'The Best Way to Keep the Devil at the Door Is to Be Rich.'

Difficult circumstances are a test of business wits and corporate character. In Poland, company builders Helena Luczywo and Wanda Rapaczynski are creating a media empire built on savvy strategy and unwavering principles.

Helena Luczywo and Wanda Rapaczynski, 54 and 52
Gazeta Wyborcza, Agora SA
Warsaw, Poland

How do you take a group of committed political activists who don't have a shred of interest or experience in building a business and create a thriving for-profit enterprise — without losing the values that brought everyone together in the first place? That was the high-stakes challenge that faced Helena Luczywo, a onetime Polish dissident turned multimedia mogul, when, in 1989, Poland became a free country and began its transition to a market economy. Luczywo, now 54, has spent the past 11 years responding to that challenge — and building one of the most successful companies in post-communist Europe.

Until 1989, Luczywo had spent more than a decade dodging government authorities and avoiding arrest while she edited Poland's most important underground newspaper. But when the communist government agreed to hold elections and to allow the opposition to have its own newspaper, Luczywo suddenly found herself running Gazeta Wyborcza (Election Gazette), the first legal, independent newspaper in the former Soviet bloc. She immediately faced a whole new set of struggles — from how to define the paper's editorial mission in a free society to how to drum up money to pay for much-needed new printing presses. Her goal: to turn a beleaguered opposition newspaper into a European media giant, making it a forum for objective news and democratic ideals. But how?

Cut to Wanda Rapaczynski, Luczywo's childhood pal. Rapaczynski had emigrated to the United States in 1968, earning a master's degree in management at Yale and then becoming a top executive at Citibank in New York. The two women had seen each other only twice in nearly 22 years, when, in January 1990, Rapaczynski came to Warsaw on a business trip and looked up her old friend. After only a few minutes together, Rapaczynski, now 52, volunteered to help with the paper. "I felt that I owed a debt," she says. "These people were here during martial law and communist rule. I wasn't."

For nearly two years, Rapaczynski worked as a pro bono consultant from New York, spending her vacations at the paper and dispensing advice by phone until the pressure of working two jobs finally got to her. In 1992, she quit her Citibank job, moved to Warsaw, and joined the paper full time. Together, Luczywo and Rapaczynski have spun the small underground newspaper into a Polish media giant, Agora SA, making it one of post-communist Europe's most remarkable success stories. Rapaczynski is president and CEO of Agora's management board. Luczywo, who has never cared much for titles, calls herself simply a "member of the management board," but she functions as the editorial director.

Agora, a publicly traded company with a market value of more than $1 billion, has holdings in newspaper, radio, and cable television. And it's rapidly expanding onto the Internet. Agora's flagship property, Gazeta Wyborcza , is by far Poland's most popular and most profitable paper, with ad sales of $123 million in 1999 and an average daily circulation of 560,000. While the company's 5-year-old radio division is small by comparison, it has grown quickly, with 13 local radio stations, one national radio station, and advertising revenues of $7 million in 1999, up from $2.7 million in 1998.

Agora's track record is so firmly established that when the company went public last year on the London and Warsaw Stock Exchanges, the IPO was oversubscribed by a factor of 10 — causing one American advertising executive based in Warsaw to quip, "It's Poland's Dell, the stock everyone wants to buy and get rich from."

Many people have. More than half of Agora's 3,000 employees are sitting on a pile of cash, thanks to a generous stock plan created by Luczywo, Rapaczynski, and Agora's third management-board member, Piotr Niemczycki, 41, head of the company's printing operations. Prior to the IPO, more than 1,500 staffers were given the right to buy shares of stock (based on their years of service) for one zloty each (about 24 cents). Last July, Agora sold 2.2 million shares to institutional investors at 104 zlotys per share, representing a huge windfall for the company's employees. The average Gazeta Wyborcza reporter earns $13,000 a year, but more than a few staffers are now millionaires.

