This time our guest is Māris Lagzdiņš from film studio "fon Films". We are talking about how to make business from creative work and how creative industry incubators help in this way. Māris Lagzdiņš:https://fonfilms.lv/fonfilms-studijaSubscribe to Asketic Podcast on:Spotify:https://open.spotify.com/show/73QSMYK46NHoHCytJYYmPZ?si=Mw4ZLISUSoueh9Es1pCLUgApple Podcast:https://podcasts.apple.com/lv/podcast/asketic-podcast/id1496922775YouTube:https://www.youtube.com/channel/UCQdekksSROS4PCxRV7aqT3QGoogle Podcasts:https://podcasts.google.com/feed/aHR0cHM6Ly9mZWVkcy50cmFuc2lzdG9yLmZtL2Fza2V0aWMtcG9kY2FzdA--Asketic design & branding:Instagram: https://www.instagram.com/asketicstudio/LinkedIn: https://www.linkedin.com/company/asketic/WWW: http://asketic.com/

Asketic Podcast

Asketic Podcast #16 Maris Lagzdiņš - Creativity & Business

M: Thanks for coming! I’ve wanted to invite you for a while. Your first start-up GrafoMap and what you did with it seemed very interesting to me.R: It’s actually not my first one. It’s the first that succeeded.M: We could actually start there. Tell me which was it and why it didn’t succeed.R: You might know, I previously lived in China for 7 years. I wouldn’t call it a start-up, but me and Mārtiņš, the other co-founder of GrafoMap, used to ship pearls from China to Latvia and sell them. The product was really uncharacteristic for us, but we wanted to take advantage of me being in China and find something that doesn’t have the vibe of cheap, Chinese goods and could sell for a high price in Latvia. So, we shipped pearls to Latvia. It didn’t go very well. We had no experience. We sold them manually, by going to shops and offering them for distribution. We attempted to create an online shop, but we had no idea how to do it. I think we would have succeeded with the knowledge we have today. It all went off in smoke. I was still in China for a while and there was an opportunity to create a shoe business. There was a Chinese platform where you could design shoes with an online tool, and they would produce it. They have this unique production method, where they print the canvas before assembling the shoe, so it allows you to put any picture on it, and they assemble and deliver it. But the quality was lacking, the delivery was hard and long. I had drawn up the revenue model in Excel, but my expectations were too positive, and that too went off in smoke. Those were my two unsuccessful businesses. We learned some lessons, but it all fizzled out.M: And then you and your partners created GrafoMap, and you managed to successfully grow and sell it. And now you have a new start-up.R: Yes.M: But previously you worked in an investment office.R: Yes, in-between I managed to work in a risk capital fund, IT Capital. It’s a Russian fund that invests 1 to 5 million. Not a seed capital, but series A. It was a very good experience, because I had the opportunity to work with series A investment rounds that involve successful companies. Not just dream projects, but companies with real revenue, with a real model that works. The only issue was how to blow them up even more, so that they work even better. It was a super-exclusive MBA program where you go through all these cases and learn.M: Your start-up was progressing concurrently with your main job. You didn’t go all in, it remained in the background. How were you able to divide your time between your main job and this new idea that requires focus in order to be driven forward? That’s the first question. And the second one is, if we could look at the things that as you mentioned didn’t work, what were those pivotal moments that allowed the company to start growing into what it became.R: It wasn’t easy to combine those things, but I also had a lot of time. Back then I had no girlfriend, no relationships, so I had all this time. I just had to sleep and continue working the next day. With GrafoMap we were moving towards automatization. The product was posters, but it had a print-on-demand delivery model. Our shop was affiliated with a supplier who executed all that. That saves an enormous amount of time, allowing you to focus on growth. The roles were also divided very well; everyone was clear on what they had to do. I was focused on Facebook and Instagram ads, content creation and conversion optimisation. We basically had to step on all of the rakes, try out all the things that don’t work.M: Can you tell me about those rakes that don’t work?R: What didn’t work for us, I don’t want to say anything bad, but we tried out about five agencies that were willing to help us with marketing and sales. Nothing of that worked. It consumed a lot of time, because we had our hopes up. And, while we worked together and the on-boarding took place, we ourselves weren’t actively working in that direction. We thought that the sales agency will join in and handle everything for us. Now of course it’s hard to imagine in which agency anybody would be willing to dedicate so much effort to one of probably ten client accounts. The other thing that changed a lot for us… We had a revenue model, an Excel table, all the formulas were put in, all variables, etc. And we entered all data monthly and kept tabs on that. But it was a tool that we used to look at the previous months and see the pluses and minuses. And then we got a bit more serious and tried to zoom out of our business and see what’s important and what we should focus on. The average cart value and conversion percent – how many people out of 100 make the purchase. Those were the two main quantities. The revenue model made us focus on that and set some goals. Then we practically went back to our webpage offer and considered how we could change something to improve the conversion and improve the cart value. We started to do various bundle offers. Adding