorgio Tinacci (00:40:18) - And I think the third piece is all about having control over the metrics of your business. So everything that has to do with the goal cascading such as frameworks, business reviews, financial control over that, it's these are the three most important things. Yeah. But I think organization and people topics and people processes is the most important one because that's the engine essentially. Because if you have the right organization then they will build and the right talent, they will be the right processes, etc.. Yeah. And it's usually you have the trade off because if you are scaling very fast, you cannot afford to draw everything like, like at McDonald's, right? So you first put the fries and then the burger doesn't work because the moment you have written down those processes, they have they are already changed. So I would rather focus on principles to set really the right principles because then process will follow and will be iterated by your team in a very natural way.

Inès Makula (00:41:20) - I'll take a question right now just from our online listeners.

Inès Makula (00:41:25) - Matteo is asking Imagine being with the version of you the moment you were looking for that first round of investment. What mistakes would you advise him to avoid?

Giorgio Tinacci (00:41:36) - I would say that when you are in racing mode, sometimes even if you are very fast dreaming and you have that culture, etcetera, you risk to take business decisions which are driven by narrative and not by fundamentals. And so it's always much better to be. Always driven by fundamentals rather than narrative, because in the long term, it will always pay off.

Speaker 6 (00:42:04) - Hi, it's Gloria. I'm the founder of Parents, a baby gear rental company. As you said before, that is a is a very sensitive topic when there is asymmetry of Information. And my question is, how do you manage to gain trust for client, especially at the beginning when low budget? Was it just brand awareness that translated into trust, or did you do something specifically to gain that?

Giorgio Tinacci (00:42:31) - I would say brand probably was the first thing also, because it's a typically unbranded industry, and so it simply by having a brand that speaks to customers and tells the why you're doing things, what you're doing, what's the kind of service in a very transparent way, it's already helpful.

Giorgio Tinacci (00:42:49) - Second, the level of service that you that you provide and being very close to your customers and also, let's say, making some choices which maybe from, let's say, a short term financial standpoint where not let's say that's sensible, then they paid off. And I would say third, through the tangible benefits that you provide with your proposition. So right in the end, if we're sellers are our first customers and a seller would typically currently and about what price I'm going to sell my home and in which time frame right So even if let's say there is skepticism at the beginning, but you really provide those tangible benefits in a clear way, then I mean, your authority and your trust is built upon the fact that you are delivering what you're promising.

Speaker 7 (00:43:38) - When was the the first non-Italian higher Alcazar? How how what you think of in terms of hiring international people from the early beginning, how does that impact?

Giorgio Tinacci (00:43:53) - Um, yeah, I think first person from the Spanish team who is still here. Um, and you, it's not easy.

Giorgio Tinacci (00:44:02) - You need to build that emotional connection. I mean, we were not active in Spain. We could have run the interviews from, from Italy. I decided to spend a lot of days in person to meet these people and build connections and show that was a real company that was trying to do something in Spain out of Italy. And it's very important that you because usually you are not alone in another country, maybe. Yes, there are some PR news or previous rounds that can come there as well. So I think usually you want them to educate those people around. Okay, what you have built in Italy, how the business works and why, and show that you have done your homework and show that this have a sense and make a sense in that local market. So you need to have credibility in that regard. And second, for sure, let's say the investor profile, the quality of investor that you have in your cap table helps a lot in building credibility by definition, right? Because if you are, I don't know, a French company that raised from Sequoia and that is entering Italy benefits as well is more startups that nobody knows but you.

Giorgio Tinacci (00:45:09) - Okay. I'm backed by Sequoia. That helps a lot. So there is a lot a role of venture capital also enabling talent attraction in markets in which you are yet not present or not known at all.

Inès Makula (00:45:22) - I'll take a question from the audience then online. Giorgio, how did won the market, the business and your own management of the business surprise you in pivotal moments of stress and crucial decision making?

