Stefan Batory has experienced living on a potato diet to several successful businesses and raising over $100M for his latest venture. Hi company Booksy has successfully raised funding from top-tier investors like Manta Ray Ventures, Kai Hansen, ENERN Investments, and VNV Global.
In this episode, you will learn:
- Why they chose to startup in the US instead of Europe
- The US versus the EU for startup fundraising
- Stefan’s #1 piece of advice for aspiring entrepreneurs
- Surviving COVID
- His recipe for creating spinoff companies
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About Stefan Batory:
Stefan Batory is the co-founder and CEO of Booksy.
An ardent serial entrepreneur and innovator who has developed and curated companies that are now leaders in his home country of Poland, Stefan Batory developed his latest startup, Booksy, out of personal frustration with trying to schedule appointments over the phone or via text.
The company’s mission is to bring peace of mind to scheduling anywhere, anytime. Already on its way to being the first Polish-founded unicorn company, Booksy has relocated its headquarters to the U.S. with the goal of becoming the leading destination marketplace for all appointment-based businesses.
Prior to Booksy, Stefan Batory was the founder and CEO of SensiSoft, a software development company with a focus on classified media. During that time, he created and bootstrapped, iTaxi, which disrupted the outdated service industry to transform the way people in Poland hail taxis today.
Stefan Batory is a visionary but also a strong analytical and dedicated entrepreneur. An accomplished ultra-marathoner who conquered the Gobi Desert, Stefan Batory imbues passion and grit in all aspects of his life.
Connect with Stefan Batory:
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FULL TRANSCRIPTION OF THE INTERVIEW:
Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. Today’s story is mind-blowing. We’re talking about someone that literally was so committed and had such amazing conviction that he put himself through years of eating just potatoes to be able to make it happen – talking about commitment! I don’t want to wait any longer here. I want to welcome our guest today. Stefan Batory, welcome to the show.
Stefan Batory: Thank you, Alejandro. It’s great to be here.
Alejandro: Originally born and raised in Poland in the late ‘70s. Obviously, at the time, communism was there and not a lot of money, so how was life growing up in that specific area where you were?
Stefan Batory: That was a pretty strange world because you couldn’t buy anything. Literally, when my parents took me out, and we went shopping, I remember standing in lines for hours to get some basic products. It was super difficult to buy toilet paper. It was super difficult to buy meat or to put gas in your car. So, everything was rationed. I remember empty shelves and long lines and my parents worrying about supporting the family and making sure that we had something to eat and something to wear.
Alejandro: What lesson do you think was there for you from the struggle because I think something that is apparent there from your journey, too, is that you have been able, to a certain degree, to be okay with struggle, to embrace the struggle and that part of the journey. What lesson was there for you to learn?
Stefan Batory: The biggest lesson was that when Poland turned over the communism, and we started being a normal country, democracy and having capitalism, we got used to the convenience of the capitalist world and life. But then, when I had those struggles, it wasn’t the end of the world for me. It was something that I didn’t train for, if that’s the right word, but I was like, “Okay. I can bear that. I can eat potatoes and not worry about not having meat and produce and vegetables and cakes and other treats because I’ve been through that, and I know I could have lived. So, it didn’t scare me, I guess.
Alejandro: Got it. Developing this love for math. How did you start getting into math and all of this good stuff?
Stefan Batory: I have always loved math. I remember that as a kid, I loved to solve puzzles and riddles, and it was hard to buy anything in Poland. I remember how happy I was when I got the math book with a lot of problems to solve, and that was one of the best weeks of my life going through the book and solving those. It was always out there. Maybe it was like a self-fulfilling prophecy because that was one of the very few things that were available, and I just enjoyed it. And the more I enjoyed it, the better I got it.
Alejandro: And funny enough, you go to university, and right after university, you literally start getting into this whole dot-com thing, which caught you by surprise, especially the company where you were at the time. Tell us about this journey.
