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How it began
Marcin holds his MSc in Econometrics from the University of Warsaw, a BA in Financial
Mathematics and an Engineering degree in computer science from the Warsaw University
of Technology. He always dreamed of becoming some sort of businessman, although he
did not know what exactly he could do. After graduating, Marcin realized that companies
began at that time to experiment with technical solutions to link business offers from
different industries. He felt this was his chance, as he always wanted to do business and Disclaimer. This case is written
solely for educational
make his ideas become a reality. He gave it a shot and developed two start-ups, one of purposes and is not intended
which, was subsequently sold. The first was a tele-information company offering hardware to represent successful or
unsuccessful managerial
and software solutions of wireless data transmission for retail, banking and energy sectors decision-making. The authors
(machine-to-machine) which he subsequently sold. Marcin learned that telecoms are may have disguised names;
financial and other
powerful as partners and customers and can give scale to a business. The second recognizable information to
start-up was a media production company specializing in the production of entertainment protect confidentiality.
DOI 10.1108/EEMCS-05-2016-0095 VOL. 7 NO. 1 2017, pp. 1-21, Emerald Publishing Limited, ISSN 2045-0621 EMERALD EMERGING MARKETS CASE STUDIES PAGE 1
content. Marcin, at this time, was taught a lesson, that to succeed, you need to control
either the content (intellectual property) or the distribution channel.
Marcin was also a music and a book lover. Despite being involved in developing his ideas
and managing his own companies, he tried to devote every spare moment to classical
music and reading novels. At that time, he also became fascinated with new possibilities of
audio technology. When he met Blazej, a sound engineer working for Polish Radio, the two
men quickly saw the potential in their cooperation. What a coincidence, Marcin thought.
Our knowledge and experience complement each other. This can be huge!. They
discussed the idea to sell audiobooks from the Polish Radio archives as collections on CD
via the internet. At first glance, it looked pretty attractive although traditional retail stores
such as Empik and Merlin and mass merchant retailers (Media Mart, Tesco) could be
potential direct competitors, their main offer was music and movies. They also could serve
as a distribution channel. Marcin felt this was the right direction, but he was not sure about
the business model. He was aware of what the market needed and CDs seemed to be
outdated. He already was involved in a high-tech business and knew that the market was
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been seen rather as a niche market. If commercial audio recordings of books existed in
2006/2007, they were available mostly from bookstores and e-sellers whose business relied
on the physical distribution of tapes and CDs. Marcins partner (K2) took responsibility for
bringing the content together, provided some financing and a stake of 50 per cent in their
venture. Marcin initiated all the major milestones. The first thing needed to be done to start
the business was to create a dedicated website. From the outside, it looked like an e-shop,
but from the back-end, it comprised a complicated and novel IT solution such as file
protection protocol and accountability with publishing houses.
Another great challenge was to sign agreements with the latter to acquire content and solve
copyright issues. Audioteka was a bit of an instant hit, and Marcin did not lead this business
in a typical structured way, taught in MBA courses. Within a couple months of its launch,
Marcin needed to recruit new people. In the beginning, no formal analytical tools and
procedures were implemented. Such things as operational performance management,
financial data and calculation were not the most important factors for Marcin. He just looked
at them and made decisions. One of the employees stated: The motto of the office shortly
after inception was: just do it, since there were so many things to deal with, we could only
act. Marcin started to negotiate with rights owners (publishing houses) which took several
months and finally led to the acquisition of 120 titles to Audiotekas collection.
It was a demanding task though, as publishers were opposed to this initiative remarking
that [. . .] audiobooks are a threat to traditional books. Marcin had to change their
mindset. The founders realized that in time, this could become a serious obstacle, giving
them a reason to consider creating their own content instead of buying it from the outside.
This allowed Audioteka to launch a Web-based service in November 2008 and acquire 500
customers in the first couple of months. The approach taken at that time was purely
technological, as an employee said. We were building an ecosystem, a platform, an IT
solution which allowed us to scale this business. Content was not the issue at that time.
