HIGHLIGHTS: Robert Gentz - Co-CEO of Zalando

0:00Nicolai Tangen: Hi everybody, tune in to this short version of the podcast which we do every Friday.

0:04Robert Gentz: For the long version, tune in on Wednesdays. Hi everyone, I'm Nicolai Tangen, the CEO of the Norwegian So-and-Wealth Fund. And today I'm here with Robert Gentz who is visiting us in Oslo. And Robert is the co-founder and co-CEO of Zalando. Which is, of course, as you know, all of you, Europe's leading online fashion platform. Robert started Zalando in 2008 right as the financial crisis hit. and most people thought that selling shoes online was a terrible idea. But now, 17 years later, Zalando serves more than 50 million customers across 25 European markets. We own a lot of shares in this company and it's really exciting to have you here.

0:43Nicolai Tangen: Thank you very much for inviting me and having me.

0:45Robert Gentz: Now, Rob, let's go back to the start. You founded Zalando in 2008, just as the financial crisis was kind of hitting the world. So tell me about the very start.

0:57Nicolai Tangen: Before we started Zalando, like me and my co-founder David, we started like a social media company in Latin America. So, which was like, you know, student network for Mexico, Argentina, Chile. And this was like a startup that didn't really work out. And then we said, okay, well, that shouldn't be it. So we actually wanted to actually try it one more time. And we came back to Europe and thought, okay, well, in e-commerce with soft goods, there's actually a very great opportunity here in Europe. And we looked into various categories and fashion and really found shoes quite interesting. And in June 2008, we started to sell flip-flops on a domain called flip-tops.de and it really worked out well.

1:42Nicolai Tangen: Consumers really liked it. It really picked up to 20 flip-flops a day. Based on this insight, we got our investment for a bigger idea, selling shoes online. And then we got started.

1:55Robert Gentz: When did you realize that there was potential beyond the shoe category?

2:03Nicolai Tangen: The skating of St. London happened extremely fast. So we went from, like in 2009, we had probably like 5 million revenues, 6 million revenues. Then we went to 150 in the next year. Then more than 500 million. Wow. And then more than 1.2 billion in the fourth year. Wow. So we literally went from 50 people in 2009 to end of 2011. We were like more than 2 ,500 employees. So the scaling went very fast because then we realized that we have this flywheel going for us. So we started off with shoes and then we understood the more you provide selection, actually the better you could actually convert the traffic.

2:44Nicolai Tangen: So better you could create the experience for customers. so we really had to just I mean scale selection and then we were able to convert the traffic in a good way and then we asked ourselves this is not only shoes but as well fashion yeah and can we actually cross sell fashion what we then started to do and then we asked ourselves this is not only Germany this is a European proposition and then we went into first market and realized that we could actually bring the same selection that we had now in Germany like to a smaller market that was very much appreciated and then we scaled across Europe and there was a very very fast scaling in these first years.

3:18Robert Gentz: What are the most important ways that AI is changing the way you run your business now?

3:22Nicolai Tangen: I mean, it has a few of components about how we actually interact with consumers. For example, we recently launched a discovery feed, which is actually a great way of how actually consumers can interact with fashion beyond actually the only buying, but as well in terms of their discovery and their inspiration and entertainment. where we actually surface from a huge pool of content, those items of content that consumers might be the most interested in, which gives them a great gateway towards finding or getting inspired or as well having fun with fashion lifestyle. So that's an interesting new project that we have launched on our mission to Inspiration Entertainment with consumers.

4:04Nicolai Tangen: A second kind of bigger initiative of ours is an assistant that we have built, which actually enables consumers to interact with us in natural language. So we can actually ask us much more occasion-based questions. So I don't know, I'm showing up here in Norway and what shall I actually wear today in Norway, which is something e-commerce previously couldn't really answer. But now with all these advanced and large language models and as well in our own advancements, we are able to cope with these questions and answer these questions in a good way.

4:35Robert Gentz: So the model told you, okay, You're going to Norway. It's such a depressing country. You need to wear black. Yeah, could be. What about sizes? How is technology going to help people choose the size?

