Five years with Europe’s No. 1 e-com company
Germany, Berlin, Sonnenburger Str. 73, Jan 6th 2011
5 years ago today, I returned through a heavy snow storm from my hometown in Aachen to Berlin. A good friend of mine (Jan, now SVP Finance) just started at a startup in Berlin and he told me to come by and visit right after I got back to Berlin. 2010 was the most horrible year of my life and I was just barely getting out of the mess I created and the things that happened to me. So I was at the point to think about my future plans. Maybe I should start an agency with friends to do…something.
Berlin at that time was starting to become more and more start-up focused. The first wave of exits just happened, incubators and investors were starting to make their names in the city. But it lacked sustainable business models and long term perspectives for young people. The typical idea was still to rather move to Munich, Dusseldorf, Frankfurt or Hamburg if you wanted good money and safe working contracts.
So I entered a castle-like office building (10.000 m²) in Berlin’s far eastern part and it was supposed to be the long term solution for office space for this young online re-seller for shoes called Zalando. The shop went online in late 2008 and was featuring a variety of shoe models online with free delivery and free returns. I was introduced to Rubin (then managing director) and we went into a meeting room called Alexandria where he offered me a one-month contract as a freelancer to work on a secret project for Zalando. All-in-all maybe 5 minutes of talking and after I agreed, he asked if I could just stay for the first meeting. Rubin told his assistant Nicky (now assistant to the management board) to send me the contract. He turned over: Do you have a laptop and a smartphone with you? Yes? Great, so you can use that. I will ask Andreas (now responsible for Internal IT) to create an email address and stuff, until then, you can just use your gmail address.
10 Minutes later I was sitting in my first meeting with a few guys and we discussed the roadmap for the construction of our first self-build warehouse, somewhere in Germany. The growth of online stores in the first years depends largely on the available shelf space and you first have to buy the products, store them, to be able to send them to the customer later. The meeting and soon to be team room was used for ping-pong tables before and hardly fit for that purpose. We were 6 guys: Jan and David (now SVP Operations), Marc (now heading transportation), Stefan (back then responsible for the new shopping club at Zalando Lounge) and Felix (Biz Developer).
The plan was easy with some key questions:
Zalando’s growth was outpacing our logistics providers and we were only capable to accomplish our future growth plans, if we would set-up our own logistics. We just didn’t know how to do that, where to build it, how much it cost and when that would be possible. So an excel sheet was created with some simple timelines for team size, project milestones and the actual need by current data when we will not be able to rely on just external logistics providers.
Next day half of the team was gone because they were pulled back into their current projects. So I was kind of sitting there alone. We then discussed how we get the right people on board and that was when I got to know Robert (founder). He just put his Red Bull can away, called someone and asked this person to directly pull out a person from his team to join the new, secret LTT (logistics think tank). Kiana (now an entrepreneur herself) joined me later that day. Before this, she was responsible to set up the process for Zalando’s first fashion magazine. Now she was given the task to organize the search process while I was contacting all the economic advisers of different regions within Germany. On our first lunch with other colleagues, nobody at the table understood what exactly my job could be since I was not coming from a consultant firm, I wasn’t a pro at excel sheets, I didn’t study at the WHU (the university which the managing team attended)… I actually never studied at all. “So you just use your contacts to help us…???” said Philipp (now responsible for a new product at Zalando). Another girl, Julia (founder of Outfittery), talked about her experiences building up the first foreign market for Zalando. And I got to know those terms: scaling, fuck-up, cohorts, ramp-up.
A few days later, I sat together with David and he offered me an unlimited contract with the just founded Zalando Operations unit as a business developer. He said, well, if you stick with us, you might actually be part of a possible IPO and for the roadshow, we will need guys with good communication skills (I neither knew what an IPO nor a roadshow was that day or what made it so special). I was still managing the aftermath of my 2010 disasters and so I was happy with a normal job with a good pay in Berlin.
My first roadshow came much earlier instead: We were presenting this new company called Zalando to a few mayors and economic advisers in some regions of Germany. I was always showing up with my private laptop leading to some confusion among the participants because it was prominently featuring a NOFX sticker on it (saw that in the google searches for my name those days).
Three months in we were done. We had a concept for the warehouse, we had an idea of the cost, we had a good variety of possible locations and some developing companies, actually willing to take the risk to build a warehouse for a young startup. To put this into context: We were making 510 million Euro in revenue in 2011 which was 240% more than the year before but we were making losses of about 12%. At the beginning of 2011 we were roughly 300 people; we started hiring more than 250 new colleagues each consecutive month that year. Rocket Internet was our largest investor but Kinnevik was already expanding their share in Zalando heavily (now we’re public and Rocket owns <1% of Zalando, Kinnevik ~30%).
