"Building an export channel is not a short-term affair. It takes at least 2-3 years to build a partner distribution network. And to be successful, you absolutely must dedicate yourself to your partners and continuously educate them."
Jan Řehák is one of the founders of HW group and Netio products, which produce hardware and software for IoT (Internet of Things). When he's not working, he's recharging his batteries in the company of his 9-month-old daughter, skiing or playing squash.
NETIO products a.s. is a Czech manufacturer of PDUs (Power Distribution Units) that can be controlled via LAN and Wi-Fi. It was established in 2016 by buying out a division of KOUKAAM a.s., which had been distributing and developing its own products for camera systems in the Czech Republic and Slovakia since 2003. It is based in Prague and designs and manufactures all products in Europe.
However, as it has a business span from the USA to New Zealand, I was interested in other things than production this time. That is, business. So I sought answers to the following questions:
🔸 What leads him to a highly specialized range?
🔸 How to build a partner network and what is needed for that?
🔸 What and how to select business partners?
🔸 How to onboard a partner?
🔸 How can an e-shop coexist with a distribution partner network?
If you're looking for a condensed answer check out the bonus to this episode. You're about to collect some thoughts to consider if you want to venture beyond borders with your store. Or take a course (in Czech only).
BONUS
How to export? Thoughts of Jan Rehak from NETIO products a.s. (Czech only)
INTERVIEW TRANSCRIPTION
Martin Hurych
Hello. I'm Martin Hurych and this is Zahžeh. This one will be with Jan Rehak from NETIO products. Honza is one of the owners and founders of the company and the reason he is here is that he exports 90% of his highly specialized products to countries outside of the European Union. So today we're going to talk a lot about how to build a partner network, how to sell hardware and software in combination and a lot of other things. Hey, Honza.
Jan Rehak
Hi Martin, thanks for inviting me.
Martin Hurych
You're welcome. Before we get into the business, so that the audience listening has an idea of the perspective we're actually going to be commenting from, can you introduce yourself and the company a little bit?
Introduction
Jan Rehak
Thank you, NETIO products was created in 2016 and it's a project that came about kind of by accident. I have a friend, he had a company that made video recording stuff and they had sockets as a side effect. They had a product that they just kind of had a way of making it and for various reasons, the whole KOUKAAM company went out of business. I met this friend of mine, I think in the fall of 2015. He said, it's such a shame we already had the certifications done and the product is nice, we did it the way we talked about it. I then flew on a trip to visit part of my family in America. I remember being stuck in the nursery with this big JetLag in a pink bed about 160 cm long, which was quite complicated for me, a 190 cm person. Once I had the JetLag and couldn't sleep, I commandeered a little tablet, all pink, to look at Unicorns on. I'm sitting there by the fireplace looking at the drawer market and thinking, man it's a shame this went bust, this could have been a good business. I had just kind of gotten free from the other company at the time, so I thought, actually, this could have worked. So I got the idea, and over time I put a team together and we formed a new company called NETIO products, which bought the bankruptcy estate of KOUKAAM, and that's how we got into the drawer business. It was born one long night in Houston. Our timing wasn't the best, because it was right before the cheap Chinese chip that everybody uses today came out and ripped the bag of so-called smart sockets for homes. Suddenly there were sockets everywhere, we had our beautiful industrial product and go and explain to these customers why this socket costs EUR 20 and yours costs EUR 200, what the difference is. That's the classic B2C versus B2B problem.
(Dis)advantages of a narrow range
Martin Hurych
I'm sure we'll get to that. I thought of one thing when we started setting up this shoot. The typical reaction from companies, salespeople, is, give me more of this to get the customer to buy. There's a natural tendency to expand the product range and somehow entice customers. You guys, on my amateur, first look at the catalogues, have a very specialised and narrow range. What are the advantages and possible disadvantages of this for you?
