What is Dropshipping?

Stories from Iraq: Launching a Lean Internet Startup


OLIVER FRANCIS KOCH: First of
all, thank you very much for inviting us and being interested
in what we have to discuss here. A little background
information. I, myself, am not from
Iraq, even if it might look like that. But I work for the German
Development Corporation as an external consultant. And we basically started a
project in Iraq which was supposed to help develop the
Iraqi private sector, which is very weak after the war. There are no private businesses,
really, so we work in different segments, like
automotive, IT, and so on. And my colleague Mohammed
Al-Samarraie and I, we work specifically in IT. So our job was to do an
assessment to see where’s Iraq right now, regarding IT? Where can it go? Is there potential? Is there interest? And at the end, basically– our conclusion was after three
months, OK, the sector’s still quite weak. It’s still quite young, but
there’s a lot of potential. So what we decided on together
with the German government to set a program which focuses on
facilitating entrepreneurship. That’s where I met Abraham, for
example, with initiatives such as the Startup Weekend
or also an innovation competition, which
we conducted. So when we actually started this
innovation competition, one of the major issues that we
saw is people or students who were just lacking this
mindset of going out there, doing your own business,
starting your own projects, and just pushing your
ideas forward. So we actually decided on
getting a couple of trainers from Germany that would show
them a little bit, OK, what state of the art methods are
there from Silicon Valley or so, that you could use to
facilitate creativity, to capture your ideas,
and basically to turn this into business. And one of the biggest issues
there, when we trained them, was that we talked
about Facebook. We obviously talked a lot about
Google, too, but people couldn’t really relate
to that. They’re like, OK, this
is Iraq, man. Really, this is too far away. So we actually thought
about it. What could we do to ease
this transition? And that’s when we sat together,
Ralph Magnus from Berlin, Christoph, Mohammed,
and myself, and two others. And thought, OK. There’s actually a really
large demand growing in food delivery. Meaning a lot of people or
cultures developing towards ordering a lot of food
from outside. But the main issue is right
now the way it works is someone would call, OK, listen
I live between that hotel, this pharmacy– and that’s how it works. And they keep calling you, and
it takes you on average an hour or two to get your
food, and it’s cold. So that’s a real big pain point
for the people there. And at the same time, I think
Abraham already said it, we operate in the north of Iraq,
which is also considered the Kurdistan region of Iraq. And it’s a little different
from the south. Currently, it’s a lot more
stable, the security situation is a lot more stable
also, and better. So things such as internet
penetration up there are a lot higher than they are
in the south. So we’re talking about
40% in Kurdistan. Kurdistan, Iraq. Just some background
information. Iraq has about 33 million
inhabitants. In the Kurdish area,
we have about 5.5. So this brings me more or less
to our elevator pitch. Easy Bites is more or less an
internet startup which focuses on providing location-based
delivery services to the local community. At first, now we’re focusing
on the Kurdish part of Iraq simply because that’s
our test market. It’s secure, it’s more stable,
I, myself, am allowed to travel everywhere, and it just
makes things a lot easier. The mid to long term objective
is, obviously, to scale this business model, take
it to Baghdad. I mean, Baghdad has a large
potential, itself. It has– sorry, Mohammed– 7 million inhabitants. And a lot of the problems that
we’re actually solving here, meaning not finding addresses,
or not being able to choose your food, and so on,
have a totally different meaning in Baghdad. Baghdad, obviously,
you see the news. There are a lot of explosions
every day. So people were telling us,
hey, you know what? For Baghdad, this has a totally
different meaning. This actually means I can stay
at home, and I don’t have to expose myself to the threat of
bombs, and I would get the food to my house. So we’re talking about a
totally different value proposition that we’re
working on there. So we don’t really want
to engage into an hour presentation and bore all of
you, so our idea is to highlight some business aspects
of how we operate, what our idea was, what we’ve
gone through, then go a little bit into the techie part. Ralph will cover that. And after that, just scoop into
a discussion, if that’s OK with all of you. So business aspects. Most of you probably know Eric
Ries’ work, the Lean Startup. Maybe you’ve heard of it, maybe
you’ve not heard of it. It basically, if you want to
summarize it, for us it has a fundamental meaning. Because the idea is basically
just that you say, OK, startups are totally different
from established enterprises or companies. Because you don’t know the
market, you don’t know if the product’s going to
work, and so on. So basically, all you have is a
conglomerate or a long list of assumptions. And your goal should not be
to make money right away. Well, it should be. But you should actually
focus on generating a lot of learnings. You want to try to turn all of
these assumptions that you have into learnings. Because only then, OK, now I can
scale my business model. Now I can invest all my millions
or billions into marketing, and it would actually
have an effect. So the principles that we were
guided by most of all, I would say is this thing that
Eric Ries proposes. It’s like a cycle, a
scientific cycle. Meaning you have an idea– let’s say for us, for
example, it was a food delivery service. So you would build something
that people could actually understand the idea. So for us, that would be– we call it a minimum
viable product. Meaning it could be a video, it
could be a cartoon, where somebody just gets the
business idea. What exactly is this about? And after that, you try to
measure, OK, and how far is this interesting to people? So what we did, we basically
placed this digital MVP in a video on a website and told
people, hey, you know what? If you’re interested,
pre-register for a free beta. And it gave us the feedback, is
this actually something the local community wants or not? And after that, obviously,
going back to this Build-Measure-Learn, you would
you then say, OK, this actually makes sense. And then you start building
around it. And then you go into
the next phase. You actually have a
tangible product. Meaning you try everything on a
smaller scale, and then you scale it after that. Let’s say from a development
standpoint of view, or what Ralph will also be emphasizing
later, we really try to focus on small batches. We didn’t have this large, super
master plan which we started implementing and at the
end everything was great. It was actually more like we had
an idea and we try to keep it really, timewise, really
small iterations. Started delivering very small
components first. I think Ralph will give
you some insights. For example, we don’t have
addresses in Iraq, so how do we work around that? So what we did is, we did
