Putting lofty ideals into practice
If marriages are made in heaven, then Maciej Bud-Gusaim's business partnership came together on a similarly lofty scale on a mountain while skiing. But the real work began apres-ski when he helped formulate the idea for an online insurance company with his colleagues, Arkadiusz Swiercz and Pawel Kowalik. And back in Warsaw, the three got to work on the project.
In February 2000, the three entrepreneurs formed the Polish Insurance Portal (PPU) as a licensed insurance broker. The company was finally launched in December: Bud-Gusaim, still only 30 years old, was president and managing partner; Swiercz, also 30, was deputy chairman; and Kowalik, 26, was a board member in charge of technology.
Between them, the partners had a wealth of experience in the industry. Bud-Gusaim worked for five years at Hestia insurance including setting up a commercial underwriting operation and previously for 18 months helped to introduce re-insurance concepts at Heros. Swiercz worked at Protektor insurance and spent five years urging insurance company executives to accept new projects. Meanwhile, Pawel Kowalik also worked at Hestia as a techno whiz.
"It was a good combination," Bud-Gusiam said. "Everything went up pretty fast."
The start-up capital of $1 million came from private investors with a venture capital injection of $850,000 from Tomasz Czechowicz's MCI Management, which gave him a 28% stake in the company.
The firm's first clients were Compensa, Heros and Italian Generale, the third-largest insurance company in Europe. In early April, negotiations were nearing conclusion with the Polish insurer Powszechny Zaklad Ubezpieczen (PZU), Fiat insurance and a German company, Inter. Another half dozen companies are also interested, Bud-Gusiam said. To date, PPU is looking for additional investors and partnerships with other portals.
What's behind a business start-up
The creation of PPU is an interesting example of how new business start-ups are propelling Poland into new service and technology sectors, a world away from the communist emphasis on heavy industry. It also says a lot about the country's new breed of entrepreneurs.
Bud-Gusaim was reared in southern Poland at a time of immense political and economic changes. He enrolled at the Warsaw School of Technology intending to study electrical engineering, but became hooked on business instead.
As a freshman, he became involved with an international student association, the Board of European Technology. He later started the Polish affiliate, became its president and then served on the European board for two years.
The experience gave him insights into how small enterprises work. A polytechnics professor, who was also deputy chairman at Heros, recruited him to help organize the company's re-insurance department. At 25, he was going to international conferences, soaking up cutting-edge information and applying it back in Poland.
Following this, he moved to Hestia insurance where he directed a new commercial underwriting office and dealt with international programs. After his first year, when premiums written increased by 370%, he took over Hestia operations in the Warsaw region, including directing a branch office as well as the commercial underwriting.
By this time, he dropped out of school. "I didn't have time," he said, although he continued to take economics and other business courses. He was learning insurance and the nuts and bolts of business on the job, along with thousands of other Poles his age.
When he left five years later, in December 1999, he was in charge of 60 people and the office was generating zl. 70 million ($17 million) in business.
Brainstorming at the ski resort with Swiercz and Kowalik was the turning point. "We decided to try to do insurance on a bigger scale, on the Internet." Their model was a U.S. portal, Insweb. The PPU portal offers comparisons of specific insurance products, with precise prices and then sells them.
The company's only Polish competitor is the Expander financial portal, which includes insurance among its products but does not sell policies. "If you go to their site, you get the estimate of comparative offers and if you want to buy, you fill in a questionnaire and it's sent to the insurance company," he said. "The company has two weeks to either issue the policy or not.
"Ours is different. We're acting as an insurance broker. You ask all the questions about insurance products; then you get a comparison of the offers, with exact prices.
"If a customer is interested, we print out (a valid insurance document) at our office and a courier delivers it the next day. And either the client pays the premium and it becomes an active contract or it doesn't."
The partners spent a year and $1 million working with technical solution provider 3dart.com, which designed a complex system "to allow us to input any insurance products." Bud-Gusaim said other insurers now use his company's transaction models to calculate benefits and premiums on their own Web sites.
PPU recently introduced life insurance after starting with auto, household, private liability and tourist insurance packages. "We're working on a small-business comprehensive insurance fire, theft, general liability and product liability."
The partners admit that few Poles have access to the Internet. But if even 2 million people log on from time to time, PPU could expect healthy returns.
"Right now we're pretty confident that the business model is good," Bud-Gusaim said. "The only question is if the market is ready and the customers will tell us that. But we have a feeling that we've done everything right."