So when a bunch of young managers decided to invest roughly 140 Million Euro into a logistics center in eastern Germany, with a 10 year plus renting contract, willing to hire more than 500 people (not in tech or online marketing or business development) in the logistics, the reaction of, in my opinion, every investor in the world would have been: No. No further discussion. But what happened at Zalando? Rubin, Jan and David explained the case to Alex Samwer(managing partner at Rocket Internet). He shot a few great questions back at us, challenging the whole concept deeply. But one meeting later he was convinced. Next day he called and said: All investors are on board. Go ahead.
My first big learning in those early 6 months was: It’s all about trust. Without trust, you cannot scale at such a pace and you will never reach such dimensions (We were Germany’s biggest online shoe retailer back then).
Now we needed a real, constant team for this task. So we hired the project lead (today Simon is the new site leader of our actually 4th warehouse), a numbers guy (today Stephan is responsible for warehouse search) and, which was the most challenging, a construction engineer (Robert now builds this — Zalando Campus). I remained the communication guy for everything. 4 guys, age about 30 each. None of us ever built anything that size before. All responsible to make sure that Zalando starts operations of Europe’s largest e-commerce facility by summer 2012. We closed the deal with the developing company, with the city (Erfurt, central Germany), had to adapt the concept slightly (from 80% shoes beginning of 2011 to 50% apparel in middle of 2012 — imagine this in capacity planning) and so on.
Key learning: Think big and act fast. Back then, Jan always said to me: We’re in here for the long run. So we always had to think a few steps ahead to make sure that we actually can fulfill on the dreams of the management team.
Zalando’s growth continued to outpace any other business of that kind at that time. So actually before we commenced operations in our first self-constructed warehouse in Erfurt, we decided to build another one. The second one of its kind. So even before we made any kind of experiences with the first one, we started building a new one. This sounds way more dangerous than it was because we always planned with the highest stretch in flexibility in mind. Rather pay up for flexibility than pay for empty space later.
For a long time, we tried to keep Zalando low profile in terms of its incredible success. We were a submarine which took the German and many European markets without anybody really noticing it, except of course its loud and aggressive marketing campaigns but no faces, no interviews, no numbers. That of course had to change someday. Maybe a little late.
So after the decision for the second warehouse in Monchengladbach (I always liked that city) had been finalized, the next challenge was up. Rubin told me to build up the first corporate communications team for Zalando. Luckily I found one super corp comms expert in the Fashion PR team at Zalando and together with Kristin (now leading the market communications at Zalando) we both handled Zalando’s first large scale shitstorms in the German media but also we announced hitting the billion in revenue for 2012. Kristin was pretty scared in the beginning when she was told that a guy who was responsible for finding logistics hubs was selected to do communications for Zalando. But we kind of worked that our over the years… :) We gathered a small team, especially focused on media relations in the beginning to regain trust among journalists and other stakeholders.
By the way, I was part of a small team looking for new office space for Zalando at that time and we decided to sign contracts for about 60.000 m² additional office space at the end of 2012 in Berlin.
Until we made the step to go public, we still had to raise our image in the public. People wanted to know who is behind such a successful company that hired many thousand new people in the logistics within just a couple of months (In Erfurt alone, we have almost 3.000 employees by now) but which was also disrupting a complete industry by enormous speed. Handling interviews became a natural habit for Rubin, Robert and David and that is also how I got to know René who was covering the startup and business scene in Berlin as managing editor for a local newspaper.
Being Europe’s largest fashion online retailer, Zalando went public in 2014. Being profitable and making a couple of billion Euros in revenue at that time made us the new poster child for successful young companies in Europe, employing more than 7.000 people at that time (now more than 10.000). A company valued at >8 billion Euros at the German stock market and being part of the second largest index now needs a super strong communications setup. I therefore hired my own boss together with Rubin, which is also something exceptional, happening only in companies that grow by such dimensions in such short time spans. So I asked René, the journalist, to join us, which is what he did a year ago and together with a unique team of talents, we now have an ultra-strong communications team, bringing together press work, public affairs, corporate publishing, internal comms and our global comms to develop the strategic communications units of Zalando. It’s another, huge challenge and as always incomparable with the challenges before that. It’s what makes it amazing to be a part of this team.
Today, 5 years later, Zalando in numbers: about 3 billion Euro in revenue, 3%+ EBIT, listed MDax company, valued at about 8 billion Euro, 10.000 employees, over 75.000 m² office space, 3 warehouses in operation and 1 being build. Being part of that and having an impact on each one these factors is incredible and makes me deeply thankful.
Thank you Zalando! Thank you to everyone in this team!