a tagging competition. We basically said, hey, first
winner is going to get a Galaxy, or so. So people were all hyped. And we said, all you
got do is, we programmed this little app. Just go to hotels, to
restaurants, and so on. It checks your location via
Google Maps, and you just create tags. Meaning, for example,
hotel or whatever. The benefit for us is we are
aggregating a lot of data which is currently not there. And this data can then be used
subsequently in delivery processes to see, OK, the
delivery guy doesn’t have to call the customer and
be an inconvenience. He actually sees straightaway,
OK, this is where the guy lives. Makes it a lot easier. Basically, most of the
principles you see here are agile guidelines, like deliver
and ship early and continuously. One very important aspect, I
would say, is also simplicity. Iraq, or developing countries
in general, just have really large challenges that we
wouldn’t find here, for example, physical addresses. For example, also dealing with
people that are just– this is actually a very
good example– most Iraqis that I’ve met, they
know how to use Facebook, and they know how to
use Google, but just to find Facebook. So meaning, they basically use
the Google search engine bar to type in Facebook, and
then they click it. If you ask them to use it in any
other context, well, it’s overwhelming. So talking about apps, all they
know is the Facebook app. So in the start, we tried to
come up with our really intuitive own app, and
we realized this is not working out. So at this stage, you’ll
probably recognize a lot of similarities between our user
interface design and Facebook’s. Just simply because we’ve got
to work with something they know and they feel comfortable
with and they want to engage in. That’s why simplicity. Even if a lot of other things
that we’ve been working on, for us, were a lot
more intuitive. But there’s that. I’m going to skip to a
little bit about this product market fit. Now, one of the Lean Startup
fundamentals is also that you can use business plans at some
point, but it basically tries to capture everything about your
business on one sheet. This is what you’ll see later. It’s very small, so I think I’ll
have to read out a lot. The fundamental part of this
is that the Lean Startup method or model basically
suggests that, OK, you have an idea, and this idea, this value
proposition, fits a certain customer segment. For example, maybe the pinpoints
or the pain that some Iraqis have regarding
delivery services might not be the same as people have
here in Europe. So you’re trying to achieve
this thing called product market fit. It’s always building something,
getting the feedback from the users,
and adapting. And this is a cycle
which is ongoing. And something that
we just try to highlight here in a timeline. For example, at the beginning
I explained we did this MVP, this digital cartoon
that we put online to get some feedback. Another part was the tagging
campaign, where we basically said, OK, are people actually
interested in the product itself, and how far are they
willing and able to engage with such an app? Another point was– what we realized, with
restaurants, especially, that it doesn’t make sense just for
them to define a delivery radius around their location. If we take a look at the city
of Erbil or Baghdad or Sulaymaniyah, there are just
places that are a lot easier to access than others. That’s, for example, hard
infrastructure that impedes making things a lot more easy
and flexible for you. So what we had to come up with
at that point, or at some point, was then, OK, people
don’t just define a delivery radius around their restaurant,
but they can actually define different points
around the city which are a lot more accessible. Which, obviously for them, also
means that they now can define, OK, when is something
economically feasible or profitable for me,
and when not? Because if you were to just
say, I’m going to deliver around the whole city, well,
your delivery guy might be gone for two days. Just guiding around, going
through this timeline, obviously other issues that we
had, and I talked about this, is that we had an interface at
the beginning UI, which was, for most Europeans– because we
tested with Europeans a lot at the beginning– was totally intuitive. But the Iraqis, we measured
through Google Analytics and so on where people would
actually bounce off. And we realized, OK, they
actually bounce off on the first stage of the order part. So we redesigned everything,
aligned it towards Facebook, and that just really
blew our mind. Because after that, we had
really a bounce off rate of maybe 10%, and it was
about 90 before. So we’re turning the
whole story around. What we’re working with now– this is, I think, very
interesting for you to know. We only started in December,
and it is March now. We launched the actual app in
February and the tagging campaign in January. So we’re very young. We’re still learning a lot. And issues such as the absence
of physical addresses are still continuously impediments
for us to actually improve the service, to make it better, to
make it more feasible for the restaurants to deliver,
and so on. But for example, our first stage
was to work with these reference locations,
meaning the hotels. So the delivery guy sees
on the map, OK, this is where the hotel is. This is where our customer is. In the second stage– most of you probably know
TripAdvisor, where you have this compass. And it shows you the direction,
OK, 400 meters, and shows you the direction
where you have to go. We’re working on an
implementation of that as second step. And in a third step, what
we’re actually doing– with the local government, about
15 years back, since then every house was given
a unique code. And this code basically had the
first three digits, which were more or less a sector. Then there are another–
sorry, Mohammed– two digits for the street,
and the rest is for the house number. The funny part is, nobody’s
really using that. I can’t explain why. The only thing I’ve heard that
10 years ago, people actually got their magazines that way. If you look at the postal
service today, well, it’s just one building, and you go there
once in a while to see if there’s a package or something,
which is highly inefficient, obviously. So we are still definitely
learning a lot in this regard. And I think in that direction
with this code in the future we’ll be able to
achieve a lot. I’m just going to briefly
explain the business model. Now, obviously, what we do is we
go out there and we talk to restaurants. We talk to restaurants,
typically those that would have already established as a
delivery service right now, because that’s just
the easiest. You don’t want to
convince them. It might take some time. And one of the biggest issues
that they obviously have– because in Iraq, aside from
restaurants, you don’t really have a lot. There are no nightclubs. Bars– OK, there are some bars, but
it’s just a food culture. So it’s all about food. So a lot of restaurants are
obviously reach their capacity limit, meaning they have a
certain amount of seats, and they’re just booked. So they actually see the
delivery service as an opportunity of scaling
their business. Of growing their business
without having to make a substantial investment into new
physical infrastructure. And that’s where we basically