4:50Nicolai Tangen: The size and fit is as well really like one of the most interesting and complex questions in fashion. And here, AI actually helps quite a lot to actually solve these questions.

5:00Robert Gentz: Can I take a picture of myself and get the size?

5:02Nicolai Tangen: Yeah, exactly. So you can take a picture of yourself at Zalando, which actually 1 million customers already have done. So you take a picture of yourself using the Zalando app and we render the sizes from your body and this actually increases our probability to actually predict the right size for you.

5:18Robert Gentz: Let's talk about leadership. So you run this from the first flip-flop to now you're like 15 ,000 people or thereabouts. How has your leadership style changed?

5:27Nicolai Tangen: I mean, a lot, I guess. When I started out, I was 24. I never really worked in another company. outside of the social media company we started in Latin America so I never really had any work experience so I think literally in the first years it was about just being in the front row and just playing on the field and just doing stuff. Over time obviously we have grown a lot and I had to as well learn about how to actually scale myself and how to scale the leadership. what I would describe now how I would lead is I'm quite an enabling leader so I trust by default the teams or like the DSL actually work for me directly and I try to actually spend quite some time in just understanding and being curious about like what's happening and then only really get involved in the areas where I feel that only I can do that now so it could be some very ambiguous decisions or like some more long-term decisions where you need a certain conviction and risk budget or or stubbornness as well and and i think on on topics around culture like corporate culture like those those kind of elements where you just have to really get involved and and take a stand as as no one else can do you've been very vocal about kind of the

6:54Robert Gentz: a European dream for entrepreneurship. And I'm very concerned about that. Just what are your thoughts about Europe as a place to start their businesses?

7:04Nicolai Tangen: I think what I'm missing sometimes in the European debate is like a positive North idea. So because if you don't really have a positive North idea, you kind of get into a lot of detailed discussions and negative discussions. What really I think we need here in Europe is first of all, I think, a positive kind of idea. What is actually what we want to do? And I felt like, you know, that actually creating such a European dream is actually like a good and North Star idea because I feel the American dream, which was, I think, like a big brand of the US, I think it actually has suffered quite a bit in recent years, which is a brand around, you know, come to the US and we cheer you up and build your dream.

7:53Nicolai Tangen: And it's the right kind of inclusive place. And I feel the American dream has suffered because it went from a very inclusive idea to a much more exclusive idea. So not everyone is really welcome in the US. And I feel Europe really has a big, big chance to actually tap into this void and actually create like a European idea because it's a free space. it's a very value-driven democratic space we have in Europe. And I think we have all the great talents and we have a lot of potential. And we just need to, I think, formulate like a positive, like North idea and make it as well clear that we are, I mean, we're in a race now.

8:36Nicolai Tangen: We're in a race between China and US and it's about relevancy and we want to win this race. And I think that's some of the positive ideas I think that we need here in Europe.

8:46Robert Gentz: If you try to abstract what it is that makes a good founder, what is it? Who are successful?

8:56Nicolai Tangen: What for me is a trade for active investors and many firms that I always look for is some element of curiosity and some element as well of humility. because that's what I realized over doing this for 17 years is curiosity is a very, very important leadership trait for me because you can only really take good decisions when you listen and when you are interested and you can learn actually from everyone so from a newly joined person to a company, from a customer, from a partner you can literally learn from everyone and this is very important that you're curious in order to actually take good decisions and the second element of humility is as well for me important because I mean you need to be respectful for what is in front of you and not get ahead because I mean just because whatever you build until here doesn't always predict that you as well be successful in the next kind of challenges that you have in front of you and I think that's I think two kind of important traits I would always look for for founders when when I invest into their companies.

10:03Nicolai Tangen: How much do you work? I think I don't really differentiate that much between like when I work and not work. I mean I think about Zalando when I get up, when I'm at work, when I'm at home, I think it's always when you're found I think it's a very very special kind of relationship that you have to the company, like a very deep care and I mean it doesn't doesn't really matter where you are and you always think about it in a way. So it's very hard for me to say like what's work, what's not work.