Giorgio Tinacci (00:45:36) - Good question. Um, I would say. I'll start from the team and showing a lot of. Proactivity and ownership, right? In tough moments, usually as a CEO. You have to focus on what really matters can be funding can be a business problem, an operational problem or something else. And so the team, I mean, especially the let's say the management team, surprise me in a way that they understood very clearly that they have to take way more ownership of certain things. And so remove burden from your shoulder. The business, I would say, surprised me if it was on moments and how we could adapt to change very fast.

Giorgio Tinacci (00:46:22) - I mean, we have gone through a transformation of our business over the last three years now, two years and a half, starting from an asset backed business like Amazon in some ways that first marketplace and then expanding as a third party marketplace. And so I was surprised by the capability of our team to adapt in the business in a way that was quite natural as a gradual evolution. And yeah, I would say your management, my, my personal management, yeah. I mean, you are quite surprised by the level of resilience that you need to have during pivotal moments. I think when when I started raising money, especially at early stages from venture capitalists, I didn't really understand why they were pushing me very hard during the negotiation process on myself for with requests that didn't make really a lot of sense to me. And I think they were testing. What's your level of resilience? And when you assess the capability of a founder to execute on a long term journey, resiliency is a big thing and you can have resilience if you are driven by the purpose and the why you're doing things.

Giorgio Tinacci (00:47:36) - I think we the previous masterclass, they said if you're driven by money, I mean, at some point this is going to last and this is how you build resilience in the long term.

Inès Makula (00:47:51) - What about failure? What's your relationship with like, do you fear failure or is it something that you've never really thought about or you're scared of? Because in Italy we don't have the same mentality as like in the US or in certain markets where failure is praised, like they want to see their fans will back more founded as tried once and failed more than one that has never tried. Right. So what's your relation with, you know, you're obviously taking high risk when you have your own company.

Giorgio Tinacci (00:48:16) - Yeah, No, I think you cannot be scared by failure. I think it's because you're you, you're, I mean, you're going to have a lot of small failures that are small and big failures. They are part of the journey. And without those, there is simply no future. Right. So one of the, let's say, quotes that we like to remind to remind ourselves that entrepreneurship is about doing, let's say, eight steps forward, every seven steps back.

Giorgio Tinacci (00:48:47) - And it's a reality. So you have to deal with that. I think I was lucky enough from a cultural standpoint to be surrounded by investors, board members and advisors that did have that stigma. And one of the risk and let's say in the maybe in the Italian ecosystem is that you might have you might not have the right partners from a mindset standpoint. And so that could be that could drive also bad decisions as well or not learning fast enough.

Speaker 5 (00:49:18) - Hi again. Is there any one moment in time in which you realized that you had a product market fit or was it more gradual?

Giorgio Tinacci (00:49:28) - I mean, my personal view of product market fit is not is not an epiphany shining moment sometimes like it's okay, you have product market fit. Oh, I from my perspective, product, I mean, you constantly have to prove product market fit. One thing is to have product market fit that 0.1% market share. And one thing is to have product market fit that 30% more product market share and you have to adapt throughout your journey.

Giorgio Tinacci (00:49:57) - So there are moments in which is, okay, I unlocked the 0 to 1 phase, right? So that's the first step. And usually, I mean, for us it was the first transactions for other businesses are the first 5 to 10 customers. And so it seemed about okay, there is willingness to pay for something that I'm offering as a product or as a service on the market. But the reality is that it's an interactive journey. So again, yes, you can offer a very niche service that applies to ten customers in your market, or you can offer something that is more mass consumer. And so I think there are you need to prove it at every different stage of growth.

Speaker 4 (00:50:41) - Last question.

Speaker 5 (00:50:42) - Again, You talked. It's about having investors and board members with the right mindset. What other key characteristics like should a founder look into, like investors and partners to navigate through the different stages, let's say? And which ones to avoid especially?

Giorgio Tinacci (00:51:02) - Yeah. So, no, I would say that first of all, I was very lucky in my journey and being surrounded by the right investors, etcetera.

