Unister Web Portal Operator: from start-up to 1 Billion Euros

By Wolfgang Seemann - Ten years after the Internet bubble burst in 2001 / 2002, Netz-Trends started to present some successful internet and software entrepreneurs in infrequent intervals. Our series begins with Thomas Wagner, 34 from Leipzig in Eastern-Germany, founder of Unister. Unister is one of Germany's and Europe’s most successful Internet companies.

Image: Unister Press
Thomas Wagner, 35, founder of Unister.

Ten years after the Internet bubble burst in 2001 / 2002, Netz-Trends started to present some successful internet and software entrepreneurs in infrequent intervals. Our series begins with Thomas Wagner, 34 from Leipzig in Eastern-Germany, founder of Unister. Unister is one of Germany's and Europe’s most successful Internet companies. The company is Germany’s market leader in online sales of travel and airline tickets. The prominent web portals of the Company (i.e. ab-in-den-urlaub.de, reisen.de and fluege.de) send more than 1 Million travellers on holidays or on business trips by plane every year.

According to the latest statistics of the German Online-Research Institute AGOF around 10 million users view a Unister page on the internet every month. It was the year 2002: Thomas Wagner studied business administration at the University of Leipzig, terminated his studies and instead taught himself computer programming by reading books - in the best example of a garage start-up-tradition in a Leipzig student residence. In 2012, the young entrepreneur can proudly look at a company with 1,500 employees not only based in Leipzig, but also in cities like Berlin, Dresden, Chemnitz, Paris, Magdeburg or Stralsund.

Unister is diverse in its online portfolio of available services. The spectrum of the e-commerce business leads from prominent travel agency portals to insurance comparison portals (like geld.de), to exchange portals (börsennews.de), to news portals (news. de) and to kredit.de or retail-portals (shopping.de). More than 40 national and international websites are now available under the Unister domain.

The portfolio reads like a ‘who's who’ of rare top-level domains. Many are among the best and most expensive to be offered by the worldwide domain-market. The web address www.shopping.de was paid for by Unister with the cost of around 1.96 million Euros. There are only a few dozen other domains in the world that required such an important investment.

Unquestionably, business for Unister was not always easy. For example: In general there are good reasons why the initial and the final price (i.e. on flight booking portals such as fluege.de) do not always coincide. Many customers purchase a travel ticket containing travel insurance, a transfer service or they use a credit card. This can be confusing for the customer as they wonder where the extra costs come from.

"Constructive criticism" is what Thomas Wagner can handle easily at any time. However, this is exactly what he misses from the "critics" of the moment."We sell several million tickets a year. The number of complaints in the consumer centre in Saxony is only 0.1 percent of all of our travel clients," Wagner answered at Netz trends.de. Nevertheless he takes every allegation seriously and of course adjusts the booking processes to the changing needs of the customers. Wagner: "The crucial guideline for us is the majority of consumers. And this majority has absolutely no problem with our way of price representation."

Growth in record time

Although the Unister travel portals have similar practices as the majority of the other travel portals (i.e. Opodo, Flugladen, ebooker, weg.de, L'Tur and holidaycheck), Unister is repeatedly exposed to criticism within the media. An industry expert of another large internet company thinks this may be caused by the strong business position of Unister, especially in the online travel market. However, this could also be caused by the "mega - presence in TV advertising," that has recently been extended by 27,000 City Light posters.

Thomas Wagner succeeded in what a few years ago would not have been thought possible at all. Namely, to displace the then market leader in distribution of package holidays in Germany, the American billion Expedia travel group. Even if it does not please critics and competitors, Unister is still on course for economic growth. With portals such as ab-in-den-urlaub.de (over 3,08 Mio. Unique Users a month) or the 1996 founded travel company travel24.com AG (ISIN securities DE000A0L1NQ8), participating in the Unister Group since 2009. This expansion is unilaterally confirmed in the travel industry. Within a short time Wagner took care, that travel24.com, for the first time since the founding in 1996, made a profit in 2012. Meanwhile travel24.com is active in many countries such as the Netherlands and in the UK and is developing the hotel brand travel24 hotels.

Even the television advertising campaigns are being driven across Europe. So far, the stock markets respond well to travel24’s performance. The online magazine boerse-online.de wrote that, since the participation to travel24.com AG, the company's stock shows an "excellent appearance" (http://www.boerse-online.de/premium/boersengefluester / Travel24-Klasse-Performance/637227.html). Similar ruling in the daily national newspaper “Die Welt” recommendation in June 2012 "buy" (http://www.welt.de/boerse/aktien/Travel24com-AG-DE000A0L1NQ8.html).