Stefan Batory: It’s a pretty crazy story because even while I was still studying math, I already worked for a couple of companies, so I made friends. There were eight of us working for a company, and we didn’t like the vision and the strategy the company had at the time. We thought, “Let’s start our own company.” The eight of us started that in January of 2000. Shortly after, the whole dot-com boom collapsed. The three guys that were supposed to run the business left the company, and there were five of us developers that were left. We didn’t have a clue how to run a business. We just liked the idea of being entrepreneurs without really understanding what that meant. We trusted that those three guys would run the business, and we would focus on building great products because this is what we loved; this is what we had passion for. When they left, we had a choice to shut down the company or figure out how to run the business, how to make sales, how to do marketing, how to do taxes. The four other guys looked up to me, and they said, “Hey, Stefan, why don’t you lead us?” I was naïve enough to say yes, and that’s what put me through two years of eating potatoes because we didn’t make any money. We made $200,000 of that. We should have declared bankruptcy, but I believed that we had a great theme. We had great guys that were capable of building great things; I just needed to figure out a way to sell the work. That took me two years, but it paid off because after those initial two years, the company started growing very fast, and we doubled and tripled our revenues for 12 consecutive years. EO rang fast as one of the Top 50 fastest-growing companies in Central and Eastern Europe. They also rang fast as one of the Top 500 fastest-growing companies in Europe, the Middle East, and Africa. So, that’s how I learned how to run a business. I didn’t go to business school. I learned it on the go, and it was a very painful and grueling experience, but the best one I was able to get at the time. I think it was 2011 or 2012 when I IPO the company on [7:29] stock exchange.
Alejandro: Wow. What do you think was the turning point? At what point did you realize, “Hey, you know what? Today, on the menu, there’s going to be something besides potatoes?”
Stefan Batory: It was gradual because even when we started making money, I saved money because I didn’t know how sustainable it was and whether we would be able to scale up and replicate it. But after two to two-and-a-half years, we started getting more and more projects, and we started having processes because the first two years, it was basically figuring out everything from scratch: how to sell, how to market the company, how to run projects, how to build clients. So, we made mistakes across the board, like in every single field, every single aspect of running a company. If you asked me if there was a place where I didn’t make any mistakes, I would say there isn’t one. I made mistakes in every single aspect of running a business.
Alejandro: What would you say were the three biggest mistakes that you knew you would never make again.
Stefan Batory: That’s a hard question. I’ve made so many of them. One of the most painful mistakes was that I didn’t know anything about taxes, and after we completed one of the biggest projects, I reinvested all the money into servers because it was all before the Cloud and all that stuff. To house the website, you had to have a server, and we invested money into servers, so I used all the available cash we had to invest into servers, and then I ended up paying taxes on profit that we made that month, and I didn’t realize that we would have to pay the taxes because I didn’t realize that the servers need to be appreciated, and you can put the whole value into your costs in that given month. That was something that I had no idea about, and ended up having a few stressful months and being chased by the IRS for not paying taxes because we didn’t have money for that.
Alejandro: Wow. An amazing journey here. You end up really turning the company around. You do the IPO, so what was the business model here? How were you guys making money?
Stefan Batory: It was a software development house, and we did custom development for clients. We did it on either a fixed-price basis or on-time and material basis, so two very straightforward models. With fixed-price projects, we made a lot of mistakes. We didn’t know how to assess risks; we didn’t know how to make buffers, so we did a lot of projects with losses on them. The business model itself was pretty simple, but I didn’t have anybody to teach me how to do it, so I guess that’s another lesson learned that after that experience, I learned to reach out to people who were successful and who were a few steps ahead of me and how they got there, so this way, I wouldn’t have to learn everything on my own mistakes.
Alejandro: You know, that’s interesting that you say that because, in the U.S., that’s normal. You can reach out to anyone, and people are willing to pick up the phone and help you out. But in Europe, at least in Spain, where I’m from, it’s not easy because there are all types of gatekeepers, the executive assistant doesn’t want to pass you through, and it’s very hard to be able to get that type of help, or it’s not very well viewed to ask for help. How was that for you?
Stefan Batory: It was the same in Poland, maybe even to a bigger extent than Spain, because of our experience with communism because when you live under communism, you had to be careful who you talked to. You have to be careful who you share your secrets or knowledge with because you never knew who was with the secret police and how they would use the information you shared with them against yourself. In our mentality and culture, I didn’t know how to ask for help because I was not taught to ask for help. I never saw my parents doing it; I never saw anybody doing it, so it didn’t even cross my mind to ask for help. It wasn’t even about the gatekeepers and people not willing to share the information. I limited myself, and I even didn’t try asking for help for the first couple of years.