No other company in post-communist Poland is believed to have shared so much stock with so many employees. But the company is sharing the wealth with the rest of Poland too. When Luczwyo, Niemczycki, and Rapaczynski restructured Agora in preparation for its IPO, they set up a charitable trust, holding 7.5% of the issued shares. When the trust matures, the company is obligated to distribute the proceeds — now valued at about $150 million — to charities in Poland. "This isn't just a business for us," says Rapaczynski. "Part of being a free media, untainted by political interests, is being willing to play a role in the country's democracy. And part of that belief is being committed to broad ownership of this company and giving back to our country."

Gazeta Wyborcza is a tabloid that uses USA Today - style color photos but that takes an intellectual approach to news, running long, thoughtful editorials and essays by philosophers and historians — the types of pieces that you might find in the New York Review of Books. That editorial thrust has been a joint effort by Luczywo and Adam Michnik, the legendary Polish dissident, historian, and author, who for years was a thorn in the side of the communist regime. Michnik, who holds the title of editor in chief, is the public face of the paper, while Luczywo has been the behind-the-scenes power, managing the paper's day-to-day affairs. (She recently took charge of Agora's Internet division.)

"I've been fighting for freedom of expression for many years," says Luczywo. "I believe that our newspaper should stand for important things and should not avoid difficult topics. It should tell the truth, even when the truth goes against the popular grain, the government, or advertisers. Our newspaper should have a reputation for integrity and should keep those standards." Adds Michnik: "We aren't liked by everybody. Some say that we impose a liberal standard for political debate. I don't think that's wrong. We take seriously our role in this country as an institution of democracy."

Meanwhile, under Rapaczynski's strategic guidance, Agora also has managed a series of shrewd business moves, transforming itself into what is considered to be one of the best-run media companies in Europe. In the early days of the company, when it desperately needed investors in order to acquire printing facilities, it turned down several suitors because it was determined to find one that would offer a sizable cash investment with no strings attached. "We had a very long list of people we didn't want as investors," says Rapaczynski. "We didn't want a media shark who eats up companies. What we wanted was someone who would make a sizable investment, without having any editorial say. We wanted what every company founder wants — which is, essentially, a free lunch."

Agora got just that in 1993. In a very sweet deal, Cox Enterprises Inc., a family-owned media chain based in Atlanta, bought a 12.5% stake in Agora and agreed not to meddle in its editorial affairs. Since then, Cox has taken stakes in Agora's radio and cable-TV businesses and has become a valuable friend to the company, providing the staff with management training, consultants, and a lot of free advice. The result: Agora has increased its profits every year. This year, its net income for the first five months alone was $17 million, up 60% from the same period last year.

Luczywo and Rapaczynski, meanwhile, are now bona fide moguls, each holding shares worth more than $30 million. (Michnik declined to take any stock, saying that, as editor, he needed to be removed from business interests.) Luczywo and Rapaczynski don't apologize for their wealth. They argue that money buys power and independence. If they wanted to live by their values, they had no choice but to create real economic value. "One of the greatest fears among the people at Agora has been, 'How are we going to keep our independence? How are we going to keep from being taken over?' " says Rapaczynski. "I've always believed that there is only one protection: You have to make sure you're financially independent. I remember telling people, 'The best way to keep the devil at the door is to be rich.' If you want to do good, you have to do well."

Declarations of Independence

To understand Agora's thirst for independence, you first need to appreciate the personal stories of both Luczywo and Rapaczynski. Like most Poles, their personal histories are wrapped up in Poland's traumatic political history. Luczywo's parents, both Jews, fled during World War II to what was then the Soviet Union, escaping the fate of roughly 3 million Polish Jews who were murdered in Nazi death camps. While in the Soviet Union, the Luczywos became friends with Rapaczynski's parents (her father was a Polish Jew; her mother was a Polish Catholic).

After the war, both couples returned to Warsaw, had children, and met every Sunday in the park. Raised as "Poles," even celebrating Catholic holidays, Luczywo and Rapacyznski both insist that they didn't think much about politics until 1968, when the Polish government launched a vicious anti-Semitic campaign against "rootless cosmopolitans" and "Zionist lackeys." Along with many other Polish Jews, Rapaczynski's parents were fired from their jobs. Meanwhile, much of Warsaw University was shut down, forcing out many students, including Luczywo and Rapaczynski. (Michnik, who was also Jewish and who was an outspoken student activist, was arrested several times during that period and spent some time in prison.)