come into play, and we convince them that, OK, listen,
this is something that you could use. Test it for free. So at this stage, we are
operating an [INAUDIBLE] and we have around 70
restaurants in each city. But we’re growing there. For the users, what we are
basically offering is a location-based service. Very obvious. They turn on their smartphone,
they see which restaurant is in their delivery radius, they
browse through the menus, place their orders, and
get their food. I think it’s very
straightforward. What might be interesting for
you is the revenue model. How exactly are we making
money on this? There, too, we had
to learn a lot. In Europe, obviously,
commission is something very common. First time I walked into a
restaurant and told the guy, hey, listen, let’s work
this with commission. He’s like, are you crazy? You don’t ask that here. So he was totally offended. So after that, I was like,
OK, what’s your proposal? He’s like, OK, we can agree
on a fixed fee per order. So right now we’re charging $1
per order, and everyone’s happy and everyone’s– it’s just a cultural
difference. Basically, localizing the
business to what exactly is suitable to the region. I can actually show you this. On average, the large
restaurants have a 150 to 200 orders a day. So we would say, right now we
have in each city we have about one large restaurant. Then we have about three
medium-sized restaurants, and the rest is small. Medium is anything between
50 and 100 orders. Small is anything between
zero and 50. Zero wouldn’t make too much
sense, obviously. But if you think about it, it’s
basically something– it’s not going to be anything
that in this Kurdistan region you would be making a lot
of money per order. It’s actually that it’s a
volume-based business, to be totally honest. And if you aggregate it up right
now, we are already– sorry, got to calculate– we’re maybe at per day
you would get– with the restaurants we have,
you could probably achieve around 2,000 maybe
3,000 orders. And we’re only covering
14 restaurants. It’s a question of
scaling that. There are a lot more
restaurants. The question is also taking a
look at large cities as, for example, Baghdad. I think the potential
is there, but it’s a volume-based business. You’re not going to make 10, 20,
$100 on every transaction. Right now we’re covering
Erbil and Sulaymaniyah. We are planning, or we had
people approach us from Baghdad, especially. From Basra, too, and some other
cities like Mosul and Kirkuk and such. So generally, we calculated the
total available market, which obviously means, this
is the whole pie just in Kurdistan right now. Which we estimate annually to
be about 7.8 million a year. The way we calculated, we’ll
probably try to send around the slides, if that’s possible
through Abraham. The biggest issue in
Iraq is there’s no real data, meaning– I’ll give you an example. A week ago, I was trying to find
out, OK, what exactly is the internet penetration
in Kurdistan? And what you’ve got to know,
there’s really a monopoly regarding the provision
of internet services. So for example, in Kurdistan
there’s one company called Newroz Telecom. And the CEO made a really,
really, really contradictious statement. It was something like, so in
entire Iraq we have an internet penetration, I
think, of 5%, but that is only due to Kurdistan. And Kurdistan has only internet
penetration of 8%, and we here in Baghdad
have 2%. Basically, the numbers
don’t add up at all. Because I basically reverse
engineered the numbers, and I came up with, well, based on
what he was saying, you at least need an internet
penetration of 50% in Kurdistan based on
the population. So that’s what we’re working
with, right? We know one thing for a fact,
and that’s very interesting for our business, especially,
is that the government actually measures its internet
penetration right now by the number of Facebook registrations
in the country. Which is totally– it’s funny. At the same time, it’s creative,
because they have no other method of doing that. Especially because the large
corporations, they’re not really publicizing a lot
of data because of tax reasons, and so on. I think you get the picture. So the question there is, we
still have a really large growing market regarding the
internet penetration. What we also have– and this is
comparing it to Germany, a real plus for us– take a look at the
demographics. Nearly 70% percent of the Iraqi
population is between zero and 34, which is a lot. Which is really a lot. Meaning we have a lot of
potential, actually, that is going to be coming up here in
the next couple of years. If you combine that with the
internet penetration, which is also growing like crazy, I think
our potential target market is growing in total. So I would like to hand this
over to Ralph, who will give you some technical insights and
how we try to involve some locals, too. RALPH BENJAMIN MAGNUS: Yes,
thank you very much, Oliver. Is this on? Can you hear me? OK. So I think Oliver has said so
much, so there’s nothing left. Any questions? No? OK. Just joking. I want just to come back
to this slide. We always have to have a mind
that we’re talking about a delivery time here of about two
months from the first idea when I met Oli first in Erbil. Then we go to implement the
first prototype only for the tagging campaign, and then we
extend it in each increment application. So for us it was a good
experience, this project, to test our agile approaches. So we really implemented only
these things, only the features that are necessary
for each increment of our application. So the change that is always
there in software engineering project comes from serial
sources here in our project. The first thing is that we
always had running serial instances of our application. We had the demo instance for
testing all new features, we had the staging system for our
partners to get trained to work with our system, then
we have the life system. And we see on the left, we
do all the automatic testing, and so on. And we get the necessary
feedback from our test suite what we have to adapt to have
a functional system to have all the features implemented
in the right way. Then we have big feedback
from our observations. So, from our local staff in
Erbil and Sulaymaniyah that are face-to-face with our
partners, the restaurants, that installed the system
and explained the system, how to use it. And this gives us a very
valuable feedback for us. It was, I think, one of the most
important channels here. And the sell channel was
the social channels. So mainly it’s Facebook, where
we had all our campaigns and get the user feedback. And all these we had to handle
on the level of our application. So we had to react very fast
to involve also the people at the place. So if we get feedback, so they
saw that the feedback is taken seriously, that we adapt
the features, their ideas, their commands. So in general, we were able to
adapt and implement features and interests, and so
on, within one day to maximum 14 days. 14 days was never– I would say one day to one
week, we were able to implement all changes that
happened in these 2 and a half months. Just some examples that those
are not only small changes and small learnings that we have
done in this time. For example, in the beginning,
there was a big issue with some kind of operating system in