Jan Rehak
Here it is necessary to say how it is in the case of sockets. A socket is a 220V thing, just technically for our listeners. Basically, we're talking about a dog or an extension cord that plugs into a 230 V outlet, typically has RJ45 or Wi-Fi in there, but nowadays only RJ45. What's possible is that that socket has some sort of web interface, you can turn each individual socket off, on, measure the consumption on it, connect it to some cloud and control it from some mobile app. That's exactly what every single one of those users imagines, that just the value is in turning my Christmas tree on and off at home, but the Christmas tree is not exactly our target. I want all of our customers to have something plugged into that every single electrical outlet that makes money. For example, we had a project with an unnamed chain of beer stores who wanted to monitor refrigerators with this. We reboot televisions, various audio-video technologies in IT as well. These are also our typical customers, we are strictly a B2B segment and the added value is both in some industrial parameters, i.e. extended temperature ranges, generating new firmware and that it is not a product where if you want a new feature, you buy a new device, which is typical in B2C. The other topic is security, because in our business for the last 5 years, security is what justifies the price. Sometimes the problem is that customers come in and the security they want from servers, they want from the little things, which is not quite technically passable or rather it is, but those customers don't realize the cost associated with it. The other thing that holds that product and justifies the price is the integrability. We deliver a relatively large package of integrations, and those integrations themselves are frankly the value that's carrying it. We still have customers that have the first version of the sockets that were made by KOUKAAM back in 2009 and to this day they just keep expanding that system and adding some 8-10 sockets every year and it works. That is exactly our value that is there. That it will still work in 10 years. So, of course, within some limitations, but that integrability, that interconnectivity with a lot of different systems from other parties is what justifies that value in that B2B market.
Martin Hurych
If you look at your catalogue, everything is clearly configurable and has the advantages you mentioned, however you only have 7 products. At first glance, compared to someone coming to you with a catalogue that's 350 pages long, it's a very narrow range. What made you not to expand with a range that is related to you, but to stick to that core business?
Jan Rehak
We don't have the resources. In Europe, which actually helps us a lot compared to our American competitor, you actually have 5 sockets. I didn't realize that until I was in this business. In Europe, there is the so-called Type F, which means the German SCHUKO, which is basically in most European countries, except for France, the Czech Republic, Slovakia and Poland, where there is the so-called Type E. That's what the pin has on the outside, not the two teats on the top and bottom, which is the German socket. Then in Europe there are the completely atypical Swiss who have their own sockets which are actually only compatible in the very smallest version. That's the mobile phone charger, for example, which can be used throughout continental Europe. The Italians used to have their own standard, but thankfully they've abandoned it. Then there are the British, they have a completely different socket. If you've never seen a British plug, that's a really special thing. It's only 13 amps as opposed to the 16 amps of the German ones, but it's much more massive, it's actually kind of ugly and it has a fuse in it. By the way the iPhone charger in the British version, you always just see that and you're like, oh my god, but okay, they designed that socket in 1905 or whatever. They revised it in 1953 or so, but it still looks very massive. In addition to the four that I've listed, you have to add this IT standard that's now actually worldwide, it's called C13. That's what's on the back of the computer power supply, the 3-pin with the chamfered corners. These are all 5 standards in Europe, realistically. So you've got one product, but you've got five different versions of it, so the number of products multiplies. It has to be said that the moment you are a manufacturer of anything 230V, you are subject to a relatively large number of standards and regulations. I have to realistically certify all of this, and with the certification of 230 V things, there are basically no shortcuts to take and it's not a good idea to take them. For those reasons, we have to certify every version of that and we have to set up manufacturing processes for that. Those manufacturing processes then have to test every single piece. For us, it's just as difficult to develop that basic product as it is to develop that whole kit to test it. So we have somehow limited resources with which we are able to expand about 1 to 2 models a year, and that's what we're trying to do. So it looks like we have 7 products for users, but we actually have about 22 products, and that's quite enough.
How to build an affiliate network
Martin Hurych
It's clearer to me now. There are a lot of people around me who want to expand their business, they want to start exporting, in short, the Czech Republic is too small for them. When I look at your website and see where your partners are at the moment, apart from the EU, you are spread from the United States, to China, to Southeast Asia, to New Zealand. They're all partners, so I'd like to dig a little bit into the question of how do you actually build that partner network, how do you do that at NETIU and what criteria do you have for selecting countries and partners?