It was in 1968 that Rapaczynski and her family emigrated — as did most of the remaining Jews in Poland. Luczywo, however, stayed. "I didn't want to be expelled from my country," she says, pausing to take a deep puff from her cigarette. "Maybe I was young and naive, but it seemed to be mostly verbal abuse from the communist propaganda machine. Lots of my friends were Polish, and none of them started treating me differently."

At that point, Lucwzyo's and Rapaczynski's lives took dramatically different turns. Rapaczynski moved to New York, where she married her Polish émigré boyfriend, had a child, and began building her career. She earned a doctorate in psychology from City University of New York and then worked as a researcher and a project director at Yale University's Family Television Research and Consultation Center.

In 1982, Rapaczynski quit academia to earn her management degree at Yale. She then spent eight years at Citibank, working her way up to a vice-president position and head of product development. "Doing academic research, I had no impact on real life," explains Rapaczynski, sitting in her small, cramped Agora office, which is decorated with snapshots of her daughter and a large photo of her other family — the Agora staff. "It didn't seem to make any difference to anybody what I was doing. I decided that there was a lot of practical work that I could be doing that would be important."

While Rapaczynski was gaining the business knowledge that would prove so valuable to Agora, Luczywo was gaining editorial experience — albeit the hard way. At first, Luczywo tried to live a quiet, normal life. She married, had a child, and began working as an English interpreter and translator. But in 1976, an opposition leader asked her to translate for a Swedish TV crew that was interviewing workers who were being persecuted by the Polish communist government. It took her three days to make the decision that would change her life. "I decided that what was important in life was that you be able to look in the mirror and see someone you approve of," she says.

A year later, when she and a small group of friends were publishing an underground paper, Robotnik (The Worker), Luczywo learned her first lesson as an editor: Push the limits, and always aim for independence. Named after a pre-World War I newspaper that was edited by a Polish independence hero, Robotnik advocated Poland's independence in its first issue — a bold stance at a time when the Iron Curtain seemed permanent. The writers also signed their real names to every article.

"We never thought that independence was a possibility," says Luczywo. "We were still living in a dictatorship, and we wanted to fight for free-trade unions. But our philosophy was to create and expand the islands of freedom. If you don't want to be a slave, you must do something. If you act as though you are free, you will feel free."

The police beat people up and made some arrests, but they overlooked Luczywo, perhaps finding it hard to believe that such a petite young mother was vital to the movement. When Lech Walesa's Solidarity coalition began its labor strikes, and Polish General Wojciech Jaruzelski declared a "state of war" and began ordering mass arrests in December 1981, Luczywo went into hiding. Sending her daughter to live with her parents, she spent more than a year moving around and using phony identification cards.

While in hiding, she and her friends began a new underground paper, Tygodnik Mazowsze (Mazovia Weekly), which carried the coalition's red logo on its banner. While they produced some 80,000 copies of each issue, Luczywo remembers feeling tired and dispirited during much of that period, worried that she was missing out on many things in life and wondering whether it was worthwhile to devote her whole life to the cause.

In 1986, she found her answer. She secured an exit visa to spend a few months as a fellow at Radcliffe's Bunting Institute, a sort of think tank for women. Nearly a decade earlier, she had spent a summer vacation traveling around the United States in a Greyhound bus. But this time, after spending months devouring the magazines and newspapers in Harvard's library, she came to appreciate the power of a free media — and the power of a free society. That appreciation deepened her commitment to both. "For the first time in my life, I lived in a free country, and I saw that whatever America's faults might be, it was so lively, so interesting, so unrestrained," she says.

In 1989, Jaruzelski began his famous Solidarity roundtables, during which he agreed to hold partly free elections and to allow the opposition to have its own newspaper for the election campaign. Walesa offered Michnik the editorship. Michnik, in turn, asked Luczwyo to run the paper. Temporarily taking up shop in an empty nursery school, Luczywo brought her crew from Tygodnik Mazowsze to put out what became the first legally independent newspaper in the Soviet bloc: Gazeta Wyborcza . Michnik set up his "office" in a bathroom; reporters worked on computers at knee-high tables and chairs. On warm days, they held meetings outside in the sandbox.