a very special version that brings for us a huge problem. We saw one of our test suites
and test environments made this visible that in this
version, if you created a full screen home link of this
application, that your location is not working. It’s only triggered once, and if
you start the app, and then it’s not working anymore. So thank god we figured out this
in the beginning, before the users started to use
our application. Because if they want to go
around and to tag and to tag, and for us, these tags are
very useful, and we want to have them. They have a huge value for us. It would have been disaster if
they wouldn’t be able to tag. Because we have metered that
nearly 90% are using iPhone. And this time we said, version
of the operating system. So we were able to handle this
in a way that we have some operating system detection that
detects a version that allows to create a
home link or not. Second thing that
comes from the observation from our partners– Oliver already has
mentioned this– was that in the beginning we
had the prototype developed like each restaurant can define
a specific radius for the delivery. But we very fast saw that this
is not sufficient for all partners, so they need the
possibility to create several independent service zones with
different charging, and so on. So this was a very important
observation from our partners that we also could implement
very fast. And observation that comes from
social channels, as well as from Google Analytics where
we observe the flow of the visitors, was that we simply had
to simplify the ordering and delivery process as much
as possible, so that it’s really straightforward. Just three clicks to get your
food, and not options here and add pepperoni here, and so on. Just a basic menu and
left out everything. So we had implemented
everything. We would be able to do
all this, but we had to leave it out. Maybe later, next year, or
whenever the users can adapt. So all that I’ve said is also
reflected in the way we deployed our application. We had serial branches and
instances running. On the left we have development
branch where Christoph and me are putting
all our new ideas. And whatever seems to make sense
goes into a demo server, where the local staff can test
it and can give us feedback. And in the same time, we had the
localization branch, where we had the local Easy Bite
stuff that is directly involved in translating
everything in time, so that each new feature, before it
comes to the live system, is completely localized. We included this localization
directly in the application, so it could be done in app. And until the version 0.2 we had
the staging server, where we trained all the restaurants
before they’re going live. So we can ensure that they are
able to handle the system, that they know what to do if
there’s a delivery [INAUDIBLE] From the current version there
is training models integrated and the live server where we can
switch a restaurant from training models to live models,
so no need anymore to migrate restaurants from
staging to live, just switching it. Here you can see wherever this
triangle there was automatic test execution of
our test suite. So whenever we committed
to a feature, it has to pass a test suite. So beside that we have this very
short period of time, we always took care about quality
and tried to follow test-driven development here. That’s for the deployment. Christoph will give some
additional information regarding the quality assurance
and the architecture that we have chosen to
implement the system. CHRISTOPH HERBST: Thank
you very much. Hello, everybody. I’m Christoph Herbst, and I’m
also glad to talk to you in the Google main headquarter. Can you hear me like this? Or do I need this one? OK, hello everybody. So just I will do very quick. So Oliver already told you that
we try to develop the application very fast, and
we have quickly changing requirements. And that’s why we need to
[INAUDIBLE] testing. And we see a small screen shots
of our testing coverage. And from the beginning on, we
tried to have a good coverage, of course, but due to the time
constraints and to very limited manpower we have, we
are not yet at 100% in each controller, but we are trying
to assume that. So that’s a screen shot
from PHP units. Then we have a mobile
application. And I just want to say a few
words about the special aspects we have to
cover there. This is a simplified overview
of our application architecture. What you see is that we use
a Symphony back end on the server, which delivers mainly
HTML files for cover HTML. But we can also deliver JSON
data in certain circumstances where it’s very important that
we have small data that we can have a good performance. Then we use a lot of JavaScript
libraries. So standard libraries that
you might already know, JavaScript. And to have a consistent
mobile look and feel on every platform. We use jQuery mobile. And of course, we use Google
Maps a lot, and a few others. So then we wrote
a lot of custom JavaScript code on our own. And the glue of everything, so
everything fits together, we use required as a modular
organization. So this is a lot of content, and
we try to keep the size of data that needs to be
transferred very small, so we use separation of the content to
static and dynamic content. And we use cookieless domain
for the static content. And we try to compress
everything and deliver it to the browsers that support
compression of content. And next is some screen shots. Maybe you already
waited for it. On the right side you see
all the tags that Oliver talked about. The tags that were collected
by our users. That’s Sulaymaniyah city. And we try to use these tags
wherever possible. And on the left side or in the
middle screen shot you can see one example of this where we use
it in the screen where the restaurant administrator can
create service zones for the restaurant. Oliver was talking about it. And this is mainly for
orientation, but also for creating the service zones to
know where you are on the map. And we use these tags in
a lot of other places. When you order food, and for
the deliverer, and so on. And on the leftmost screen
shot, you see one of our restaurant partners. That’s the [INAUDIBLE]
restaurant and menu. And what you can see here is
also that it mainly is using jQuery mobile here, because we
have a lot of information to show on small screens. So we use there, for example,
collapsibles, for instance. So you can click on the food
category, and then it opens up all the food there. And then you click on it. And there you can add different
food items. And everything’s
on one screen. You don’t have to switch around
pages, something. So everything’s on one screen,
and it fits very good into a smartphone. So that’s something maybe you
want to talk about again? Thank you very much. RALPH BENJAMIN MAGNUS: So I’ve
already mentioned the task of localization and providing the
whole application also in Arabic language. So in the beginning, we started,
if you wanted to do the tagging campaign, we really
had only two and a half weeks to start to implement
application to make the users able to go around the city
and tag important places. So it was a short time. So there for the localization,
we simply had the text file that we sent to our colleagues