The year 2009 proved to be a pivotal year for the company. Over 50,000 audiobooks were
downloaded by users, but Marcin (who soon became a leading co-founder) was not fully
satisfied with the platform at that time. He wanted to change the way everyone paid for
audio versions of books. He also believed that Audioteka should change the perception of
the product in Poland (from the product for the blind to a fashionable commodity). This is
why the first online survey was launched to get feedback from users. One of the
respondents was a sailor and stressed that when having a night watch, the only thing he
can do is to listen to audiobooks. Such feedback gave the company a hint of how to
position and communicate its value proposition. Marcin wanted his employees to believe
that they are involved not only in this company development but also in the whole market
creation. We are building the whole industry [. . .]. Maybe audiobooks are not going to
Shift to mobile
Because of a change in the companys growth orientation, 2009 brought about cooperation
with Nokia. The firms mobile application (together with an audiobook) was pre-installed on
the Finnish companys 250,000 e52 model phones. This collaboration was possible thanks
to the entrepreneurs personal network. As he said: I knew a guy, who knew another guy,
whose company developed dedicated applications for Nokia. And he introduced me to
Nokia. Starting a partnership with Nokia was a conscious decision. Marcin, with his past
experience in telecommunications, knew that multinational corporations in this industry
could serve as a springboard for visibility and growth. Before he laboriously established
connections waiting for a long period of time for an answer. The relationship changed and
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Super production
It was high time to move on with the content. Marcin understood that this is one of the major
issues in this type of business. In September 2009, the company launched its own
audiobook super-production (with 120 actors, dedicated music and sound effects) for the
first time. One of the important issues that Audioteka had to face at that time was the
relatively small number of audiobook users in Poland. Looking for effective means of
promotion, Marcin decided to invest in this super-production. As the company did not have
its own cash resources, the entrepreneur decided to lend the company his private money.
Kate was not happy but she understood that having an entrepreneur as a husband means
being in a relationship not only with him but also his ideas and passions. The idea was to
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capture public and media attention to promote the venture. The book that the company
chose was a best seller on the Polish traditional book market. According to the founder,
Audiotekas first super-production was the biggest event of this kind in Poland and Europe.
Few other super-productions were launched in the following few years, involving celebrities
from show business. This decision was dictated by the founders previous experience. He
was aware of the importance of content ownership and show business rules. Later that
year, Audioteka began to develop their own content with 300 audiobooks. Such a turn of
events and the leading founders attitude to the companys growth, his ambitions and his
emerging international vision, were in contrast with the second founders beliefs who
preferred to play safe at home (the service included only Polish titles!).
The dilemma
And now Marcin is lying on a terrace in a deck chair in the Alps with a charming view
on a mountain with the sun overhead. Hes thinking about the road Audioteka has
undertaken and about the path it can follow to flourish and become no. 1 on the market.
Marcins ambitions were (in his own words) to build something bigger than Poland.Bazej
wanted to own a Web business where he could work all his life, having a stable monthly
income, while Marcin has always pursued something big and become successful in
business. As a result, this led to some tensions between them. One of the managers
explained this as follows: All the big projects involving cooperation with big partners have
been initiated by Marcin. He thinks about Audioteka in global terms [. . .] I think it was a
consequence of their different thinking. They were simply on different planets. The one was
interested in having a small business, where he could work until the end of his life, having
a stable monthly income. The other thought completely differently, dreaming about building
a big business. There was an exceptional opportunity for Audioteka to grow fast. Both
technology trends and changes in consumer perception of audiobooks indicated that the
audiobook industry has potential to develop dynamically in the coming years. A turn of
events seemed to confirm this.
Marcins phone rang. It wasBazej. Hey, whats up?, Marcin picked up the phone. Why
didnt you tell me that you talked to a new publisher? How was it? Any good news?,Bazej
asked. For a time being, Marcin tried to explore the idea on his own. He was testing the
water in regards to new markets and spoke with a potential partner (a publisher). He was
just being curious. He felt that he needed to do this but not engage others in this just yet.
Uhm [. . .] nothing big. I met this guy 2 weeks ago accidentally. Thats all, Marcin replied.
Ok then, I thought it was something you wanted to talk to me about. We need to have a
beer. Bayern play against Real Madrid in the Champions League. Call me, when youre
back in Poland,Bazej stated and hung up.
before thinking about going abroad. Marcin argued: Mobile technologies are growing
and the potential client base worldwide has doubled in the last couple of years. People
need such a service and we are gonna give it to them anywhere they are. How much
would that cost?, askedBazej. Maybe a couple of hundreds of thousands, guessed
Marcin. Youve got to be kidding me! Look at our finances, where are we going to take this
money from? We cannot afford this! You havent even considered additional marketing and
sales costs. We know nothing about any foreign country in terms of its audiobook market.
