Skin in the game

Michael Alan Hamlin

Posted on June 9, 2011

“Skin in the game,” is a sure-fire way to demonstrate to investors that an entrepreneur is serious about his venture and takes ROI seriously, according to DirectWithHotels president & CEO Emiliano Zulberti. An “import” from Argentina, Zulberti worked for a highly visible dot-com consulting firm in the 1990s and was managing director for a European-owned and managed web-services company called Zimplizity.

In a forum last week on venture capital organized by the American Chamber of Commerce in the Philippines, Zulberti explained his decision to found and develop DirectWithHotels in the Philippines. A former resident of Singapore, he noted that the island-nation’s founding prime minister Lee Kwan Yew had recently resigned as minister mentor from the government, saying that it was time to make way for younger leaders.

Zulberti echoed a common refrain describing Lee as the architect of Singapore’s development, taking the country from a poor Asian backwater and transforming it into a highly competitive global economy in just four decades. During that same period, Zulberti said, leaders in his native Argentina had taken that nation’s world-class economy and turned it into a South American backwater. Asia is where the opportunity is, including the Philippines.

With significant experience with the Internet and entrepreneurship—his LinkedIn profile describes him as an internet strategy consultant and entrepreneur—Zulberti understood the challenges of entrepreneurship and convincing investors to believe in his vision with their money. “Skin in the game”—meaning a significant financial stake of his own—is one of seven insights into successfully marketing a startup to potential funders.

DirectWithHotels leverages the expertise of its founders—which include Zulberti’s father—to help small- and medium-size hotels market their rooms to travelers and level the playing field with much larger firms such as the Intercontinental Hotels Group and Marriott which have developed sophisticated websites with robust booking engines. The value proposition is straightforward. DirectWithHotels markets its clients to travelers who book rooms using the company’s Internet booking engine on their clients’ websites.

Zulberti’s concept eases reliance on costly middlemen such as Expedia and Travelocity whose sites interface with hotels, but are not integrated into their websites. The commissions such firms charge are hefty, and can range from 30% to 50% of the cost of rooms. Partnering with DirectWithHotels provides significant upfront savings—although Zulberti didn’t disclose what commissions his firm charges.

Unlike his competitors which merely aggregate room availabilities, DirectWithHotels invests significantly to promote its clients. It is a major Google AdWords user, and according to the company’s website one of the “few” Google AdWords Certified Partners. I won’t reveal how significant his budget for marketing clients is although Zulberti provided a number, but I did confirm that it is significant, demonstrating that anyone who suggests Philippine companies don’t use and benefit from search engine advertising doesn’t know what he or she’s talking about.

The company also provides visibility for its clients on social networks, and has a mobile platform in the works as well. According to Zulberti and the venture partner I talked with, DirectWithHotels is cash flowing and is profitable. Aside from deep experience, a value-driven concept, and an entrepreneur’s passion, Zulberti put his own financial resources and those of his family on the line to obtain the money necessary to “build a world-class brand and company.”

Obtaining venture funding is the third step to achieving the financial resources to truly execute a workable vision, according to Zulberti. First is the fabled napkin where an idea is put to paper. The idea is funded with personal resources. Next comes the angels, or relatives and friends who actually like you enough to help you take something small and make it steady and reliable. Then come the venture capitalists (VC), who take something “steady to Google.”

Zulberti’s second insight is that venture capitalists don’t want to manage the firms they invest in, and so they are really investing in management. Convincing a VC to invest in you is “much like dating… the courting matters,” Zulberti said. “Listen to your gut about whether you like the people that will be sitting at the boardroom table,” he advises. Timing also matters. Don’t expect to convince a VC to invest if the company struggles to make payroll.

On the other hand, understand when your VC will need liquidity for other investments and be prepared to manage and develop the company to their timeline. Skin in the game is reassuring, but syndication of a cash investment among multiple investors spreads risk, making the level of risk for each VC more palatable. Finally, the best VCs provide more than just funding. They should be able to advise management on a wide range of issues, from corporate restructuring to mergers & acquisitions.

And a little emotional support is helpful too, said Zulberti, and cheerleading. VCs should help management “think big” to achieve their potential, and make everyone better off financially.

(Michael Alan Hamlin is the managing director of TeamAsia and a Manila-based author. His latest book is High Visibility: Transforming Your Personal and Professional Brand. Write him at and follow him on TwitterFacebook and LinkedIn.). Copyright © 2011 Michael Alan Hamlin. All Rights Reserved.)


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