Jan Rehak
First of all, NETIO has the huge advantage that I've been in the business 15 years longer, the previous company did something similar. So we have a lot of experience in this area, that's the first thing that helped a lot. The second thing is that we actually bought a company that was already producing something, had a partner in Germany that had a turnover of about 6 - 7 000 000 CZK. We did buy a company that had something like that and somehow had that value, but we moved it to a very different market, very different quality, etc. Let's say we turned the Fabia into an Octavia, or maybe an Octavia on the border with the Superb, so we had to change the network of those partners. That means that this, paradoxically, stopped being a value for us, even though at the beginning I thought this would be the value. The main thing in our industry is that there has to be someone who knows what they want to do and knows their customers. We, when we went into this, my technical background was more in, say, IT or for IT customers. I mean, my partner and I saw mainly those IT customers in front of us and today the situation is exactly like that, here in the Czech Republic we sell more to those IT customers. After about three years, we found out that those IT customers don't really know what to do with our sockets. The fact that they would turn something off remotely, that came up a lot with the covid that somebody would turn off a backup router in some test lab or something like that, that was happening, but that wasn't the mass application. Occasionally someone is monitoring servers that are mining bitcoin or something like that and they want to know the consumption and/or restart it. But those reboots are not the main thing in IT because IT is pretty stable and functional now and that's not where the grit of the business is. We found out over time that the genius of that business is in the audio-video segment, but we didn't understand it, so we had to learn it. We started going to shows and asking our partners. We had one or two distributors who were so straddled that they were out of IT into the audio-video thing. So always listen to your customers, put the time and energy into it. Then somebody in that company has to learn it too. They actually told us what they needed, the customers. We've made some sort of system of evaluating what they're telling us and what we think about it business-wise. Then we take steps in that direction based on that. The difference between integrating a product in IT and in the audio-video world is that in IT you basically release a standard. I mean, you put out some documentation, a description of the protocol, you put an example of it, you put it on GitHub or something like that, and that's it. But in audio-video, it's not like that. In the audio-video segment, the company will tell you: Give us the drivers for this system. So we have to get and arrange the drivers. There's maybe 30 of those systems and you have to figure out which of those 30 systems are the ones that are doing real numbers, real business and start getting drivers for those. Of course, there are companies that will write the driver for you, but the price fluctuates a lot. For example, one particular American system. I had an offer from I'll do it for you over time for free, for a sample up to $18,000 plus $4,000 a year maintenance. It's very hard for me to distinguish the quality of that output, because there's probably a difference in the result.
How to choose a business partner
Martin Hurych
If I wanted to be your partner today. In some country that's not yet occupied, what will you show me? What are you gonna ask me to do, what are your evaluation criteria for becoming a partner or not?
Jan Rehak
I'm going to jump ahead a little bit to make this more understandable to the audience. A little introduction. NETIO has only 7 products, i.e. basically smart sockets in different designs. The basic difference is in the segments, who uses it. Part of those applications are in the IT, I'm monitoring, remotely turn something on somewhere, turn on some alternate connection, reboot, etc. Then part of those applications are in the audio-video segment. That means I have, for example, a museum, I want to light up x exhibits in a room with one button. By the way, the National Museum is one of our customers and our references. That beautiful room with the shark, there are about 8 NETIAS in that. So I have some sort of button that I use to open the whole room, close it, turn the lights on, turn the lights off, and at the same time it runs on a schedule that from 9 to 5 it's automatically lit up every day. If there's an event, I have a button to extend the whole thing and let it run. And these audio-video segments are a lot different from IT. They're different worlds that don't intersect to some extent. They have different distribution, they sell in different ways, and so on. It took us a while to figure that out and to just understand that those worlds are different. Based on that, over time we came to the conclusion that we wanted to have 2 distributors independently in every reasonably sized country. One strictly in the IT field and one strictly in the audio-video field. Over time we found that it was more complicated in the audio-video business. There the structure of the companies is different than in the IT. So we always look for one distributor from one side and one from the other side. Well, how do you know a good distributor? Well, you never know. In the end, it's always about a feeling and about some five or six criteria that you can use to look at the company. Whether we're the ones choosing the distributor and we're actively going after them, whether we're responding to requests from the web that somebody comes to us and somebody writes in, we basically have some simple guiding criteria. That's always a number at the end of the day that each of us marketers suck out of our fingers and then we average it out. So we have 3 traders who each come up with a number from 1 to 