Two “boys” from the North of Spain are preparing to conquer the United States and challenge the powerful MapQuest in the emerging business of georeferencing local and business information
After covering five thousand cities in Europe and Latin America and developing the maps for the street location guides for the LaNetro portal in seven countries (Spain, Portugal, France, Italy, Brazil, Argentina, and Mexico), a small Santander company of 60 workers prepare to conquer North America and challenge the powerful MapQuest, belonging to the AOL Group.
Geofactory Technologies is barely a year old – it was incorporated in June of last year. But it is determined to make 2001 the year of the attack on the “high tech” citadel and will start with some 160 cities in the United States, with the help of other portals with local content with which it is in negotiation.
Who uses Yahoo! to consult maps or Travelocity to locate hotels or tourist routes in the United States, you currently come across the MapQuest logo, a company whose condition is to be a pioneer in this area in its country and which has been characterized by the launching an aggressive marketing campaign until its acquisition, last year, by AOL.
But the Geofactory founders are not intimidated. They believe that the graphic quality, the ease of exporting maps in formats ranging from GIF to Flash without the need for large bandwidth, and the flexibility available to the user to customize the maps, are competitive advantages of the Cantabrian companies.
To The Table
The international adventure began during Christmas dinner in 1999, at the house of Luis Marina, 32 years old. “On my hands, I had a product created by my geographic information systems company and I had to decide what to do – or sell it – or form an Internet-based company that would take advantage of the georeferencing of information, a booming segment,” he says. Antonio Ribalaygua, 36 years old, challenged his friend to give him an answer. Luis had previously created a consulting and Internet company.
These two restless Cantabrians were joined by José Luis del Val, Roberto Rico, and the chance of a meeting with the Madrid leader of LaNetro, Javier Pérez Dolset. «Javier advised us to create a company and mature the idea of a clearly emerging business.
He suggested that we analyze a “Business plan” for a month, recalls Luis Marina, who is today the CEO of the small Santander company. LaNetro would later make an investment of 250 million pesetas (close to 1,350,000 dollars) at the head of a group of investors who would hold 40% of Geofactory, created in June of last year.
LaNetro’s strategic interest was understandable – the creation of a georeferencing service would immediately add value to the local portals that were being launched.
No To Megalomania
Despite the fact that the Nasdaq crash had occurred in the United States a few months earlier, in Spain there was a period of euphoria around the Internet, and many of the business plans “had a long line of zeros”, thinking of the millions that would be obtained in an IPO (entry on the Stock Market). «We were aware of the effects of the crash. We have always been confused by megalomania, and we feel that a business model that is based on continuously going to the Stock Market, and not on generating profits, is not going anywhere”, comments Antonio, the company’s technology manager, who continues with irony: “To the surprise of our investors, we drew up a plan that was intended to generate short-term benefits and with Spartan costs. We weren’t over the moon waiting for the millions to drop.
We said no to luxuries. We do not spend a single penny on advertising. The strategy was to generate profits in this emerging segment.” The two “Cantabrian boys” were right to act with caution. The business began to give operating profits at the end of the first month of activity.
The reader will wonder how this “miracle” was possible in the New Economy, an area characterized by “spending rather than earning,” according to a recent devastating analysis by Harvard guru Michael Porter.
The secret was not to be seduced by the splendor of the portals (which lived off advertising on the Web). Geofactory defined a much broader business segment – that of information and data georeferencing, which today has a high added value, both for the individual user and, above all, for companies.
The Gold Of Location
With the Internet platform, the business of maps, guides, and routes, the control of fleets or points of interest, “prisoner of the heavy and static” Geographic Information Systems (GIS, in the original English acronym), has radically transformed. The Internet brought a competitive advantage for value-added services to digital mapping.
Antonio Ribalaygua, the founder of a company in the GIS sector, immediately realized this. The second impulse came from the increase in the mobility of communications through new telecommunications platforms, such as GSM, from the development of new mobile devices (mobile phones and personal digital assistants), and from new programming languages (eg WAP ).
The obvious interest in this segment led LaNetro to make Geofactory an irrefutable offer to acquire 100% of the company. The founders of the small Santander company currently hold 6% of the Madrid group.
Based on the acquisition of Geofactory, LaNetro developed a business area around location-based services, which today represents between 25 and 30% of billing and which will mean, by the end of the year, between 40 and Four. Five%.
The perception of the size of this business segment led Geofactory itself to direct its operations towards “customized” applications for companies. “We will base 75% of our activity on this area, which we could call B2B,” says Luis Marina, who lists several axes of data georeferencing: real-time location of vehicle fleets, geopositioning of properties, telesales, control alarms, public and municipal services for citizens.
These sectors include real estate (one of the clients is Bescasa, in Portugal), security companies (Prosegur is another client), banks (for marketing georeferencing), insurance companies (vans or ambulances for accident vehicles), construction companies (in construction cranes, for example), the entire logistics and distribution sector, mobile telecommunications operators (50% of future traffic will focus on this type of service), the media (content georeferencing) and public administration.
The Cantabrian Spell
In the corridors of LaNetro, they are known as the “Cantabrian boys”, a nickname that honors the individuality of this sector of the Madrid group.
The people of Cantabria are descendants of a warrior people who, like the Lusitanos, caused more than one headache to the Romans during the colonization of that territory in the north of the Iberian Peninsula.
The founders of Geofactory are very fond of the land on which they are established. «In Santander, we have a very good quality of life and it is an excellent environment to work. We never thought of moving to Madrid,” says Antonio Ribalaygua, who confesses, between laughs, almost having seduced the leader of LaNetro, Javier Pérez Dolset, with a Cantabrian spell, a good antidote to the concentration of the Spanish capital.
In order to do justice to the requirement of having a good working environment, the company acquired a chalet in La Pereda, on the outskirts of the city, in an area that was once rural (cows can still be seen grazing), today in urbanization and with a view of the university campus of Santander.
Cantabria ( http://cantabria.lanetro.com ), where the Altamira cave and Picos de Europa are located, is the fourth Spanish region (after Madrid, Catalonia, and Asturias) in terms of remuneration, and has a level of education among its active population, very high, thanks to the quality of university education and professional training.
95% of Geofactory’s 40 full-time employees are graduates, and the average age of the workers is around 26 years.