After several years in a bank, a decision matured to leave the corporate world and get a taste of the world of business and startups instead. Not every project was successful, but those that were became known on a broad scale. His Obedovat.sk and Lunchtime.cz portals were acquired by Zomato for 3.25 mil USD and his e-commerce platform ZlavaDna.sk is doing great with ambitious aims to grow. Zdenko Hoschek.
Zdenko, since 2009, you have been the CEO and co-owner of market leaders in group buying in Slovakia and the Czech Republic – ZlavaDna.sk. Can you share the story of the project? Where did you find the inspiration or where did the first idea come from? What followed afterwards?
My business partner Peter Paska had already been in the business environment since 2004, he launched Obedovat.sk, the portal focused on daily menus. Since then, he had been trying to persuade me to leave the corporate life behind and join him in business. He finally succeeded in 2010 when we founded Creative Web that currently also covers ZlavaDna.sk portal. At that time, we were also trying to succeed with some other products, but nothing was as successful as Obedovat.sk. Luckily, we had excellent relations with our service partners, and once American Groupon crossed our way as a pioneer in the so called group buying, we knew this was our opportunity. After that, things picked up speed, and thanks to the contacts with our partners, we basically became the number one in the Slovak market.
What were the biggest challenges you faced on the way from the first idea up to the present days?
I would say the biggest challenge was the extremely rapid growth we faced as a company. We started as a family business with only 6-7 family members and friends working together, and in two years, we hired 100 people. So you can see it was fast growth, and we weren´t prepared for that. Actually, we had neither our processes, nor our organizational structure set up. Everything we did was more about feelings, and, luckily, we managed the growth, and the team today is well established.
Could we dive a bit deeper into that? How did you manage the growth? What steps did you take? Is there a know-how you can share with other growing companies?
From my perspective, the key is to have skilled people willing to move your company forward. As I´ve said before, we didn´t have everything prepared from the beginning; there was no organizational structure, no clear processes. But the team wanted to work on it, and they used every opportunity and created completely new positions we hadn´t even heard of before. I would say we had a bit of luck back then, as we weren´t following any specifically given rules. But if you have the right team willing to work, you will definitely manage your growth to your advantage.
What are the lessons you learnt when building ZlavaDna.sk?
I learnt a lot during those years, and there are two key things I would like to point out. First, you have to keep trying. ZlavaDna.sk is the xth product we came up with. There was a time when we had maybe 10 different ongoing projects, out of which none exist today. You don´t need to be afraid of failing. Successful people never give up on anything. Second, you won´t build anything without the right, skillful people, and you don´t only need to find them but also take care of them the whole time. This is important.
What is your strategy when looking for and hiring the right people?
We don´t only look for skillful people, we look for people who will eventually fit in the team. This is crucial, because a skillful employee who doesn´t fit in will sooner or later leave. Either they get frustrated, or the team dynamics just won´t work. The company culture is therefore crucial, and we choose people according to their strengths and weaknesses. Everyone has both, and being aware of them is the first step leading to a happy job. To pick just one example, creative people tend to lack the perfect time management or tend to let their stuff unfinished. It is then better to create the team from different types of people so they are complementary to each other. You cannot create a team with the same type of people, that just won´t work.
In 2014, you also managed to exit market leading restaurant portals both in Slovakia and the Czech Republic for 3.25 mil USD. Exit is the dream of most startup projects. Do you remember when Zomato approached you with the offer? What were your thoughts at that moment? Have you always wanted to sell the portals?
I need to admit that I, personally, am not a big fan of this exit philosophy. Many young businessmen start with the idea of a project just to eventually sell it to someone. I don´t really understand this thinking. From the beginning, we wanted to build our own company with our own product and develop both. Originally, we didn´t have any intention to sell any of our products. With the exit of Obedovat.sk and its Czech version Lunchtime.cz, it was more of a coincidence.
When Zomato approached us, we didn´t want to sell anything as I´ve mentioned, and to be honest, we thought it was some kind of a joke first 🙂 Afterwards, we realized they had a serious interest, but even so, we didn’t want to sell it. Therefore, we set the price very high, at least from our point of view, and waited. To our surprise, they said yes, and we decided to go for it. The offer actually came at a time when our company needed some optimization, and we wanted to focus more on ZlavaDna.sk. Obedovat.sk was at that time a well-established product we didn´t want to put any more special effort into.
