Adapted from Chapter 3 of my book Chasing Black Unicorns. My singles portal had just collapsed, I was broke, and I was working behind a bar in Warsaw.
In the beginning there was the word. Well, actually, PowerPoint slides. While browsing the internet and calling it analysis, I reached the extraordinary conclusion that everywhere a technological revolution had occurred, great fortunes had been made. If you had not chosen wealthy parents and had not gone down the route of organized crime, your best chance was to build on change. In every revolution some part of the market died and something bigger took its place. Nokia, MySpace, Kodak, Blackberry and Yahoo took their eye off the ball and are now shadows of their former selves.
So it was worth seeking out an area where it seemed nothing could ever happen, where the roles of moguls and minions had been handed out years ago, and then shaking it up from within with new technology. Running a funeral business was not going to impress the opposite sex. But it fit every one of my assumptions.
The soup incident
I happened to be at home for dinner when my mom mentioned that a neighbor’s relative had died, and what a nightmare it had been to sort out the formalities.
“What? You don’t like it?” asked my mother, worried, when I spat out my soup in amazement.
That was it. A funeral services brand. The sector was almost entirely offline. Undertakers were hyperlocal companies without the knowledge, the budget or the desire to invest in technology, a bit like hotels in the 1990s, which let Expedia and Booking.com become the biggest players without owning a single hotel. The heads of these firms were the proverbial mustachioed gentlemen in comfy chairs, convinced that over their dead bodies would anything happen to their business.
Mistake. Ladies and gentlemen, I give you Marek Zmysłowski, code name: Tombstone.
My working hypothesis was this. The undertaker’s customer is not the deceased, only the family member organizing the funeral. Statistically, Mr. Average organizes two and a half funerals in his lifetime, and he has only a few hours to choose. Usually a doctor or a priest recommends a “very reliable” company. But Mr. Average is thirty to forty-five, the first generation of heavy internet users, and the chances were rising that he would take out his phone and find Mementis: the best website, a 24-hour call center, Western-level quality at Polish prices, and many loosely related services under one brand, from grave cleaning and wills to funeral loans and eulogies. I put it all on fifteen PowerPoint slides.
Fifteen slides and a one-way ticket
After Halves of the Orange I knew one thing: if I was going to lose money in a spectacular fashion, it would be someone else’s money. I was broke, with no chance of a loan and no nerve to ask my parents, who had already helped me so much. So I built a database of the venture capital funds I could find, around forty, and sent each a nice email. Five replied. The most interested was a fund in Wrocław.
I got there by hiding in the toilet on the train. I only had enough money for a one-way ticket, and I preferred to get the stress out of the way before the meeting.
“Tell us about this business,” the investor asked, with several colleagues watching. I explained that you could arrange a funeral over the internet, that the cost-per-click was ridiculously cheap and that the word “funeral” had tens of thousands of searches a month. “The competition is asleep. They haven’t noticed the market is changing.”
“Because it isn’t changing,” observed an investor.
“Mr. Zmysłowski, do you know what the funeral services sector in Poland actually is?”
“Of course. I know everything and have planned for everything.”
That was not true. If I had known, I would never have got involved.
I went home to Koszalin, paying for my ticket like any good citizen. Two days later, I heard that my fifteen slides had been valued at 1.5 million zloty. I would receive a little over 700,000 zloty and keep 49% of the shares.
“You are investing in a presentation of a bunch of slides,” I wrote to them, throwing caution to the wind. “A very risky idea, run by a young entrepreneur with a lot of failures behind him. And that doesn’t bother you?”
“Correction,” came the reply. “We’re investing in the lesson we hope you have learned from these failures.”
It was then I learned, almost incidentally, that in the West nobody is taken seriously in business unless they have at least one failure behind them. “Don’t piss it away on a new sports car,” I was told at the start. I laughed. The guy was serious: the board of a previous company they backed had begun by leasing two Porsche 911s. I moved to Wrocław, set up the company and the bank account, and literally stayed on the rails, travelling the length of Poland by train.
The sector fights back
It was on these trips that I understood the weakness in my concept. Convincing investors that the internet would revolutionize funeral services was easy. Convincing the sector itself was a different story. As I learned the hard way, it was a closed and very tightly knit world. Two incidents will do.
In a small town in southern Poland, an elderly lady who ran a family undertaker’s received me and listened to my KPIs and forecasts, then looked deep into my eyes: “Hold on a second, are you even over 18? Show me your ID, sonny. Ya want to get money out of me, do ya? Going on about these yenternets.” They ordered me to leave, several times, so there would be no misunderstanding.
In Słupsk, the owner of a funeral company seemed very nice over the phone, and in person he was a friendly, elegant older gentleman. I had barely started when he said: “Just a moment. We have to wait for the owner. I’ve already phoned him.” I was surprised, because I was sure it was him I had come to see. Then two huge men in black leather stepped out of a black Mercedes S Class, and the one with a tattoo on his bald head sat down opposite me.
“Talk, sonny.”
I talked about profits and KPIs. When I finished, he asked: “So this all means that I’m supposed to pay you per funeral. How much?”
I knew the margins were not the worst: on average customers spent 6,000 zloty, the amount of the state funeral allowance, and the undertaker handled the paperwork until the state paid him directly. So, with the certainty of a former financial advisor, I threw out a figure I expected to negotiate down.
“A thousand zloty,” I said.
