Commercial experience
My Strategy Consulting Days
1999 - 2008
Mars & Co, BCG, Strategy Partners
"How many consultants does it take to screw in a light bulb? Depends. What is your budget?"
So I remember my old consulting days very fondly... mainly because the co-workers were awesome, young talented people from top schools like Harvard, MIT, etc who had a real team-like camaraderie. In early 2001 I became one of the first foreign consultants in the Tokyo office of Mars & Co (an offshoot by one of the top guys at BCG back in the day, Dominique Mars).
It was a boutique consultancy that worked with some industry leaders like Nestle, Sony, etc. And I kind of became a Nestle expert in those years. First working on a project in canned vending machines as we were working on optimizing the vending machine network of UCC Coffee, which had been purchased by Nestle. As I was fairly young looking I would travel to major cities like Nagoya and Osaka and chase down the trucks that would refill the vending machines.
I would then proceed to pose as a student and ask them questions on what were the sales of the specific vending machine locations. It was great exercise and a lot of fun. As i'd party my butt off at night and then chase down trucks all day.
Another project, which was typical of Mars, was competitive intelligence on factories. We pretended to be an interested customer and asked for a factory visit to some factory... and then proceeded to jot down notes on all the processes, their efficiency, etc.
It was wild and fun times... and me and some of the guys even got a chance to spend an entire year out in Malaysia helping Nestle with strategic planning as well as launching a bottled water business. It was an absolute blast.
Later on my consulting took me to London (with BCG) and then to Strategy Partners in russia (russia's top strategy consultancy at the time)... and it was an absolute adventure.
My consulting days taught me some important things:
Work hard, play hard.
How to wing it with senior managers and CEO's that had been in the business for 20+ years
How to make some an awesome friends and really feel like you were in the trenches with them. Perhaps more so that at any other time in my career.
Visa Inc.
2008 - 10
Head of Acquiring Products (russia)
Head of Issuing Products for CIS & SEE (15 countries)
"When you put a pipe in the ground that everyone uses... you can get away with being pretty damn slow in execution."
I moved to Visa Inc. after managing a consulting project to kick off their acquiring group
Acquiring was already a business that made $40m+ in revenue at the time for the company but almost no effort was involved. Banks provided acquiring services to merchants and paid Visa a cut of the transaction. But now Visa had the idea to actively grow this business and so they'd hired my consulting firm at the time to help them with this.
Following the completion of the consulting project one of the senior managers in Visa that had sponsored the project asked if I wanted to stay on and create and run the group, essentially implementing the recommendations of the project we had just completed. At first I wasn't sure and so sat on it for the first few months.
But the problem was timing... it was the 'Global Financial Crisis' (from all the mortgage backed security stuff) and it was starting to hit russia hard. All of the consulting projects were drying up fast... and I was already at a point where I was supposed to be selling projects and bringing in revenue (something I was already finding not to be my strong suit as I was more of a manager than a sales person).
And so finally I agreed. And in the coming months hired a team and actively began driving the acquiring business of Visa Inc. in russia for the first time.
In early 2010 Visa Inc. moved me to Kyiv, Ukraine to run Issuing Products for the CIS & SEE region
It was a 15 country region (from memory) and my job was to get more sales from issuing products (which essentially meant debit cards, credit cards, commercial cards, etc.). And essentially I was the 'product' head that worked hand-in-hand with the sales team to achieve this.
For the first six months or so it was fun as hell. I mean I had a greenlight to travel almost wherever I wanted in the region and meet with our local sales guys to drum up businesses with banks. Plus I'd stay in the nicest hotels, travel only business class, and do a fair bit of partying in the process. I lived it up for awhile.
But then I kind of tired of it. As it was just too much travel and to me it kind of felt like 'fake' business half the time. In that I'd give incentives to banks for things they were likely to do anyway. And even though the money was very good.. at some point I was asking myself.... "Ken.. is this really what you want to do at the prime of your career?"
And it was around that time that I was working on a Groupon<>Visa Inc. deal with an ex-colleague of mine, Victor. Victor had started a company called "Cheap & Daily" which had been acquired by MyCityDeal (ie. Rocket Internet's Samwer brothers), which had soon after been purchased by Groupon Inc.
In the middle of the deal Victor and another guy, Martin Reiter, asked me at some point... "Ken... why don't you just come join us?" And after thinking about it for a couple weeks I was like "hell.. why not? You guys look cool and like you're having a shitload of fun." And i'm too entrepreneurial to see myself as a Visa Inc. corporate guy for much longer.
Groupon
"The rapid rise and then fall of an online empire"
2011 - 2013
CEO of Groupon Ukraine
Groupon in 2011 was perhaps the most fun I have ever had in my career
I mean let's look at the situation... I was hired by a friend and all the senior guys I worked with were super cool. The company was flush with cash from its recent acquisition by Groupon Inc. And we had a greenlight to grow like the wind. I mean... what could go wrong? LOL
So I started around the Spring of 2011 in Groupon a few weeks after leaving my cushy role at Visa Inc. And I went from flying business class and working in a super fancy office in one of the most prestigious buildings in downtown Kyiv to working in this rundown old building that was fairly typical of the old Soviet offices.