Giorgio Tinacci (00:51:11) - So I don't want to, let's say, fake that I picked exactly the right people over time. I was lucky. I was lucky. My suggestion is first. Diversity is very helpful. So try to syndicate a group that can bring different levels of value. So usually you have people that have very solid, very significant relational capital. Then you have people that can get into the nitty gritty of your business and help you with a lot of operational topics. So that's the first thing diversity and syndicating a diversity of mindsets. As long as you are able to orchestrate those well, there is a common baseline, works very well. Second, try always to have operators as well. It's good to have investors because they bring you the mean financial market perspective. And again, you cannot be detached from that. But you need to have at the table at the operator perspective because otherwise the risk is that you take some decisions which are purely, let's say, financially enterprise value related, that then in practice don't make much sense.

Giorgio Tinacci (00:52:22) - And you need to have there are great investors that have a heritage of being 30 years an executive or an entrepreneur. These are very good people and I think third. Try. Try to avoid short term. Investors, meaning that mean everybody will tell you we are long term, we are here to support you, blah, blah, blah, blah, blah. There are investors that get overly excited and up markets and then that would not pick up your phone, your call in down markets and you want to avoid those kind of people because there will be difficult moments. And so you need to make sure that you have what I would call net stabilizers as partners, meaning that our people do not get overly excited in up markets and they don't get the press in down markets and they are there. And finally, I think you want to have clarity and transparency, right, whether you get financial support or not. The most important thing for a founder is to know exactly whether you have support, whether people believe in a vision, whether people believe in a certain strategy that you have put in place.

Giorgio Tinacci (00:53:35) - So it's much better to have very blunt and direct people that tell you what they think rather than people that I mean, working in a shady matter. But then there is no moral judgment is like, okay, you have to find people that are in fit with you. It's like when you hire people, right? So if someone is not in fit, it's not that person is bad. Simply it's not in fit with how your company works. Was the DNA of that company and all that.

Speaker 4 (00:53:57) - Hi, Giorgio. I'm Francesco, co-founder at Parc, also coming out of the latest venture. But you were very young when you first raised your round in with an ambitious and rather capital intensive idea. Do you have any advice on how to tackle those very, very first moment like Pre-seed seed? And what role can advisors and or mentor can play? Thank you.

Giorgio Tinacci (00:54:22) - So yeah, as you said, the worst of the worst and capital intensive, just ethically single consumer, the worst, right? So first advice is if you have an idea now B2B, SaaS kind of industry, maybe, maybe it's easier.

Giorgio Tinacci (00:54:39) - But you need to you need to feel passionate about. Now, jokes aside, I think that in the very that there are different things you need to stress and focus on at different stages of fundraising. So if you're speaking about Pre-seed to Seed, it's all about. Your vision. You're transmitting your passion and also showing that that is the right thing set up and the right energy to go through that third show that even if you haven't gone through certain things, you have very clear ideas of what's the direction, right? So I remember, for example, we raised our first institutional round was in April 2018 with one of the main VCs, VC funds in Italy. And they told me, okay, can you send us the five year business plan? That's okay. I barely bought the first three homes. We are going to sell the first one in a month. And so we said, okay, let's do it. And that business plan was then met for the following three years and we didn't we reopened it after three years. Of course, we didn't take that path. Right. It's not a spreadsheet business, but it tells you that you have a direction and so you know which kind of route you want to follow. So it's really about team the vision showing that you have clear ideas of what you want to do and most importantly, that you are really into the details of the product or the service you are offering terms of how the economics work, how the operations could work, etcetera. So that was, that was a helpful for, for me.

Camilla Scassellati (00:56:15) – Grazie mille di averci ascoltate, mi raccomando, non dimenticate di iscrivervi al nostro podcast ovunque ci ascoltiate, per non perdere nessuna puntata.

Inès Makula (00:56:21) – Se ci volete dare una mano a crescere, lasciateci cinque stelle su Spotify, o scriveteci una recensione su Apple Podcast. Ci mettete davvero pochissimi secondi, ma è un grande aiuto per fare scoprire il podcast a nuovi ascoltatori. Continuate a condividere MadeIT con i vostri amici, colleghi e parenti.