LARGE ENOUGH TO BE A UNICORN, INTERVIEW WITH MERGIM CAHANI, FOUNDER OF GJIRAFA
Most founders go to Silicon Valley to start a company but you started your company in a dorm at New York University and then applied to Startupyard, an accelerator in Prague, in the Czech Republic. This seems like a non-standard start for a startup. Why?
Almost everything, or parts of it, about how entrepreneurs build companies is non-standard. In essence however, it just made more sense to follow that path for the vision I had: build and facilitate the Internet economy in the Balkans. For that, I had to be in the region. Czech Republic and StartupYard was the right place, because they already had a a successful company who was doing just that, for the Czech Republic — it was Seznam. This provided me with the opportunity and insights so when speaking to regional investors I utilized an already successful model from Seznam, something that they were familiar with. The vision and the story made sense. Imagine how some reputable investors in the Valley would have perceived this pitch: we want to build services that Google and Amazon is neglecting in the Balkans. Pitching today is different as we have the growth track and numbers to exemplify our execution, but at that time I would have been shown the door.
You are competing with the likes of Google, Facebook, E-bay and Amazon. Those companies are bigger and have more money. Shouldn’t you be afraid of them? How do you explain to investors that you can beat them in your vertical?
I love these companies. The have been and are an inspiration ever since they were created. Thanks for comparing us to such awesome companies, but in essence we compete with their services only in our region. That makes it easier, since for the big tech companies the region is not sexy enough yet, and smaller compared to other markets that they are still expanding. For Gjirafa, it is a great geo niche and we have been very successful in providing world standard services, compared to the Amazon or Google.
The way we compete with them is by utilizing the fact that they are almost not focused at all in the region, by having local presence and understanding culture of the customer, and specializing in a language (technologically integrated) that no one else does. So it is not a competition per se, but we provide equivalent services and do it better for this market.
You basically digitalized the Balkans from scratch, which seems like a crazy idea. How did you start?
It was and for some it still is. It all started with master’s project where I worked with Prof. Torsten Suel, a global authority on the subject, on a New Zealand search engine. The technical know how, combined with my business knowledge of the region, marathonic grit, great team, and some luck did the trick. Next, I completely took my 401(K) and 403(B) out, had no plan B, and the rest followed.
Are you marketplace, an e-commerce site, a search engine, a streaming service for the Albanian diaspora?
We provide all the above, but for diaspora (Albanian people living in Germany, Switzerland, US, Sweden, etc) we have select services, but for the regional market we provide all the above services and then some. We have millions of unique users from the Western Europe.
Do you feel your geographical focus limits you as a company? Is the pie still growing for Gjirafa?
We have four main revenue pillars, and one of them is a global product (we license some of our technology, especially our Video Streaming Platform OTT and advertising system). The pie for Balkans for one single service is small, but for multiple products, where one unique users can be a customer in several products, it is large enough for a unicorn to be born. Our strategy has been vertical growth (several products for the region) vs horizontal (one service for the global market) — think, Naver in South Korea, Seznam in Czech Republic, Jumia in Africa (NASDAQ: JMIA), etc. This thesis is well described in an Economist article that I like to share with potential investors.
How do you develop your products far from Silicon Valley? Aren’t Silicon Valley products better then anything Europe can produce?
The Valley is the Valley, and just like most founders, I love the place. But that does not mean, the non-valley places cannot produce and create tech that is globally competitive. We have seen that is the case and more often it can be better in efficiency. A startup in our market with $200K can start and build a globally competitive high-tech beta product, a sustainable product team, and grow the product, maybe even generate some meaningful revenue, and have high probability to go over 12 months and survive. In the Valley a senior engineer would cost more. So the question is not only what can you build but also the unit economics for that.
On the other hand, raising $200K in Balkans is almost impossible, and in the Valley it can happen over a 15 minute coffee break. It has pros and cons, but in my view if I were to start a company with high global potential I would prefer and look forward to start in the Valley, and even though I think it would be very important I don’t think it would be a critical condition.
You raised recently a massive series B for your company to digitalize the Balkans. Why should investors join the next round?
Because of our vision, track record, growth rate, and exceptional team, and already have blue chip investors part of our journey — thus investors would be joining an outlier company that is planing to list on Nasdaq in 2024. IPO out of the Balkans sees improbable and very ambitious to say the least. But we didn’t start to create a company, or even a good company; we are building an exceptional company that solves real problems. Solutions to such problems typically are taken for granted in more developed economies. The execution plan is sound and plausible, not a rocket science, and it is about consistent execution, passion and grit to achieve it. We think, and we have shown on the past five years, that the team at Gjirafa has what it takes.
How do you deal with hardball investors? Just say no? Personal charm? Ethics?
We have great investors. Of course we have dealt with negotiations that were difficult from both sides, but as challenging as they were it is also a good thing: after all is said and done, I want them in my side for the future, and I am sure the other way around is also true. I haven’t used “just no” approach in critical decisions, rather attempted and work hard with rationality and integrity. So far that works, and not planning on changing that, as I can’t think a case where the answer is a solid yes or a no — it is somewhere in between.
You were featured in the Economist, Techcrunch and many newspapers. Are you famous? Are founders the new rockstars?
Yes we were, and fame is within some context. But I am definitely very famous when I visit my dad, my sister and niece. If we assume that a conference room is the new stage, then yes, founders are the new rockstars. As a founder that is a flattering comparison, but in sincerity the two are incomparable; how would one go about to compare Elvis to Elon for example? Imagine one day, Elon doing an Elvis move on Mars.
What will you do after your exit? Move to Monte Carlo, start a new company or become a hard ball investor yourself?
Not planing to exit until we have created and achieved what we ought to build, and then eventually, I would join forces with a few key people that I currently work at Gjirafa, and solve the next problem.
It’s been a long road for you as a founder. Is vacation a dirty pleasure for a founder? How have you dealt with the challenges and the bumpy road?
It is one of the loneliest professions, with almost no vacations, but one with high reward as a human being. So not only is not bad, but it is the best thing that I could professionally be involved in. The opportunity and ability to create something from zero and in a short time having millions of people use that product every day is priceless, and no vacation or challenge can come to terms to compete with that. Before anything, getting enough rest and staying healthy is vital, but everything else must fit with being a founder and not the other way around. As a founder it is understood that one is passionate about the journey, which also means the things that commonly are accepted as fun or part of living, e.g., a week vacation at the beach, likely is not the same as what founders may elect to be the fun part of living. For instance, whenever I can, I would rather use (hence enjoy more) my Sunday to create or focus on a technical thing or product or work to improve the R square in one of the models, then spent the time at a beach, park, or fancy restaurant. This does not imply that they are mutually exclusive, but I would pick the former, and I think most tech founders would do the same.