Startup and then scale-up. What’s next? Well, when startup companies reach that level of growth, it’s true that the challenges they’ll have to deal with change. They’ll now have to focus on sustaining a leading position in their market, probably further extending their ventures and going beyond growth. Let’s find out, with Skroutz.
We got the chance to discuss issues such as these, with George Hadjigeorgiou, co-founder of Skroutz, during our 4th ScaleUp Greece event.
Skroutz has been testing new waters in e-commerce and food. And it is, without a doubt, far away from the first steps we discussed in the first part of our discussion ; and the struggles of a startup that grows, as we discussed in the second part of our discussion.
Onward, to the future, then!
Building the future Skroutz
Q1: Is it among your plans to focus on AI, Data Science or Machine Learning, in order to build the future version of Skroutz and be competitive?
Well, these are all hot topics. Actually, Data Science came along three years ago.
Everyone now focuses on AI and ML. Its true technological benefit is that it’s an accelerator of growth. But, no matter what technology you use, you definitely need to have deep knowledge of it. When you know what you’re doing, technology is just a vehicle that can drive you faster to success.
Personally, I believe that you if you need to do AI, simply do AI. There’s no value in merely chasing after some technology because of a trend.
At Skroutz, we exploit data we already have. We only use ML to a short extent. That’s because that’s all we need. We see value in it. That’s why we do it.
All in all, technology can give you a boost, only if you use it wisely.
Q2: You mentioned you have 8.5 million unique users. Is there a ceiling to that? If so, how do you plan to deal with it? Can you see growth coming from abroad or by offering new services to the Greek market?
Well, we made an effort to expand our business in foreign markets twice, but it didn’t work out well. And that was a valuable learning for us. We’ve learned that it’s difficult to start from scratch in any country abroad. Especially when you’re trying to penetrate mature markets. There is an equilibrium in these markets and it’s very difficult to change/quake it.
For example, regarding our venture in the UK, even if we were, hypothetically, venture funding backed, it would be very difficult for us to compete with Amazon. As a matter of fact, it would be almost impossible.
So, to answer your question, I believe that growth for Skroutz will come from Greece and it will come through the adoption of our own model. There is a huge margin in that. And to give you a few more details, the metric we use to measure our growth is GMV. That stands for Gross Merchandise Volume. And it is the revenues we generate for our merchants. Currently, e-commerce in Greece is at 7% and in Europe it’s at 15% of total commerce. In the UK it’s higher than 20%. Of course, there will always be additional satellite services, but the e-commerce business has a great growth potential.
Q3: How do you plan to compete with already established competitors in the e-commerce food industry?
We are a proven e-commerce channel for merchants. Based on our data, we are more efficient in comparison with our existing competitors. And that’s exactly what we offer: an efficient sales channel.
Things in e-commerce food are a little different, but our drive in all our services leads us to build something better than what already exists and offer our customers an efficient service. For example, we wouldn’t build a flight tickets pricing comparison platform. We’ve been called to answer that question many times; and we always give the same answer: we cannot offer a better solution than existing ones.
As for the e-commerce food service, we believe we can offer a much better service than the ones now available, to customers. Our efforts are not based on the existing market share it may get.
That’s our drive. That has been our drive so far. We lead with our products. Marketing is not (yet) our strong suit. Throughout these 13 years we haven’t spent a dollar in paid ads. We just did a few TV commercials. Oddly enough, they didn’t contribute to our growth. Our traffic is exclusively organic.
That’s our challenge for e-commerce food. We’re planning for slow, steady growth. We focus on our goal, not on our competitors. That’s our mentality, in general; and it will also be embedded in new services to come. We’ve still got a lot to give.
My motto is “Product beats marketing any time.”
There’s a book focused on that: Purple Cow.There was a time that marketing was all about aggressive tactics to help you increase your sales. We’ve left this far behind. Customers today are much more demanding. and that’s why your product is your marketing tool. Although it’s not a high-speed marketing tool (like burning money on ads), yet it’s a reliable one.