The debut issue consisted of eight pages, mostly filled with glowing profiles of the Solidarity candidates. The Solidarity logo was featured on the front page, along with the slogan "There's no liberty without Solidarity." All 150,000 copies of the first issue sold out, and Solidarity candidates won every contested seat in the June 1989 election.

Gazeta Wyborcza established itself as a political force almost immediately after the June 1989 election. But soon after, the newspaper declared its own independence from the Solidarity coalition. The party had begun to split into different factions, and the paper had taken sides, endorsing Walesa's opponent, Tadeusz Mazowiecki, in the 1990 presidential election. (Mazowiecki lost; Michnik ran and won a seat in the country's first noncommunist parliament, which he kept from 1989 to 1991.) Walesa was furious and demanded that the Solidarity logo be removed from the paper. He also pushed to get Michnik fired. The logo was removed, and Michnik offered to resign. But Luczywo, among others at the paper, wouldn't hear of it.

"Even before we had published our first issue, we wanted to be an independent newspaper," Luczywo says. "We created a parent company as owner of the newspaper and called it Agora because in Polish, 'agora' means 'a place to exchange views freely.' Walesa thought that Solidarity should own the paper. He just didn't understand the concept of free media. We were lucky to be free from him."

Cautiously Bold, Boldly Cautious

Just as Poland was struggling to reinvent itself during that new period, so too was Gazeta Wyborcza . For years, Polish newspapers had been political platforms. Now Gazeta Wyborcza had to find a way to make itself relevant in a new, capitalist society. "Before was a time of rebellion and revolution," says Luczywo. "Now we were in a market economy and had to find constructive ways to help people live in this new society. Everything that was happening in western societies was happening here: globalization, technology, civil rights. But we also had a totally new system that people had to find their place in." Thus, Gazeta Wyborcza was thrust into a classic strategic dilemma: How do you create a new purpose for your enterprise when the market — and the world around you — is changing?

Luczywo began working on the answer to that question. Dressed in a black T-shirt and pants, wearing no makeup, and scribbling notes to herself on an empty cigarette box and on the palm of her hand, Luczywo hardly seems like a business dynamo. But everyone agrees: While Michnik, a brilliant writer and a deep thinker, set the paper's political persona, it was mostly Luczywo — the organizer, the editor — who figured out how to reach the new Polish mass market. "In Poland, there weren't any models for independent newspapers," says Luczywo. "We had to be good about asking people abroad for advice. We had to be willing to learn from other people about how to do what we wanted to do."

In fact, one of Luczywo's earliest guiding principles — that a newspaper should strive to serve the needs of every reader — was inspired by a media conference that she attended in Prague in 1990. New York Times publisher Arthur Sulzberger Jr. "spoke about how a free media needs to meet as many of its readers' needs as possible," Luczywo recalls. "That may sound banal, but it is a really big thought for a newspaper. It is not an easy thing for a newspaper to do. And I thought, That's exactly what we are going to do."

Luczywo was among those people who pushed for the paper to start regional editions, and she was an early supporter of its supplements. Today, the paper has 20 regional editions and 11 themed sections, dubbed "day bombs" — supplements that explode with ads and practical information about such specialized topics as cars, employment, travel, and real estate. The paper also regularly runs consumer-oriented articles, such as a recent series that exposed poor conditions in Poland's maternity wards. The supplements and regional editions have been key to the paper's success, helping Gazeta Wyborcza establish itself as the must-read paper. Its Monday employment supplement — which now runs more than 100 pages and bulges with ads — carried the first serious job listings in Poland. Its glossy Saturday women's magazine, High Heels, which launched in April 1999, helped boost Saturday sales 8% (to 474,000) in its first year.