They had just fired more than half the Groupon Ukraine team because the previous country head had been doing some corrupt things like stealing money... and so when I joined it was basically a backoffice finance & accounting team and some recently hired sales people. I'd never run a sales team directly before but this was going to the equivalent of being thrown into the deep end.
Groupon Ukraine was part of the MyCityDeal acquisition spree by the Samwers
This meant that Oli Samwer was essentially running Groupon International and even though he reported to the US... everyone that knows Oli knows that when he is running the show, you are in for a wild ride. And I was about to learn exactly what this meant.
For the first 3-4 weeks into the job I was told to "hire, hire, hire". And so with my new Head of HR, Vika, I did exactly that. We hired like 10 additional sales people in the span of a few weeks and had built our Kiev sales team to about 20 members. All of whom were pretty much new.
It was at this point that for some reason or other Oli decided that headcount needed to be slashed across Europe. And so I was told to fire like 10 people, which came as a bit of a shock to me. I mean here I was just a few weeks prior selling them on the vision and how they were gonna be rocking it in this sexy global startup that was all over the newspaper headlines. And convincing them to leave their cushy job somewhere.. and then a few weeks later i'd be telling them "Oh sorry... but i gotta fire you now." I mean it wasn't fair and it didn't feel right.
And given that my sales target hadn't changed and was super aggressive (eg. 30% m-m growth) I didnt' understand how this was gonna give me any kind of realistic chance of ever hitting these targets
.So I took a 'strategic' decision... I kind of cheated LOL
Basically I fired these guys 'officially' and removed them from payroll and headcount. But I said to them "hey... I just convinced you to leave your job and so I don't wanna just let you go. How about you work on commission?" Now not having any salary at all was not very convincing... as they were still just learning how to sell Groupon deals. So we made a deal with the sales people that were still part of official headcount that these guys I was 'firing' would kind of be their 'agents'.
Which essentially meant that the sales member who was part of headcount agreed to 'share' some of their salary with their agents. And we in turn improved their salary a bit. Ok ok... yes by western standards it probably sounds a bit fishy... but hey.. i look at it in two ways:
1) This was Ukraine and not central Europe, so more creative ways of solving problems were sometimes needed. And we were not actually breaking any laws. ie. it is not illegal to raise the salary of my sales guys. What they then chose to do with their money was up to them.
2) I was doing what I felt was morally correct.
In that it was not fair of me or the company to hire these folks away from their jobs and then fire them a few weeks later for no reason.
So essentially I kind of had like 2-3x sales staff then my 'actual' sales headcount
But from a legal perspective we were essentially doing everything correctly. We paid our full-time sales members their full salary and the commissions of all deals that were booked through their Salesforce account.
And they'd book all their agents' deals through their own Salesforce account. But when we paid our official sales staff their full salary and commission they would then share part of it with their agents.
So within a few months... I had the highest "Deals per sales person" of any country in Groupon International (ie. 30+ countries).
They'd send the spreadsheet of KPI's by country around and I'd think to myself "oh shit... we look kind of weird on here. We have like 2x the average number of new deals booked per sales member."
But fact of the matter was that Ukraine, by revenue, was still quite small relatively and so we kinda flew under the radar. As long as we kept growing and hitting our KPI's they were gonna leave us alone.
And if they left us alone it would mean:
a) That I wouldn't have to unfairly fire people.
b) I could keep my job. Which in those days was a relative accomplishment given that it seemed like Oli was travelling around firing a CEO every week.
"Whereas most Groupon leaders were taught to learn by heart the 'optimal deal structure' for beauty deals, etc. I concluded that that was a waste of time. And I was gonna do shit my way."
By this I mean that I focused on systems and motivation (which has always been my forte). I took my best sales guys and I turned them into team leads. I let them hire their own sales people and fire them for not performing.
I ran a competition of teams with a revenue calculator that was updated hourly so that the teams could see who was in the lead. And out of the five Kiev-based sales teams, if a team won it could easily mean a boost of 25-30% on top of their normal salary.
Things were starting to work like clockwork and I had created all of my own systems. And was optimizing them constantly.
I essentially ignored most of the advice that came out of Germany because I considered that whole thing to be a 'rat race' of firing a whole bunch of people just to hire new ones, and then fire them again. Plus the senior leaders of many European countries were being tossed by Oli like a salad.
And anyway we were kicking their goddamn asses.
We took a commanding #1 position in the Ukraine market
When i joined we had something like $30k revenue per month and were in about 4th place in Ukraine out of the deal sites.
About 14 months later we had done nearly $1m in monthly revenue, were #1, and were now 3x bigger than our 2nd largest competitor according to our calculations (and we were scraping Biglion and Pokupon at the time to figure out their sales).
