The Trust Multiplier

ODS (Optical Disc Solutions), the company whose main shareholder and CEO is Mr. Zoltan Tussai, has its headquarters in the Free Press House. It was surprising for me to discover, among the walls that traditionally shelter typographies that witnessed the press history, a space that looks, as if it was detached from a science fiction movie. And yet, that’s how things go. Millions of CDs and DVDs that delights our eyes and ears are produced in the plant of Mr. Tussai, starting from some polycarbonate bags.

If there is a gene of entrepreneurship, then Zoltan Tussai has it. From cherry picking, along with other classmates, to the postman experience, for a month, in a summer vacation, before his last high school year, and the launching on its own into business, were just the college years. Here’s how the discussion with a full-blooded entrepreneur went.

You are an inborn entrepreneur. You didn't even feel the need to make yourself a CV. You have not put in any moment the problem to be someone else’s employee, of another company. How so?

In papers, I have been an employee for some companies, but as mentality, thinking style, I’m particularly distinguished from a typical employee. I’ve always had an entrepreneurial spirit and I always engaged in the activity like the company was my own. Luckily for me all agreements with the companies where I’ve worked previously were like partnerships and that helped me a lot in my development as a person, as a professional or manager.

How long did it take you to open your own business after you graduated?

That’s why I say that I was lucky. Immediately after graduating, I started on my own. I knew someone through some common relations outside the country that wanted to start a business on the Romanian market. Shortly after receiving this proposal, we started a market survey to see the potential; this was a condition for start-up. It happened in 2001, in Cluj. Basically, this is how it all began, like a family business, with my wife, my sister and my brother –in-law. After this small research, for five months we made a lot of trips to Bucharest, where there is 80% of the market. This is how we realized that only here we can open a sales office with chances of success. We are talking about the same business in industrial replication of (CDs and DVDs) in which we still are. At that moment, the market was much smaller (maybe just a 10% of what is now) it was in the early stage. It was still the audio cassettes time, the CDs barely imposed in the music zone, and the DVDs were just a beautiful dream…

I understand that you’ve prospected the market and found that there are a lot to be done…

The first partner with whom we started our business helped us very much at the beginning. Then, the things have evolved, the approach and context have changed, and my partner sold the group of companies to a western customer. I continued the business, but under a different shareholder. Neither this formula took too long. Within a year, they entered into a serious crisis and shortly the company collapsed. Gradually, we have already built the business in Bucharest, based on long-term partnerships.

At that time, did you already have the replication technology purchased?

We were only sales representatives and we imported the discs for contracted orders. However the local relationships mattered greatly. In the media industry, you must know how to treat your clients, to deliver the merchandise on time and respect your commitments. Think that we are talking about deadlines, launching deadlines, about crucial moments for them and for publications or the artists carrier. If you are unable to stick to an engaged delivery deadline, you risk compromising them, not only your contractual relationship. I can say that during 2001-2006 we had much hassle. I have to emphasize that we are talking about a seasonal industry. The first three quarters sums up the activity of the last quarter. For us, the high season is represented by the period between September to December. If in these four months, you don’t perform to your maximum potential, you risk to compromise the entire next year, because you lose your clientele. And you know how it says: “A lost customer means actually ten lost customers”. So, I learned in that period how to protect my own business, but also to be fare with our customers and to respect them. That’s why many customers earned then have appreciated the honesty with which we treated each situation. Even in critical moments we found suitable solutions for them.

How many people counted your team at that time?

Gradually, gradually the team in Bucharest developed. Today we have reached more than 100 employees. In 2006, when we managed to create the new ODS, along with some partners in Germany, it also constituted the moment when the local replication market consolidated. Since then we can say that we have local production capacities and we managed to impose on the basis of the seriousness of our german partners. They built their business at the European level, carefully studying the weaknesses of the industry. One of them was that many replicators promise a lot off the season, but in the season they had great talent to miss the delivery deadlines, inventing all sorts of reasons and excuses for not respecting their commitments. All this facts did nothing then to put salt on the client’s wound, as long as he didn’t receive the merchandise on time it was useless for him to know the reasons. The Germans were the best in this. They invested a lot in the production capacity so that it could fulfill the orders all year long, whatever the season. Another principle that I learned from them was the seriousness. When they said “yes” for a quantity or a delivery term, it was “yes”. If they said “no”, whatever the created frustrations, meant that they knew they could not deliver in the desired conditions. That was how I learned to say “no”, because otherwise you risk a lot on short and long term, as commitments. When we started out in 2006, we agreed with the employees a strategic target, as simple as clear: “To become a reliable supplier!” I explained what I mean by that. Going into details, we ended up on dividing the activity on each operator level, packer, delivery man, etc., so that everyone realize the importance of it’s job. Over time this story started other problems that we corrected on the way. We have become a very competitive company in terms of speed, flexibility, most people being focused on tasks. They did fast all that they had to do because they knew that they must close the circuit at the agreed terms. Instead, in the context of the current economy, this leads to a certain rigidity. This also comes with the increasing of the personnel, of the structure that we work with. Given that the market develops or evolves, I don’t want to lose our ability to think creatively, to seek for other lines of business, and eventually to be able to do with the same production capacity, totally different things.