another poster to the tube cost us nothing in regards to shipping, therefor we started to do “buy two, get the third one free” offers, and that helped us improve the numbers. In the end the contribution margin was positive, which means that we earn from each sold unit before deducting the operating costs. When the contribution margin is positive, we just have to scale everything in order to surpass the operating costs and have a balance that provides a positive profit. And that’s what we did. The moment we understood that one unit is starting to create a positive value, we started to push ads and scale it.M: You were three, four people in GrafoMap.R: Mhm.M: And you managed to get from the initial idea, when you hustled and had to borrow money, to a point of having a turnover of above one million when you successfully sold the company. How did you do it with such a small team of three to four people, how did you create a business with an annual turnover exceeding one million?R: Our goal when we started to create a poster business instead of something else was that we wanted to create a lean business model, so that we wouldn’t put on weight, stay away from not only unnecessary operating costs, but also management. It takes a lot of time to manage all these processes if you have a lot of employees, etc. And on the product side we wanted to use the print-on-demand method, because we didn’t want to mess around with products and order fulfilment. We wanted to design them, but we didn’t want to produce them. We think it was the only way we could have scaled the business with the resources and knowledge we had back then and achieve good sales results. This philosophy also runs thought the team composition. The main core consisted of three people. I was responsible for marketing, Mārtiņš took care of finances and operations, and the programmer did the programming, of course. Whenever we needed we did outsourcing, for photography, web design. For social media management we had a girl from Romania, I have never met her in real life, but we worked together for four years, had weekly calls. She did a great job with managing all social media and influencer campaigns for us. I just called her once a week, and she told me how everything was going in 5 minutes and that everything was okay. She managed everything superbly. The process was polished so well that you didn’t need to change much. That was our goal and we gradually achieved it.M: What do you think is the main thing that should be paid attention to when you’re actually doing it, like scaling from one dollar to ten thousand, so that you earn the invested money back instead of losing it. What’s your advice to somebody just starting out?R: In our product niche, that’s a direct-to-consumer product, a very visual, decorative product. For us photos very incredibly important, like webpage design and photos. We had to show that we are selling a product of very high quality and that it justifies its cost. The perceived value had to be equal or higher than the product price. That’s the first. The second is social proof. You have to show that your product is not a lonely page on the internet that nobody’s interested in, you have to create a feeling that it’s highly demanded and recognized, valued. You can do it in several ways. What we had from the start, on the page under the first fold we displayed all press mentions. We collected them gradually. We started with simple “featured on Product Hunt”, where we posted ourselves and it counted as being featured, like they had written about us. We put some niches and media there, at the end we got articles from Business Insider, CNN, Men’s Health, Cosmopolitan, a full row of the loudest media. We put in logos of places that have featured us, and that leaves an impression. It might be true or not, but it leaves an impression. That gives you the stamp of quality. Somebody writing about you doesn’t mean anything, but it works on a psychological level. The next social proof we had… you have to show up on several places and give people a sense of security. The next thing we did, we showed our Instagram feed on a page with all the influencers who have posted pictures with our poster. It featured very beautiful pictures, a lifestyle, beautiful Scandinavian décor with our posters, and smiling people. And above the feed it read “The proud owners of our posters”. It didn’t say that they were influencers; we also didn’t say that they are our clients. But if you come to our page, it creates a feeling that they are our super-loyal clients who are so happy with our posters that they take pictures with them and post them on the internet.M: I think that for many people here, in this small spot on the world map called Latvia, have the goal to make it in the foreign press. Instead of local media, how did you manage to get in the world class media? How did you package yourselves to seem interesting for them to write about?R: It was clear for us from the start that we should target the USA market. It’s an English-speaking market, a single market, more than 300 million people. Europe also has a lot of purchasing power, but the market is very fragmented. In Germany you need German, in France you need French. So we targeted the USA. How did we get in these media? First of all, we had an interesting product, something new, unseen. It was to create a map of your design and receive a poster. That was cool. Somebody wrote us right after the post about us on Product Hunt. And anyone can get there with their product, but if you get enough “Up” votes, you start to get noticed by the smaller, niche influencers, and they write about you, whereas lifestyle writers follow these niche influencers. And that’s how we got picked up by Dwell magazine, a top interior and décor