We also had an average gross margin of over 40%, which was awesome for Europe.
The unfortunate side was that there was no proper taxation structure for companies of our type in Ukraine. We were being taxed at over 20% of our gross revenue. And so if you sell a deal for say $10 and earn 40% in margin ($4)... well then if you pay 20% in tax ($2) you were essentially being taxed at 50% of your 'actual revenue'. And this is what killed us.
I had my CFO, Sergey (pic above), who is a good friend to this day, try to figure out a way around this... but there wasn't really anyway to circumvent this stupid taxation without someone ending up in jail.
And so our profitability looked crappy... whereas if we were taxed similarly to how the European countries were taxed (as they had 'agency tax rules') we probably would have been one of the most profitable countries in Europe.
We also aggressively expanded into physical products & the travel business
This was a ton of fun and something I got heavily involved in. We created 'travel agents' in each of our six offices who would book tours that were sold on-site. And we'd acquired an actual tour agency license from some other deceased company.
We also got active into seeing how to sell physical products. Which generally meant finding quality inventory at a very deep discount, and agreeing to dropship it (ie. not purchase it from the supplier in advance but rather only purchase what was sold onsite).
It was fun times... I'd travel around warehouses looking at inventory of importers and strike up deals. We also tested dropshipping stuff in from China (note that this was in the days before Aliexpress became big).
While our official headcount never surpassed 60 people or so... our actual headcount (including agents) was once as high as 120
I am actually very proud of this fact as it reflected my strategy from the start. And it is why we trounced the other deal sites.
You see early on I'd participate in a lot of in-person sales meetings. And what I noticed was that the sales people had to spend a lot of time explaining the Groupon model to the business owners who were very tentative about trying it. And these business owners would often require multiple visits and sheer effort to convince to try it.
So I concluded that 'the player that has the most boots on the ground early on' will educate the market the fastest. And thereby grow the entire market much quicker, but also have a first mover advantage on most merchants. And so that is exactly what I did.
When our headcount was 120, we probably had around 90 sales people in 6 different sales offices. I let my regional heads hire and fire agents at will. And so cities like Odessa or Kharkov could easily have 10-15 sales people at any one time.
I would guestimate that when we had 90 sales people... the entire next 3 deal sites after us probably did not even have 90 sales people combined. Our guys were generally better trained & managed, they were hungrier (from a very optimized KPI/bonus system), and there were just more of them.
Unfortunately all good things come to an end
The problem was that we were coming under more and more profit pressure. Groupon was now post-IPO and the main theme was no longer revenue but rather controlling cost. And we were seen to have a high cost base.
In reality our cost base was in line with other countries but we looked skewed because we were paying double or triple the tax they were. But this didn't really matter to the international guys. They told me to cut, cut, cut. And they didn't care what it did to our revenue as we were not a large part of Europe's overall revenue.
So I cut our official staff by about 20% or so and cut our agents by like 70%. Then I was asked to cut more and I cut another 15% or so of headcount and completely shut down the agency system. Also in part as we were getting more frequent visits from international. Which was always fun...
I was being forced to destroy the empire we had created. An empire that had probably become the top 10 ecommerce companies in revenue at the time in Ukraine. And more than that I was destroying my 'family' because the team had become really tight at this point.
When i was asked to cut even more... I decided I couldn't do it.
I asked for a sabbatical and let them send someone from international to do further cuts
It had just become too painful to destroy this thing that I was proud of having just built.
And to have to fire people that were doing a great job and who i now considered my friends. We were already less than half the original team size and so I told the international guys to send one of their own people in to take the task further, as I didn't want to do it.
It was clear that Ukraine was not a priority for Groupon and so I didn't really see a future. And i'd already been told that they were likely going to shut Ukraine later on, which saddened me. And I didn't want to have to be the one to do it.
Because we had kicked everyone else's butts on relative terms. I'd compare key KPI's of Ukraine vs. any of the international Groupon countries... and we'd beaten most of them on most things.
So in the end I handed the keys to a guy 'Tengiz' who took over the time and wound the thing down until they finally shut it down sometime later. And Groupon's presence in Ukraine became part of the history books.
lthough officially I had asked for a 'sabbatical' and Groupon would send me some potential positions in Europe and the US... I had no real intention of returning. And I was onto my next adventure... startups and my pivot into product management and being on the tech side of the house.
I tell this story here, now after about 10 years, because I do not want it to be forgotten
How me and a band of young Ukrainians bonded together and kicked some ass. In my entire career I don't think there was a better culture or spirit in any team or company that I was a part of that compared to what we had during those Groupon years.
Not because of me... I consider myself only a side facilitator who made sure that politics were killed and fun reigned. It was because we all felt like we were building something together. Part of something that we'd be proud of.
A company that we had taken from the bottom to the top and had invested a part of who we are into.
Groupon Ukraine will live forever in our hearts.