Hi there, Mario here! From 2013-2023, I was the CEO and founder of GLEAM bikes, a multi-use e-bike startup. Despite our best efforts, this journey came to an end when we faced bankruptcy last summer and had to shut down. (You can hear more about what happened in this interview.) Now, I'm leveraging my founder experience to help corporates build new ventures, and I'm excited to share some of my insights and learnings from GLEAM and other players with you too. Before that take a look at what we’ve been up to over the last month.

Find your market niche, build a MVP and aim for monopoly-status in that market

When I brought GLEAM to the market in Europe in 2020, we started production in a Dutch factory at the same time as the scooter startup Etergo. At that point they had raised €21 million for their “App Scooter”, comparatively GLEAM had raised <€1 million, however Etergo went bankrupt in early 2020 before being sold to the Indian ride sharing startup, OLA. And what did OLA do with it? They scaled the shit out of it!  

They started production of the ‘Etergo scooter’, adapted for the Indian market in 2021 and were able to ship an impressive 100.000 units between November 2022 and April 2023 and are still scaling their production. They now have a market share of almost 50% in India and were easy to spot whilst I was on a recent trip to Bangalore, the “Silicon Valley of India”.

OLA’s success is a great reminder of the importance of product-market fit. At GLEAM we initially addressed the bike messenger market, but we quickly learned that our early product was too expensive for that segment. So, we shifted our focus to small and medium business owners who believed in the product, required delivery vehicles and wanted to be at the forefront of climate-friendly logistics. This segment had the ability and willingness to pay prices of up to €10.000. Even as a corporate venture, you must avoid the pitfall of selling to the majority market from the beginning. We have seen many projects fail to reach market entry because they attempted to enter the mass market too soon.

Key takeaways for venture building

Identify your market niche and strive for product-market fit

• Invest time in finding a specific market niche that has unmet needs. And remember, to be at the top of your field, narrow your field.
• Conduct thorough customer segmentation to understand different user groups and their requirements. Don’t forget to consider international markets too.  

Build a MVP first and focus on your early adopters  

• Develop a MVP that addresses the core needs of your target niche.
• Focus on selling to innovators and early adopters to gain initial traction and feedback.

Scale in your niche market first and then sell to the majority market  

• Once product-market fit is achieved, scale rapidly within the niche to dominate the market.  
• You can then use your strong market position to enter new markets and segments.

Pay attention to the bullwhip effect and don’t overstock

No matter where or how you enter the hardware market, there is another critical lesson for any venture builder: the importance of effective inventory management. This was one of the key issues we faced at GLEAM, in particular the bullwhip effect. The bullwhip effect refers to the phenomenon where small fluctuations in customer demand can cause increasingly larger fluctuations in orders upstream in the supply chain. This can lead to excessive inventory buildup.

During the start of the COVID-19 pandemic in 2020, there was a dramatic increase in the demand for bikes, driven by people seeking outdoor activities and alternative transportation options. This surge in demand had a ripple effect through the supply chain, causing delivery times for components to skyrocket and introducing significant uncertainty. At GLEAM, our planned stock levels quadrupled due to the initial spike in demand and subsequent supply chain disruptions. This overstocking tied up valuable cash reserves and led to increased storage costs and risk of inventory obsolescence.

Key takeaways for venture building

Invest in demand forecasting and flexibility

• Invest in the tools and capacity for real-time demand prediction.
• Follow a dual-source or multi-source strategy and keep a buffer stock for sudden demand spikes. If you can, try to outsource some risk to your suppliers.
• Prepare for various demand scenarios and have contingency plans ready, including sudden changes.
• Figure out what lead time a customer is expecting for your product and what lead time your competitors are offering so that you can optimize for production and delivery.

Pay close attention to inventory management

• Adopt a just-in-time approach to your inventory by minimizing excess stock while maintaining enough inventory to meet customer demand.
• Monitor turnover rates to avoid overstocking and use capital efficiently.

Venture building for competitive advantage

Whilst startups excel at finding niche markets, corporations are better at scaling. GLEAM was a reflection of this: we identified our market and built a great product for it but struggled with scaling. I strongly believe GLEAM could have thrived as a corporate venture, since corporate ventures offer the best of both worlds and would have enabled us to leverage existing sales and production channels. This is a testament to the fact that innovation can sometimes be faster in a corporate environment than in a standalone startup. Want to dive deeper into these insights? Schedule a call with me.