Q4: There’s a rumor that wants Amazon flirting with the Greek market, have you heard of it?
Yes, I have. We believe it would be great for the market. At Skroutz we’re not afraid of competitors. That’s not the problem we need to deal with.
Q5: Regarding the difficulty of penetrating an established market, as the one you mentioned about Amazon in the UK. Let’s take a closer look at Greece, where today there are about 3-4 competitors and two of them have grown well enough. The market gets more and more mature. That’s a fact. Is focusing on a great product enough to help you sustain your position as a leading player?
If you want to become, or remain the number one player in two years from now, you need to have patience. We’ve grown because we had patience. That’s the way we grow and we’re OK with this. We are determined to wait 3 or 4 years to get traction.
The mentality “let’s make a unicorn in three years” is very common these days. If someone shares with me his/her ambition to exit in three years, I believe I’d be wasting my time talking to that person. I see no value in this mentality. Creating a company and ending up selling it three years from now, seems pointless to me. I’m not interested in this. Besides, the odds are so low that I see no objective value in this.
What’s happening in the US is a game for investors to earn money, there is no value creation in all this. There are so many examples; Rework. I’d also say Uber.
When you focus on creating long-term value, things become simpler. You have to admit that you’re not going to exit in three years. There’s no use talking about startups that raised huge funds, but created no real value. The US is not a healthy example to use as a guide. I see no value creation in running 300km/h for three years, in order to achieve illusionary goals, such as an exit.
The reward you’d get from a 10-year effort would be greater.
Q6: Tell us a few things about trends in e-commerce, in the Greek market. Do you see any upcoming changes, in terms of market size, verticals etc. ?
First of all, Greece is growing at approximately 7% each year, compared to other e-commerce markets abroad. That’s what reports say.
There are some friction points in the Greek e-commerce market, but if we manage to get over/surpass them, things will be much better. Nonetheless, at Skroutz we see a 20% growth rate coming our way.
Q7: Skroutz.gr started out as a price comparison site for PC spare parts. What made you go for the marketplace when you did? And what made you recently decide to go for the e-commerce food service? What was the tipping point that made you go these directions?
Well, this is actually a decision you can make once you realize you have extra resources. Right from the beginning we were focused on breaking even or doing much better, with extra profits.
Now, we have reached a point where we’ve got extra resources. And that allows us to go for new services. There’s no reason to stay static, you need to move forward. You need to expand. We reached a tipping point where business is really solid. That allows us to try new things.
Q8: Going from 100% to 50% and then back to 100% of your company. Did owning just 50% of your company put additional pressure on your team? Did that change your motivation? And did giving away 50% of your company reduce your drive?
No, our motivation didn’t change, but that decision was a huge mistake. It cost us a lot, in terms of stress. We are really happy that we finally managed to get that 50% back.
Our goals didn’t change, but getting back our 50% changed the way we feel about these goals. The problem with giving away our 50% was that we got no value from this. You might get a strategic partnership that will benefit your company, be it venture capital funding or any other partnership, but that didn’t happen in our case.
Q9: Fast forward five years from now, in 2025, imagine you’ve grown beyond all expectations.Would you still come to work? What would be your motivation?
Things change as you grow and so do the challenges you face. I never had any trouble remembering each employee’s name, but that became difficult once we crossed the threshold of 200 people.
Things changed, but I don’t think this day will ever come. And, if it does, I believe I’d still come to work :).
That’s it then!
That was, indeed, a really insightful discussion. We’d like to thank George Hadjigeorgiou and his team for the warm hospitality they extended our team; and all the attendees of the 4th ScaleUp Greece meetup.
What comes next?
That was the 1st ScaleUp Greece of this year. Stay tuned for the next one! Who will be our next host for a ScaleUp Greece event? Subscribe to our Newsletter and be the first to know.