media at the global level.M: You basically founded GrafoMap, scaled it from zero to a turnover of more than one million euros, and sold it. Did you take a break afterwards or did you already have an idea in your pocket for when you have free time to think about it?R: We should have taken a break, but I guess we’re workaholics. Even before we sold it, we had already bought a domain and had started to program our next business. I actually had a notebook with future ideas. I had been collecting ideas for several years, written them down. We had various criteria for what we want to do, what we don’t. Then we put everything in an Excel table, had a discussion, we considered which idea satisfies all these criteria and then chose one.M: Can you tell me about your criteria and thought process for selecting the ideas? How do you evaluate them, what’s your decision journal?R: The criteria develop from the lessons learned, from the whole GrafoMap story. I think that, by reaching a turnover of more than one million euros, we exhausted ourselves almost to the max in this business model. Then we thought about why that happened and the main lessons. It created criteria for the next business. One example, customer acquisition made up a large part of our product costs. The money you had to spend to get one client. For us it was 20-25 dollars on average that you had to spend on marketing ads to sell one poster. One criterion was to have an organic customer flow. We don’t want to spend money on each visitor anymore, on each potential buyer. The other main criterion was to have repeated purchases. Okay, we spend those 20-25 dollars on one client, but then he doesn’t buy anything again. The customer acquisition costs could be higher, they are higher for a lot of businesses. About 100 or 200 dollars, even if the first purchase is around 50 dollars. And they do it because they know that the lifetime value is much larger. The client will return again and again. That’s a great lesson, to have a product or a service that people constantly return to. Now, our new start-up Supliful is in the dietary supplement market, which is an enormous industry, 40 billion in the USA alone. It’s relatively undeveloped in the online environment, the boom is just beginning. We thought that was interesting. Business model is actually the same, the Printful business model, but in different market. This business model has proven itself, we see how it develops.M: Can you tell me about your approach? You had an idea, and what were the first tests to validate your idea?R: You create a webpage as it should be. You present your product, set a price, put in a “checkout” button, and let people go and buy it. When someone pushes the “buy” button, you can provide a pop-up message saying “sorry, this product is out of stock”. Write that it’s so good that it sells out really quickly, or think of anything else. But that’s it, you have analytics and you see how many people actually push that button. You can make conclusions on whether people are willing to buy.M: One thing that’s common to both of your start-ups is the design and visuals. In case of GrafoMap you sold design maps, designed by people themselves, so you sold an added value.R: Instead of showing digital mock-ups of how that product will look, it was important to show how the poster would look in interior design. We didn’t just sell them a poster; it just embodied the idea. We sold them the aesthetics. Scandinavian, modern interior aesthetics. Now, with Supliful, we have a white label product that we offer to people. A white label dietary supplement that we offer to them for branding. We have products for various niches, but when a person sees a white product, it doesn’t inspire fantasy on how it could look like. That’s why we created an image gallery of imaginary brands, beautiful examples of how a dietary supplement brand could look like for gamers, for yoga instructors, etc. We create the vision for them, the visuals.M: At Supliful you work mostly in marketing, right?R: Yes.M: What are your personal marketing pillars that you base your way of thinking and work on?R: First of all, people come to your page and consider your product and service because they lack something or they think they lack something. It’s important to tell the visitor what that is. What is the thing that’s missing in your current state. Then you show where you could be. Everything that’s in-between is me as a service. I offer to get you there, and this is how we’ll do it. Giving the message is what’s most important.M: Super! Thanks, Rihards! I find it very interesting, that you, coming from the analytics side, have added the marketing side, and then the companies you create are largely connected to the way you sell design or smaller brands that you help create in case of Supliful. That these things can be combined and that you need both of these sides, like you said, that you have to sell the space, the interior or the vision of where you want to end up, and at the same time you can’t forget the practical, tactical things needed for arranging your webpage and systems, and that’s a combination of both of these things. You need the consistency and clarity.Rihards Pīks:https://www.linkedin.com/in/rihardspiks/?originalSubdomain=lv--Subscribe to Asketic Podcast on:Spotify:https://open.spotify.com/show/73QSMYK46NHoHCytJYYmPZ?si=Mw4ZLISUSoueh9Es1pCLUgApple Podcast:https://podcasts.apple.com/lv/podcast/asketic-podcast/id1496922775YouTube:https://www.youtube.com/channel/UCQdekksSROS4PCxRV7aqT3QGoogle Podcasts:https://podcasts.google.com/feed/aHR0cHM6Ly9mZWVkcy50cmFuc2lzdG9yLmZtL2Fza2V0aWMtcG9kY2FzdA--Asketic design & branding:Instagram: https://www.instagram.com/asketicstudio/LinkedIn: https://www.linkedin.com/company/asketic/WWW: http://asketic.com/

