Tiago Costa found a way with WayNext
Somewhat different from my other posts about Portugal and entrepreneurship that feature raw startups is Tiago Costa and his digital marketing agency, WayNext. Founded in 2002, WayNext is the brainchild of three colleagues who lost their jobs when a large corporation pulled out of Portugal. Rather than hunting for jobs, the trio decided to go it alone, together.
Meet Tiago Costa, co-founder and Business Manager for WayNext. Along the way, one partner left and two others joined, leaving four partners today. And they have ten other employees now.
The company focuses on digital marketing in all aspects: social media, website design and development, ecommerce, online advertising campaigns, search marketing, mobile apps, etc. WayNext has morphed from a company working with advertising agencies to becoming one of the top five digital marketing agencies in Portugal. Today, they work in all sectors of the economy: banking, insurance, telecom, auto, consumer, tourism, and healthcare. They count many of the top Portuguese brands as customers.
Background. Since Tiago was six years old, he was interested in computers. He started programming at the age of nine. Tiago recalls his interest in programming on the Internet, “I remember the first time I connected to the internet. It was ’94 or ’95 and I was around 15. I became very interested in the internet and developed those skills.”
A few years later, in the Economics Department of Porto’s University, Tiago studied business and management, knowing that he would need those skills coupled with his internet skills. While still a student, Tiago founded his first company, Total Sites, which created websites. The company also had an auction project, which got acquired by iBazar, which in turn got acquired by eBay in 2001.
Why WayNext? Tiago and his partners clearly saw the opportunity for exploiting their internet skills as they witnessed the rise and fall of the dot.com era. When they actually decided to form the company, Tiago recounts, “It was rough then. The dot.com bubble had just burst. Most companies were looking at web projects with additional scrutiny. That’s why we developed a strategy of working with partners – ad agencies – which needed our skills. That was the lowest risk way we could enter the market.”
Tiago discusses his business philosophy, “Maybe because of my background in business management I have a clear idea of what companies are created to do. I don’t have a romantic approach. I believe that companies have certain purposes, like generating profits and creating jobs. And of course pushing things forward and focusing on innovation. My goal is to continue to fulfill these three goals. That is how I define success.”
Challenges. Since the beginning, WayNext has operated with a lean structure. The company started earning revenues within six months of founding. The team kept their costs low and used revenues to bootstrap the company to profitability. Outside of the three original co-founders, there were no employees in the first two years. This enabled them to be able to take risk on some of the projects. It’s a solid story.
But Tiago also faced challenges. He reels off his list:
- Portugal and the economy. Tiago concurs that doing business in Portugal is hard. It’s particularly difficult right now as the Portuguese economy is going through a tough period. But Tiago is confident of the stability of WayNext. The company has grown by 15% this year (2011), not a small feat and probably the envy of many another companies. Tiago admits that this growth rate is slower than it was in the early years, but he believes that slow and steady growth is a good thing right now.
- People. Tiago cites his biggest challenge as finding the right people, building the right team. He tells me, “I believe in people, but it’s hard. We have hired very good people and other times we have failed and hired the wrong people. But, we have managed to keep the key people on the team. That speaks volumes; it always pays to keep the best people on the team.”
- Lack of credibility. While this is not a problem for WayNext today, it used to be a big one. Tiago recounts, “Everyone asked two questions: ‘How many are you?’ and ‘What have you done?’ That we were so young caused us to lose projects because clients thought maybe we wouldn’t be around in a year. And in the beginning we didn’t have a strong portfolio to back us up. We had to prove ourselves again and again and again. Now we have credibility, and we are also not in our twenties anymore!”
- Growth strategy. WayNext has pretty much stayed in Portugal. The companies services a few clients elsewhere but the vast majority of revenues comes from clients inside Portugal. How to expand, or whether to expand remains a question: “I know that if we go international we will face some learning curves and inefficiencies. That doesn’t make sense to do that right now.”
Thoughts on entrepreneurship in Portugal. Tiago tells me his impressions of starting and growing a business in this small European nation on the sea, “I think there is a lot of talk about entrepreneurship and that’s a good thing. It’s good to have lots of discussion about creating new companies. But I know that only a fraction of those people talking are really going to take the risk and leave their jobs to start a company.”
Tiago also questions why people don’t look at some of the old-school industries as fertile ground for reinvention through newcos: “It is sexy to do a tech startup. But I don’t hear many people talking about creating startups in traditional areas that need refreshing. What about butchers and other services?”
Tiago sees the inherent challenges of starting a company in Portugal. He tells me, “Yes, our country is not the most favorable or helpful for new businesses. Yes, we have high taxes and doing startups is high risk. We don’t make it easy for you to fail. There should be some exceptions in terms of risks and taxes. We need a more forgiving environment for people to be encouraged to experiment. And then be able to close down if it doesn’t work out. That would enable more projects that are still sketches on paper to be brought to life. And that would be good for all of us.”
Parting thoughts. Tiago believes that you have to have a solid road map to revenues with a clear business model to be successful. He notes that too many young entrepreneurs are romantic about their businesses and have no idea how they will get to revenues and profitability.
And most of all, Tiago tells me, “Entrepreneurship is about people. We needed people, smart people, not money. It’s not about capital; it’s about brain power.” You are right, Tiago. Good luck!