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Rafał Styczeń: Rules of engagement

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Can you hear me? Thank you very much for having me here, and thank you very much, Charles, for being between the performer and me, because, you know, I didn't feel pretty good as a technology nerd speaking after such a great performance. You know, it might be boring for you. Well, I must say I was pretty nervous being invited to give a speech at TEDx, because I usually sell myself, and I'm not allowed to do it here. So, I didn't really know what I [had] to say to you, and what I could say to you. But I thought, maybe, well, putting some things together that [have been] guiding me now for almost 20 years in trying to finance various ideas, trying to finance start-ups. And I think this is all [of us] here talk about, these are different ideas. And I think ideas are great, but if ideas are not deployed, if they are not put into action, if we don't see them, are they really worth [it]? So I think what for me is generally of the same importance as an idea is actually the right execution. And I saw many people working on great ideas and not achieving what they wanted to achieve. So I think talking about the things that I think make people achieve and bring through the ideas that they have in their heads is really important. So, I sometimes [show] some achievements that I've been going through with trying to finance, starting or developing more than 18 projects or today employing several people here in Poland and generally in the world, because after showing a slide like this, I can usually talk [about] stupid things and people listen. (Laughter) So, I've done pretty many things, yes? And I was trying to be successful in many things that I was doing, but I [was] not. I was not always successful, and people very often are not successful in things they're doing. So I wanted to talk with you [about] what I think is really important when we go forward with the things that we want to do. The first and most important thing that I see is, you have to be -- It's not working. You have to be engaged in things you are doing. You have to be 100% committed. And you cannot think about any alternatives. I very often see people that are coming to us with great ideas and they want to prove to us they are so great, so they are showing us, doing many things concurrently. Or they very often think about their alternatives that they [have] if they fail. The most successful people I've seen in my life are people that are mortgaging their houses against bets on ideas they are doing. And these people go forward. Sorry. The second important thing that I believe is discipline and courage. But discipline understood not in the way that you have to work hard to achieve your success. Discipline understood [as] that you have to be committed to things that you believe, and be with this till the very end. So if you believe in something, do it. Because people often fail because of not actually executing their beliefs. This is very often, of course, connected with courage. The slide slipped. And I have [had] several failures because of not actually standing behind my beliefs. I have [left] investments that right after [I left] actually became successful off the things realized that I strongly believed in, but was not able to actually stick with these beliefs till the very end. I went bankrupt in some businesses because I didn't have the courage to keep [at] it till the end. Although the business model proved to be very successful and others actually [had] a pretty good success in this sector. But on the other hand, when I talk about Comarch -- This is the first company I was involved with, I was one of the co-founders. [Very] often people ask me, "How did it [happen] that you had the feeling that this March 2000 when you were selling your shares is the right moment to sell?" I said, "It had nothing to do with my feelings, this was just my internal beliefs." They said, "When some things are going in the right direction, I'm with the company. When they are not, I'm not with the company." And because of internal politics, I just took the decision to leave the company. It was half a year before the IT business actually reached the hype, so I [was able] to exit at the highest valuation. The same as [when] I started the company, yes? People very often asked me, I mean, "[What was it like]?" Why did I start this company? I said, "It was very simple." I was [in my 4th year of college], and I decided that I'd take the first job, the first opportunity. I had to take [it], because I wanted to learn [what it's like] to work. Then, I went to a lecture with Janusz Filipiak. He was a professor at [the AGH University], and he said -- He was very boring, always not organized, so actually, these were pretty bad lectures he was giving, yes? And is standing in front of us, and he's asking, "Well, I have this project with TPSA that we have to develop software for them. Is anybody interested in doing this with me?" And I went, "Yes!" Not because it was interesting, or not because Filipiak was interesting. (Laughter) It was just because I took the decision that I'm taking the first job possible, yes? (Laughter) (Applause) And I really think success comes from this, that you stick to your rules. And, of course, later on it turned [out] that we set up a company together, and it was pretty successful, yes? And today, I would say this is one of the biggest companies here in Kraków that is turning Kraków into a technology company, yes? Before, we had the steelworks, and today, we have software companies here. So, the same way I entered Comarch, the same way I exited Comarch. Not because it was worth a lot and the market was at this high, and I could make a lot of money. No, I just thought