MachinePoint is a clear example of exporting SMEs, with 90% of its turnover outside Spain, and 70% of its turnover outside Europe
Interview with Cesar Rodriguez Gabilondo, CEO and Founder of MachinePoint Consultants, international company dedicated to the purchase and sale of industrial machinery used worldwide to understand the success of your business model based on internationalization. Founded in 1999, are located in the technological park of Valladolid, 85% of its capital is Valladolid, do not manufacture anything, but it exports 90% of what they sell. In MachinePoint all speak English, Spanish is not required language to its more than 50 workers, mean age 34 years, almost every university, and sold more than 85 countries speaking some 15 languages.
Question: MachinePoint has been a company that has broken new ground since its inception, and it was one of the few Spanish companies that attracted foreign capital during the Internet boom
CRG: Yes, indeed. We were able to launch the project by investing MachinePoint we get from ten family and friends initially, twenty other European private investors (English, French, German and Dutch), and finally the American Warburg Pincus Ventures, one of the largest companies Venture Capital World. From those crazy times of the Internet boom, (when we were a “dot com” and we lost money like most of the “dot com”) have changed much Warburg Pincus, after our first failed business model of selling information on-line, wanted to liquidate the company. I prevented it, I bought their participation, restructured the company in 2003 keeping 10 jobs in the previous 28 and change the business model at present. It was hard but worth it., But we can say proudly that we have not only survived, but we have built a solid business model for the benefit of all around us: employees, customers, suppliers, shareholders and society … general.
Question: Before you say that you were a dot-com, what is your business now? “You are no longer a” dot com “?
We took advantage of some main industrial machinery factories in Europe or other countries no longer want to continue to use (because the machine is no longer competitive because the product is no longer sold in your area, or because the business closes) and I find buyer anywhere in the world. Some machines are not salable and we recommend scrapping or chatarreo.
At other times our customers are looking for machinery that can not afford to go to market new and second hand look. They begin that search at this time, we’ve already done a long time and we save time by presenting what is in the market. If they find what they want try to lose as little time as possible to equip its factory and seek our help in finding the machine and import it into your country.
Our website is primarily responsible for our development because through it we went to 100% of our business. Now 50% is from repeat customers and 50% of new customers find what they want on our website.
Question: What is the success of this model?
CRG: Well, on several factors.
The critical question is to promote and knowing how to sell internationally, although we have no own product. Understand that both buyers and suppliers of our products are our customers.
Success is based on several pillars:
1. First we opted for our people forever, they are the key to our business as they are for most utilities.
2. Second, we have pursued a policy of internalization of the company, our business thrives on many markets making it less sensitive to this local crisis.
3. We have also invested heavily in new information technologies to facilitate the work of our people and be more efficient.
4. And finally, we are a team we are constantly in search of perfection, where innovation in developing new services and business processes is rewarded, it helps us stay one step ahead of the competition. Machines started with plastic wrap, followed by machine for pipes, profiles, preforms for bottles, bottles, cups, milk, drinks. Now we continue to innovate to be moving into new sectors and providing more services to the industry. No one has this combination of products and services in the world. Everything has been innovation and market development and services.
Question: How did you come to internationalize the company?
Our business and in itself is international, because we sell used machinery of European technology mainly located in Europe the rest of the world.
While it is true that the used equipment market is traditionally a very fragmented market consisting of mainly one-person businesses. In MachinePoint we have to have a team of 40 people and be the greatest thanks to international growth we’ve had. That is, look beyond our local market in Spain and create a team of professionals specializing in countries that can penetrate well the different key markets.
Only 10% of our revenue comes from Spain, and 60% of our turnover comes from outside Europe. At present we already have people working in 3 continents. I think we are an example of globalization, now that so much talk about how Spanish companies should go outside. We bring 11 years internationalized.
We buy and sell triangulating between foreign countries, but wages and profits stay in Spain with which we help the economy work better (if we were generating more foreign banks in Spain, we would get to inject more money into the economy and the wheel domestic demand and employment to roll again. This would create the business model that Spain (Castilla y León and Valladolid in particular) needs.
Much better would be to make products here and capture the full value for our region, but if we do not have the manufacturing capacity with industrial companies such as Pascual, Indal, Special Ingots, Grupo Antolin, Nicolas Correa, etc, we help our economy by trading with machines products or services from outside. Examples: France, Mexico, Germany, India, Brazil or Mexico Siberia to Afghanistan … the important thing is to generate a value in the transaction between customers (buyers and sellers) wherever they are.