5 like in school, and then we average it out normally. But of course, this feelingology is based on something. One of the important things is whether the company is purely a business, or whether it's doing something we call VAR or Value Added Reseller. One of the basic things that you can tell a Value Added Reseller from, say, Alza, Amazon, and similarly oriented companies is that they have, say, a list of brands that they sell. It has a clearly defined list of brands, it has clearly defined logos of the brands that it sells. In those newsletters and in that marketing, they're just pushing that brand and they're also pushing that brand in parallel with that product, or if it's just a complete mishmash in pixels and it's putting a completely chaotic jumble of products out there without any vision or connection. That's kind of my favorite parameter is product knowledge, that comes first. If that distributor has product knowledge, that is, if they have a product guy who at least in principle understands the system, how it connects and can actually advise that customer on how to build that system. That's a good distributor for us. If he doesn't have product knowledge, then it's really just logistics and I'm not interested in that. In our volumes and in our specialisation, it's easier for the customer to order it directly from us than to have the logistics. In the United States I need logistics, yes, but within the European Union I don't. So even in the UK I prefer to ship direct rather than through a partner who is just logistics, there is no value there.
Martin Hurych
So it has to be a loyal strategic partner in a way.
Jan Rehak
Look at it from his point of view, he has a limited number of product managers that he has in that company and that product manager can't be in charge of 30 companies, or he can, but then it looks like that. So if he has to allocate the capacity of his product manager to some other brand, if that person has to learn it, if that person has to get a feel for it, if that person has to know something about it, then he has to have some annual turnover in it. He's got to have some margin a year that he's going to make in it and we see it the same way. We need somebody on the other side who is really dedicated to it.
Martin Hurych
I get that, i.e., strategically a partner who is dedicated to the brand. I'm sure there's some sort of turnaround criteria, some sort of assumption.
Jan Rehak
What's difficult in our business is that you choose a partner, then you train them and then realistically you wait a year or two to see if it's going to be good or not. In the case of France, you wait three years, because in France, for some reason I don't understand, everything takes 1.5 times longer. But then it breaks and it works, just don't make the mistake of saying during those three years, after two years, this partner is bad and you'll go for another one. You'll wait three years again. Then, of course, you hesitate. Is he really good? Is he doing anything? It's about some communication with the firm, some communication with the partner. Then you get inquiries from that country and you're wondering for each individual inquiry whether you should send it to the partner or trade it directly. Is the value of that partner there for that particular customer? And that's what day-to-day business is all about.
Martin Hurych
A turnaround, some strategic partnering, what's next? What's the next thing you're assessing?
Jan Rehak
Similarity of marks. I have some system that I use to sort all these companies by what other brands they distribute. If someone sells BMWs, they're probably capable of selling Audis, and they're probably capable of selling Mercedes on top of that. Hard enough to sell KIU to it, though I'm sure KIA would be horribly upset and tell us they do. Of course there are some attempts like SsangYong. A distributor of, say, Renault or Dacia will actually be quite happy to try SsangYong because they just see the penetration there. It's similar with commercial cars. Someone who specializes in utility cars will have no problem selling utility cars of the four brands, because simply the added value is that they have the utility cars, the things just logically belong together in some way.
Martin Hurych
Excuse me, do you mean that you are looking for a partner who is used to selling similar goods in that particular price or luxury segment?
Jan Rehak
I would rather say to the same customer, there goes from that customer. It's really all about that product knowledge. If somebody has product knowledge of the supply, you can quite easily add another supply and they'll keep selling another supply. I imagine if you're making specialty gas vans, if someone is selling diesel vans, there are companies that want gas vans today, so why not. If you want a gas van, you realistically have one or two manufacturers here and it's similar here. But if you're selling motorcycles, then you're not going to go to a van distributor, because a van is bought by someone for a business, whereas a motorcycle is mostly bought for pleasure. To someone who sells BMW cars or Audi cars I can quite imagine those motorbikes because there is a similar customer. This is our point of view, let's go from the customer. Let's go from that to where the added value is for that customer. I call it in my spreadsheets B-rate or Brand Rate and I always have some brands that tell me how far away they are from our customers. We have somehow rated every single brand and based on those brands that the company sells or that the distributor sells, I somehow build a rating for that brand and then I say I have those distributors sorted by rating. Then the moment when we have a distributor in Portugal drop out and we suddenly say we need a new distributor in Portugal, it's good to have that spreadsheet where you have those 20 companies in Portugal and have them sorted by rating because otherwise you have no one to call and you're drowning in it. Portugal is still good, it's small, but Germany, France, it's hell.
