The COVID-19 related situation caught us all as businesses far less prepared then we wish we were. Churning users, hesitant clients, or unexpected growth and scalability issues – there are all kinds of challenges for each business right now. But there are also solutions and ideas on how to act. So we invited Hristo Hristov, a serial digital entrepreneur and investors for a comment on the situation.
Hristo Hristov is a serial entrepreneur, an investor and a mentor in the entrepreneurial network Endeavor. In 2005, he founded a digital news site Dariknews, which later acquired Netinfo and thus created the biggest digital media company in Bulgaria. As CEO of Netinfo, the company grew threefold by entering into new verticals and expanding the content offering. Hristo’s latest endeavors include two news media outlets – Dnews.bg for general news, Dsport.bg focusing on sports commentary, and WhitePress.bg a content marketing & SEO platform. Hristo was a journalist at BBC London and Darik Radio Sofia and holds a Law degree from Sofia University. As CEO of HR Capital, a private equity company, he focuses on marketplaces, commerce digital, and fintech businesses.
Trending Topics: You wear different hats and are involved in many different businesses. How was the past month for you?
Hristo Hristov: Every crisis is a challenge for the big majority of the businesses, but also a very big opportunity for a smaller part. Particularly what I found out about the coronavirus crisis is- it’s helping the very conservative sectors to move much faster into digital space and adapt faster. For startups that do business in security, digital services, healthcare, most probably have great opportunities once they solve the logistics issues like working from home, etc. I think it’s also a great stepping stone for all of us to rethink the working environment. We are so used to working in offices and gathering around, being in discussions a lot of the time. Now being remote, we see we can be a bit more efficient because we don’t have to commute to work, you don’t waste time over lunch, and at the same time, everyone is in front of the computer and bombarding you with tasks. I find the last weeks challenging.
If we go beyond the internal organization of our businesses and look at the business development right now, what does the situation look like there? What are the challenges there?
The businesses that see their demand diminishing, need to rethink their strategies at a very fast pace. The publishing business, for instance, where advertising dropped 40%, needs to reevaluate monetization strategies and go more in direction subscription and transaction, quickly identify advertisers whose businesses are growing right now. It’s a fast-paced game.
In businesses that are booming, like eBag, the challenge is different – they need to scale up their business and operations as fast as possible. No matter on which side of the spectrum you are – badly hit and in need to reorganize, or benefiting and in need to reorganize, one thing is clear for all – you cannot stay still and hope that this will go away. I see opportunities on both sides of the spectrum. No matter whether the revenue line is increasing or decreasing, entrepreneurs and managers need to look for the demand they haven’t touched,the opportunities they haven’t considered, and take a look at projects that were put on the shelve.
So you are talking about acting quickly but we know that quick decisions are usually emotional and in many cases wrong. And there’s this group of people who see the situation as an opportunity to relax a bit and think strategically. What do you think about that?
It’s a very difficult question. A quick decision is better than no decision. In that respect, I think what the Bulgarian authorities did with handling the crisis was the absolutely right thing to do. And this is a great example of quick decisions, that have quick results and they are not always the best.
In a time of crisis, when the building is on fire, it’s better to take quick decisions rather than stay and burn. I’m a much bigger fan of navigating quickly, and I think there’s no better time for quick decisions than now. The landscape is changing on a daily and weekly basis, so we don’t really know what will follow. We kind of have an idea of which sectors will be hit the hardest – tourism and travel, shared economy, etc. so these are the sectors where quick decisions are a must. If your sector is mildly hit, you can take it a little bit slower.
A case in point. One of the projects you are currently quite involved in is the sports media dsport.bg. It’s in a tough situation as it’s on the one hand reliant on live sports, which is not really happening right now, and at the same time on advertising budgets – the first victims of economic crises. How are you handling the situation there?
That’s a great example. We see users going down and revenue going down. To handle it we launched two new things. The one is esports – we are finishing all the matches that were supposed to be played in the Bulgarian league in PlayStation inviting football stars and couches to comment and we are basically doing the same what we would have done with live matches. We actually see that there’s the same amount of emotions and fans are responding quite well. The second thing we did is a donation campaign. We were planning to launch a subscription in our new mobile app, but we immediately postponed the mobile app for a time when the sports events are back, and instead we launched a Patreon campaign to support our editorial team. Every euro fans are donating through the platform is going directly to the team.
This is indeed a great initiative. For everyone who’s not familiar with Patreon – this is a platform for supporting independent creators in different spheres. Indeed, at Trending Topics, we have an ongoing campaign too, and we see it as a great way for media to come back to its roots and be supported by the audience it’s created for, instead of advertisers only. What are your first impressions from this campaign?
It’s super amazing and in a week we are close to the 100 patrons. The average among of donations is super high. Also, the team enjoys the idea and they started sharing super exclusive content that couldn’t be found on other channels. It gives us a great opportunity to build a healthy relationship with our audience.
You are a business angel too. On your portfolio you have different companies – on the one hand, eBag, the e-supermarket that is growing fast, but also 15toGo, the group travel platform, which I guess is not having the best time of its life. What are the founders trying to understand right now, are there any similarities?
Every entrepreneur is asking what they should do now and where the company is going to be in the next few months. Of course, founders are concerned whether the company will be able to survive the next two-three months, or what will happen if they have to grow three times in a short period of time. No matter where on the spectrum you are, times are quickly changing and challenging. For 15toGo, there’s obviously no travel, so the team is now taking time and spending on infrastructure. So for businesses that don’t have demand now, it’s the right time to put more effort into building the infrastructure, setting administrative structure, etc. With eBag, it’s the total opposite – everything has gone to hell there because there’s no infrastructure. Everyone, including the CEO, is on the battlefield in the warehouse trying to fulfill all the orders. This is, I guess, what an investor should be doing: remind founders what the big vision and end-goal are and not allow them to panic.
Given the current situation, how many months ahead could businesses plan?
I think it’s a bad time to do forecasts, we don’t know the shape of the recovery – U, V, or L shape. You need to plan month by month now. Whatever business forecasts you had in March, they are already old. Yearly forecasts are also old. So let’s hope for the best, but better prepare for several tough months ahead.
In general, all of my investments are in the digital realm, and the digital economy is better positioned than the physical one. I have friends entrepreneurs in the physical business, who’ve been hit by 70-85% sales drop, and the general forecast for 2020 is a 50% decrease in retail.
Is there one very practical and actionable advice you would give to founders in this situation?
Figure out what has changed in the market and find the biggest growth opportunity. Sometimes there’s something that used to be a small crack on the market and now turns out to be a bigger opportunity.
What should businesses do in terms of marketing? We hear all types of advice – from cutting the cost, to increasing spending on particular channels. What do you think?
There’s no silver bullet here. Obviously, in Horeca, doing marketing is not good, unless you have the ability to deliver online. We saw that from Happy – they immediately channeled their marketing budget to online to promote delivery options. If your core segment is hit hard, stop the marketing there and amplify the marketing for a segment that is growing now. It’s a game of opportunities. Refocus on opportunities that may be smaller now, but are capable of surviving in tough times.
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