Alejandro: Wow. In this case, an incredible turning point. You end up doing the IPO of the company, and then what happens next?
Stefan Batory: I learned another lesson that when you’re in a service business, when you’re in the business of selling time to double or triple your revenues, you have to double or triple your headcount. That was not scalable, so I started thinking, “How do I draw the company without doubling the headcount? That’s when I figured out that there are other different business models like licensing or recurring revenue or marketplaces where you can actually draw the company without drawing the team and have less complexity so heavy on recruiting so many people to grow the company. I started figuring out what would be my next move. I came up with the idea of launching iTaxi. I didn’t know how to do it back then. I saw a similar project operate and thought that was a great idea. There wasn’t anything like that in Poland or any other European country at the time, and I thought: why don’t we launch that in Poland? That’s how iTaxi was born, the first [13:40] in Central Europe.
Alejandro: One of the things that is amazing is that you’ve done spin-off after spin-off, so when you’re doing a spin-off, for example, like what we’re discussing here, how do you go about doing it successfully because it’s not that easy to completely touch that new entity from the parent so fast and so quick. So, what does that process look like, and how do you make it smooth?
Stefan Batory: In my case, it was pretty easy to detach it from the parents. I just geofenced a team that focused on building that app, and six months later, we also created a separate entity, and we moved all the assets and the team to that new entity. I guess that was serendipity. Back then, I didn’t realize that having spin-offs might have heavy challenges, and I was pretty successful with the first one, so later on, when I was making my next spin-offs, I replicated that model. I had a blueprint that worked for me, so I did exactly the same thing as other spin-offs.
Alejandro: Got it. One of your latest spin-offs was what led to creating Booksy. I find that the story of the creation of Booksy and the origin of how that came about is mind-blowing. That comes from you running marathons in the Sierra Desert. I mean, how crazy is that?
Stefan Batory: Yeah, that is a really crazy and funny story. After eating potatoes for two years, once I could afford to eat meat and pasta and ice cream, I started gaining weight, and at some point, I was almost a 100-kilo guy. I didn’t want to pass the 100K mark, so to make a long story short, I started running. Once I got into running, I didn’t realize how much I would enjoy it, and I started signing up for 5K and 10K races. The more I worked out and the more I competed, the more I liked that, and then I signed up for my first half marathon and then 100K race. I was 12 months into running, and I signed up for Marathon Des Sables, which is considered the toughest footrace on earth. It is six back-to-back marathons across the Sierra in self-sufficiency formula, so you have to carry a backpack with all the food and supplies and everything you need to survive for a week in the desert. They only provide you with water because it’s not feasible to carry that much water with you for a week. Going back to Booksy, when I signed up for Marathon Des Sables, I started running up my mileage to get ready for the race, I started having some aches and pains in my legs, and I had to see a physiotherapist. It struck me that all the people that work with their hands, whether they give somebody a message or they paint nails or cut hair, or they color it, or they do makeup or lashes, they basically can’t take phone calls when they are busy working. And when they are done with their work, they want to go back home and spend time with their families and friends and not answer the phone calls. So I learned that there is a pain point, and I started thinking about how to solve it and how to take the hustle out of the booking process.
Alejandro: Wow. Now, it’s interesting how incredibly well you’ve been able to embrace struggles, and it’s incredible how you are done with potatoes, and then you’re like, “You know what? Now, I’m going to go into the Sierra and run a marathon. It’s super cool here, the similarities, as well, between building a startup and being in the desert, especially when you’re not there yet perhaps on the product/market fit; you’re testing; it’s a trial and error; it’s like you raised your seed round – it’s like you go through the desert until you’re able to find the water, and then everything starts going in the right direction. How do you think that experience or you dealing with being in the desert and all of that? How do you think that’s also applied to that mentality to build something from nothing and really finding that switch in that room when everything is dark, and you need to find that switch to get out of the room and survive?
