Fundamentals of Entrepreneurship  

INCREASE: TRANSFORMING THE ECONOMY BY EMPOWERING MERCHANTS

THE SPARK

Matias was twenty years old and living in Argentina. One day he decided to sell his own car in order to build a bar on the beach. He knew the owner of an existing bar, so he made an   agreement with him and started running the bar with the help of some friends. Sebastian was a little bit older.  He was thirty and working at an American start-up in the USA after building   his   first   company, which   helped   foreign students during their stay in Argentina. The entrepreneurs met during 2009 when Matias participated   in   a   GSEA   competition   Sebastian   was organising; however, they   were   living   in   different countries, so communication was sporadic. In  early  2013  they  again  met  briefly  and  spoke  for the first time about a problem they had both seen and suffered  from  firsthand:  it  was  a  total  nightmare  for  a business to check and control every sale or transaction made with  a  credit  card,  as  the  way  these  transactions were recorded depended largely on what bank the credit cards were affiliated with. In Latin America, every credit card company takes a different amount of time to pay merchants. For example, credit card A may pay you 18 days after the transaction was made, while credit card B will make that same payment in 28 days.  To make it even more complex, transactions   made   in   instalments   are   paid   to   the merchant in 48 or 72 hours depending on the card provider, and of course you also must take into account discounts and promotions as well as taxes and retentions.  Lastly, it is not unusual to have rejected coupons that are automatically discounted, and merchants only have a 48-hour opportunity to claim that chargeback by presenting the data of that single transaction. When  one  of  the  main  newspapers  in  Argentina published  an  article  pointing  out  that  merchants  who did not control  their  payments  lost  up  to  7%  of  their income,  it  was  the  final  push  Matias  and  Sebastian needed  to  narrow  down  the  product  they  wanted  to build – along with the fact that there were 500 000 POS terminals in the country. Knowing when and how much money is received each day is vital information for every merchant   in   order   to   make   better   decisions   and therefore grow the business. With that in mind, in 2014 Matias and Sebastian decided   to   start   INCREASE, a   platform   that   gives merchants and businesses a simple way to understand their income using payment analytics.

THE TEAM

In the first three years of the company, Sebastian and Matias went from 0 employees to 22 and from 0 clients to more than 6000. First, they   recruited   three   employees:   The   Chief Technology   Officer, a   salesperson, and   a   marketing director.  They then recruited nine more staff in 2016: three   developers, one   administrative   assistant, four salespeople and one customer support person.  Finally, another   nine   employees   were   hired   in   2017:   three positions in customer support, one Chief Marketing Officer, one Chief Culture Officer, and four developers. With the slogan ‘empowering businesses’, the team was able to provide their service to many different types of clients, from small businesses to big companies with more than 1000 POS terminals.

THE CLIENTS
The company’s   main targets are small and mid-size businesses   who   have   1–30   POS   terminals, and   are involved in B2C business with customers paying by credit   or   debit   card (in-store   or   via   e-commerce). INCREASE also offers their services to bigger companies that need or want to empower their local managers. Growth in client acquisition was progressive, going from 900 POS terminals in December 2015, to 5982 in December 2016, to 16 095 in December 2017. In the last three years, the company has identified three main types of clients:  the Gustavo segment, the Pablo segment and the Julieta segment.

THE MOMENTUM

By the end of 2017, business was going well, and it was time to take it to the next level. Sebastian, as the CEO, started the investment round that would allow the team to grow and achieve the ambitious goal of becoming a multi-product, multi-country company. Within the first three months of 2018, eight bright new employees were recruited and went through a three-week induction program. In the first week, the focus was on INCREASE as a company:   its   mission, values, methodologies, team members, clients and everything regarding the products and their key value proposition. As an agile company, INCREASE works without a predefined   structure.   The   company   is   organized   in circles that have a purpose and might grow or disappear depending   on   the   needs   of   every   quarter.   Each employee,  each  ‘Increaser’,  contributes  to  at  least  two circles:  a  main  circle,  which  usually  represents  80%  of their time, and a secondary circle for the other 20%.The  second  week  of  the  induction  program  was focused   on   on-the-job   training   in   both   main   and secondary   circles,   working   side   by   side   with   other members of the team. Finally, the third week was meant to give the new members   the   opportunity   to   join   in   meetings   with customers, partners and other meaningful stake holders of the fintech industry. Every employee at INCREASE has access to all company   information, not   only   because   everyone believes in transparency as a value, but because every single person needs to be able to share information in real time, 24-7. ‘Ideas might come from everywhere and we better be prepared to make them happen’, says Matias.

THE SPIRIT: ‘VELOCIDAD CON SERENIDAD’ (SPEEDINESS WITH SERENITY)

INCREASE was born to simplify merchants’ lives so that they can grow.  As a SaaS (software as a service) company, their ability to understand client needs is crucial. In doing so, they must not only be on top of the speed and quality of their products, but they also need to  be  highly  attuned  to  every  aspect  of  their  client’s business   and   market   trends   so   that   they   continue adding value in a proactive way. Keeping    the    balance    between    solving    today’s problems   and   being   aware   of   and   ready   for   the challenges of tomorrow is probably the one ability every entrepreneur should pay most attention to. Having one without the other means the start-up won’t make it. Being able to adapt equals being able to properly assess situations and make decisions accordingly. That is why at INCREASE they take their values and skills very seriously. They are not just nice to have; they are a way of being. The company believes that creating relevant and accessible   fintech   solutions   that   empower   businessowners in terms of their financial management will bring financial stability, professionalization and transparency to how small and midsize businesses are run in Latin America. INCREASE    has    a    strong    work    ethic    and    a collaborative culture centered around six core values that they follow in all their business endeavours:

• People first
• Creation & pragmatism
• Positive atmosphere
• Transparency
• Constant progress
• Ownership

THE CHALLENGE

INCREASE   believe   learning   agility   is   the   key   to sustainable  growth,  not  just  as  human  beings  but  as  a company  –  a  company  that  knows  that  there  is  no learning without motivation, and there’s no motivation without a team that enjoys having a good time solving a huge challenge. By   the   end   of   this   year   INCREASE   will   have recruited another 10 employees, meaning it will have doubled its   employees   during 2018.   It will   also   be operating   in   at   least   two   more   countries   in   Latin America and reaching 10 per cent of the market in Argentina. Apart from its main product, INCREASE will also   be   offering   another   three   products   that   are currently being used by some clients.

TABLE 1 DISTRIBUTION OF TYPE OF CLIENTS BY JUNE 2017

• What do you think is the essence of this venture?
• Which traits do these entrepreneurs have?
• What did you discover or learn and what surprised you about this venture?
• What do you think will be the long-term future of this venture?