“We’re all choosing things that are beneficial and pleasing to ourselves, and this decision is probably egotistical as well. I want to actively share my experience and knowledge with others. When I see how successful our startups are growing, I realise that they are the core and future of Lithuania’s tech ecosystem. By joining our forces, know-how and talent, we must become a world-class intellectual powerhouse. It would be unfair not to do so, and I’m always delighted to share,” Mantas shares today.
And he definitely has something to share. Valued at €3.5 billion, Vinted unites more than 50 million users, offices in Berlin, Prague, Amsterdam, Utrecht and Vilnius, and more than 1000 employees working across 15 markets. And although the global economy is in a troubled state, Mantas is sure that unicorns, perhaps even several at once, will see a rebirth together with the inevitable economic upturn.
- Various experts and analysts are all talking about an economic winter, which will probably not spare the tech sector and startups. What kind of end-of-year scenario do you foresee? After all, everyone is looking up to the big players for answers.
- We haven’t seen such a complicated turn of events in a long time. An inflation fuelled by stimulus packages and the pandemic, a war that brought about an energy crisis, and overall gloomy investor outlook. There are a lot of variables, but I try to look at the flipside – what we get out of it, what changes, how everything will look like in the future. For instance, the energy crisis that stems from our strong dependence on fossil fuels, is the perfect impetus to embrace green energy. We have the technology, what we needed was an economical and geopolitical push. In the next 10 years, this will open new horizons, especially in Europe, without any geopolitical ties.
Looking at the tech sector in the context of these macro-level issues, I am convinced time and time again how innovative, fleet-footed, and flexible it is. That’s the obvious answer to the question about what we should have as the core of the economy of such a small country as Lithuania. We saw fast growth thanks to an abundance of cheap capital, which lasted for more than a decade. Naturally, today the system is ripe for a healthy correction. Resources will return to those who are able to create real and relevant value. These are tough times, especially for young fledgling companies, but the end result will bring positive changes for all. The economy operates in cycles, what we’re witnessing is the end of once cycle and the beginning of another.
- How should young startups act in these circumstances?
- It’s more difficult now for startups who don’t create obvious value and don’t have a strong innovative component, and many will fail. Before starting to look for funding, you must have convincing answers to the following questions: Where is my meaningful innovation? What’s my actual distinctive feature and value proposition? Do I have a competitive advantage that can’t be easily copied? And then you should prepare yourself for the fact that it’s going to be more difficult to raise funds. For some time, growth will be slower but more sustainable. Capital markets did not fold, and startups are still raising funds. However, VCs are more selective. But that’s for the better. Such an environment teaches us to work more and be bolder innovators. At the same time, talent is going to get redistributed to the most effective companies. Such situations offer the best lessons and experiences.
I remember that period as the most difficult in my entire career, but also as the most educational. Saying goodbye to a team you love and that you’ve built based on each member’s talent, just because you can see bankruptcy looming on the horizon, is really hard.
- It seems that you can talk a lot from your experience at Vinted. 2016 did not bring a financial crisis, but it brought massive change when you had to reorganise your company and let a third of your staff go, move parts of your operations to Berlin, and so on. What happened back then?
- Most startups pass through certain existential phases. The first one is showing that you’re creating value for your customers and that you’re capable of attracting and retaining your very first users. The second one is proving that you’re able to grow exponentially across geographical space. And the third is transforming all of this into a sustainable, profitable business, rather than simply having a product that your customers love. In our case, we managed to grow quite substantially, yet weren’t too happy with our profitability. Making money was quite a bit harder than we expected. We also made some mistakes that prompted investors to start asking questions.
Eventually, the realisation sunk in that, given our cost structure, we had no more than 8 months to live. Is it possible to make a company profitable and resume growth that quickly? I remember that period as the most difficult in my entire career, but also as the most educational. Saying goodbye to a team you love and that you’ve built based on each member’s talent, just because you can see bankruptcy looming on the horizon, is really hard. In any case, we cut our expenses in half, which bought us some time, and managed to bring the situation under control and transform the company into a financially sustainable business.
- With the benefit of hindsight, what helped you recover? Multiplying income 16-fold on the foundation of a monthly loss of €1 million is quite the feat.
- We overestimated customers’ financial valuation of our services, i.e., we set the service charges way too high. People simply went for alternatives that weren’t as good but were at least cheaper. This is the brutal reality of the internet. On the one hand, it’s the freest space imaginable, which brings many advantages and opportunities for growth. On the other hand, if you make a mistake, your customers will drop you like a hot potato. Recovery came when we staked our business on this exact principle – we set ourselves the goal of becoming the platform which creates the most value to customers at the lowest possible price. And we’re innovating in this area to this day.
- Fast-forward three years and Vinted is a unicorn. Do you remember the moment when you realised this had happened?