Asketic Podcast #15 Rihards Pīks — Million Dollar Design Side Gig

Andris Bērziņš:https://www.linkedin.com/in/aberzins/?originalSubdomain=lv--Subscribe to Asketic Podcast on:Spotify:https://open.spotify.com/show/73QSMYK46NHoHCytJYYmPZ?si=Mw4ZLISUSoueh9Es1pCLUgApple Podcast:https://podcasts.apple.com/lv/podcast/asketic-podcast/id1496922775YouTube:https://www.youtube.com/channel/UCQdekksSROS4PCxRV7aqT3QGoogle Podcasts:https://podcasts.google.com/feed/aHR0cHM6Ly9mZWVkcy50cmFuc2lzdG9yLmZtL2Fza2V0aWMtcG9kY2FzdA--Asketic design & branding:Instagram: https://www.instagram.com/asketicstudio/LinkedIn: https://www.linkedin.com/company/asketic/WWW: http://asketic.com/

Asketic Podcast #14 Andris Bērziņš — Baltics: The Next Startup Nations

Saruna ar Raimondu Gusarevu no "Manta North", par to kāpēc spēcīgs zīmols ir svarīgs biznesam, un par to kā labu dizainu paņemt sev līdzi uz jebkuru vidi. A conversation with Raimonds Gusarevs from "Manta North" about why a strong brand is important for business and how to bring good design into the wild.

Asketic Podcast #13 Raimonds Gusarevs — Bring Design Into The Wild

Saruna ar Gati Zēmani vienu no Kalve Coffee dibinātājiem. Par kafijas grauzdēšanu Latvijā, ilgstpējīgu dizainu un zīmola kultūras veidošanu. We are talking with Gatis Zēmanis co founder of Kalve Coffee Roastery. about to create sustainable design and strong brand culture that works both externally on target audience and internally as a guide for the team.

Asketic Podcast #12 Gatis Zēmanis — Good Design & Great Coffee

Saruna ar mūziķi Jāni Šipkēvicu par radošu procesu, disciplīnu, to kā idejas īstenot un nogādāt pareizajai auditorijai.

Asketic Podcast #11 Jānis Šipkēvics — The Process Of Creative Work

Saruna ar Līvu Pērkoni par inovācijām, Latvijas uzņēmumiem globālā kontekstā, un to kāpēc bērniem vajadzētu mācīt programēšanu.

Asketic Podcast #10 Līva Pērkone — Latvian Brands Going Global

Saruna ar Iļju Olijevski par e-komerciju, pārdošanu internetā, pareizo kanālu atrašanu un to kā zīmola stāsts var palīdzēt pārdošanā.

Asketic Podcast #9 Iļja Olijevskis — Selling, Storytelling and Ecommerce

Saruna ar Aigaru Ruņģi, "Valmiermuiža", "Kokmuiža" un "Gardu Muti" zīmolu veidotāju un vadītāju. Par to kāpēc spēcīgi zīmoli garšo labāk, un kā savu sirdslietu pārvērst veiksmīgā biznesā.

Asketic Podcast #8 Aigars Ruņģis — Why Strong Brands Taste Better

Saruna ar Ņikitu Kazakeviču, Jelgavas biznesa inkubatora vadītāju un vairāku veiksmīgu uzņēmumu dibinātāju. Par svarīgākajiem fokusiem un biežāk pieļautajām kļūdām jaunuzņēmuma veidošanā.

Asketic Podcast #7 Ņikita Kazakevičs — Build, Measure, Learn

Saruna ar Jāni Lanku, e-komercijas un digitālo platformu stratēģi. Par to, kāpēc ir svarīgi klientu ne tikai iegūt, bet arī uzturēt ilgstošas attiecības pēc pirkuma veikšanas. Kādēļ šajā laikā zīmoliem ir svarīgi runāt skaidri, caurspīdīgi un drīzāk vairāk nekā mazāk.

Asketic Podcast #6 Jānis Lanka — Ecommerce, Sales & Relationships

Saruna ar Gintu Medni, SonarWorks un SoundID pārdošanas vadītāju. Par to kā spēcīgs zīmols palīdz pārdot skaņu un kā kļūt pa pasaulē vadošo zīmolu savā jomā. Kāpēc latviešiem ir svarīgi likt malā kautrīgumu, vienlaikus saglabājot savu autentisko balsi.

Asketic Podcast #5 Gints Mednis — Sales, Branding & Authentic Voice

Saruna ar Annu Celmiņu par skadru un sociāli atbildīgu zīmolu stratēģijas veidošanu.

Asketic Podcast #4 Anna Celmiņa — Defining Your Brand Strategy

Pyry Taanila is a co-founder and design director of Catchbox — a company that gets people talking with their throwable microphone.

Asketic Podcast #3 Pyry Taanila — Creating a Brand Step by Step

Saruna ar Latvijas start-up ekosistēmas aizsācēju, TechHub Riga līdzdibinātāju, uzņēmēju un TechChill konferences vadītāju Ernestu Štālu.

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