Stefan Batory: That’s a great question. Actually, there are a lot of similarities in long-distance running and running a business because a lot of people get scared, and they are not even willing to put their shoes on when they think about running 5K or 10K, not even mentioning a marathon. It just scares people, so they don’t even make the first step. I think in running, the first thing is to put your shoes on and get out of your home and make the first step. And the same thing is true about business. People also give up halfway. A lot of people actually give up when the success is just around the corner, they just don’t see it coming, so they just give up literally the last mile before they succeed, and because of that, they fail. What I learned about running and running a business is that on one hand, you need to have this big hairy audacious gall and know the direction you are going or the direction you are running. But, at the same time, break it down into smaller pieces – break it down into small achievable pieces. When I was running in the Sierra, and I felt like, “Oh! I can’t make it! I still have 50K to go.” Instead of thinking about how difficult and scary that thought was, I focused on, “I see this palm tree, or rock, or I see that hill. I’ll get there, and then I’ll figure out what my next steps are.” This is where I see a lot of similarities in running a business and running long-distance that you need to bond between this long-term perspective and short-term perspective. If you are too obsessed about the short-term, you miss on the bigger vision. If you are too obsessed on the big vision and on the big picture, then you’ll fail to execute in your day-to-day life and operations. So you have to do both and alternate between the long-term vision and the day-to-day work. Whenever you feel like you can’t do it, and the goal seems to be so far away, just focus on doing the next step, and somehow the next step will be easier. Every step gets you closer to the finish line. When racing in the Sierra or in regular races, a lot of people, at some point, when they feel they are tired, they just stop; they sit down, but it doesn’t get them any closer to the finish line. So my attitude has always been even if I cannot run, then I slow down. If I cannot jog, then I still walk because even if I’m not walking or running at the exact pace I was aiming at, those steps that I’m making are getting me closer to the finish line, and stopping doesn’t get me any closer to the finish line. I apply the same with business. Even if we are not making enough progress, the most important thing is about learning something every single day and making small progress, even if it’s not what we have planned for, even if it’s smaller, then you’re still making progress.
Alejandro: That’s amazing. It’s interesting because the people who are right now listening to us are probably in the comfort of their homes, but we’re talking about running through the Sierra desert. I’ve seen those pictures; crazy blisters on the feet, massive pain before you cross the finish line. It’s unbelievable what you put yourself through. How many times have you done that?
Stefan Batory: I’ve done that three times so far. The first time I signed up just to see if I could do that. The second time I signed up with a goal of finishing in the top 100 out of 1,300 people participating, and I succeeded. Then, the third time, I wanted to finish in the Elite Top 50. And I finished 43rd. I’m still thinking about going back and finishing in the top 30 or 25 now. But I have too much on my plate, and I’m focusing on work now, but hopefully, one day, I will be able to go back and finish it the fourth time.
Alejandro: Wow! So, let’s talk about Booksy. Booksy is the result of you going through these races and making it happen. You come up with the concept; you come up with the idea, and then what do you do to bring it to life?
Stefan Batory: We did two things. We started developing it. We started designing the product developing it, and in order to do that, we started talking with our potential clients with hair salons, barbershops, hair and beauty places, owners, managers, and stylists who work there. But the second thing that we did, and now when I think about it, it was pretty crazy, but back then, it didn’t seem like a crazy idea. We just felt a very strong urge to do that. In all those conversations, we started heading them in the U.S., not in Poland, because we felt that we wanted to build a global company, and we wanted to validate that idea in the U.S., which is the most competitive market in the world. We felt like if we can succeed in the U.S., we can succeed anywhere. So, we flew over to the U.S. with my partner Konrad, and we started meeting with our potential clients and getting their feedback and learning how the beauty industry works and how they operate to make sure that we design the product that is a great fit for them.
Alejandro: What were some of the early days like?
Stefan Batory: Getting a lot of feedback, understanding how they run their business, what their challenges were, and we spend a lot of time with the developers and our designers putting those insights into a product, into the design, and then we spent a lot of time selling to the first clients and onboarding them ourselves so we could learn from that, and we could improve on the product. Before we hired a team and before we hired science people and marketing people, we wanted to make sure that we had product/market fit. We understood who our clients were, so we could onboard all the new people that would join the company. These were the first few months, maybe even a year, when Konrad and I practically ran the business and were hands-on, and we did sales and marketing and everything on our own.