With whom will you be talking to? How do you plan to conquer other countries!?,Bazej
exclaimed in an irritable voice. Calm down, we will figure this out. Just trust me, if we dont
take the next step, well give into the market to more experienced ones here, said Marcin.
He noticedBazejs eyes narrowing. He wasnt surprised. Id also like to meet some
candidates to lead this, he continued. Its not only your company!,Bazej shouted,
slammed the door and left the room. Everyone, including Marcin, was in deep shock and
couldnt believe how these two friends working together in harmony until then were getting
into such an argument.
Considering two different visions of both founders about the future of the company, a
dilemma emerged. What actions should Audioteka pursue if it is to grow? Was foreign
expansion the best option for the company? Should Audioteka stay local or rather go
global, taking into account that it offered titles only for Polish-speaking customers? If so,
why, where and what entry mode should it pursue, considering the high risk and uncertainty
of the business and newness of the market?
Part B
De kuju, nashledanou![1] said Marcin when leaving the office room. Audiotekas new
vice-chairman was paying a working visit in Czechs headquarters in Ostrava in Spring
2013. He was replaced few months earlier by ukasz Kosman a former Audiotekas
Account Manager and head of system development. Newly appointed CEO was a 26-year
old graduate of Warsaw School of Economics and MBA diploma holder with a three-year IT
and financial experience gained in Poland and Singapore. When foreign expansion
opportunity appeared, Marcin decided to resign from CEO position and focus on
internationalization of his company. ukasz become responsible for domestic operations.
While waiting for an elevator, Marcin realized that already three years had passed since he
split with his former co-founderBazej and took charge of Audioteka himself. He regretted
that their joint endeavor ended up this way, but Audioteka moved forward since then.
Somewhere deep inside he wanted to be this way. In fact, this was one of the reasons of
conflict between him andBazej. Before, Marcin never declared loudly that going global was
Republic was a deliberate choice, but entering a foreign market required conducting
marketing activities and making common recordings, step by step. Marcin remarked: You
cannot invest immediately a million zloty in recording audiobooks. If it didnt work, we would
withdraw. Czech market seemed to be a risky but significant step in Audiotekas life that
time and potential partner was a major book distributor. Marcin explains the reasons behind
establishing a joint venture in Czech Republic: The partner took upon itself to finance our
new venture. Secondly, its close, and I knew we would have to travel there. If I started from
Australia, travel costs would kill me. Third, its a small country but it has a great reading
culture. 4,5 book per head. In Poland its half of it. In Germany also around 4. Its simply a
protestant country which reads.
Audiotekas partner was responsible for financial side of the project and partners
relationship management. It served as a guide both in financial and operational terms, thus
mitigating the internationalization risk. On the Audiotekas side was content development.
To effectuate this, it was crucial to establish contacts with key partners (local publishing
houses, acquiring copyrights and creating a catalogue of audiobooks). Service was
launched on November 2011. First 300 audiobooks were offered through the platform a
similar solution to one in Poland a website in the Czech domain Audioteka.cz hosted in
Poland. The company carried out minimal product adjustment and resource adaptation.
After a year, the business reached a breakeven point.
At the same time, Audioteka got its first round of capital financing. Giza Polish Ventures, a
sister company of Giza Ventures Israeli fund, invested 440,000 for a 20 per cent stake in
Audioteka. Getting cash injection was a turning point for the company. Marcin admits that
Audioteka has for five years been like a pack of students: I was running and the rest of
people was running after me breaking their legs. International investors started to help
structuring the whole business (strategy, performance metrics) and wanted to formalize the
management process by dividing it into areas such as accounting, finance and law. One
of the employees admitted that time: For many years, Audioteka was a purely visionary
business, it was hidden in Marcins head. Now it is getting materialized. Finally, with the
help of Giza Ventures, Audioteka started to develop managerial processes, instead of
solving problems all the time. ukasz, the new CEO recalls: Marcin has never run this
business in an analytical way, has never made decisions based on data [. . .]. He just
looked at things and made decisions. So this is a different approach. I am trying to
understand our strategy and make decisions or change some decisions. There are aspects
that simply dont lie in Marcins area of interest such as financial results and their
calculations. These are things that are more my responsibility. Giza is interested both in
vision and in performance, so Marcin talks with them about vision [. . .] while I take care
about the way we do this. Marcin admitted this: Audioteka is entering a difficult phase; we
businessman were in Paris, presenting Audioteka to one of the major car manufacturers.