Thomas was working in a student’s apartment

Most of the talk from many industry insiders is half envious and half admiringly of the „Wizards of Leipzig." However, the success story of Unister has nothing to do with witchcraft, but with lots of hard work! Within the industry Thomas is considered to be a workaholic. 14 hr days are less the exception for him, but rather the rule. Of course there is also work left to be done at the weekends. More than a few consecutive days of vacation a year, he hardly indulges and if so, gladly taking part in a business meeting. Until about two years ago the successful young entrepreneur still lived in a small rented student-flat in Leipzig, which he shared with other students.

But there is one thing he never misses. Once a year he goes for a week's skiing with two friends from childhood days, mostly in the Austrian Alps. Even then the way they holiday is rather Spartan, Especially if there are other pals from Dessau, too! The long way from of Leipzig to the Alps they ride in the car together. While his friends drive "Thomas sleeps in the back," says a long time friend of Wagner.

Thomas Wagner and Unister with him recognized early that Internet search engines like Google are no enemies which is clearly a different point of view as there exists now in many European media houses and newspapers publishers. On the other hand, Unister has always recognized Google as a partner that offers useful structures in e-commerce-business.

Until a few years ago, many companies in the German travel industry, or the service sector refused to display Google adword ads Unister therefore, took an early opportunity. The rise of Google has also enabled the rise of numerous Internet companies in the world – such as eBay or Amazon.

Leadership and competition

A problem for some: Wagner is considered to be authoritarian and likes to interfere everywhere. This is not always easy, especially for his managers! "But on the other hand he has an extremely broad knowledge," says one employee. "He's quite a brain," also says a former director-general of a competitor who has also worked at times for Unister. Therefore, everybody who is willing and able to receive constructive input by Wagner has large opportunities to develop professionally. But if on a free weekend, Thomas "bombs" an employee with 20 emails this is not always easy for his employees.

"After three years, I simply could not stand it anymore. I find Thomas absolutely amazing. But I was afraid of the many daily emails from Thomas," says a former manager, who has left the company after less than three years. He says that it was a problem for him, that "Thomas likes to overrule decisions when he thinks it is necessary." Nevertheless, there are some executives that have accompanied Wagner’s rise for years. There are still some people who have worked in Leipzig Barfußgässchen from the beginnings!

There is an agreement amongstUnister employees that with Thomas many young talents, could forge a career at a pace that would have been impossible in other larger companies. Unister is therefore seen by many employees as a springboard into the digital world. Furthermore, Leipzig is becoming a kind of a small Silicon Valley lab. Whether it’s check24, groupon.com or the Heinrich Bauer Verlag. There are many companies, who also want to grow in the digital environment created by Unister, have therefore intended to come to Leipzig to win ground in the Internet business in the wake of Unister. This is not always easy for Unister. However, on the other hand, many employees who switched to the competitors regretted their decision after only a few weeks. Many have even returned!

Retention of staff is important

At the moment Unister, has about 90 trainees. These include, computer scientists, graphic artists, and marketing or tourism sales agents. As the Human Resources department confirms, the Leipzig-based company also works very closely with universities, job fairs and of course with the Federal Employment Agency. The average age of workers at Unister is 31years old. The salaries in Unister are ranged in the middle within the Leipzig area. However, there are some pleasant surprises. With overtime there is often a gain of 25 percent. There are 28 days holiday per year. Other Internet companies in Germany only offer 24 days and overtime is not paid. In addition, Unister sponsors around 144,000 litres of free mineral water for the 1,500 employees and 20,000 litres of coffee per year.

In view of the general shortage of highly skilled labour, employee development and training is seen as very important within the company. As the company's management confirmed there is a large amount of support. Paid English training courses at the institute for employees is but one example. There are also regularly offered training courses in software development as well as search engine optimization, (SEO) or tourism.

Membership and Engagements of Unister

Unister is an active member in numerous industry associations. Whether in the IVW (German Federation of Newspaper Circulation Control) or the AGOF (Germany Institute for measuring Unique Users in the internet). Another membership is the BVDW (Federation of German digital business) or the Bundesverband Mittelständische Wirtschaft (Federation of German Mittelstand).

In addition, there is a presence at most of the important tourism trade fairs. At the annual ITB Berlin, the world's leading international tourism fair, there is a Unister-booth in the great hall. Also Unister is present every year with a big exhibitor stand at the world's biggest Internet Fair, the dmexco in Cologne.

But it is not only business meetings at the executive level that are important to Wagner at the fairs, but also the basic work. So his staff is always amazed at how ‘hard’ Thomas acts in acquiring new customers. So even now he personally endeavours to "seek good travel deals". During the ITB 2012 in Berlin, for example, he talked with representatives of the most beautiful tourist holiday regions in Germany and Austria. Wagner wants to present to them the benefits of ab-in-den-urlaub and deals.de to the short break customer. "People just love good short-holiday breaks, especially in Germany," explains the Unister-founder.

