Exclusive Interview with Turbado CEO Andrej Vargecko

We met up with Andrej Vargecko, CEO of Turbado - a company that is solving every problem associated with using electronics by offering a brilliant model for their customers to swap their gadgets for the newest model at a fraction of the cost and solving warranty super fast.

Q: Can you please tell us about your company and the specific problem or challenge that you are addressing?

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We operate an ecommerce business offering consumer electronics. The increasing competition and vast number of retailers mean in the space make it is very difficult to stand out over other businesses. We don’t manufacture products, we only offer them to end customers and so it is hard to come up with something new and unique.

In 2013, our company’s founder, Stefan Durina, came up with the idea of offering products as a service. We don’t sell smartphones to customers — instead we offer them an opportunity to use them. We see ownership as a thing of a past. It has no real benefits to customers whatsoeve, and instead, brings with it many problems.

Ownership is bad, got it?

Company Snapshot:

Website: www.turbado.eu

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Q: Can you please tell us a little about the market and the market opportunity?

We are limited only by ourselves, the potential is great. The populatoin of EU countries alone is over 500 million and virtually everyone owns electronics. Houses are flooded with them and users crave the newest models. Getting only 1% share of the market would mean satisfying over 10,000 customers a day with an average order value of 250€!

For example, the smartphone is a great product as customers change their devices every 18-24 months — this is right in line with the business we are in. Solving all the problems of choosing the right model, getting it quickly from a trusted source, using it without trouble for as long as you want to and finally disposing of it when you don’t want it.

Q: Please tell us a little about your technology that drives your platform?

Andrej Vargecko
Turbado.eu CEO Andrej Vargecko

The actual ecommerce CMS is not that important but there are quite a lot of additional ingredients from our own kitchen. We created sophisticated systems that automatically compare the best wholesale prices from suppliers throughout Europe, so we buy where it is available at the lowest price. Also we designed a fully automated pricing software to beat the competition when it comes to price.

There is much more as we aim for a fully automated company and a lot of the software is highly localized for each country to cope with the differences. The whole system is designed to get as many orders as possible with as little personnel as possible.

The other equally important part is not about technology. We deal with customers all the time and we never forget that they are real human beings, not just numbers or email addresses. We want to secure the trust of our customers so they will come back to us again and again. We are not after the initial sale and forget the customer when it comes to solving a return or a warranty claim. Quite the opposite. Our staff is well trained and happy also thanks to our customers satisfaction. In our shops we often manage to reach the magic 100% satisfaction rate measured by independent parties.

Q: What geographic markets are you focusing on currently?

Our main focus is Europe as it is the place we come from and know the best. Our shops in Germany, Czech Republic, Poland, Hungary and Slovakia grew recently by opening France and Spain. All countries have good infrastructure and strong online sales. Now we’ll try to repeat the extraordinary success of our German shop where we became the most successful newcomer in the history of Amazon.de.

Opening a new country is not that easy, nor cheap. On top of the obvious things like the ecommerce shop and software itself, content, staff, shipping partner, payment provider and a lot of legal requirement, there is the logistics part too. We had to open our own warehouse in Girona, Spain; sort out new suppliers for faster deliveries; and every aspect must be tuned up to 99.8%. Anything less is below our standard, but at the same time going all the way to 100% is not worth it. It is just a better practice to make a mistake and then make sure it doesn’t happen again, than to think in advance of all the problems that might come.

Q: What markets will you focus on in the near future and what is your plan to conquer them?

gigabit-internetWell, the next step will be to launch UK, the biggest European market in online sales. Again, careful planning and calculations are important. The very first step is always to find an excellent country manager. All the rest is then part of his responsibilities. If the manager starts all from scratch, it will be his baby and thus know it the best. Plus, we will know we have the right guy when we know his baby. After that it is a matter of finding reliable local suppliers, opening a small warehouse but being ready to scale up quickly.

Depending on our cash flow or presence of an investor we want to expand into every EU country. That is 28 countries. Later we would like to open a cross-border marketplace where through our Turbado brand, other merchants can offer their products to customers abroad without them needing to do anything else than what they do now in their home country. We will take care of the shipping, customer support, marketing, returns handling, accounting and payments collecting. Our merchants just keep focusing on what they do best at home and we take them abroad without any risk or extra expenses to them.

Q: So you are looking for investors?

Of course! Who isn’t? The thing is that we are not interested in venture capital. Our managers are getting shares in the company and we don’t want to deprive them of this benefit, nor we want to lose the control in what we do and how we do it. We just love our company too much to give it up for money.