in Kurdistan, and then we get it back. But obviously, this is not
manageable for application that grows and grows and has
to meet a lot of changes. So we decided to have a
localization back end, and this screen shot is just
depicting this fact. So we see the application in
English and then Arabic. And you can also use application
on the desktop. For example here, for
doing localization. So the process of localization
is totally embedded in the application. You can log in as translator and
during the deployment of the localization of translatable
screens, I extracted and provided in this
interface that automatically saves as you type all the
necessary translations. So this is just one example how
we integrate the work flow with the local stuff,
as in Berlin. And from this translation, all
translation are pulled from [INAUDIBLE] repositories to
all different branches, so that we have a consistent
environment, at least regarding the translation
and the localization. Just to give a little outlook at
what will happen within the next weeks and months,
and let’s have a look how it works. So Oliver already mentioned
that we want to implement something like a compass. Why we want to do this? Because the easy tags are very
good to overcome, in the beginning, the situation with
lack of physical addresses. But they’re not so accurate. So for the first, it’s good to
come near to the user or to the customer who has ordered our
food, but so the last 100 meters are important to
find the customer. And we want to implement such
a compass where the delivery boy can see which direction
he has to go to find the customer. And it should be very easy. Without maps, without street
names, just during driving he should be able to look there,
and not to read there and drive in this direction
against the wall. He should be able to have a
quick look where to go. And then we also want to reuse
the tags that we have collected so that not only is
the user is displayed, or not only is the customers displayed,
but also tags that are nearby that can help the
delivery boy to get an orientation of where he is,
where he has to go. So right of Canyon Hotel,
for example. Then one other thing is, of
course, we want to allow the restaurants to customize
the menus to give it a unique look and feel. And maybe later to
run independent instances of Easy Bites. But one of our main focuses is
really to extend the work with the tags to extend to overcome
the absence of physical addresses, to find different
approaches to provide good orientation. And we have many ideas, and we
are currently working on this. We’re doing research on this
in cooperation with the government, and so on. So there will come a lot
of new changes in the next weeks for us. But we are looking forward for
the changes, because we are prepared with our architecture
and with the application design. So this is, I think, the most
important things that we will do in the next weeks, months. We have collected some facts
where we can talk about. It sums up everything
a little bit. Which technologies we have used,
what we have integrated, which services we are using, and
so on, I think that’s all that you want to say in the
short introduction. I think everything else we can
do in the discussion part. OLIVER FRANCIS KOCH: That
wasn’t that short. Sorry about that. Obviously, we couldn’t give you
guys the whole picture. There’s a lot missing. We have a feedback system where
you rate your order, but it’s all very basic. But anyone have any questions? Can we hand this around, or
how do you want to do it? MALE SPEAKER: You could
repeat the question. OLIVER FRANCIS KOCH: Oh, OK. AUDIENCE: Have you got a sense
of what standard devices people normally use, like
what kind of phones? Is there a part of the
application which is also on the desktop or– OLIVER FRANCIS KOCH: So the
question was whether we have a sense of what mobile devices are
currently being used, and if also the application is accessed via desktop computers. Remember right at the beginning,
I told you something about this
MVP, where we placed it on the website? This cartoon. When people signed up, we asked
them to– they could choose four different
categories. Are you using Android? Are you using iOS? Are you using Windows
Mobile, and so on? So there we aggregated
a lot of data. And back then, our question was
are we going native, or are we not going native? And I know Ralph had said
something about the iPhone being very, let’s say, present,
but that was the first impression. After we had that running for
two or three weeks, we saw there was a balance between
Android and iPhone. And once in a while, you had
Windows Mobile and BlackBerry slipped in there. So I’d say right now we have
about 40% iPhone, 40% Android, and 10, 10 Windows
and BlackBerry. Regarding desktop, it’s actually
funny that you’re asking, because we have measured
over the last two weeks that– basically, when the system
cannot position you, we had a fallback, meaning, where
is it supposed to deliver the things to? We realized that a lot of people
weren’t using this fallback, meaning a lot of
people were getting this message that they couldn’t
be located. So we tracked this back, and
people were using it through their desktop, which was
also part of it. But the issue was that with the
desktop computers, we used wireless LAN to position them. And the problem with Google
Chrome, but also with other browsers, obviously, that you
get little pop-up to allow it, and people don’t
really read it. So they’re just stuck there,
and so they close their browser at some time and
just order via phone. So that’s something that we
need to work on, too. But definitely, those
two channels are– AUDIENCE: So at the restaurant,
[INAUDIBLE] OLIVER FRANCIS KOCH: The
restaurant has its own view. I think you saw parts of it. Basically, most of them use a
point of sales, and in Iraq, I think like 95% run on Windows. But it doesn’t really
matter for us. We open up a little browser
window next to it, and I don’t know if Ralph can simulate it. They basically, whenever an
order comes in, they get this really, really annoying sound,
which keeps going until you read the order. So that’s how it works
on their end. AUDIENCE: With the menu, my
question is basically, how do they customize their
menu on the app? Does it go back to the
point of sale? OLIVER FRANCIS KOCH: No, it’s
not integrated to the point of sale, because it’s just
so heterogeneous. People are using own systems,
and so that’s not feasible for us. So they basically have a manager
interface, and they have an approver interface. The approver is basically the
cashier that sees the orders, and so on. The manager has the option of
editing the menu, and so on. And it’s all– AUDIENCE: On the app, or– OLIVER FRANCIS KOCH:
On the app. On the app. AUDIENCE: They open
on their phone? OLIVER FRANCIS KOCH: No, no. They basically open up on
a desktop computer. And I think Ralph can just show
you while I’m talking. RALPH BENJAMIN MAGNUS:
Just keep talking. OLIVER FRANCIS KOCH: I’ll
just keep talking. So yeah. They open up on their computer, have a little screen. And they have the same view as
here, just that they have a lot more options of editing
the menu, deleting orders, setting delivery radiuses,
and so on. AUDIENCE: So if the restaurant
owner doesn’t have a PC, [INAUDIBLE] OLIVER FRANCIS KOCH: You could