Football-Manager-Star "Calli" Calmund in cross-examination

In 2011, the appearance of fluege.de advertising testimonial Reiner Calmund, who is loved by millions as "Calli " caused a lot of attention on the Internet Fair dmexco. The long-time Bayer Leverkusen football manager accompanied the Unister stand and answered the questions from Unister boss Thomas Wagner and the head of national and international corporate communications, Dr. Konstantin Korosides, in front of hundreds of spectators, including many football fans. When asked what Calmund thinks about the Critique of a German Consumer Organization, Calmund said: "Anyone who has problems to put or take out the Internet check, should not even turn on the Internet”. Calmund said further, "A consumer should be expected to take a good look around the page before booking a flight or a travel."

Payment options and Unister Privacy

A major problem for European and German e-commerce-companies is credit card fraud. The situation is particularly bad in countries such as Spain or France. In these countries up to 20 percent of credit card fraud is to be found. It can costs Millions of Euros. Unfortunately, the government, banks and credit card companies do not do enough to curb credit card fraud, as many industry insiders complain.

Credit card payments are associated with a large effort. Management, Control and insurance require high data protection. These are conditions that are aggravated from year to year, and that costs a lot of money. For Example it is possible that a family of four has to pay up to 80 euro fee for credit card payments for its flight or travel package. Unister shows special charge fees for certain credit card payments. These payments will always be explicitly stated. However, due to European law, there is at least one payment option that is free.

When it comes to fraudulent credit cards or not insured accounts it gets expensive for the company concerned: "Each chargeback is provided by banks or credit card companies to the account of the company with up to 40 €," says financial expert Friedrich Wiedemann.

Despite the increasing global fraud using false credit cards, which is a problem for many companies, Unister is also expanding on data security. Unister have invested a lot of money (around two million Euros) into the highest possible Internet security standard for credit card payments - in a so-called PCI audit. Thus subjecting all payment transactions on travel portals such as ab-in-den-urlaub.de to the rigorous independent Payment Card Industry Security Standard.

Preference for sport

The former Bayer Leverkusen football manager Reiner Calmund is one of the biggest advertising stars in Germany. His fluege.de spot has already been viewed on YouTube by more than 15 million people. Within those famous testimonials it is clear to be seen that Unister-founder Wagner, has a passion for sport. He is now expanding that offline too which is by marketing professionals rewarded with respectful recognition. So in October 2010, Wagner, the avid soccer player and skier bought the production of the venerable the traditional sports brand of the former East-German brand Germina.

Since then with the company „fluege.de Sprungskiproduktions GmbH" (www.ssp-fluege.de/Flugski) he has produced his own ski. The production facilities are located in Floh Seligenthal, a sleepy village in the Thuringia Forest. The managers there are Georg Reichart and Bernhard Seidl. The cost of production of the ski to Unister is not at all talked about. But the Financial Times Germany FTD writes: "On numbers Wagner is not saying anything (...) one number nevertheless has as a matter of fact slipped out. His producer George Reichart has openly reported that the production of skis, including expenses, per year is around 750,000 Euros".

For the “Vierschanzen-Tournee” (Four Hills Tournament), which is transmitted by ARD, many ski jumpers compete with fluege.de skis. Financial Times Germany created the headline "Der Rüberflieger" (Somebody who flies over everything) followed by a full paged article on 4. January 2012. (Online source: ftd.de).

Martin U. Müller of the German weekly news-magazine Der Spiegel said in a post that he considered Wagner's ski commitment to be a brilliant marketing move. Up to nine million viewers switch to the German huge TV-channels ARD and ZDF at ski jumping events.

From month to month the list of top athletes now ‘flying’ with fluege.de skis is getting longer. Olympic champion Stephan Hocke from Thuringia, Team World Cup winner Maximilian Mechler and Austrian "Vier-Schanzen"-Winner Wolfgang Loitzel are but a few names on that list. Not without local pride, the Thüringer Allgemeine newspaper also reported recently that "U.S.-World Cup winner Sarah Hendrickson visited the manufacturer of her boards in Floh Seligenthal. Meanwhile 92 athletes are jumping on Thuringia (fluege.de) "Slats", nine of those regularly fly to the Top 10 of the World Cup."

But it is not only the ski circus Unister is engaged in. The leading Germany flight-booking Website, fluege.de, was also an advertising partner of the German TV-Channel RTL in Formula 1 TV broadcasts. Last but not least, Unister promotes a premium sponsorship deal in the future success of the German handball Second League men's handball team SC DHfK Leipzig on its way to the first League.