Jakub Havrlant for E15: We are building a global technology group

Jakub Havrlant belongs among the most important personalities of domestic internet and technology-oriented business. His Rockaway Group with revenues in billions of CZK has expanded, within a short time, from running e-shops to investments into start-ups. Part of the Group is also E-commerce Holding into which Daniel Křetínský and Patrik Tkáč have recently entered as investors. Immediately after that, the company bought Vivantis, an important player in Czech online shopping. “Acquisitions are certainly going to be the thing stimulating our growth,” Havrlant says in his interview for E15 daily.

* E15: When you started the project Bezrealitky.cz in 2007, was it a big step into the dark?

I don´t think so. I always follow the rule that when going up the staircase, you should go step by step and not jump over more than one step at once. In all my business, it is always about seeing three or four steps in front of you, but not trying to see the top of the staircase by all means necessary. The project Bezrealitky.cz was growing naturally. In all my career so far there have been only few things that really hit and unsettle you, because you suddenly get several levels up. On the other hand, going up the stairs is rather a natural process. It has more solid base, because you don´t find yourself in situations which are completely new.

* E15: The sale of Bezrealitky.cz to Allegro, followed by running Czech branch of Allegro, then leaving the company and founding Rockaway. This all in just going up the stairs?

Exactly. Even though I have to admit that sometimes I took two steps at once. But I have never jumped across the wall. I have never had the feeling that I found myself somewhere where I had not expected it.

* E15: It is no secret that corporate sphere is not really for you. Why is one´s own business better?

The basic difference is that when you wake up as a businessman you know exactly what you want to reach. While in the corporate sphere, one day it gets very similar to politics. You wake up in the morning and do things about which you have no idea where they lead and why you do them. It means that the goal you want to reach is dissolving in the fog. And I dislike it.

* E15: What is your current vision?

We are building Rockaway as a global investment group. It is our vision to exceed the size of the Czech Republic and build up a technology-oriented company with global impact. I think that we will create a very interesting hub in the Czech Republic and thanks to that, we will be able to draw the best people to us. We believe that the Czechs are competitive on global level.

* E15: This looks like a really advanced stage of climbing up the staircase.

We already see ourselves as a global company today. Our activities have not been limited just to the Czech Republic for a long time. Rockaway has offices, assets as well as revenues also outside Czech borders. Right now, we just deal with the rate and size. The Czech Republic is still the core business for us. However, in a year or two it could be quite the opposite.  The Czech Republic can then serve only as an infrastructural base.

* E15: So you do expect the upcoming years to be as dynamic as this year?

 Definitely. However, after reaching certain size, the jumps are less visible. This year, we have done an extremely big amount of work. Also for me, as far as work is concerned, it was probably the hardest year in my life. Never in my life have I looked forward to the winter to switch my brain off during holidays as this year. And we have not finished it yet. I think that also the following year will bring lots of big fights which we will try to win.

* E15: What kind of battles do you mean? More acquisitions? Investments into new start-ups?

 Acquisitions are definitely going to be the factor stimulating our growth. We are ready for them both from the point of view of finance as well as human resources.

* E15: As to the volume, will the investments be similar as this year?

 I think they will be bigger. In recent months we have been working a lot on our portfolio division, i.e. technology investments and shares in global companies. In this division we are just about to conclude three transactions: Two investments in the USA and one in Europe. These transactions are certain to happen, two more are 70% likely. So in total we are working on five things.

* E15: How much have you invested this year in total?

 Hundreds of millions CZK. It is our money and sources which Rockaway got from the investors.

* E15: If we disregard new big investors in your E-commerce Holding, who else gives money to Rockaway?

 Mostly people with whom we agree as far as business in concerned, and who have been building their own products and companies for their whole life. Either businessmen whose companies make great profits or who have gone through big exits.

* E15: Is there currently enough of such investment money on the market?

 Everybody says there is enough money. I agree, but at the same time I have to add that there is never enough of good money. I mean money which is relevant. We would not accept money from anyone. We accept the money only from those who succeeded in something themselves.

