Jan Cienski in Warsaw -
Poland is Europe's most successful post-communist country, growing faster for longer than any of its neighbours over the past quarter century. Much of that expansion is the result of a wave of business creation that started 25 years ago, when Poland was a bankrupt, hyper-inflationary basket case.
That entrepreneurial drive, which makes Poles in some respects more similar to Americans than to most of their fellow Europeans, is not over, as a conversation with Rafal Brzoska attests. Brzoska turned a flyer delivery business into the main competitor of the Polish post office called InPost, and is now creating an international parcel delivery company to take advantage of the surge in internet-driven sales.
Sitting in his office in suburban Krakow, Brzoska – worth PLN700m (€167m) at the tender age of only 37, according to the list of wealthiest Poles complied by the Forbes magazine – is an example of Poland's next generation of business success. These are the people who missed out on the chaos of transformation but still made a fortune.
“There was a general feeling that the people who started a decade earlier selling on the streets and in the stadiums, that that was when the fortunes were made,” Brzoska says, a grinning man who sports the close cropped hair popular with many Poles. “There was a feeling that the market was occupied and that all the easy stuff was done. That's the same thing I hear from young people today. But the truth is that the market is changing all the time so there are always opportunities. If you have an idea, work hard and have ambitions – you can scale any peak.”
He was only 12 when communist rule crumbled in Poland, and came of age in a proper market economy. The market was actually such a familiar concept to him that he became the family expert on its intricate workings. His parents had been employees of Rafako, a power generating equipment manufacturer that was one of the main employers in their home town of Raciborz. As such, they received a packet of shares when the company was floated on the Warsaw Stock Exchange in 1993. The shares were worth the enormous sum of PLN200,000, and the parents made the curious decision of allowing their 15-year-old son to speculate with their nest egg.
The result was about the same as handing the keys of a sports car to a teenager. Brzoska hung on to the shares, which soared in value for three weeks, but then the market hit its first downturn since its creation in 1991. Poles had seen the bourse as a one-way bet, but the bear market put a swift end to get-rich-quick dreams. Brzoska's parents' shares lost 90% of their value. “I promised them I would their money back and I did,” says Brzoska.
It took him almost seven years of trading on the stock market, though. He would buy business newspapers, study the market, and make canny trades, slowly clawing back the family money.
A high flyer
His bruising brush with the market so entranced him that he ditched the idea of studying medicine and instead took on economics in Krakow. That gung-ho appreciation of capitalism wasn't overblown. In 1999, in the third year of university, Brzoska, his girlfriend (and now wife) and some friends saw an opportunity in the rapid expansion of supermarkets and hypermarkets, which were opening new locations around the country. The food retaillers turned to the same methods of advertising that have filled mail boxes across the western world – junk mail.
The three began to distribute leaflets. The field was crowded, but Brzoska hit on two new ideas. One was to offer a low price, and the second was to guarantee timely delivery so that the pamphlets would actually end up where they were supposed to go. “This was innovative for the time,” says Brzoska. His company, Integer, exploded in size and in less than five years had about 7,000 part time workers, delivered more than 1m pamphlets yearly and had one of the largest market shares in Poland.
But a solid share of such a small niche wasn't enough to keep Brzoska happy. In building the flyer delivery business, he had acquired people, trucks and a really good sense of logistics. With that experience he decided to aim very high – at the Polish Post Office, a sluggish and expensive state-owned outfit with a monopoly on all mail weighing less than 50g.
Taking a close look at the law, Brzoska had an idea. Why not add something to envelopes so that they weighed more than 50g, allowing companies like his new outfit, InPost, to make deliveries? He decided to glue on metal tabs that pushed the envelope's weight above the post office's threshold. Brzoska invested PLN6m and launched his new service in 2006, expecting to start breaking even in only three months.
But the initial start was very tough. People who had delivered flyers turned out to have problems with the greater precision needed for delivering mail. Instead of fat profits, InPost struggled through two years of losses. But fuelled by PLN20m in additional investment gained from Integer's IPO, Brzoska soldiered on. “If I had known how strong our opponents were, I probably wouldn't have started this business,” says Brzoska. “A lack of knowledge is a common characteristic of many entrepreneurs. But once you start you can't retreat – then it's like on the Eastern Front.”
By 2008, InPost was making a profit. By 2012, by which time the metal tabs were no longer needed thanks to EU pressure to liberalise the postal market, the upstart had captured more than 15% of Poland's letter deliveries. In 2013, InPost won a contract to deliver official mail from courts and prosecutor's offices. The company is planning to take part in an upcoming tender to deliver all first class mail, and also expand overseas.
As InPost has grown, Brzoska launched another business called easyPack. And took aim at conventional courier companies. “We saw that waiting around for the courier was the `narrow throat' of the business,” he says.
Instead, he came up with an idea to set up automated package centres. Scattered around Poland, they allowed a customer to drop off a parcel, write in the phone number of the recipient and pay by credit card. Delivered by the same people and vans and trucks already used for the mail, by the next day the parcel would be stashed in one of compartments at an EasyPack box close to the recipient, ready to be opened with a code sent by SMS. easyPack now has 4,000 stations in nine countries, and plans to have 16,000 by 2017. The idea is to capitalise on the growing demand for e-purchases.
Brzoska feels that stories like his could still be repeated in Poland today. “We have a lot of people hungry for success,” he says. “We are still a society that wants to achieve and works hard. The energy is still there – the volcano is still bubbling.”
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