The startup spirit of Capsens

Yes we play ping pong at work! Yes we play PokemonGO! Yes we go to work by bike! So what? We are proud to fall into certain stereotypes about startups!

We are proud to claim to be a startup, simply because the latest major innovations were introduced by them, giving priority to large groups, unable to provide the innovations that will shape our future.

We see this evolution as the consequence of a profound change in the innovation process and the inability of historical actors to put in place adequate governance.

Capsens is a web agency specialized in fintechs who lives the “startup spirit” in his own way.

Change in the innovation process and the philosophy of lean startup

Yesterday, our grandfather felt at the cutting edge of technology when he brought home the first black and white television, weighing five kilos and taking up half the space of the living room. Today, the “few” lines of code from Facebook and Twitter have revolutionized the way we live.

We have gone from technical and intensely capitalistic innovations to practical innovations requiring little capital to be launched: innovation has become democratized and it has become much faster to innovate and grow.

But tell me Jamy, how is that possible?

In our opinion, the lean method is responsible for this rapid growth in the number of unicorns.

Concretely, after having an idea, the entrepreneur will develop a prototype with minimal functionalities as quickly as possible: the Minimum Viable Product (MVP). This prototype is then tested with customers in order to obtain their feedback. Afterwards, the entrepreneur will take into account the relevant feedback to improve his product and test it again. This is in contrast to the more rigid and traditional methods, which mostly consist in drawing up very detailed specifications and then implementing them for two years.

Thanks to this method, the startup puts the user of its product at the heart of its strategy and can, at the end of each cycle, pivot if necessary, i.e. remodel its product or choose another target if they do not seem to be the right ones.

Dropbox, a lean startup case study

In 2006, by the time Dropbox was created, there were already dozens of platforms of this type, but no one was using them because of an extremely poor user experience.

To test their platform idea — simple but user-centered — the founders then make a three-minute video explaining how their service works.

The success was immediate: in two weeks the list of users wanting to try the beta version grew from 5,000 to 75,000 people. In addition to participating in improving their service, this first video allowed them to test their market while acquiring a base. From early Adopters which subsequently continued to participate in the optimization of the user experience.

And CapSens in all this?

For our part, we have also evolved through these create-test-learn cycles on various topics. We created the service Crowdfunding from CapSens, because we felt that this market was going to grow very strongly and that platform creators were going to need support on technical subjects. In addition to a technical solution, we also thought that the platforms would need advice (strategy, legal...).

By testing the market and listening to customer feedback, we quickly realized that the technical solution was much more valuable to them than advice. We focused on this value and sought to build a robust and scalable product.

In this construction phase, we hesitated between several languages (scala, ruby,...) and several architectures (micro services, web services...). It was only by testing that we were able to form a firm opinion on the matter. By creating an MVP, we were able to quickly realize that a particular language or architecture was not adapted to the needs of our customers.

We could have thought for a long time and compared the advantages of one language compared to another from a theoretical point of view, but it was only by creating a prototype that we could make our choice. A startup must confront a reality principle (customer, technical...) as quickly as possible in order to evolve.

Today, our offer is not limited to crowdfunding, and we are expanding our business in the world of Fintech with our specificity of working on the Framework Ruby on Rails Maintaining this flexibility is essential to capture other markets or to pivot if necessary.

What are the obstacles to the innovation process in large groups and how can they overcome them?

The example not to follow: Kodak

In contrast to this methodology, we find large structures that are unable to innovate. The best known example is that of Kodak, which in 1978 filed the first patent on a digital camera. However, Kodak is voluntarily choosing to abandon this technology, without even testing the product, in order to avoid breaking the goose that lays the golden eggs of silver.

Obstacles to innovation

This example is indicative of the obstacles that large groups often face in order to innovate:

• A phenomenon of inertia: the large group is a structure involving too many people and its decision-making circuits are excessively complex,
• A lack of understanding of customer needs: the large group does not manufacture its new products according to the needs that it can identify among its customers,
• A compartmentalization of knowledge: the structure of the majority of companies compartmentalizes the functions of the company, limiting exchange,
• An indifference to failure: while the life of a startup depends on the success of its innovation, the large group will survive even if one of its innovations is a failure,
• An inability to pivot: when the first customer feedback on a new product is negative, it is difficult for a large group to recognize its mistake. He is more interested in adapting his customer to the product rather than adapting his product to the customer.

The example to follow: Nespresso

However, the story of Nespresso at Nestlé (an entity created in 1982) shows that large companies are still capable of generating great innovations.

In 1988, after having failed to launch its capsules in B2B, the Nespresso subsidiary was on the verge of disappearance and its activity was considered inconsistent with the rest of the group's strategy by the majority of Nestlé executives. The company's CEO then goes all out by appointing a person from outside the group, Jean Paul Gaillard, to head the subsidiary, who is responsible for relaunching the subsidiary with a marketing budget of barely €1.6M and a team of 8 people.

Nespresso then made a strategic shift, a perfect example of a pivot, by reorienting itself into B2C and targeting wealthy customers. The sauce is taking hold: in 1995, Nespresso reached a standstill and, in the 2000s, experienced a growth of 35% per year. Today, Nespresso is the Business unites the most profitable of Nestlé and continues its development by relying on digital technology and by claiming the status of a sustainable company.

Overcoming barriers to innovation

How did Nestlé manage to overcome the obstacles to innovation that large groups are victims of? Above all, they isolated the development of coffee capsule innovation outside of Nestlé's structure by creating a team dedicated to its deployment.

Then, they simplified the decision-making process to the extreme by giving this team complete autonomy. Thanks to this independent and autonomous governance, the coffee capsule has become a great success. Without this, Nespresso would have been unable to pivot at the right time by moving from B2B to B2C to ensure that innovation found its right customers.

How to innovate well

To innovate effectively, you need to:

• Get into create-test-learn cycles,
• Talk to others about your idea to get user feedback,
• Don't wait until you have a perfect product to get started,
• Accept having made mistakes in order to pivot.