* E15: The entrance of Daniel Křetínský and Patrik Tkáč into E-commerce Holding was pretty surprising. Were you preparing the transaction for a long time?

 Since the very beginning, we have been building E-commerce Holding with the vision of the entrance of a strong partner. It is a tough and from the point of view of capital demanding business. That is why we needed investors. If you do not want to wait ten years to grow into certain position, you need to get into it on large scale. We still keep the majority as well as managerial control there.

* E15: Are similar big investors likely to enter the world of e-shops more often than before?

 There is some interest I think. The problem would be with quality assets which would make sense. People do not want to get burnt and bother too much with something. A lot of big investment groups look for a way to small technology-oriented companies. Start-up culture and mentality are nothing simple. Internet business is specific in many ways and there are not many assets big enough which are suitable for investments.

* E15: Why do online businesses keep on growing, but are frequently in loss?

 The majority of players are still driven by the fight for market share. If you build an interesting asset in this segment, its value will rise. The pressure of shareholders for making profit is not as big today as it would be in another kind of business which would not be growing so fast. To put it simply, many companies today grow very fast at the expense of lower profitability. Moreover, e-commerce is not a simple matter, because it joins technologies and classical business. You have to master trade, logistics, marketing as well as the technological aspect. If you combine all these features successfully, you have the chance to make a profit.

* E15: How about you and profitability?

We make an effort to have balanced strategy. We do not want to go for growing revenues by all possible means. We are building a company on solid economic foundations.

* E15: When a layman takes a look at your Group, they can get a bit lost. What does it actually look like?

Rockaway Group has two pillars: Strategic division for which we purchase but also build companies ourselves, mostly from the segment of Internet sale, online financing and transaction systems. We want to run these companies and have the majority in them. Part of this division is also E-commerce Holding which was our biggest project of this year. We were working on it all year. Second division is based on portfolio financing and works as a venture fund. In this case, we leave the final word to founders of the start-ups. Even though we make an effort to help them on various levels, it is mostly investment business. For the portfolio division we search for technology-oriented start-ups which have a chance to become global players.

* E15: Are you going to continue running the e-shops as independent shops, or are you going to join them into one horizontal unit?

Within E-commerce Holding, we transfer all vertical e-shops to a unified platform from the point of view of infrastructure, logistics and management. Once, the group shall be fully integrated. We will further develop specialized e-shops, because we are into segments which require such an approach and need to go deep. Customers will be able to use e.g.  unified login, there will be the same payment methods available in all shops and other services.

* E15: Recently, you have opened an office in Silicon Valley. What are your plans there?

We want to create basic infrastructure for companies which want to go to the US market. And we can help them with this transition. We still think that a company which wants to sell something globally needs to be somehow present in Silicon Valley. It is much easier to find there people for marketing and trade as well as developing business. Anyone who wants to invest into technology-oriented start-ups and is not going to be limited by the location, needs to be in the epicenter. The primary goal is to support start-ups from our portfolio in Silicon Valley.

* E15: Are you preparing, apart from expanding to the USA and previously to Brazil, something anywhere else abroad?

 With E-commerce Holding and other projects we would like to strengthen our position in Poland. Generally, we want to profile more in all Central and Eastern Europe and also create a good base for expanding to the West. We also deeply examine opportunities in Vietnam, the Philippines and Malaysia.

* E15: How does your investment into Leo Express fit among technology-oriented start-ups and e-shops? 

It may seem to be a bit out of your core business. However, we perceive Leo Express as a big start-up with an extremely interesting opportunity. We were not interested in buying trains, but in entering the whole ecosystem of public transport. The railway transport is still very inefficient and there is a lack of private subjects.  The change will be neither simple nor fast. But there is a lot of fat and where the fat is, every innovator wants to be. It is possible to create there some added value for which people are willing to pay. And we started to be successful in this. Thank to the know-how from Leo Express we develop Bileto which substitutes for booking systems and in some cases for whole IT department and moreover, it is ready to expand into five more countries.