While the rest of the world ponders if this spurt of activity is a tech bubble or not, in Greece one of the oldest ones is about to pop. Now you could say that a company that has been around for 13 years doesn’t really qualify. In fact in the tech industry, they should perhaps get a medal for surviving that long! But I have been one of those annoying cleverclogs who publicly stated objections from their beginning. So it is my pleasure to be finally vindicated by recent developments.
www.e-direct.gr was a clear cut case of a scam. And a well executed one at that. But Eshop.gr is much more complicated. In internet economy terms you could almost say it was a perfect example. It had growing turnover, even physical stores. And – as traditional distribution crumbled from vanishing margins and credit differential – they even took genuine market share. But they never made sense.
At first it was their approach to business which worried me. They had made a parallel import of Pinnacle TV tuners back then and I visited to discover what was on their mind. Nothing it seemed. I had never seen a sales director less in touch with the actual products he was selling. Tech support? Non existent. Infrastructure? Let’s say “problematic” to be polite! Then I started monitoring their media spend. Ridiculous. They were regularly spending as much as Plaisio, even though their revenues were but a small fragment of the market leader’s.
So it looked like a perfect example of a company grooming itself to be sold. As long as everybody thinks they are the No1 Eshop in Greece, sooner or later someone will buy them. Some Greek businessman who suddenly gets itchy and worried that his empire doesn’t have an e-something. Rumours flew around about Panos Germanos (owner of such permanent money losing machines as Multirama and Public). But here remained the problem: nobody really knew.
I tried to explain this all to one of Eshop’s founder, the wonderful Apostolos, back in 2007. It was a dinner during Retail Vision at Paris and we ended up talking about our common passion of fast cars… In 2008 I wrote a blog post urging them to sell. “Last chance is now…” It may be that in Silicon Valley having a failure is considered a medal for venture capitalists, but only for quick mistakes in genuinely new business ventures. Eshop was drawing out, parallel concepts were emerging, even the founders started up other things, again in extreme secrecy.
The Greek business scene is in fact highly political. ie too many companies are in fact not related to the business of making profits. Private TV channels have been like that from their beginning, supported by some business man (personally even!) in order to influence politics. So the occasional press release of Eshop.gr breaking this or the other record in sales was a red flag to me in communication terms. My verdict: guilty by omission. Extremely selective presentation of subsets of data, it takes one to know one!
It doesn’t really matter whether or not they survive this crisis. In a way it gives them great cover to lay off people, close their pointless retail locations and make any other cuts necessary. Blame it all on the economic crisis. But without more transparency in financial and strategy matters nothing will change in the long term.