Pavel Řehák (Direct): We don’t hold customers hostage. It’s not our place to tell them where to get insured

In this episode of the CEO na ostří nože podcast, we talk to Pavel Řehák, partner at VIGO Investments and CEO of Direct pojišťovna. At 35, he ran Česká pojišťovna, the largest Czech insurer, but after three years he left to build what he calls “a normal insurance company”. In his view, a normal insurer treats people like your own mum: no hidden catches, no unpleasant surprises and no excuses when something goes wrong. “If you wouldn’t want it to treat your mum this way, don’t do it,” is the rule that applies across everything Direct does.

Why don’t other insurers do the same? According to Řehák, it comes down to ownership. A company owned by thousands of anonymous investors has to maximise profit every quarter. Direct, by contrast, could afford decisions that industry experts considered risky, such as letting customers leave at any time. “It isn’t normal to hold people hostage,” he says. In the short term, it costs the company money; in the long term, it’s one of its biggest sources of fans. Some of Direct’s innovations, such as a policy coming into force once it’s paid, have since become market standard. Policy terms should be just as simple. Direct writes them “in plain Czech, not legalese”, interprets any ambiguity in the customer’s favour and sums up the key points on a single page. Its hotline has no automated menu, because a person who enjoys helping should pick up the phone quickly.

People like that, Řehák says, are easiest to find once you already have a few: “Crazy attracts crazy.” Selection is strict, though. Six people have to agree on every candidate, or they don’t get the job. Compromises, he says, have never paid off. One bad hire cost the company six months of delay and around CZK 30 million. The candidate looked great on paper but didn’t fit the culture and couldn’t get things done. That’s why Direct hires for mindset, not skills. Skills can be taught; mindset can’t. The company reviews everyone’s performance every quarter, 70% of it based on non-financial contribution. Anyone who falls short gets clear feedback, support and another quarter. If things don’t improve, they part ways.

Motivating people, Řehák says, is a waste of time. The company should be made up of people who know why they come to work and for whom the job fits their purpose in life. Direct has an inverted organisational structure. At the top are the people who look after customers, because every day they decide what ten thousand people will think of the company. Řehák himself spends 70% of his time making sure the right people are in the right places. When the group grew in two years from 350 to 700 people and from CZK 1.8 billion to 5.9 billion in revenue, he spent the whole summer running two-day workshops with all employees about why Direct exists and what its values are. Some realised afterwards that they weren’t in the right place. And that, he says, is fine.

What else will you learn in the podcast?

• Why a company’s owner shapes its culture more than its management

• Why Direct lets customers leave at any time

• How to write policy terms that customers, not just lawyers, understand

• How much a single hiring compromise can cost

• Why Direct hires for mindset, not skills

• Why Direct’s organisational pyramid is upside down

According to Pavel Řehák, you can’t build an exceptional company without being honest with yourself. You have to admit why you’re doing it, whether it’s about ego, money, status or something else, and then stay true to it. “It’s incredibly liberating. You don’t have to pretend, and it gives you calm and resilience even in the toughest situations.”