We spent the last 18 months creating, iterating, fixing and re-iterating our Mimoni online lending service. We operated for all that time just in Mexico City, where we have our home office, in order to keep it in as controlled a setting as possible. Earlier this month, we launched in three other cities. We started preparing for this launch four months ago, lining up all our ducks. In this case, the ducks were:
- Regulatory authorization to send and receive legal loan e-docs (of course the idea of opening new cities was to do it virtually, no additional offices!)
- Local partnerships for our cash out (since our customers do not have bank accounts), processes for receiving payments
- Online marketing for each new city
- Training for call centers (service and sales reps) on the new cities
- Develop and maintain analytics databases to track differentiated loan performance
- etc.
In other words, we did not do it lightly. We were prepared. We celebrated the day we started marketing for our new regions and excitedly waited for the loan applications to flood in. Happily, they did. Sadly, our carefully thought-out systems and processes broke. In less than ten hours after launch, we were in emergency meetings with our UX folks, systems team, partners, you name it. It all broke. My co-founder and I had been to this rodeo before, so we were not entirely surprised by this event. If we had not prepared, more would have broken and it would have taken much longer to fix.
As it turned out, some of the things that broke were quite Homer Simpsonian: “You can only upload your application documents as JPGs, not as PDFs or any other format.” Why did we limit this? Not sure, but in some meeting a few months ago, we decided it was a good idea and the developers did their jobs. Other things that broke were less predictable, such as our local distribution partners not having any personnel to give reloadable cards to our clients when they showed up.
The lesson, not new and thus even more painful for us, is that scaling IS hard and things WILL break. I remember several series B/C conversations in various companies where we would passionately argue with the VCs that everything was working great and all we needed was money to grow exponentially (“just add water!”). They knew better and would always dig deep into the systems and processes in place to scale up. They were right to do so. At Mimoni, we were cautious enough to not light up all of Mexico at once, though we still ended up acting overconfident and the same things ended up breaking across three cities instead of what could have been a single location.
We are slowly fixing all the urgent stuff, and we will get there eventually. Fortunately for us, our 18 months in Mexico City have given us a very robust sales base to work with, so we can afford a few hiccups as the rest of the country launches. It would be a very different story (in a bad way) if we had tried to launch in several cities before we had a solidly consolidated business in at least one location.
Would we do the same thing again? Absolutely. No amount of planning will avoid scaling pains. You just have to do it and be ready to put out fires. A reasonable person could argue that opening three cities at once was overly ambitious and we are now paying for it. Maybe. Though another just as reasonable person would say that opening one single other location after 18 months does not really prove scalability, which is the end goal. We went for the prize behind door #2, pushing it until it broke. We now fix it and push again, yes, until it breaks again.
Par for the course in startups, I would say.
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