What do you think is the most important in terms of exit? What to be careful about during the negotiations, when to back away from negotiations, how to set up the price, whom to involve, when to inform about the exit, etc.?
As I said before, we didn´t intend to sell the products in the first place, so we weren´t ready to do so to a full extent. To give you an example, Zomato wanted to buy not only our product but also the license, so we wouldn´t be able to use the software on other projects – which we were doing at that time. Therefore, if you think of a successful exit, you have to think about a lot of things beforehand and prepare the company from the legal, accounting and technological perspective.
Another very important thing is the context itself. At that time, we didn´t think about Zomato´s intention to buy Lunchtime.cz and Obedovat.sk very much. From our point of view, we had put the price higher, but Zomato was prepared to give more than that for Lunchtime.cz only. When we calculated the final price, it was based on our cash flow extrapolated for several years into the future. As we later realized, Zomato didn´t care about this that much. They received money from investors for a world expansion that should be followed by their stock market entry. Their main goal was to get together all the market leaders in different countries, the Czech Republic being one of them. Clearly, to buy the leader in the market was more important for them than the financial execution of our products.
If you had the chance to exit the companies again, what would you do differently in terms of preparing yourself or your business for that?
Today, I know that “never say never” truly applies everywhere. We still maintain our first idea of not exiting in general, but I know that doing business, especially on the internet, is extremely turbulent. I can say it was a great experience for us and it changed our perspective a bit, as now, we aren´t that impulsive anymore.
Secondly, the exit gave us the chance to “clean up” a little bit, mainly the formal stuff like the organizational structure, our legal form and these kind of things which now help us in our everyday work. The last thing I would point out is to have negotiation strategy prepared. As we didn´t have any back then 🙂
You spent around 8 years in the corporate world, whether in audit or as the head of key corporate clients in a bank. Do you remember the moment you decided to build something on your own? What led you to the decision to leave the corporation and start your own business?
I wouldn´t say it was an impulsive decision; the longer I worked there, the more I realized I wanted to work on my own ideas and business, to develop my own company. I had carried this feeling for several years in my mind until my business partner Peter Paska finally convinced me.
What are the skills you acquired at the corporation that were also beneficial in your own business?
I learnt a lot during my corporate life, everything from technical skills such as the analysis of financial reports, working with economic indicators and even soft skills like people management or how to do sales. Even though we are more of a technical company, sales is the core of our business. We have a huge number of business partners who sell our products, and I have to say that I still use my experiences from the bank´s sales department I worked at previously.
You have been a part of our startup environment for a while. What do you think about the ecosystem? Where do you see gaps and what are our greatest advantages according to your experience?
I will start with the disadvantages so I can finish with the positives. As I’ve already pointed out, I have the impression that young people in the startup community tend to have unrealistic expectations. For example, they´ve got an idea and think that some investor will actually appear and invest in their bare idea or even buy it.
Unfortunately, it doesn´t work like this. You have to have a real product, ideally a running business with your own clients. No investor is going to buy your excel sheet or a nice app visualization. It has to be a functional product with its results. This approach may be caused by something we’ve already talked about – young people don´t have an ambition to develop their own companies or the product. They want to sell their idea and earn money, and that´s a mistake. Fortunately, this doesn´t apply to everyone, but I come across people like this all the time.
However, what I see as a positive thing in Slovakia is that we have a lot of skilled people willing to work hard. Meetings with young ambitious people always highly motivate me. I believe Slovakia will be a better country once the new generation that is not affected by the previous regime will come to the foreground. I can see it´s already happening slowly, but it will take some more years until the old structures fall down definitely. Anyway, Slovakia can be glad to have such talent and potential.
When you think about Slovak startup projects, which are the first ones that cross your mind? Why?
I have to say it would be our new projects – BookioPro and Camarero as currently I am fully focusing on them 🙂 The first one is an online reservation book that allows you to make table management at your restaurant more efficient. The second one is “a mobile waiter” – this is in the mobile phones or PDAs the waiters use when taking your order. After they complete it, the order gets immediately to the kitchen in real time. The main benefit is that you can get a great customer analysis together with the analysis of how your restaurant is running.
Can you share with us your plans for the near future? What are you up to and where can people meet you?
My current plan is to update our organizational structure for ZlavaDna.sk with more smart and skilled people so our project can grow and run more independently. I would like to have some more space for starting new projects in which I can see a lot of potential even from the global point of view. You can find me regularly at JCI Business Bootcamp as well.