Martin Hurych
Are you assessing anything else?
Jan Rehak
At the moment when we are doing various web calls and assessing this, we are of course talking to these companies. There are some companies that to this day don't do newsletters, don't do any social media, have their business partners, do physical training for example, and have paper catalogues and send those out. I don't want to say that's bad, it's a great company that we're actually quite happy to work with if their existing customers have a match with a customer that we need. But it's a lot harder for this company to extend that product range somewhere else, because it's going to take them a lot longer, logically, to say to those existing customers, "We've got something new, interesting, that might theoretically be of value to you." Whereas, conversely, if I have a company that knows how to do that marketing and does it well, generates those newsletters, generates that content, goes to shows, etc., it's much easier for them to introduce a new brand.
Martin Hurych
Are you making any judgments about the country where this person is from? Let's say I come from a country where you don't have a distributor yet. It's gonna be from Kazakhstan, you're gonna make any judgement on that country?
Jan Rehak
In the case of Kazakhstan in particular, there is relatively little chance of finding out anything, because Kazakhstan has a customs union with Russia, as does Belarus. As a result, they have essentially the same rules for importing goods. On the one hand, they want a lot of certification, which is problematic because it has to be renewed regularly, it costs some fixed costs. In other words, if I have a functional business to Russia, where I am used to sell, then logically I will go to Kazakhstan quite easily, because I have met all the entry conditions and I know how to ship goods there. Georgia is another case. Georgia is somehow big, however engineering in Georgia is somehow big. IT and companies there are some, i.e. Georgia in particular is maybe a market that will be like a whimper, but it won't be in our particular case, it won't be anything like amazing. I mean, if I have a motivated partner that wants to build something, yes, but it's certainly not in my top 10 list that I'm going to pound development into. Poland is on the list of the first 10 companies I'm banging development into. Poland is experiencing a huge boom in audio-video because there is a lot of construction going on there and audio-video is developing very well. We just don't have a partner in Poland. We have an open seventh or eighth, but we just don't have a functional partner in Poland yet and we can't find one. Even though we are trying with all these metrics and talking to companies, Poland in particular is kind of vicious for us and we are not getting it done, so even if you really try, sometimes it just doesn't work.
Business Partner Onboarding
Martin Hurych
You said the affiliate network business, the rollout is relatively long shot. A lot of people think, even in my bubble, we're gonna find an outside firm tomorrow and we'll have our first deal tomorrow. I try to talk them out of it. Plus there's I suppose some intensive, in your case two years, in France three years onboarding, you have to help them in some way. What's it like for you? What does the partner have to go through with you in those two years to even get started?