"We set up offices all around the country, with sales and editorial people in each one," says Luczywo, nibbling at a bowl of raspberries on her desk. "At the time, many people thought that the supplements and regional editions were a crazy thing to do because nobody here had done that before. But Poles needed consumer news to help them make their way in this new world. And our forecast for the future was that if you don't have a local presence in advertising and in news, you can't become a national newspaper." The strategy paid off: Gazeta Wyborcza captured 23% of local advertising and 62% of the national advertising in 1999, far more than any of its competitors.

But if Luczywo was able to steer Gazeta Wyborcza 's editorial direction smoothly, she also knew her limitations well enough to understand that she was at a loss when it came to the newspaper's business affairs. So, back in 1990, when her old friend, Rapaczynski, showed up in Warsaw, Luczywo immediately began lobbying her to join the paper. "We needed her," she says. "At the time, we were looking for people who knew how to do things, and Wanda knew how a company should be run. That was a skill we needed."

In fact today, Agora is known for being a well-organized and tightly run business — one that provides analysts with clear, detailed reports and that has well-informed, knowledgeable executives. That reputation, in large part, was earned by the work of Rapaczynski. Dressed in an elegant linen pantsuit, looking every bit the American executive, Rapaczynski recalls how she found Agora in disarray when she joined the company full time in 1992. Working closely with Piotr Niemczycki, the two worked to change the culture. "There was this horrible inheritance from communism, a certain passivity, where people would think, Why get active? " she says. "In the communist system, there was no reward for getting things done. There was no reward for competency, so people weren't motivated."

It was Rapaczynski who helped lure Cox in as an investor in 1993, and that relationship has proved immensely valuable to Agora. Cox agreed to be a passive investor and gave Agora the cash that it needed to buy its first printing presses. In 1995, when Agora decided to expand its media empire into radio, Rapaczynski was able to turn to Cox as a partner. Cox, which owns several local radio stations in the United States, helped draw up a business plan, sent over some of its radio consultants, and became a minority investor. After conducting market research in Poland, among other countries, Agora ended up following Cox's strategy — investing almost exclusively in local radio and creating heavily formatted stations.

It was a radical move in Poland, where, at the time, most radio stations were national and all stations were a mix of news and music. But after studying other markets and learning about Polish tastes, Rapaczynski decided to specialize in so-called oldies music — music from the 1960s through the 1990s — so that the stations could target Polish listeners between the ages of 25 and 45, the most demographically desirable group to advertisers. Also, that focus enabled Agora to leverage its strength in local markets. The strategy was classic Agora: First see what works abroad, then adapt it to Polish tastes. Call it the "fast follower principle." "I had a boss at Citibank who used to say, 'I never want to be the first. I just want to be the best,' " Rapaczynski says. "And I agree with that. When I go on a path, I don't want to be the one with the machete clearing the way. If you go in too early, you just burn money. If you go in too late, you have too much competition. We're not afraid to be innovators. But we believe that you should study what others have done and then benefit from their experience."

Wise to the Web

Agora's 1999 IPO was successful beyond its leaders' wildest dreams. It raised $93 million, which the company is using to construct a campus-style office complex and new printing facilities, and it has made many people at Gazeta Wyborcza rich — which makes Luczywo and Rapaczynski quite proud. "Isn't it great poetic justice that the people who lived for years on their ideals now have money?" says Rapaczynski.

But she admits that becoming a publicly traded company has also brought new scrutiny and pressures, making her relationship with Lucyzwo more tense. "You can say that you aren't going to worry about what the press and the analysts say, but you do so at your own peril," says Rapaczynski.

A case in point: In January, when Agora announced that it was going to spend $10 million over the next three years developing an Internet portal, its stock tripled. Like most of eastern Europe, Poland has no real Internet economy (no one even bothers keeping track of Internet-advertising expenditures in Poland), but suddenly, the country was experiencing its own dotcom fever. Then, when the U.S. market crashed, taming the exuberance for all things dotcom, Poland's market had a minicrash of its own, and analysts became skeptical. Suddenly, Agora — whose stock at the time was a healthy 104 zlotys per share — was one of those companies facing questions. Was $10 million really enough to build an Internet portal? (Luczywo now estimates that the investment may be as much as $30 million, not including advertising or promotion.) What was taking Agora so long to launch, anyway?