Yes. On the other hand, you must know how to model directions so that people understand that we need these small changes, so we can achieve our goals, to operate in a profitable way, to be able pay our salaries, taxes, suppliers etc.

I know that before making a professional business, you had another type of entrepreneurial experiences.

There were some common experiences for all children of my age, but also some life lessons that I received when I was younger. The first job where I actually received remuneration was picking cherries, that it was practiced by everyone in my generation, in school. I also was a postman for a month, in a holiday, before I started the 12 th grade. An acquaintance asked me to replace her, at work during her vacation. It seemed simple and so it was. But in the end, I left with a bitter taste when I’ve realized how much you have to work, for a modest amount. Neither the woman that I replaced did not win with a lot more then they had given me. I realized then how little physical work is appreciated and what perspective is offered if you stay at a low level of knowledge. I was curious anyway, I love to learn, but this experiment has helped me to always set new and new targets. I constrained myself not to stay in one place, to self-develop. I tried to communicate this attitude to my team.

Will you share with your children this kind of experience when they will grow up?

For the moment I left their education on my wife’s hands, I am less involved. The boys learn very fast. They took a lot from me and my wife.

They are twins, but are they alike temperamentally speaking?

They take it in turns. This is spectacular to twins, because they mutually stimulate to nonsense and to good things. We set them some targets, but they always take care to be motivated by their interests.

Returning to ODS, what gives the company a competitive advantage?

Currently, starting over Germany, each country has remained with one or maximum two serious replicator. On the markets, there was no room for more competitors, or in Hungary, or in Serbia, Croatia, Romania, or in Bulgaria, although there was the heaven of the legal replicators or less legal. We came in addition with seriousness. I kept a close collaboration, on one hand with the main organizations and institutions dealing with this industry. I mean the international organizations of anti piracy, to the organizations of large groups of producers and distributors of content. So, the advantage comes from the international certifications and from the seriousness in business. On the other hand, the customer service is very important provided locally and on the location. Without a client-oriented approach, I think it would be much harder to resist on the market, under current conditions.

Are you the only replication company in Romania?

In what concerns DVDs, yes, but for CDs there is a factory in Iasi. They, however, belong to a Music Publisher Group and makes copies mainly for their catalogs and music publisher partners, and we cover the rest of the market.There is place for all of us in the market; Of course that in the last years, we have been forced to grow in other directions, to ensure our income, but I am talking only about areas that we can serve easily with our existing resources and capabilities. Yet the competition must not be looked for within the boundaries of the country, because we operate on an open market and we “fight” from equal to equal with all the major players. On the other hand, we must not forget that we also fight with a “gray” area of the market, where the incoming invoices on export are appreciated, without VAT. All that we invoice have all corresponding taxes, but our neighbors can invoice in a more "advantageous” way, because of different fiscal conditions. But this time, also our partners from Czech Republic complain: appear overnight all sorts of companies that produce and sell below cost and make unfair competition.

What percentage of ODS production is exported and how much internally?

We export between 15 and 20%, and the rest remains on the local market.

What turnover do you have?

We closed last year with seven million Euros and we hope that this year we will reach the same level.

Did the crisis affect your activity?

Yes, obviously. We reached the top in 2008, when we had 7.5 millions. In 2009, the turnover decreased by over 39%, which was a great shock, but we managed to mobilize and come back.

You were talking about opening new business lines, in parallel with the main line. How much creativity involves such a strategy?

Packing and labeling are areas where we can not put into game more creativity, but we rely mostly on sales creativity. In this sense, we plan not to remain only just some producers of DVDs, but to position ourselves as some solution providers. We have close relationships with the leading entertainment producers, of film music, documentary, cartoons, which in their turn “fights” with a closed market. We try to position ourselves like consultants for these firms in crisis, looking for solutions, and offer them connections between brands, between their needs and what we can offer. We want to creat win-win relationships, not to push down on our customers throat our proposals, but to seek the needs of each segment of consumers. We have already had a number of projects of this type that confirmed and I think that it remains a niche market to be exploited further. Once these are realized at the market level, the need will increase. It’s like you’d put seeds and wait for it to bloom. It’s important to do it often and constant. People also forget, sometimes lose their confidence because of some unfortunate experiences with other suppliers, but those who have had success with you, remembers and comes back. On the other hand, all the time appear new agencies, new people, you must always start from the beginning. The better you do your job all year round, the more you increase your chances that your projects materialize.