Jan Rehak
So I would like to say one thing at this point, because it needs to be said. Please, if you have an established method that you are doing that is working, keep doing it. So don't pay attention to what Rehak is telling you, because I'm a bit of a marketing Nazi. I have an idea of what the materials should look like for the distributor. For me, that marketeer or that produce guy from that distributor is basically my customer because I need to make his life easier and I need to keep in intense contact with him. I mean, okay, we do product flyers, we do something we call, Icon Flyer. We've done some research. We came to the conclusion that everybody keeps putting pictures of these products up, but we have smart products that have an awful lot of special unique features, and it just doesn't show up in the picture. So we thought we'd just give those distributors flyers that have those icons in them. We have photos that are just high resolution, but we only give flyers with the icons on them at first glance because we have a lot of features that we want to push with them. We have photos of all the versions. A typical page looks like everybody takes pictures of German sockets and tries to sell it in the Czech Republic. But we in the Czech Republic have French type drawers, so we need to have pictures of French drawers. Nobody is going to buy a thing in the Czech Republic that has visibly different sockets than what's peeking out of your wall in the Czech Republic. We have texts ready for the marketeer, which he just takes, translates into his language and puts on the web. Why? Our website is complicated, our website is terribly long. We have very complicated texts, because we do SEO so that somebody can actually find us, and we have PowerPoint presentations for the marketer. We even go so far as to have the first three emails in the package for him, which he can take and send as a newsletter. He's got ready-made content in there in short version, medium version, long version that he'll take and send. I have a training system for that marketeer where I come in and the tech guy, the production guy gets training from us where he has to go through some homework. I've got a starter package that's discounted the moment he goes through that training. The minute he has six marks on his desk to start with, which one does he start with? The one that's easier and this is all marketing that I'm wrapped up in. Obviously, when that person starts out, this takes an awful lot of time to build up. You have to have a clear idea of what you want it to look like. It's good to put yourself very much in the shoes of the marketeer who has those 6 marks on that table and is deciding what to do in the morning. How is it going to be easy for him to like or dislike that brand. I go so far as to say, for example, NETIO tries to keep things in stock. It's such a bit of a tricky subject at the moment, because the chip famine of today means that there's always something out of stock. Let's just say in 2019, we've always tried to have a couple hundred of each product in stock. Back then, that was still the case. You go to these distributors, you go to lunch with them or have a drink somewhere, and you ask them, what is it about us that you like? One of the answers I often hear is, "You have the best marketing of our suppliers and you have stuff in stock. The minute I order, the thing comes to me and I don't have to constantly worry about it being 14 days away or a month away."
Martin Hurych
Brutally short, without long-term and really detailed or day-to-day support, you can't crush a partner.
Jan Rehak
You'll crush it. One motivated guy comes along who has a project, who knows what he wants to do, knows exactly what he wants to do and how to do it, don't try to cram it into some box of yours, and it just takes off. The question is how many will come and whether or not they'll come from that company that has a chance to make the best turnaround in that market, unfortunately often they don't.
How an e-shop can coexist with a distribution partner network
Martin Hurych
You have an e-shop on your website and you're a B2B company and a lot of B2B companies get pimples from e-shops. I can imagine you're building an offline distribution network on the ground and now you're stabbing those partners, at least that's the opinion of a lot of people, in the back with the e-shop. So what's the co-existence of the partners and the e-shop like in your country?
Jan Rehak
NETIO was relatively lucky, we launched our e-shop at a time when we didn't have many partners and when the main market pressure came from the IT sector. Those IT guys want to order the equipment at 3am, have it there in 3 days and not worry about anything. The vast majority of B2B companies don't have those prices published, they just have a form or an email, send us an enquiry etc. These are actually two different markets that are somewhat intertwined. For us, we've managed to get an e-shop up and running at some point. It has to be said that on average the e-shop generates about 5 - 6% of our turnover, but although it does 6%, I as a business am awfully happy to have an e-shop. You go, for God's sake, 6%, you're stabbing your partners in the back because of that, in the sense that they can't do what they want with that price. You're defining some kind of ceiling for them. A Brit can afford to go 15% above our official shop price because of the exchange rate, because of the shipping, because of the customs, but he can't go 30%. Sooner or later, of course, I'm afraid, it will be a topic for revision, because when a big project comes up, of course the partners shout a lot. By me setting a price ceiling there, they have some room. On the other hand, if they're okay with it from the beginning, it's fine. The fact that we have an e-shop can't be an excuse for why they stopped selling now, for example. It's problematic, but I didn't say why I'm so glad we have the e-shop. Without the e-shop we would have no references. All the photos and all the use-cases we have are only because of the e-shop. That's where I talk to the end customer. I always feel like an artilleryman shooting for two hills. Not one hill, two hills, because behind the first hill is the distributor, his office and his people, and from there your shot is still bouncing like a ping-pong ball or a hop and just bouncing to the customer who is behind the second hill. I don't really know what's going on at the distributor, let alone the customer. I don't know his needs. So without an extremely good understanding of that market, I'm often shooting way off the mark. I recently had a discussion with Vladan Hejnic on this topic and he says, "Ask, ask, ask, ask those customers. Do forms in your training sessions, collect feedback." In the covid era, how we were able to collect feedback changed and we didn't respond to that. We often didn't even respond to how to collect feedback from customers and how to actually find out what those customers want and don't want. We often think something today, but we don't know. It's terribly hard to measure, it's not like in e-commerce where you take Google analytics and say, "Yes, the majority of customers are choosing the white box version and we're going to go with that." You can't do it that way today, at least not in our industry. So do forms, find out from those people what they actually want and make some of your own opinion on it. The customer doesn't really say what they want. He's going to say what he thinks he wants on the face of it without thinking deeply. It's very difficult without that knowledge of the customer, and the e-commerce store is what's going to give you the opportunity to talk directly to at least some of those customers.