Alejandro: For the people that are listening, what ended up being the business model of Booksy?
Stefan Batory: The business model is pretty simple. We charge monthly subscriptions. Basically, this is a SaaS business. We offer a great tool for service providers to manage the calendar and manage the clients, so their clients can book with them 24 hours, seven days a week online and they can focus on doing what they love on cutting hair or making people feel pretty and making people feel taken care of. We take the hassle out of the process, and we charge them a flat monthly fee. It’s $30 for independent contractors, so it’s basically $1 a day.
Alejandro: In this case, now you were running Booksy, and all of a sudden, the opportunity of coming to the U.S. shows up. Obviously, you could have built a really big business in Poland, but you decided to go, once again, through the struggle of crossing the Atlantic. Why did you do that, and how was that experience for you guys?
Stefan Batory: We wanted to make sure that we validated the idea in the most competitive market because we wanted to build a global company. You can always build a global company and start in your home market, which is always the easiest, but at the same time, Poland is probably not the best blueprint when you want to roll out in Western Europe, in North America, or even in Asia. There are so many differences, cultural differences, sometimes business differences, so we felt that the U.S. is the best market to validate it; it’s the most diversified market. If we can succeed with this market, then we can take Booksy to other markets and be successful. And it worked for us because today, the U.S. is our biggest market. It’s 50% of our business, but we also have presence in the UK, Spain, Mexico, Brazil, South Africa, and obviously, Poland. But Poland was the second market that we launched, and we actually translated the app from English to Polish, so we treated Poland not as a home market but as a market where we localized the idea to launch it.
Alejandro: What were some of the biggest hurdles of coming to a place like the U.S. because there probably are a lot of founders right now that are listening to us from outside of the U.S. and thinking about making the jump, maybe because they want to raise money because they see it’s a great place to ramp up their operations. What were some of the obstacles that you encountered?
Stefan Batory: Hiring people – I guess that was the biggest obstacle because we didn’t know anything about the U.S. market from an employment point of view. We didn’t know how to source talent; we didn’t know what competitive rates were; we didn’t know what would be the best place to set up an office; we didn’t know how to screen people, like how to retain them. These were all the obstacles we’ve been striving with, especially in the first two or three years until we established a really strong presence, and right now, we have a really strong U.S. team, and brand awareness, and we’re getting better at employer branding and getting really amazing candidates right now. But the first two or three years, this is where we struggled the most.
Alejandro: How much capital have you guys raised to date?
Stefan Batory: We’ve raised almost $120 million to date, with $70 million in the latest round in November the last year.
Alejandro: Wow! It’s interesting because, also being from Europe, I thought, and I saw that fundraising in the U.S. is quite different from the investor mentality in Europe, so what did you find different, especially when you were out there and perhaps doing Sand Hill Road and knocking on those doors and how people were reacting toward you guys?
Stefan Batory: I guess the biggest difference is that the ecosystem in the U.S. is developed and is at least a few years, if not a decade or two, ahead of some of the other ecosystems around the world. Everything is structured like you have templates for everything, so you don’t need to spend days or weeks negotiating contracts. Basically, everything is run on those templates, VCs know them, and startups know them, so you just plug in the numbers; you just plug in some of the most important terms, and that’s it. In Europe, everything is negotiated from scratch, so you waste a lot of time working with lawyers, paying them fees, and focusing on that instead of focusing on building your business. That’s something that I found is the biggest difference or the first difference I noticed. The second one, which now seems pretty obvious, but back then, I hated it, was a lot of VCs like to invest in founders that have credibility, and I had zero credibility in the U.S. I still don’t know if I have enough. Having said that, if you graduated from Stanford or Harvard, or if you worked at Google or Facebook, or if they know somebody who knows you who can vouch for you, that helps with the fundraising a lot. At first, I didn’t understand it, and I didn’t know why it was so important. I should have spent more time on building relationships on building by credibility because it didn’t mean anything that I was successful in Poland. When I moved in here three years ago, I was literally nobody with no credentials.