But you, personally, where do you get your ideas? Where do you take you creativity?

On one hand, I try to stay informed, aware of everything related to the technology specific to the industry, because we do not reinvent the wheel here… The ideas come after many years of involvement, experience, and direct contact with things. The better you know the field that you activate, the more chances you have to be creative, to build some new business models or to find some valuable ideas to implement. On the other hand, the family is the main source of recharging the “batteries” or, if you like, the motivation deep setted in the subconscious. Is a state of mind, the light you see in each people’s eyes that knows what the love from home means. The creativity also has its roots in this state of mind.

The ideas of your children inspire you in your business?

They inspired me especially in the projects that we develop dedicated to children. The fact is that we have free testing at home. And when I am at home, it is my great pleasure to do this testing together.

How did you obtain the replication rights for the Walt Disney productions?

With great efforts, which were successfully completed this year. For two years, we try to attract them, convince and make them recognize us, as reliable partners. To understand how difficult it was, you should know that these big studios have at the continental level only a few accredited plants. As long as that relationship work, they have no reason to look for other partners. It happened that one of the factories in the area, left place for some doubt concerning the legality of their activity, and therefore our partnership proposal was accepted, and supported by the good recommendations that ODS had. We were audited, it also came a team from the “Walt Disney” studios, examined the terms of production and the financial condition, and this year we received the replication approval.

Concretely, what form does this collaboration take?

The market developed and it’s an additional opportunity that the studios accept premium projects. We are agreed by the “Walt Disney” studios to work specific projects considered premium or inserts in the mass press, throughout all Eastern Europe zone. All that means retail titles – discs sold in the commercial networks- must be produced in centers approved by them. There's no way to enter. Because we are partners with their representatives from here, Pro Video, we can provide a lot of packing and wrapping services for those discs.

Who are your main clients?

The main record companies, publishers that have all kinds of projects with inserted CD’s or DVD’s, the major local licensees in documentary films etc.

What plans of further business development do you have?

It is estimated that in 2015-2016, the replication volume from this European zone area will decrease, perhaps to 60%-70 % from the current level. Perhaps we should use the existing resources and the investments that we’ve made so far. Based on the existing equipment and the gained experience, we must be able to do something else. We started some studies on new lines of development, but we must see how valid they will be from the economical point of view.

But the industry is going towards what destination?

Unfortunately, the digital age has begun to produce effects, attracts consequences that are not favorable. Plus the Romanian legislator fails to impose the law and the online piracy reaches to impressive quotas. If this could be reduced by at least 50-60%, the lifetime of the discs would increase significantly. However, the injected disc, not burned is the most stable data storage support, compared with USB devices or other magnetic memories. It has the quality to keep their characteristics a longer period. The stick which is believed to be the future, is more expensive than the disc and loses its magnetic qualities in time. The future belongs to digital developments. In the last years, major studios began to coagulate on common platforms, called "cloud computing", and thus began to provide consumers almost any content in legal conditions. It seems that they are future sources of income in the 2020s.

What does the Replication Association of optical discs from Romania consist, whose president you are?

The association is trying to protect the interests of the replication industry. We have already done several studies about the market condition, we made various letters to the relevant organizations and institutions from Romania, we also organized seminars in which we discuss basic knowledge in the field and made other efforts to draw the attention on the risks and consequences of the online piracy. The association also include several companies from the industry, but already presented their intent to join most of the music publishers and film distributors, all the players involved in this industry that have the interest to be more protected against piracy and illegal practices.

What kind of leader are you?

I tried to create my own style of leadership, to be closer to people. I am not the best capitalist. I tried to take care of the organization, considering a series of human aspects. To understand better you must know that back in 2009 when the turnover felt by 30%-40% and in that moment I should have fired 30%-40% of people, I rather choosed to discuss the situation with all our employees and seek for solutions, so that the whole team stays together. From that moment, the market dropped anyway, in a crisis area, but I regularly repeat my message to our employees, telling them that this crisis means to double our efforts in order to remain competitive, but also means many opportunities. You must be prepared to learn things quickly. Otherwise, I played football for 14 years, from which I enharited some valuable ideas like leading a team. In general, I’ve noticed that those who had the experience of a team sport understand better the strategic objectives of the business.

Do you have spare time? And if you have, what passions do you have?

I am trying to get out of the workaholic condition and earn time for my main passion: my children and my wife.