that the period of working [at] and developing Comarch is over. And, [speaking] about failures, I think this is the most important element that we actually face in our lives. These are not successes, but these are failures that shape us, yes? Successes make us fly and make us do stupid things. But failures make us think. But, as I thought, I've failed many times. Maybe sometimes not making as much money on an investment that we made, sometimes in going bankrupt, yes? As a venture fund, we started in 2000, yes? This was the Internet hype. Everybody remembers the dot-com boom. Everybody was talking about the Internet, but back then, the Internet did not prove to make any revenue anywhere. Revenue -- maybe, but companies were not profitable. So actually, when the bubble burst, nobody was interested in investing in the Internet. And our company's name was "Internet Investment Fund," and we were raising money. (Laughter) So actually, our investors were running away faster than we could finish [saying the] name of our company. (Laughter) So, it was actually a very bad time to be in, so we wanted to make investments, but we had to close most of them down. And work [unclear] that we were successful, without having any external investors in the fund. We had to make them successful, sell them, and to make money on them, to be able to invest further. And it was very OK. And I must say this was one of the reasons that the crisis that we have today we perceived as the greatest opportunity of all time, yes? Most probably this crisis would be one of the biggest, for me, in my professional life. So it was, for me, really a pleasure to enter into. Maybe I'm exaggerating a little bit, but actually, we [were able to] get prepared for it. And we are taking advantage of it, honestly [speaking], yes? There are many great companies that are right now in trouble that we can help and take over. So, [on the one hand], failures are great, because they teach you, really, yes? I mean, successes will not teach you anything, but failures do. But it's very important, after you fail, to stand up. And the other thing that is important [is] to admit that you're failing, and let it go. Because people very often go down with their failures, yes? Another important issue is delegating and outsourcing, yes? It is very important to be able to develop your organization fast, [develop] your ideas fast, either geographically distributed, or within a growing organization, is to delegate and outsource. But it is very important to know what you outsource. And I see, very often, people outsourcing hiring. And I must say I don't understand why people are doing this, yes? Why people outsource the most important thing that there is for the management of a company to be done. If people are outsourcing hiring, especially at the levels right [below] them, they should outsource themselves in the first [place], I would say. So, talking about "mass" and "small." I think, yes, small is beautiful, because small is fast. But for me, what small is really about is actually the ability [to put] people in charge of those small things. If you grow a big organization, you don't want to delegate, because you are afraid people's failures will fail the organization. But if you're able to divide the organization into small pieces, you're able to delegate full power and responsibility over people. That's why small is beautiful, I believe, because it can really empower people. Free them and give them the [opportunity] to take risky steps, yes? But this will not fail your whole organization. That's why I came to the conclusion, actually, after working for a few [unclear], that venture capital is really the right place, that I feel good with. Because I can do exactly this. Finance people, give them the freedom to act. On the other hand, what we struggle all the time [with], and this is why I say that we are [always] looking for the right organization, is still to be able to an impact on the strategic moves. Which is, I think, the most important issue for a venture capitalist or somebody who is financing ideas. Because very often we finance people that do not have the experience, yes? And if we know that they are doing something wrong, we want to correct it, and this is not always possible. I mean, look at this picture. People were afraid of typing machines coming into market. Our grandchildren will laugh about Facebook. This is what I believe. So, change is something that's speeding up, we could say, but I don't think so, we just get older. That's why we think that this is speeding up. But it was always there, and it will always be there. So, for us to exist, for our organization to exist, it's to be able to [adapt] to change. And what I do in my life, in all our companies -- I mean, we're [always] trying to find the holy grail that will really make all of these companies develop. And we are really open [to] change everywhere, and I think everybody should be. And if we are getting older -- I'm getting older, I think that I cannot invent things anymore, we start to fund it, yes? So I think, you know, if you can't invent things, fund things. And this is, I think, the right thing for any big organization to do. Because I haven't actually seen a big organization be very innovative without funding ideas, without buying and taking over. It's WiFi, and I think when I'm closer, it's working better. (Whistle, Laughter) And there is the issue of luck in being successful, yes? Everybody says that, of course, you need to work hard, you need to have great ideas, but you always need to [be lucky]. And I must say, I don't believe so much in this idea of [being lucky], yes? Because, if you see that, I think, over 60% of lottery jackpot winners are bankrupt within 5 years. Now, I think, "So what does luck actually have [to do] with constantly