Martin Hurych
Such a periscope to the market.
Jan Rehak
Yes, it's kind of a ticker that actually gives you some pictures of real installations and gives you some customer to say why they haven't ordered again. It'll give you some customer that you can actually talk to and I'm really happy to have somebody to talk to in our industry where the customer will tell you we're going to link this to this and we're going to do this to this. My team and I, who I salute here, we put a relatively large amount of effort into that communication. We really send those emails to those customers and ask them after three months, "Were you happy, did it work for what you wanted?" Sometimes, of course, somebody will come in and say, "I haven't turned it on yet." Someone else will come in and say, "Yeah, everything's working." "Yeah, it works, but this..." And those are always such great questions. But we're very grateful for them, because without that we'd be very much behind the wall.
Martin Hurych
The fact that you really understand exporting is evidenced by the fact that you have courses on exporting.
Jan Rehak
If you don't know naučmese.cz, it's a great platform that has been around for about 15 years. Adam Marčan has managed to put together an amazing community of people and excellent courses, definitely check it out. What I personally love so much about naučmese is that it's a platform where there is relatively little distance between the instructor and the listener. So you get a pretty close look at what works and what doesn't work. The person will actually be happy to talk to you about it, it's a bit of a hobby platform. There's often people on there who are hobbyists and I, as a hobbyist, put my own course on there on how to start a B2B export business, with that lovely red container logo shuffling around. From time to time, some really interesting people come in. I've had a guy there who sells wood-plastic patios, how to sell beer abroad, how to sell animal treats. So yes, I have a course there to learn how to identify potential partners, how to evaluate them, how to find them and how to start a business with them.
Martin Hurych
I would like to use this exact information for the benefit of the viewers and listeners of this Zah Zah. I always ask my guests here to share their know-how in the form of some bonus that the listener or viewer can print out, read or use in their daily practice. If I direct the same request to you, what can you help us with regarding exporting?
Jan Rehak
I can take my presentation on how to start a B2B export and somehow make it available to you as a PDF or something, but honestly, it doesn't really work without the live course. I'll open up 1 - 2 dates on teachme, come physically to the course. Hopefully we'll be able to meet physically now, it'll be safe again. Let's have a nice 3 - 4 hours sometime in the evening. What's great is when you get totally different topics together where you're actually discussing how to sell totally different things. So we can just do something like that within the teachmeet. However, I'm certainly happy to provide the materials that I have for that.
Martin Hurych
Great, so the materials and the link to the tutorials are definitely on my website www.martinhurych.com in the Ignition section by now. Honzo, one of the last things. Just as a bonus, so traditionally, some sort of summary of that episode of ours in a couple of sentences. For example, if you were starting out in exporting right now and you knew what you already know, what would you be most careful about, or what should our viewers and listeners be most careful about?