- A moment that was even more significant internally was when – after 7 years of tireless work that nearly ended in bankruptcy, and when our company was largely written off by investors and the market as without prospects – we made our first profit and became financially independent. Realising that it was now possible for us to continue operating without any new investors was a huge win. The subsequent capital round proved that market confidence in our business, thanks to real-world performance, was finally coming back. I saw that we were on the way to becoming a unicorn, our growth was extremely rapid, yet I didn’t think of it as a goal, unlike, say, further development, customer retention indicators, etc. Unicorndom simply came as a confirmation of our value in other people’s eyes. It’s also worth noting that, given the scars we still bear from those difficult times, we’d become exceptionally cautious and always looked at success with skepticism – it might be working now, but it may also crash any moment. It’s a kind of healthy internal paranoia. Those last capital rounds gave us an additional reserve in case of any unforeseen trouble. Which, by the way, did materialise after all.
There’s going to be a breakthrough – perhaps as soon as late next year or in 2024 – when 2-3 unicorns will drop around the same time.
- How did you end up in Vinted? You joined in 2011 as the very first investor and COO. What tasks did set for yourself at that time? What did you discover?
- After selling my first business, I didn’t want to just lay under a palm tree and enjoy my earnings. As I thought about the best ways of engaging my knowledge and capital, I saw 2 basic options – building something on my own from the ground up or joining a project that appealed to me, but which lacked funds and human resources. Being a proponent of team work, I decided to have some talks with members of Lithuania’s still relatively small tech community.
I met Justas, and later Milda, at a co-working space. To be perfectly honest, what I liked at first wasn’t the idea, but the team – I wanted to do something bigger with these guys. Given that my previous business was oriented towards Lithuania, to me “bigger” meant, e.g., Germany. We started mulling it over and I eventually proposed a double role to them – as investor and manager.
Of all the options that I had, Vinted was by far the craziest. Whenever I brought it up, people would always say it was nonsense. And yet, I was seeing lots of enthusiasm from customers and from our team, as well as a developing community and perhaps even the beginnings of a social media platform. Being 25 at the time, I decided to invest most of my capital in the company. As I saw it, I didn’t yet have any real commitments and it would be a valuable experience. And if it failed, I’d make money some other way.
- You mentioned your first company. How did you decide to go into business? You started tinkering with computers at 11 and joined the labour market at 15, is that right?
- My parents had regular jobs, but when the economy crashed in 1991, they lost them and went into business. Despite seeing them work a lot, take risks, and deal with constant stress, I was inspired by the sense of freedom and of being responsible for your own success. With a business, you could decide how much you wanted to work and this would have direct consequences for you. I was doing all kinds of things since childhood to make money. I loved it because I would make enough to cover my needs and felt quite free in that sense.
- Your first business – Interdata – was a hosting service that was bought by TEO after 5 years. What gave you that idea? How did you manage to grow it? What were the reactions of partners and clients to an 18-year-old entrepreneur?
- I learned during an interview that I was the youngest executive in Lithuania – I filed the papers as soon as I turned 18 to make my business official. I got a computer early on and my parents weren’t long to notice my passion. I learned a lot by experimenting and making mistakes, which never bothered me. I was self-taught. For instance, already at 16 I wrote technology news articles for an online publication, I worked at a cable news channel, and fixed my customers’ PCs and network equipment. Since my income vastly outstripped my expenses, I was financially independent and could not imagine living any other way.
- You’ve left the COO position at Vinted. Are people now constantly asking you about your future plans?
- I have lots of other activities that I find meaningful and motivating. To be precise, I haven’t left Vinted altogether, it’s just that my role has changed. From now on, my focus is on strategic matters and working on the company board, to which I dedicate 1 day each week. This, I believe, is enough for me to generate 80% of the value that I’m able to bring.
The kind of experience I went through at Vinted during its various stages of growth is worthwhile to 99% of startups. I want to share it with others, which I do by investing in early- stage startups and consulting them on everything that I have actual experience with, both in terms of strategy and operational matters. I used to do it after work and on weekends, working 12-14 hours per day on average. At one point during that intense period, I gave a heads up to my fellow Vinted executives that 3 months from now I was going to start making some changes. We made the necessary preparations and hired some excellent managers who are now following through on my previous initiatives. I’m really happy to see them making great progress.
- Which segments of the tech industry do you see as the most promising today?
- We are on the verge of a massive change that’s going to reverberate across human civilization, namely – the development of AI. It’s not science fiction anymore, it’s really happening. I believe that it will lead to a fundamentally different economy. Another tectonic shift will have to do with transforming our current, fossil fuel-based energy system into a sustainable one. And there’s also the medical sector. Today’s medicine is pretty much “out of date”. Let’s be honest, pro-active measures are lacking, while symptomatic treatments dominate. This is going to change dramatically within our lifetimes.
- Tell us a secret – who’s going to be the next Lithuanian unicorn? Which startups, in your opinion, are the most likely to achieve this status near term?
- The good news is that we have a robust startup ecosystem. I can already see some prospective Lithuanian unicorns in the making. However, I don’t want to speculate. All I’ll say is that there’s going to be a breakthrough – perhaps as soon as late next year or in 2024 – when 2-3 unicorns will drop around the same time. And commentators will be surprised, as if people haven’t been working hard to achieve this for years. There are some positive signs already today, and the current economic situation will only make future potential stronger.