being successful?" I don't believe in being lucky. There is a joke about a rabbi coming to the synagog and asking God to give him the opportunity to win the jackpot, yes? And he's coming [back again and again]. One day God speaks to him: "Rabbi, give me a chance, buy a ticket," yes? (Laughter) So, I think this is exactly what each of us faces every day. I mean, we see all these trains leaving, yes? And I think what we [call] "luck" is having the guts [to take] the opportunity. I think whatever opportunity you take, you can be lucky with it, but you have to give God the chance. And I think [most people] just don't. And that's why they say, "You were lucky, and I'm not." Yeah, and that's it. And because, as I said, I'm actually a technology guy, I wanted also to give you a few words about technology and a few words about Poland, [which] I think is a great place to be, and is a great place to develop. Why am I in technology? You could say I started 20 years ago, it is not that long. But today, people are investing in clean technologies, in biotechnologies, and many others. And I think technology is great, because technology is reinventing itself every 10 years. And it's even speeding up. I mean, you had the minicomputer era, the desktop era, we had the Internet era. We already today say we "had" the Internet era. Because, I think, Google's growth is over. I mean, it's great, it will still be growing, but the most growth is over, yes? Today, we are coming to the social network era. I believe 2011, 2012, Facebook will IPO. I encourage you to buy their shares. They will be growing then. Then, we will go to another era, and this is all actually facilitated with technology. And the connection with the Internet only makes it faster. Develop faster, the cycles are faster. But every cycle, a new opportunity emerges. And here, I name just the biggest names. But around all those companies, there are tons of others, that create a completely new economy. So there are tons of opportunities in the technology field to develop. Another very important issue is that technology is very short-cycled. This is why Warren Buffet is saying he's not investing in technology. Because he wants to invest for 30 years now. Now, if you want to be successful in technology, you need to set something up, grow it, and sell. Most of the technology companies, most of the cases, if you look at them, they [grew] in a period of around 7-10 years. I mean in value, yes? An investor will always [see this] as value. Of course, they later [grew] in market share, in their success, whatever. But in terms of shareholders' value, they had a relatively small growth period. You see this in America, where this is the broadest market. You had Microsoft growing from '80 till '99. Since then, they are not growing in value, it's [been] 10 years already. You had Google growing for more or less 8 years, I would say. Their highest growth, they are still growing. Yesterday, they grew [by] 10%. But this growth is not that great anymore. You have Facebook, [which] is growing right now. You had Comarch, for example. They were growing in value since '93 till 2000. In 2000, the value of Comarch, the biggest IT company in Kraków, was around 1-2 billion zloty. Today, it's 600 million. So look, for 10 years, the company did not grow, in terms of value. So that's an important issue to remember. And I think what is also an important issue to remember [is] that if want to make money investing in these shares, it's pretty easy. If you [had invested] in Microsoft back then, when they were IPOing, which was a no-brainer that it is a successful company, you would [make] fifty times. If you [had invested] in Google by the time Google was IPOing, it was a no-brainer they would be successful. You would make seven times your investment. If you [invest] in Facebook in 2012, and this is a no-brainer they will be successful, you will also make significant money. So, actually, looking at those companies, but only staying for a short cycle of time. It's the only successful way in developing investments in the technology sector. My time is slowly running [out]. I also wanted to share with you what I think the future development and future gain in the technology sector will be, in IT, especially. One of them is cloud computing. It is going mainstream today. This is something we [were] talking about 10 years ago. Remember the company Sun Computers? Once, a big company. They said, "The network is the computer." They do not exist today. But the network is the computer, actually. And some other things, I just split them. I think the presentation will be available online. I also wanted to say a few words about Poland, because not many people are aware of this, but Poland today is the second best IPO market in Europe. After the UK. We have the biggest active community of VC investors in Poland. Actually, today we are talking to many German and French companies that cannot get investment money over there, in Poland, to invest. You have tons of incubators that will be financing ideas. And what I think [is], today we also have the second generation of people, coming into the market, that we didn't have for 20 years. People that actually are the Millenials, that actually were born after communism, or got their education after communism. And I think, you know, this is more about people and money, less about ideas. The ideas, we can take from TEDx. (Laughter) And this is about us, you know, that we can grow those into successful things. Thank you very much. (Applause)

Video Details

Duration: 19 minutes and 26 seconds
Country: Poland
Language: English
Genre: None
Producer: TEDxKraków
Director: TEDxKraków
Views: 1,402
Posted by: tedxkrakow on Nov 11, 2010

Talk delivered at TEDxKraków, on October 15, 2010.

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