say it like that, yes. But the issue is– the way they operate right now
is someone approves the order and then they print out
a sheet of paper. On that sheet of paper we have
a zoomed in view of the location where it’s going to,
and a zoomed out view. So you see the tags that are
exactly next to the location, and some that in a different
perspective. Because some restaurants, let’s
say maybe 80% of them are like, OK, I’m not going to
give my delivery guy a phone. No way. He’s going to be gone. So they’re like, OK, what
can you offer us? And we’re like, OK, we can work
with this sheet of paper. And that’s basically what we
developed with them together. So they have a printer. They print out the thing, the
customer signs it at the bottom, and that’s it. AUDIENCE: Do you guys have any
issue that people were complaining, the business owners
were complaining that I don’t have a PC, so I can
not customize my menu? OLIVER FRANCIS KOCH: Well if
you think about it, the restaurants– MALE SPEAKER: Keep repeating
the question, because there are people– OLIVER FRANCIS KOCH: Oh,
sorry about that. So the question was, is it an
issue that a lot of restaurant owners don’t have
any computers? Right now, the restaurants we’re
targeting, really, all of them have a point of sales. The only issue is maybe
the internet. But there’s a thing called a
HiMax, which is basically something like 3G here for us,
and they buy this little adapter, pay $10 a month,
and that’s it. And it doesn’t take a lot of
convincing on that side. And strategically for us, and
this is a very important point, for us, this
whole thing has a large network effect. Two groups, the users
and the restaurants. There are two or three
restaurants, if you have them on board, a lot of people
join, and a lot of restaurants join. And the restaurants join if
a lot of people join. And it’s a cycle. And I think about two weeks
ago we really broke that cycle, because there’s a
restaurant called B to B, which is in a Erbil. Really, everyone orders there. They have 200 or 300
deliveries a day. Meaning you tell another
restaurant, hey, B to B is on it. Oh, really? OK, I’m in on it, too. So that’s basically
how it works. And I think we got to
that point now. RALPH BENJAMIN MAGNUS: And in
addition to this, especially in the beginning, we also
assisted the restaurants with importing their menus. And we give lots
of assistance. OLIVER FRANCIS KOCH: Well,
the issue is also that– and that was training
our sales team, the people that go out. We had limited resources. So you’re going to probably
laugh if I tell you that what we did is we got some students
that really liked the idea and told them, hey, listen. Go around and start asking
restaurants, hey, why are you not using this? And basically, go to the
restaurants, and if you seal the contract, we’ll give you
50% of our revenue for the next six months, which is
achieved through that. And that’s working wonders,
because we have really limited capacity regarding
our resources. That’s working around it. And one of the main things
training them– maybe also a cultural aspect– is that we don’t even show the
people the manager interface. We go there first, and even
while they’re using it, we just show them the approver
interface. Putting in the menu the
first time, we do it. Because they’re just going to be
so over overwhelmed by the complexity. They’ll be like, ahh,
no, I don’t know. So right now, it’s
three buttons. We tell them, hey, listen, it’s
exactly three clicks, and you’ve got your order. And they’re all totally happy. Then they come back to us. That’s actually what
has been happening. They come to asking us, hey, is
there something to edit the menu and blah? We’re like, yeah, there’s
this, this, and this. Oh, really? And there’s reporting, too? Great. So that’s basically– it comes from their side and at
their pace, and that makes it a lot easier for
us to go along. RALPH BENJAMIN MAGNUS:
Thank you so much. That was what I wanted to say
with previous sentence. AUDIENCE: I have
two questions. First, it seems you’re doing
cash on delivery. There is no other payment,
no other way? And the second thing, do you,
from your experience– I know it is still early, but–
do you think users know already to trust ordering
something online, even if [INAUDIBLE]? OLIVER FRANCIS KOCH: Well, first
thing, cash on delivery. The question was, are we
doing cash on delivery? Yeah, there are no mobile
payments, for whatever reason. A lot of conspiracy theories
there, but let’s not go into that. The second question was whether
there’s a trust issue within the local community. I think– I was there since July. And monitoring what’s been
happening in Erbil and Sulaymaniyah, especially
regarding the engagement of technology in day-to-day life,
they’re really opening up towards that. And like I said, a lot of people
are already using the phone to order food. And the amount of those people
is actually increasing. And if we take a look at,
really, our primary customer segments, at the beginning it
was really focused on students who obviously like to engage
with new technologies. But at this stage, now,
it’s a lot of private sector employees. Companies like big telecom
providers like Korek or so, where they’re just sitting in
their cubicles, and they order their lunch. And for them it’s
just amazing. It’s their highlight of the
day, just using the app to order something. Because– AUDIENCE: Do you mean they
are using the phone? OLIVER FRANCIS KOCH: Yeah,
they’re already using it via phone, and they’re really
annoyed by that process. So within our marketing
campaign, and that was really, I think, that’s the
feedback we got. It was a really important
factor. We put at the beginning made
on Germany everywhere. And they’re like, OK,
Germany sounds good. We trust Germany. So that made a big
difference, too. So it’s a question of
how you position yourself in the market. I think it’s very sensitive
to this. AUDIENCE: [INAUDIBLE] OLIVER FRANCIS KOCH: How do
we handle the quality expectations? Now, like I said, we couldn’t
show you the whole picture. What basically happens, after
you’re done ordering– and I hope– I don’t know if Ralph is
actually working– OK. And the delivery guy went back
to his restaurant and said, OK, the order was delivered. You would get a pop-up screen
next time you log in, and you have to rate the delivery
service regarding time, regarding food quality,
and service quality. This feedback always goes back
to us, first, but also to the restaurants on a regular basis,
for numerous reasons. We believe that it’s a point we
have definitely considered, that bad service regarding the
restaurant will reflect negatively upon us. So we have a responsibility
of engaging there. I’ll just give you one example
of how we would engage. A lot of restaurants at
the beginning were like, you know what? I’m going to take entire Erbil
as delivery radius. And I’m like, for me with my
car, and let’s say not rush hour, it would still take me
over an hour to get there and food would be cold, and so on. So what we try to do is
we actually issue recommendations then. If we see that the delivery time
is really a lot more than average, we would go there and
tell them, hey, listen, the way you defined your service
zones is just not working out. And I think we have the leverage