Alejandro: Wow. Was it on the way you were building relationships? I’ll share my story, and maybe there’s something there on your end in the same way, which is, when I came to the U.S. – in Spain, you had to be friends because your parents were friends or some kind of stuff like that. Here in the U.S., in New York, I remember that I would go to a dinner. I’d meet someone, and then the next day I could be in a different dinner with all the friends of that individual, and not a problem. So, how was that networking process for you in building those relationships?
Stefan Batory: It was difficult because I had neglected it. I didn’t realize the importance of the process, so I didn’t spend enough time on doing that. I had almost zero networking, and I still don’t have a big network. I was lucky to have Zach Coelius investing in Booksy and then a couple of early-stage investors and angels. At some point, that made the difference. They started helping me out, but until I got somebody who invested into Booksy who understood our business and who got to know me, it was super difficult.
Alejandro: Got it. Shifting gears here, let’s talk about Booksy a little bit more. What do you guys have in store? If you had to go to sleep tonight, and you wake up in a world where the vision of Booksy is fully realized, what does that world look like?
Stefan Batory: We want to make appointments easy for anybody anywhere, so if you wake up and the vision is fully realized, then no matter where you wake up, you can book your hair appointment with Booksy, you can book your doctor appointment, you can book your carwash appointment with Booksy. We envision Booksy as the booking app.
Alejandro: That’s amazing. One of the things that again is interesting here is how incredibly well you’ve always dealt with the ups and downs during your journey and also your life. One thing that definitely comes to mind is COVID. COVID has been a terrible year for everyone – full of uncertainty, full of people getting sick, loved ones having to go through it too, and also the businesses and seeing people suffer. I think in your case, it was a little bit bumpy, so how was that for you? How did you deal with that downturn of events?
Stefan Batory: It was very difficult. I think it was the most difficult experience in my professional career because we had a successful company growing and an amazing team, and when COVID hit, and markets went into lockdown, we faced a possibility of going out of business in the next few months because people stopped using Booksy. They were not booking haircuts. Salons stopped paying subscriptions because they wanted to save money, and we had to lay off over half of our team. That was a very sad moment, and that was a very difficult decision. There was a lot of volatility, and it was very unclear at that time if we were making the right decision, how long the lockdowns would last, whether it had to be at that scale. So there was a lot of stress, and it was a very difficult and sad moment. It was the hardest time in my professional career. Then, three months later, when markets reopened – at first, I had thought I had made the wrong decision because we had assumed that lockdowns would last longer and there would be second and third waves of lockdowns, but we saw a surge in signups and our numbers since then went through the roof. In May, June, and July, it went through the roof. I had heard a lot of people laying them off, and our business is thriving again, and I had thought it was a bad decision; it was a bad move. But then, some markets started going into lockdowns again, so it proved to be a good decision after all and good for the company because we were already prepared, and we didn’t have to go through another round of layoffs. So, that was a very difficult year with a lot of ups and downs, which ended really well for us because we ended up the year merging with one of our biggest competitors, [37:14], and raising the $70 million round. In hindsight, if you had asked me last year in February if I was expecting all of that to happen, I would tell you that was a crazy question because what we went through last year, it’s more than I went through in the previous 10 or 15 years.
Alejandro: Wow. That’s really unbelievable. I’m sure that now, looking back, what a remarkable journey. There’s one question that I typically ask the guests that come on the show, and that is if you had the opportunity to go back in time, and you were able to speak with that younger self that was thinking about that moment where you were alone, the partners had left, you needed to take the reins and really understand that you had a business to build or maybe a business that you were going to launch if you were able to go back and tell that younger Stefan one piece of advice before launching a business or leading a business, what would that be and why knowing what you know now?
Stefan Batory: Seek out help. Ask questions because it didn’t have to be that difficult and so much struggle if I had done that. I think that’s the #1 thing I would have done back then.
Alejandro: I love it. Stefan, for the people that are listening, what is the best way for them to reach out and say hi?
Stefan Batory: Email me at firstname.lastname@example.org. I’ll reply. Maybe not immediately, but I’ll reply to everybody.
Alejandro: Amazing. Stefan, thank you so much for being on the DealMakers show today.
Stefan Batory: Thank you for having me, and thank you for the great questions.
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