His face turned bright red. He took my business card from the table and threw it back at me so hard that it cut my forehead. “Get out of heeerrreeee!” So I got out. Maybe I had not been clear enough that I was willing to negotiate. I discovered later that a few weeks earlier the nice older gentleman had lost his business in a game of poker. For the new owner I was probably the first legal client he had ever had.
Still, I found partners and launched a nationwide campaign: television, billboards, the metro, promoting funeral planning, which proved controversial. Then I came to the attention of the professional associations of undertakers. I had assumed I would put helpless mustachioed old men out of business. It turned out they were not helpless and had far-reaching influence, and things got very unpleasant.
Someone connected with a notorious scandal in the sector, the “skin hunters” affair in Łódź, invited me for a drink, because he “respected me greatly”. I stupidly went. Over whiskey in his office he said: “Marek my boy, something bad has happened. We took our eye off the ball regarding you coming into the market. And now you’re too big and too well known for us to shut you up without arousing suspicion.” Then he burst out laughing. So did I. What else was I supposed to do? He never said anything directly incriminating, but I had the strange conviction that the whole meeting was one enormous threat.
Then a “concerned citizen” reported Mementis to the Office of Competition and Consumer Protection, for pretending to be an undertaker when I wasn’t one, which is like accusing Booking.com of offering hotel reservations without owning a hotel. The inspectors asked me to initial every contract of the last six months, around two thousand pages. I spent the night signing, and today my right forearm is bigger than my left. They found nothing. My noble competitors were simply doing everything possible to make my life difficult, hoping I would give up on my own.
“I’ll show you”
They did not know whom they had crossed. Nothing motivates me more than the chance to show someone that I can manage. “I’ll show you” suits me. And I had no way out: the investor was growing impatient, and if the company was laid to rest, I would spend the rest of my life at a supermarket checkout.
The truth was that I had misjudged the speed of market change, or rather its slowness. Polish customers knew priests and doctors were often corrupt, but at that moment they wanted peace and quiet, and the last thing on their minds was going online to shop around. The revolution in funerals would not happen as fast as in my fifteen slides.
When the investors rang daily to ask about progress, I lost patience and told them to leave me alone because I intended to buy them out. The “I’ll show you” alarm went off again, and a damn good thing it did. They agreed, at a fair price with delayed payment: they no longer believed in the project, and could now report to the government agency that had funded them that the project had been concluded successfully. I was left with an almost dead company and debts, but without an annoying investor.
With the money left, I decided to move offline and consolidate undertakers, as a Dutch fund had done in Benelux. It showed interest in repeating the trick in Poland, if I found at least 20 undertakers worth a million zloty each. Alongside, a side project was growing, MotoRaporter, which let people remotely check US cars before buying them. I needed a business angel for both.
The angel in Szczecin
I qualified for a meeting of the Pomeranian Group of Business Angels in Szczecin. This time I paid for my ticket, which I considered a symbolic social advancement. About fifty businessmen over forty were in the room. I made my talk a show. As they say, all power corrupts, but PowerPoint corrupts absolutely.
Only one person came up to me afterwards. Marcin. He was my height, which earned my immediate respect, and seemed friendly and laid-back. We exchanged cards and I spent the evening at a bar, on a lot of warm cheap vodka.
The next morning I woke to a headache and an email: “I’m in. We’ll start with 300,000 zloty with an option on a further transfer once the goals have been met. One condition: I join the board and we work together. I like this business and I think I could add value beyond money. Give me a buzz within 3 days, I’m off on holiday.”
“It’s a deal, here’s the account number. We’ll go through the details on your return.” The money landed the next day. Those are the kind of deals I like.
A month later, when Marcin was back, brown as a berry, I invited him for a steak. We chatted about trivial things and the past, and then suddenly I became very honest.
“It somehow slipped my mind earlier, but there’s still one important issue. I must have forgotten to tell you when you joined that we are 200,000 zloty in debt. I mean, not so much that I forgot to tell you, as that you forgot to ask…”
Marcin was about to put a piece of steak in his mouth. He held the fork in mid-air. Then, very slowly, he laid the meat back on the plate and said through gritted teeth: “Tell me that once again. But slowly, so that I definitely understand it.”
He got mad, of course, and he was right to. He did not call me for two days, and later we laughed about it. He told me that I really was a good salesman: I had talked the business up so much that he forgot to check the finances. There are moments when I wonder whether I took him in or he took me in. I still don’t know.
The undertaker consolidation never happened. After months on the road we were several decades ahead of the market. Some companies operated illegally, some had horrendous debts, some had ownership problems, such as an owner who had died ten years earlier. There was actually nothing to buy, and the guy from the Dutch fund could only bang his head against a wall before leaving quickly. MotoRaporter, on the other hand, began to grow properly, and this time, thanks to Marcin, we made money.
And here we are talking, and meanwhile Africa was getting closer in leaps and bounds.
What I took from it
- Look for change, but check its speed. The thesis, that technology transforms sleepy industries, was right. My timing was wrong: the market was far slower than my slides.
- Know the sector before you pitch it. I told investors “I know everything”, and found out what the sector actually was only after I had their money.
- Disclose the debt before the money, not over a steak. Marcin forgave me, but not everyone would have.
This is from Chapter 3, “Memento Mori”, of Chasing Black Unicorns. The story continues in the book, and Africa is getting closer. All of my income from the book goes to the MaYa Foundation.
Listen to this chapter: Polish audiobook on YouTube (English version coming soon) · Spotify
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