there, to be honest. AUDIENCE: [INAUDIBLE] OLIVER FRANCIS KOCH:
Yes, of course. AUDIENCE: [INAUDIBLE] OLIVER FRANCIS KOCH:
It’s a mix. Two interactive components
that we have. The first thing is on every
order you place as a customer, you can put in notes, which
are retrieved by the restaurant. And the restaurant obviously can
reject your order, approve your order, but it always has
the option of responding. It’s like integrated
chat, if you want. That’s one interactive component
where you have some human components, if you want. The second part is we do
display the restaurant telephone number. The third point is also that
what we try to monitor very closely is how many orders
have failed? What were the reasons
why they failed? We also try to monitor very
closely this dialogue between the people. If your order was rejected,
why was it rejected? But these are obviously issues
that really become very critical when we scale,
when we grow. And yes, we haven’t reached
that point yet. And I hope we do reach it
at some point, because that would be good. RALPH BENJAMIN MAGNUS: One
addition to this is that we also track if the restaurants
are using the application when they’re intended to use it. So they can set up constraints
of opening hours, and we can monitor if they’re really having
open this site on the left, where you see the
incoming orders. If they are offline when they
should be open, Oliver and Christoph and Mohammed will
get on the email. And Mohammed has to call
them and say, look, switch on your computer. You guys should work. OLIVER FRANCIS KOCH:
You’re laughing. It actually happens. And they’re like,
how do you know? Well. You hacked into my computer,
or something. No. And it’s an evolving process. We didn’t have all of
this from the start. It actually happened I
ordered one day, and then nothing happened. And he’s like, OK, let’s
implement this. AUDIENCE: Two questions, one
from a person dialing in, and one from myself. The question from me is, going
back to the business model, what’s the difference between
a commission and a $1 charge for ordering? Practical terms and
cultural terms. OLIVER FRANCIS KOCH: Cultural
terms, I guess– I don’t want to offend anyone,
so I got to be careful how I say it. If we take a look at the
average order volume. The minimum order value
of most restaurants is about $10 to $12. And for them, it’s obviously– I think it’s an economic
motive. They basically see, OK, no
matter what we do, we’re providing the same service. So why would we get be getting
more money if someone’s ordering more? That’s their perspective. I think it’s cultural. At the same time, it’s
also practical. Because if you take a look
at it culturally, usually it’s families. Families, the normal household
size would be about five to six people. So it wouldn’t just be one
person ordering, it would be a person ordering for
five people. So we’re talking of orders
of $50 or $60. So for them, they’re basically
saying, OK, so you’re not doing a lot more when one person
is ordering or five people are ordering, so I just
want to stick with this fixed fee of the minimum
amount, which is on average $1, exactly. AUDIENCE: My question is
about the [INAUDIBLE]. OLIVER FRANCIS KOCH: Yeah,
you want to run another competition with us? That’s cool. You can sponsor Nexus
Ones, or something. No. So what was the design
of the competition? Well, obviously what
we did is– people didn’t even know
what tagging was. So we invested a lot of
time in educating people in that regard. Facebook is a very
popular channel. It’s probably one of the only
channels that you can use to target the audience that we
were trying to target. So what we did during the set
up, we said we’re going to focus on Sulaymaniyah and Erbil,
because there’s no use in just tagging and not
validating the data. So we had a couple of students
who were freelancers who were looking into the tags, saying,
does this make sense? Is this realistic? And they would then
approved the tags. Because that was also an
adjustment that we had. The first couple of tags, we had
the first day one person who did, I think, 150 tags. So we were like, oh, this
is going like crazy. And then we realized
she was tagging everything from her house. So we were really
adjusting that. And he basically fixed that
you can tag things in a certain radius, and so on. So it’s an evolving process. In total, we ran the campaign,
I think, about five weeks in total. We have accumulated in
Sulaymaniyah about 350 tags, I think, and in Erbil a little
less, about 200. And they’re a little
wide scattered, so we’re lucky there. AUDIENCE: Is it private data? OLIVER FRANCIS KOCH: Up
until now, if you guys have use for it, sure. I’m saying that. But we invested some
money into it. So I think we’re open minded,
but right now, it is private. But again, if there’s use,
definitely we’re open for discussions. We’re not hogging. AUDIENCE: So you mentioned
about the internet penetration, what the
percentage may be. But what about smartphone
penetration? OLIVER FRANCIS KOCH: We have
data on mobile phone penetration. I’ll give you that first. And it’s going to stun
you, because it’s 90% in whole Iraq. But then, you have
to look at– and this is, again, this is more
a qualitative assessment that I can give you, going
around and telling you what I’ve seen. Is that especially in the target
segment that we’re focusing on, 18 to 35-year-olds,
all the people are using smartphones,
especially in the Kurdish region. And we also have people that
come from Baghdad, that see Baghdad, and I hardly– anyone that has a cheap old
Nokia phone in that age group, always has his iPhone along. And this culture is basically
all about logging into Facebook at every location
that you go to. It’s cool, but it’s different
from here. So what we can say on that end
right now is we have no hard data on that. But we basically– it’s more based on our
qualitative assumptions that along with the internet
penetration, a lot of it is mobile. And I think a next step for us
to narrow that down would also be to see in how far the
internet penetration, which is already measured through
Facebook, is to see and how far is it also being
used mobile? AUDIENCE: [INAUDIBLE] OLIVER FRANCIS KOCH: I’ll
give that to my– AUDIENCE: How do you maintain
your 99.9% of time? RALPH BENJAMIN MAGNUS:
How we maintain this? Right now, we sit there
and pray all the day. No. We have running some monitoring
services, of course, that are notifying us
when something happens. So we have serial instances
running of this service, but only one is known for
the live system. Others are reserved for testing
and for localization. For now, we have
no redundancy. But this will change if there
will be some money and we have the ability to invest a
little bit more in the infrastructure. But for now it’s working well. And we can react very fast,
because, of course, monitoring from external services. So we have a chance to maybe
react within some minutes. [INAUDIBLE] AUDIENCE: [INAUDIBLE]? OLIVER FRANCIS KOCH: Well, up
until now, we had a couple of local companies, too, that
showed interest in sponsoring this, and so on. We’re still bootstrapping,
because, like I said, for us, [? Karoge ?] is our pilot market. Our goal is actually to expand
to Baghdad, and so on. But if there are any options of
acquiring funds in another way, we probably would do it. But we haven’t gotten to the
