Facing The Absurd

chanllenges of running a business in a country town

I happen to live and run my businesses from a country that most Americans can’t point out on a map or still call Czechoslovakia (which is totally understandable, I couldn’t name the 50 US States either). Although I am obviously a big Czech patriot, I would still like to ventilate my frustrations of operating a business from a country that has a population of 10 million. It makes competing on a global scale much more difficult and me and my team have to go the extra yard to be better.

The most frustrating thing is the size of the market – 10 million people with a GDP per capita of $24k at PPP. Compare that to the U.S. with 300 million people / $46k and you find out that the US is roughly a 60x bigger market than the Czech Rep when it comes to buying power. Because of all the language barriers and unique aspects of every European country, it is very difficult to scale a project/service once you reach a certain level. Being part of the EU has certainly helped, but the EU is certainly not a federation of states like the US. Just to illustrate this frustration with an example – take our lead generation department within Elephant Orchestra. Lead Generation is in many ways a local service – you have to be close to your customers (lead buyers) and you have to understand the local market for acquiring traffic. What is currently frustrating us here is that we are hitting  a major constraint in the amount of traffic we can profitably buy and convert. If we want to grow, we have to expand into other lead gen niches (like health, education) or expand abroad. But expanding abroad is very difficult since you have to build up your knowledge and a team from zero and that costs money. Whereas if we would have a US presence, it would be much more easy to scale our model and maintain margins.

Then there are several frustrations of running a global business from here, again to illustrate, I will use the example of Elephant Traffic. First of all, if we want to sell in the US, we have to understand the language. The HR pool of native speakers is really tied to the expat community. Or we have to “import” the people. Second is the travel barrier, if we want to meet our clients, we have to be constantly travelling, which increases costs.  Then there is the time difference, hence our sales people and account managers have to work the US time zone, which means coming to work at 3 p.m. and finishing at 12 p.m. Again that limits the HR pool, a lot of people don’t want to work those hours. Then there is the issue of knowledge exchange – there are virtually no people that would be in a similar business as us, so you can’t refine your ideas, network etc. Then there is the mindset. Czechs typically have a pretty provincial way of thinking (recommend reading the book Good Soldier Svejk to understand). It is difficult to transplant “global thinking” into them.

Obviously there are certainn advantages of operating from the CZ such as well educated cheaper labour, maybe a more favourable tax climate, it’s easier to become a market leader here etc. But really the dissadvantages are still much bigger. Hence I think it is inevitable for us to open a US presence next year. That will allow us to both exploit some of the favourable aspects of the CZ but also make it easier for us to compete with the global players. Take the best of both.

I really enjoy reading the feature stories on DNJournal, they bring a lot of inspiration. What usually most of the profiled people share in common is a pretty comfortable middle to upper class upbringing (I’m no different) which to a large extent helped them to be successful in their future business careers.

Today I want to tell you part of the life story of a huge domainer (easily over $200k in revenue per month), because it is one of the most breathtaking and fascinating stories I have ever heard and really differs from all of us. This person comes from Eastern Europe just like me and I have got to know him pretty well in the last two years, although we have met in person only a few times. This guy is completely under the radar, so obviously I will keep his name private. Let’s just call him Igor for the purpose of this story.

Igor spent most of his teenager years still behind the iron curtain, growing up under the communist regime of the time. The times were tough then, shops were undersupplied, there was a lack of freedom, you couldn’t travel etc. Igor dropped out of school early, never finishing high school. His first major encounter with life was when his father committed suicide when he was a teenager, to be found by Igor’s brother. Igor would later attempt to committ suicide himself through a rohypnol overdose, which he fortunately survived (he woke up 48 hours later). With the revolution in 1989, Igor discovered he had an entrepreneural spirit and decided to go into business, opening a newsstand at a train station. Unfortunately he ended bancrupt with no money, he had to find a new way how to provide himself with a living quickly. During his time working at the newsstand he got acquainted with some of the homosexual prostitutes residing there, which would tell him about their “business” and the potential of making decent money from it. Because of the situation he was in, he opted for this option and moved to Germany, where he would prostitute himself for over a year (although being straight himself). He also had a stint in Switzerland, only to be banned from the country for 10 years. As his financial situation improved, he came back and went back into business, starting a book wholesale operation. This career was brought to a halt though as he got involved in a serious car accident for which he was sentenced to two years in prison. After being released from prison he again started a new business, this time in import-export, where he finally found some success. The internet was becoming integral to this business and Igor stumbled upon the relatively new Google Adsense programme, which he implemented on his export related websites. After making 50 cents in the first day, he saw potential in this and was looking at ways to scale this and was quickly drawn to domains, which he would acquire through drops. Even though he had a demon called alcohol haunting him (he would go through two bottles of vodka a night working), he would put immense amounts of work into his new passion of domains and would observe his portfolio and parking revenue grow every month, mainly through re-investing all his income back into domains. Today, his portfolio numbers tens of thousands of domains and is still growing every day.I really admire this guy because he is one of the smartest people in the business, has a huge drive to move forward and has an unbelievable sense of humour. This guy is the biggest charater in the biz and is 100% pure. I hope a movie is made out of his life one day.