Luczywo, who says that the portal will launch by the end of this year, acknowledges that Agora, like many old-media companies, was a bit slow to embrace the Internet. But she argues that Agora's plans are so big and so creative that the company will quickly make up for lost time. "We're going to turn a brick-and-mortar company into a new-media company," she declares. "We're going to be as big on the Internet as we've been in print."

Still, Rapaczynski admits that the outside criticism has created friction. "We have a million disagreements every day," she says. "I get anxieties. I say to Helena, 'When are you going to launch?' I know she would just like to go into skunk works and emerge when it's done. But you can't do that as a public company. I spend a lot of time forcing people to document their progress, the milestones that they've reached. Unless investors and analysts can see and touch what you've done, they're turned off."

Meanwhile, Agora's CFO, Jerzy Thieme, resigned abruptly in June after only six months on the job. In a press statement, he said that he was resigning for "personal" reasons, but some people saw his departure as a sign of Agora's cultural resistance to outsiders. Rapaczynski denies that, but admits that the company — which has always insisted on control and independence, and has been very choosy about its partners — is wrestling with the reality that alliances are a necessary fact of life on the Internet.

Many, though, are betting on Agora, noting that the company has become such a respected brand that it has the power to create the kinds of deals that it wants to do. "Everyone wants to do business with Agora," says Joe Senfft, a Warsaw-based advertising consultant. "Its value proposition is quality." Indeed, Gazeta Wyborcza 's 3-year-old Web site recently became Poland's third most popular site, despite the little attention that the company has paid to it.

Sitting in her office one afternoon, Luczywo looks tired as she rattles off the Internet issues that she is trying to sort out. "It's all terribly boring but important," she says. Has she ever considered retiring, doing something else, now that she is very wealthy? "Why would I do that?" she asks. "There is too much that we need to do here." Later, when asked the same question, Rapaczynski offers much the same answer: "Now we have to make Agora a global company."

Pamela Kruger (pkruger@fastcompany.com), a Fast Company contributing editor, is based in Millburn, New Jersey. Contact Wanda Rapaczynski (w.rapaczynski@gazeta.pl) by email, or visit Agora SA on the Web (www.agora.pl).

Sidebar: What's Fast

The leaders of Agora, Helena Luczywo and Wanda Rapaczynski, have learned a lot about building a company under extreme conditions and against long odds. In just 11 years, they have transformed a small underground newspaper in Poland into what is widely considered the best-run and most profitable media company in post-communist Europe. Here are their strategies.

If you want to live by your values, create value.

From the outset, Luczywo and Rapaczynski were determined that Agora would remain an independent agent of democracy. And the way to guarantee that course, they concluded, was to become extremely profitable, so that the company would never be vulnerable to outside economic pressure. "If you want to be independent, then you must be financially independent," says Luczywo.

Don't do everything on your own.

One factor behind Agora's success has been its partnership with Cox Enterprises Inc., a family-owned media company based in Atlanta. Cox has provided Agora not only with cash but also with management training, consultants, and strategic advice. "The investment was not a strictly monetary one for Cox," says Luczywo. "They just liked us — what we stood for and what we were trying to do. And they became very helpful friends to us."

Treat investors with respect.

Rapaczynski is the first to criticize the investment community as being fickle, even irrational. "If you went by what the analysts say, you could have serious bipolar disorder," she says. "They change their minds minute by minute. You can't live by what they say."

But, she also cautions, "You ignore them at your own peril." As a result, Rapaczynski has made sure to provide the investment community with lots of clear, detailed reports on Agora's strategies and progress, going far beyond what companies are legally required to disclose in Poland.

Finish second — and smarter.

It sounds counterintuitive in the age of Internet time, when everyone's mantra is speed over accuracy. But Agora has always operated on the strategic principle that it's better to take the time to study the market, the competition, and their mistakes before committing big resources to new initiatives. This go-slow approach has attracted some criticism from analysts who believe in first-mover advantages, but Rapaczynski says that caution is one of Agora's strengths: "If you go in too early, you may go in when the market is still asleep, burn a lot of cash, and never see revenues. If you go in later, you have more competitors — but we've never been afraid of competition."

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