The businessman turned out to be the owner of a company developing, among other
projects, IT applications for the French car manufacturer.
Marcins gut feeling was that cars are key for the audiobook market. His new business
partner introduced Marcin to the senior managers of the car manufacturing corporation and
helped to convince them that Audioteka was a viable company. Soon after, both sides
signed a very lucrative contract which allowed the Polish firm to pre-install its software in the
vehicles sold in France and Spain. They were extremely happy, as that was more than they
wanted. It meant a huge opportunity for the start-up and an even bigger responsibility.
Audioteka was absolutely not ready for this type of endeavor, but Marcin believed he would
manage as the solution was almost ready to scale.
Business a la French
Decision to eventually expand into French market was in line with Marcins principle of three
simple rules: of internationalizing with partners (based on the Czechs lesson), choosing
potential markets where Audible is not present and where Audioteka could be number one
after three to six months. Audible is strong in Germany but isnt in France. Marcin remarks:
[Audible] is weak there. Im stronger as I have a contract that Audible doesnt. [French car
manufacturer] pulled us. We declared to be the audiobooks supplying service wherever
they go. This allows us to scale in a simple way. Audioteka was in a favorable position
since it already cooperated with Orange, HTC and Nokia on the Polish market.
Soon after signing a contract with the French automobile company, Audioteka made an
offering to HTC and Nokia in France. Imagine entering to France with pre-installations on
Orange phones and French automobiles. I dont need to do anything else as Im doubly
anchored there. These partnerships are tools to do that, remarked Marcin. So Marcin was
convinced that Audioteka needed to have a partner like in the Czech Republic to
accomplish its objectives. Marcin was seeking French publishing houses from Poland to
talk with. But these attempts were unsuccessful. French companies did not want to talk
to foreign unknown Audioteka.
On one of the meetings, with the rest of the Audiotekas team, at Warsaw headquarters to
discuss the companys partner acquisition strategy, the CEO began by setting the context
of the French business culture: When making a deal in France, the first thing that you need
to do is, when sitting at the table, eat a croissant, repeat it 50 times and then you can
continue with the business stuff. Marcin nodded affirmatively and said: French are
different [. . .]. They even wanted to have our servers there, not to let out the French national
good and we have to remember that France perceives French literature as a cultural
essence. So what do we do?, asked Agnieszka. We need to rethink our partner
established on January 2013. More and more French companies were willing to cooperate
and soon the content (several hundred titles) was ready to be released via Audioteka.fr
website.
Audioteka was lucky and benefited from a mammoth media affair. When first audiobook
recordings in France, a journalist called one of the French publishing houses. An employee
responded that they have signed a contract with Audible, having Audioteka in mind. Her
words were published and she had to deny her own words. She made a huge mess
because they dont want to make a deal with Audible. They chose us and this will carry
news to the world, Marcin recalls the situation. Marcin admitted: Business model relying
on telecoms and cars usually works, as these are simultaneously tools allowing to listen. So
far we have giant two-digit conversions, while internet-based businesses takes out 1 or 2.5
per cent, and we have two-digit conversion out of our partnership and this a slight shock.
And now, Marcin is going back from Ostrava to Audiotekas Warsaw headquarters sitting
in a train, admiring the view outside the window. Things are going in the right direction.
Going abroad with the product was a good choice and so far, well executed, thought
Marcin. As expected the Czechs audiobook market grew and Audioteka was getting more
and more benefits of its presence there. But Marcin also knew that hes playing now high
stakes as Audioteka is operating now in two foreign countries and needs to grow further to Keywords:
fulfil the shareholders expectations. How should I proceed now with Spain? I need people Entrepreneurship,
to help me there [. . .], Marcin felt he cannot sit back and relax when such opportunities International business,
emerged. He was always dreaming about international success and now its getting to Online shopping/electronic
materialize. commerce
Notes
1. Means Thanks and see you! in Czech.
2. See at www.vikingshaveclub.com/ (access 18 October 2016).
Reference
Audio Publishers Association (2012), available at: http://independentpublisher.com/article.php?
page1611 (accessed 6 April 2016).
Corresponding author
Piotr Wjcik can be contacted at: pwojcik@alk.edu.pl