Jan Rehak
Martin, that's a difficult question and there is probably no one clear answer. Look at the long term nature of this thing. We basically have a Blue Ocean strategy. Our product is different, our product is just not quite the norm and we put quite a lot of effort into explaining to that customer where those applications are. I, sometimes when I tell somebody that we do smart outlets, they'll say, "Yeah okay, and for God's sake, for the Christmas tree or what?" And I always say, "No, we've got, like, 1,200 devices hanging in supermarkets in France and Spain where we're restarting these televisions where they're showing ads inside the store telling you what to buy. The reason is that one service call for that one advert costs EUR 700, because through that France, you drive a long way from Paris, then you get there and you need a ladder that is 4 m or 5 m high to get up there and find out that somebody has knocked the wrong cable or that a piece of equipment that you don't have central management for has died. So we have our equipment there for that reason, and it reboots the thing." It's difficult for us to explain where the apps are. The typical icing on the cake in our applications or in what we can actually do as an outlet with those outlets is that the moment you have that "dog", which in our case typically has 4 outlets, I can actually tell purely from the electrical consumption of each individual device whether that device is working or not. If I have a coffee machine in there, I'm able to tell how many cups of coffee it made in that day. It requires some math and knowledge of the product. Even with a large number of devices, say 300, I can tell how many times I opened or closed the garage door, for example. NETIO has some relatively simple algorithm in it. I'll look at the consumption history over time and say, "Sure, that TV is no longer consuming the 150 watts it's consuming when it's working as it should, it's consuming 7 watts." That means it's gone into IDLE or sleep mode, and I don't want that because now I've got the store open, so I'm automatically restarting it. I'll do it myself, via some central cloud and central management just send a message about what happened and the problem has been solved. And these different apps that are around that product, we have to show those customers. Nobody expects this thing to be solved that way. Finding those apps where they are is sometimes tricky. But it's important not to have exaggerated expectations, because sometimes today that customer expects that thing to do everything by itself, even though they don't know what they want. I'll say, "Okay, but you have to narrow that specification down to some clear parameter, and that's the biggest problem for us because we're a Blue Ocean strategy. We have a product that is atypical, we are open to atypical applications and interfacing with different systems. From door operators, to building management system, to integromat for example. We're able to control our outlets from the integromat, which we used to use to count how many minutes a day a device runs. One fairly large customer in the UK, wanted to know for every single microscope, every single centrifuge, every single piece of equipment, how many minutes out of the day it was in IDLE mode and how many minutes someone was using it. Often hospitals have these applications so we can find out and tell these things. Showing those apps to those customers is actually the biggest challenge for us.
Martin Hurych
In summary, and if you correct me, the status of exports is a long term issue.
Jan Rehak
Certainly in our case FMCG.
Martin Hurych
Building a distribution network is not something that will instantly solve your business, it's more like a years-long process.
Jan Rehak
3 years.
Martin Hurych
And the third thing I took away from that is, take time with your partners and educate them, educate them, educate them to get them going as soon as possible. Is that right?
Jan Rehak
Partner education is absolutely essential. In B2B, we often rely on the product manager on the other side to know this. How can you be so sure they know? Because he knows some of the terms? Does he really know? Training that partner, that channel is actually very important and it makes sense to do that. We responded to covid by starting to do webinars with our partners. Does it make sense to do a webinar for your Finnish distributor's Finnish customers if your Finnish distributor sends 12 people there in real life? Yes, but does it make sense to do this in France when those customers just don't speak English? And now we had a big dilemma on this topic. It does, because from my point of view, 50% of the reason why I'm doing the webinar with that partner is because I make it clear to that partner that I'm only going to do the webinar with them when they've got all their sales people there. I have the confidence that those salespeople will finally hear what the product is about because they've been told clearly by their boss to get their customers there. If that salesperson doesn't even come to this webinar, they'll never come to any webinar. So we were actually pretending that we were doing end customer education, but it was actually an excuse to give that distributor network a little bit of a lift to get them to come in. I was perfectly happy when there was 1 customer and 3 salespeople from inside that company because it served its purpose and it was a very good event that we did last year.
Martin Hurych
It shows, because you still look happy. I can see your enthusiasm for what you're doing. Congratulations on that, fingers crossed, and thank you for being on this episode. This was Ignite with Honza Rehak from NETIO products and if we've ignited you to build an export partner network or anything else, we're just happy. Be sure to subscribe on your favorite podcast app or maybe on YouTube. As I said here once before, be sure to check out my website www.martinhurych.com where you can find Honza's bonuses in the podcast section. And I can't help but keep my fingers crossed and wish you success, not just for the export. Thank you.
(shortened, edited, automatically translated by DeepL)