Thursday, September 25, 2003

Food for Thought from Tokyo

Dominic Penaloza has had a colorful background in banking, private equity, and in startup-land. It looks like he's finally found his home. The hardcore entrepreneur braved nights on the mattress in the office to grow his baby to become a healthy, profitable business in the dotcom world (of all places). Not for the faint of heart. I recently caught up with him and twisted his busy arm to get an exclusive interview to see what HungryForWords is hungry for these days. Looks like a bit of venture money would warm the stomach just fine, thanks. VC's take note. Don't wait till businesses have no need of your money before you offer your hard-raised institutional cash...by then Dominique might be public on the TSE.

1-tell us about your most recent venture?
HungryForWords.com is my 3.5 year-old dotcom venture, and we're now expanding to offer online friend-finder services. For years, we've witnessed the deep relationship between language learning and socializing in Japan and Greater China. It's a very powerful force and we're now catering to it with our launch of WorldFriends, which is a unique multi-lingual friend-finder service that will match people using their language exchange preferences and travel desires, as well as their friendship or romantic preferences. A big part of our growth strategy is to provide this unique platform and member base to third-party websites. This will enable our partners to access a new revenue source (since Online Personals are by far the biggest category of legitimate paid contents on the web) in an area where they could never succeed on their own. What's interesting is that in our case, the whole is definitely greater than the sum of its parts.

2-would you say you are successful so far? Why?
HungryForWords is now Japan's #1 daily publication for English learners in terms of reach, with 280,000 unique subscribers. We've been profitable for quite some time, so I guess I'd say we're successful so far. But, 280,000 is not even 2% of the total number of people who are studying English in Japan so there is still a lot of work ahead for us. We've learned a great deal about how to grow without using much capital, and we're trying to bring that to bear in our business expansion.

As for the success of our friend-finder network it's far too early to say, but we've got two signed deals and several more in deep discussion. Hopefully, as soon as the first network partners are up and running, it will become much easier to get the rest on board.

3-what do you think the climate is, for starting businesses like HFW? Good, bad, ugly? And why?
From my perspective, the funding climate has been cold for about three years. It's hard to generalize, since there should always be room for great ideas and great managers regardless of the climate. In general, if you consider that the venture leader's paramount job is to raise money, then the climate has been frigid for years.

4-what are your plans going forward for the business?
Given my comments about the climate above, for the medium term our plan is to continue to grow using internal resources. We've got a ton of work to do ... see www.meta4-group.com for more info.

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