Question: How was the process to reach this internationalization?
From the outset it was clear that my goal was to create a company with a strong business model, so I’m not consistent with the trading of machinery that I had done for years in Spain and seek investment to grow to other countries.
The first years we have concentrated on the European market positioning. In MachinePoint people who is responsible for the different markets are usually native, because they provide a more local and add more value to the team. At present we have over 10 nationalities and are a team very rich culturally.
From about 6 years ago we started to get into key markets for us in Eastern Europe such as Poland, Czech Republic and Turkey.
And in the last two years we focused on a process of internationalization outside Europe, Africa and India.
To achieve this we have opened local sales offices in several geographical areas, we have invested heavily in communication technology for distance poses no barrier to our company language is English and all speak at least 2 or 3 languages, team is willing to travel and move, and the company to pursue a policy of reconciling work very hard so it does not affect them much travel too much on their privacy.
Question: What would you recommend to Spanish companies are now looking fully in the export since the domestic crisis?
First we must analyze whether the product is exportable, or need modifications for export and if so to implement them. The important thing is to have a product that is competitive in the international market and then prepare a good strategy to penetrate slowly.
Then there are many ways to get internationalize a company, there is no single formula. Moreover, this process is very complex and is one of the greatest challenges facing most businesses. We have had and still have a lot of trial and error, sometimes out faces. Each company must find its own way according to his philosophy and product.
What I recommend is to not be afraid and put to work, to seek the necessary support to be possible in countries which want to export, the cultural diversity within a company helps to generate of ideas and promotes export. You need to know the country they want to export to know which door to enter. You have to be willing to travel. Today there are many young people who already have a very international profile and that should bet on them because they provide a different view as you can get things done. The internet is a must for any company that wants to have international presence and investment in communication technologies.
Many Spanish SMEs have a great capacity to generate value. The other European countries has for years exported its products to the world and its attorneys are prepared for it, from youth to executives. So are public organizations have been working on this task to pave the way for the companies.
In Spain there is still some way to go, but I think as a nation are ready for it and that SMEs with the current financial need will go a long way in the coming years in this field.
Question: Commenting also an important part of business success is the investment in technology, how is that?
Ours is an industry where people still work a lot with paper and pencil, and hit records, although in recent years, everything is changing very fast and the Internet is now a must-have tool for even the most technical and senior staff.
We went too fast because they raise capital in 1997 with the aim of making the company MachinePoint machinery transaction online and already created a great platform. Then we realized that the market was not ripe then for an idea so revolutionary and we had to reassess the business model.
We have always continued to invest in an IT system that would facilitate the work of our employees and the quality of service to our customers. We have a CRM that although it has cost us much effort and money to create is one of the cornerstones of our business, because it is like our memory and our main tool to penetrate markets.
We have also invested in a strong website and communication technologies that are necessary for the international sales and managing a team in different geographical locations. Our salespeople travel 30% of their time, and being in contact with colleagues wherever they are is vital to close deals.
Question: What help need of our leaders?
The most important thing would be to hire extra to export more to their countries. We are unable to hire Chinese, Americans or Russians for bureaucratic prohibition (to protect Spanish incorrectly) and that is why it costs us more to export to these countries.
We also would do well to understand that even if we invest in a marketable product, we are investing in research and development and services markets. If you do not understand this will never support our investments in R & D and lose competitive edge in the world. Our competitors do not sleep and we need tax incentives that the recognition of our research and R & D would bring.
Finally we need our leaders to legislate better defend our intellectual property. Although we have patents, our business model and our data is extremely valuable to us can steal. I am among those who suffer watching it lets you download music, movies and software use, all very expensive to develop, without paying anything. I know that is not very popular to say, but I’m totally against piracy.
Although I do not think that will happen, I would not want our competitors or our customers could be done with our valuable information (clients, suppliers, machines, business models, software) as if such a thing.
Question: What does the future hold?
Puff … I expect many things. We still have a long way to go, we can say we are just the beginning.
Our business is still very hard, with few barriers to entry, and while we have created a stable company in the purchase and sale of used machinery, with 40 jobs, the struggle in day to day is still tough. The margins are narrow, we must fight hard for each operation and this requires a great effort the whole team MachinePoint.
My goal and responsibility is to further improve the way we do business to achieve more efficient and do more with the same effort. In this way I can make my team better than working hard, to everyday investors remain confident in ourselves and society in general with the highest employment and foreign exchange for our economy.
In this we are always in discourse as to be better …