stage where we are actively seeking seed funding or anything
to push this or boost the business. It’s also, we still feel that
we are really learning a lot regarding the changes. Just taking a look at the last
months, we’re not at the– I mean you reach the point
where your learnings– obviously, at the beginning,
your learning curve is very steep. At some point it flattens, and
we have not completely reached that point yet. When we do, and we get our
internal responsibilities and all settled, I think that’s the
stage when we would start seeking external funding. AUDIENCE: [INAUDIBLE] OLIVER FRANCIS KOCH: Totally. Currently, one of the biggest
issues from the restaurants point of view was, OK, so this
is internet and people are ordering, and couldn’t people
just fake order and stuff? So what we did is, when you
register, you have to give your phone number and
you get a code. Now, you’re going to laugh, but
we actually took this from Eric Ries’ Lean Startup idea. We did it really manually. I mean, we have someone sitting
there sending out text messages, this is your
activation code. So at some point, yes, that’s
definitely something we have to look into, or want
to look into. AUDIENCE: You mean ordering. AUDIENCE: Yeah, that
was my question. Just it provides another– OLIVER FRANCIS KOCH: I think
that when we start integrating SMS gateways and so on, that
would be something that we could approach then,
too, obviously. AUDIENCE: [INAUDIBLE] OLIVER FRANCIS KOCH: Like I
said, we had a platform. We were conducting these
startup trainings. And a lot of things in
that community are– word of mouth is really, really,
really, really big. So what we did is, in one of
the trainings we did a user acceptance test. We basically showed a video– we have it here, too– but which
basically explained the idea of Easy Bites. Kind of like that
Dropbox video. You might have seen it. And we told people, hey,
OK, you know what? We’re going to post on
our Facebook page. If you like it, sign
up and share it. And that’s how the whole thing
got started, actually. And the next stage then was to
build a website where we put this MVP on. And I think up until today, for
some Facebook and flyer campaigns we spent
maybe $1,500. That was more from our own
pockets here and there. AUDIENCE: OK. I think that’s it for now. Thank you. OLIVER FRANCIS KOCH:
Thank you. RALPH BENJAMIN MAGNUS: Maybe
just I can just show this small use case. I don’t know. I can’t remember why I wanted
to show, but maybe it’s interesting. Here on the left side, I’m
logged in as an approver. This is also a role that has
come up from our observations that not everything has to be
done by a manager with all privileges. We have just one guy sitting
there that approves deliveries. OLIVER FRANCIS KOCH:
Cashier, basically. RALPH BENJAMIN MAGNUS:
Cashier, exactly. So he has very limited
possibilities. And this button is also
one observation. We have to have the ability
to switch off delivery immediately, if maybe the
delivery guy leaves for lunch, or something unplanned
happens. So this overrides the schedule
of opening hours. So what happens if
I’ve placed my– I put my position now to
Erbil in a location where we have delivery. I choose my own category of
desire, and I choose to order from this restaurant. What I get here is their menu. Well, my son loves pizza,
so I order some pizza. Let’s try it with chicken,
he like. I take also one. And he can give some
information. OLIVER FRANCIS KOCH: He can
comment on this, because the complexity of the whole process
gets more complicated if we have a shopping cart. So we kept in this very easy,
straightforward design, where you see at the bottom here,
you just have a listing of what you have and you
can cancel it out. The cost is, obviously, it’s not
as flexible, but it keeps it in a very, very streamlined,
straight process. RALPH BENJAMIN MAGNUS: So
now the customer orders. It comes up with nice sound,
and you see the overview here of orders. To cancel this, you have to go
to the order, and you get overview, including the customer
notes and telephone number to call the customer,
maybe to call something is out, or do you want to
change something. You can edit then if something
should be changed on request of the user. So then we had– after one month of
implementing, we had a list of seven? Seven states that the
delivery can have. It was very detailed,
and very cool. You can follow each step. This totally failed,
because nobody was able to handle this. Now we come up with two states, in progress or rejected. So 30 minutes. So the customer also has
here some information. So submit it, and the customer
here should automatically get an updated information that
it’s in progress. So here we use our JSON
interface to pull the status of the delivery. The cashier gets something to
print for the delivery guy– the route and screen shot of
position, very close screen of the position of the customer
where you see, OK, he’s close to this tag. That’s one of the tags that
has been submitted by our customers and users. And then you can set
it to delivered. And the user now is blocked for
a new order until he has rated the order. So in this way, we get a
feedback that delivery has taken place, and we
have to get our dollar from the delivery. So he has to give this. Our observation is that this
actually is done when the user wants to order new food
three days later. So it’s never done immediately,
only we have to wait three days, and then it’s
completed, the order. And then it can continue. OLIVER FRANCIS KOCH: This
process was basically– the way we changed it. He said we had a seven
step process. It was really complex. And just speaking to the
restaurant owners, they’re like, I don’t get it,
and my cashier definitely won’t get it. So what can you do
to reduce this? And then we came up with,
OK, you know what? It’s just in progress,
rejected. And then after that, you print
it out, and it’s delivered or delivered failed. And that has really served us
a lot, because it has really reduced the complexity of
the whole application. Because you can explain it to
anyone in five seconds, and they get the idea. RALPH BENJAMIN MAGNUS: Maybe
just to close it, because there was a question. I’m just now take the role of
the manager of this restaurant that I ordered right now. And the manager has the
possibility to maintain the whole menu. He can arrange the menu, the
categories, the options. So different sizes
he can define for pizza and for drinks. And so everything can be done
directly in the application. I think that’s all in the short time that we can present. MALE SPEAKER: Thank you
again for this event.

Reader Comments

  1. fantastic talk. One minuscule nitpick: at 18m on your slides, you have all your numbers in parens aka ( ). In accounting this is used to denote negative. It's distracting.

    Other than that, FANTASTIC JOB!

  2. @meotaku2: I don't know where you have your information from. Easy Bites is a self funded project that exactly is intended to facilitate the involved Iraqi companies (~90% of Easy Bites) to start and grow their business and to share their experiences. There is no governmental funding at all. If you want to have concrete information about the project, please contact us directly.

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