Taking a byte
By : Roseanne Gerin
Wired: Adam Niewinski, CEO of Expander.pl
No more pounding the pavement, bouncing between banks and flipping through pamphlets for that sweet deal on a personal loan or homeowners insurance. For Poles, all the financial information they need is available with the click of a mouse.
Expander.pl (http://www.expander.pl), a personal finance information portal cum e-commerce site for financial products, thinks it's solved the dilemma of Poles with little or no knowledge of basic banking and insurance. The Web site serves as a personal financial adviser as well as a mechanism for comparing and purchasing products online.
"Information and selling products are on top, but the core is to advise and educate," said Adam Niewinski, the 26-year-old chief executive officer and cofounder of Expander.pl.
Although the site was launched last October, transactions started in February after a month-long test phase. Now Expander is tallying up hundreds of transactions a month, Niewinski said. It has more than 75,000 registered users and plans on 100,000 by the end of the year. Getting Poles to buy online has been Expander's biggest challenge, he said. The firm has an agreement with consumer electronics manufacturer Philips to entice prospective buyers by rewarding them with small radios or digital videodisc players, depending on the amount of their transactions.
Expander has agreements with 30 financial institutions, including banks, insurance companies and investment funds, to offer their products online. It expects seven to 12 others to sign on by the end of the year. For each completed transaction for mortgage credits, cash loans and insurance, Expander receives a small commission, although Niewinski declined to give a specific percentage range.
For users, registration is free and personal information is submitted only to the financial institutions. Poles looking for homeowners insurance, for example, type in basic information online and get a list of the top 10 deals based on their specific needs. After accepting an offer, they receive detailed terms of the agreement, and then the information is zapped to the financial institutions, which respond via phone or e-mail in about 24 hours. Final contracts are sent by snail mail, and Expander collects its commission when the deal has been completed.
Unlike its eight or nine peers in financial cyberspace, Expander may have a better-than-average chance of surviving the cash dry-up deathblows of most online start-ups. While most new Internet sites depend on limited rounds of financing from private investors or venture capitalists, Expander managed to snag Polish software powerhouse Softbank as its financier after its founders convinced chief executive Aleksander Lesz that Poles needed a fresh, reliable and objective source of financial information and that the Internet could supply it quickly and effectively. Softbank pitched in zl. 20 million ($5 million) for an 86% stake in Expander, which it controls through the Internet firm's operating company FinFin. Expander's management team holds the remaining shares.
Yet, like other cash-gobbling Internet start-ups, Expander has consumed most of its initial funding in a short amount of time. Niewinski said last year's huge expenditures of a couple million zlotys for a software license to ensure secure transactions and more than zl. 5 million ($1.25 million) for its kick-off ad campaign were one-time expenses. The site now needs another cash injection, but Niewinski is confident that Softbank won't balk at ponying up more as long as Expander stays on track with its business plans and keeps operational costs as low as possible.
Niewinski, formerly an insurance and banking consultant for Boston Consulting Group, said profits would come as the stability of the service continued to grow. Expander expects to break even in 2003 with revenue split evenly between online ad sales and commissions from transactions. And according to Niewinski, the company is looking to see an operating profit of "a couple of million (zlotys)" in 2004.
This year, Expander is counting on zl. 2 million ($500,000) in revenue, mostly from online ad sales. Despite Poland's limited online ad spending, Niewinski said Expander's ad space was sold out in May, and that advertisers such as auto and telecom companies were willing to pay top prices to reach the site's target group of 25 to 45-year-old professionals with Internet access and disposable income.
Expander's peers, however, are less sanguine about its ambitious financial projections. "As far as transactions go, they (Expander) don't have much yet," said Maciej Bud-Gusaim, president of Expertia.pl (http://expertia.pl), an Internet site that sells online insurance policies.