Debt financing is the answer for us, but those investors are harder to find. Even though we offer exceptional ROI and pay out interest from day one. OK, it is day 30 for the first monthly interest payment.

Q: What are the key user benefits and features of your platform?

Not owning the product you use is a great advantage from the start. Considering the act of choosing the right model, just that itself creates a lot of uncertainty in customers. With us, it is easy to swap if they don’t love the product. It does not matter whether they use it for a week, a month or a year. Swap Anytime!!!

Then you have the problems of ownership: What if my gadget goes belly up or it gets a spider webbed screen? Will it be easy to have it repaired? How long will it take to get it fixed?

And in the end: I don’t need it anymore!? I want a new model! A full drawer of used, useless cellphones? Yeah. We at Turbado don’t just recycle, but refurbish and sell the unwanted items (eBay anyone?) for you and you get a credit for your next order on Turbado.

Q: Who are your competitors?

The competition is truly vast. Anyone offering consumer electronics to customers counts as a competitor. But in a sense, we don’t have any competition. To our knowledge, no one offers what we do. Our services are common in the professional world, but consumers have never had the chance to use a similar business model before. And if there were any in the past, they were not designed for the end user or were just too expensive to even consider. There was no added value for an average customer. Turbado brings excellent services at a bottom line, a truly one stop shop for the whole lifetime of your electronics.

Q: What makes your platform stand out?

CHIPOur vision is to take care of all of the needs that our customers have or will have. Every problem must be solved to the customer’s satisfaction. You can try as hard as you want and there will always be delays or mistakes. But the customer at the end has to leave satisfied and knowing that we cared and solved all quickly, so it will be an obvious choice of where he goes and orders next time again.

Many companies say and market exactly the same as we do. It is easy to make promises. But only results show the truth, and that we deliver on the promises we make. In the world of business nothing counts as much as trust. Many tech companies forget that. They have good products, unique and well built. They think that the product on its own is enough. Yes, customers desire it and at the beginning it will work for you. But sooner or later there will be a competitor. If customers don’t trust you to deliver what you promise, you will be the one to fade away.

Q: Tell us about your team?

I am very proud of the staff we currently have. We are still a smallish company with 60+ employees but the people we have are the jewel of it.

The middle management (country managers) is the backbone of our company. It is down to them to keep the shops ticking and gathering excellent reviews from satisfied customers. It was a surprise to us to realize how crucial the physical warehouse is. We invested a lot of time and resources into software and automation to make the work easier and foolproof.

But as with any online business, the biggest demand is on our IT team. Matej Kontros, our CTO has a team of 5 busy bees. The constant innovation and apparent progress is slowly getting us in front of the competition, whether in user experience or maximizing profit.

And as unexpected or unusual it might sound, there is a great thinker and leader behind every successful business. Stefan Durina founded Turbado in 2013 and still provides us with inspiration and drive.

Q: How many users do you have?

In three years we went from 0 to 300k customers in 7 countries. Considering that most startups in the ecommerce sector struggle to survive, we are doing well. Still, our plan is to be in the whole of EU within a few years, with 1M orders a year.

Q: What is your focus for the next 6-12 months?

Except expanding into new countries we need to keep in check our expenses. That does not mean to lay off staff. Instead, we need to invest into automation, a general tuning up of every process. That is a huge task but a necessary one if we want to keep scaling up. When you start small and don’t take care of your expenses they will grow on you exponentially. It is paradoxical that expenditure is always growing faster than profit if not in check.

Q: How much money have you raised and from who?

So far we manage with our own money, reinvesting all of our profit back into the company. It means the progress is slower, especially the first two years it was sluggish. But it has one enormous advantage. Working with a tight budget pushes you into precise calculations, planning and balanced budgeting. When suddenly you have a lot of money at hand, overspending and lack of good cash flow management will be the norm. Bad cash flow and excess spending can kill the business even if profitable.

Q: Are you looking to raise another round? If so how much?

Yes, we are always open to investors. To reach our target we need a total of 20M euros. At the moment we could easily find work for 2M euros and secure a good return for its owners. Then a year later we could do the same with 8M euros. Getting less than that is also OK but not ideal. On the other hand, getting more might create an opposite problem of not being able to use it quickly enough and subsequently not generating satisfactory returns to our investors.

Q: Anything else that you would like to add?

I could go on for hours. And that is what our startup is about: Excitement, motivation and drive. But not just the top 1 or 2 guys. The whole management has to pull in the same direction. And if it doesn’t? My advice is to replace people as soon as possible. We tried to change people to fit our culture and we thought we did. But only for a limited period of time.

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