How the service started

• Back in the 2010s, Semyon Dukach, a famous Ukrainian investor, had an idea for a new project. He decided to discuss it with his friend from Boston, Vadym Yasynovskiy, who had moved to the US when he was 18 and had already launched several successful businesses. For instance, he sold his company Clear Software in 1996 to SPSS for $8.5 million. He worked on several startups together with Dukach.
• By the time PDFfiller (the former name of AirSlate) was conceived, Yasynovskiy had already been “retired” – he traveled the world and was into sports and arts. But the idea for a new startup sparked his interest.
• Dukach’s vision was to offer a service that would allow editing and e-sign PDF documents online. Yasynovskiy liked the idea. He supported the launch financially and agreed to develop the product. This is how PDFfiller came to be.

How the company developed

• The initial investments in the company amounted to $25,000, with $5,000 coming from Dukach, and the rest, from Yasynovskiy. Vadym had a programmer from Donetsk who had worked for one of his former projects. The entrepreneur decided to involve him in the creation of the online PDF editor. As Yasynovsky would later recall, they “somehow cobbled together” a prototype, and it began to grow unexpectedly fast.
• This growth accelerated even more when the team was strengthened by another co-founder, Borys Shakhnovich, who had also moved to the US, studied at Urbana University, and become one of the youngest professors at Boston University, and later Harvard.
• The idea to create, edit and e-sign PDF documents online proved to be in high demand among small and medium-sized businesses in the West. Thanks to Shakhnovich’s efforts, the website’s traffic soared from several hundred to 4 million visits a month.
• Initially, the service was free for users; later, a fee of $0.5 per document was introduced, followed by a subscription plan of $30 per year. Under Shakhnovich’s management, the service added the bank card payment option; since then, the monthly subscription rose to $20, and the annual one — to $72. In the first five years of work, the service gained 15,000 paid subscribers.
• Over time, the service expanded to include not only PDFs but also all types of office documents to work with. Because of this, in 2019, the team rebranded the service as AirSlate.
• At the same time, the startup raised a large investment from General Catalyst ($20 million). Other portfolio companies of this investor include Airbnb, HubSpot, Snap, Stripe, and others. The Ukrainian investor in the project was Horizon Capital, which invested through its Emerging Europe Growth Fund III (EEGF III).
• Since then, AirSlate has repeatedly raised rounds of tens of millions of dollars from prominent investors. For example, in January 2021, the team announced the closure of a $40 million round from Morgan Stanley Expansion Capital, General Catalyst, and HighSage Ventures.

What the results are

• Last year, Forbes was the first to write that the startup had become a unicorn after another investment round. The startup has repeatedly appeared on lists of Europe’s most expensive projects. This is no wonder: in 2021, its audience amounted to 700,000 clients from all around the world. And during the corona crisis, the project was able to increase its revenue by 65% and attract a total of $130m (including the current round).
• As of the time of the latest round of $51.5m, Airslate can boast more than 900,000 paying customers and 100m users globally. So, its co-founder has every reason to celebrate the news on Facebook.

In this article, Pavlo Maherovsky shares how the startup has managed to stay in the market, received its first investment, and closed a deal worth $20 million with a $1.6 billion company.

The idea for Honest Health first emerged when the two of us met during our MBA at London Business School. We started having conversations about the healthcare market, and these soon grew into conversations about starting a business together.

I came to the opportunity from the patient’s perspective. I was previously a customer of a hair loss clinic in London, and I had witnessed first hand the inefficiency and expense of in-person private treatment. This clinic would use pressure tactics to make me buy more expensive treatments, and once every few months, I’d have to go back into a pharmacy to pick up prescriptions.

Sam came from the provider’s perspective. Before Honest Health, he’d already built two healthcare businesses with his mother: a primary care clinic and a pharmacy. Sam was surprised by how old-fashioned people’s attitudes were when it came to healthcare. Pre-pandemic, fewer than 1% of medical appointments took place online.

We were looking for solutions, and that’s when we recognized the emergence of the direct-to-consumer (D2C) healthcare category in the US, with companies like Hims & Hers, Curology, Nurx, and others, and it clicked. They were offering a variety of telemedicine solutions for medical issues, including erectile dysfunction, birth control, and dermatology.

Such an approach could solve the problems of inefficiency and the high cost of medical services. So in 2019, we launched our product Freshman, a D2C platform that offers subscription-based remote treatment for hair loss.

Fundraising was consistently the biggest challenge we faced early on in the business.

Having been turned down by 186 investors, we bootstrapped the business with our limited savings. We built and launched the original product, Freshman, on a tight budget of around £35,000, which came entirely out of our own pockets. Pile this on top of the fact that we’d both just taken two years out to study MBAs—and taking on the significant student debt associated with that.

During our fundraising journey, we spoke to many investors – and the vast majority of them didn’t invest. It was difficult to deal with at the time. It makes you question what you’re doing and puts doubt in your mind because we were very fixated on trying to secure a big fund to invest in our business. But actually, the investors who added the most value were some of those angel investors with smaller cheques, but they provided much more value over and above the financial investment.

In 2020, everything changed: suddenly telehealth became a necessity, then a norm.

The COVID-19 pandemic triggered a rapid acceleration of the trends that we predicted back when we started in 2018. Out of necessity, healthcare provision became remote where possible, and consumers began to see the possibilities that technology could provide. Compared to the 1% who had used telehealth before the pandemic, in May 2020, around 37% of medical appointments took place online.

We witnessed over a decade-worth of growth and adoption in the space of six months. The company grew by 800% over the course of 2020 alone. By early 2021, we had thousands of men around the country using our treatments each day.

Ultimately, the hard work all paid off. We closed our seed round in November 2020, which included investment from VGC Partners and Fagron, the leading global pharmaceutical compounding company. This seed round helped us hire our first employee, Head of Growth, build further momentum in the market, and ultimately led to our acquisition by Hims & Hers Health, Inc.

Our company is now 100% owned by Hims & Hers Health, Inc.

We were put in touch with Hims & Hers by one of our investors, who was an angel investor himself and a recently exited founder in London. He was just very, very plugged into the tech community in the UK and had known Hims & Hers for a while, and he just made that connection for us. As soon as we started talking to the Hims & Hers team in early 2021, it became clear that we shared a vision for the future of healthcare, and even more importantly, we knew right away that there was a great cultural fit too.

Our company is now 100% owned by Hims & Hers Health, Inc. Sam and I are now responsible for managing the Hims & Hers growth and expansion strategy in the UK.

Now, without the stress of having to think about our next funding round, we can focus on what we do best: building our business, broadening our range of products, and finding new ways to delight our customers.

Getting rejected many times is part of the game

What’s crucial to remember through the fundraising process is not to give up. Getting rejected many times is part of the game when it comes to raising investment: look at any successful company, and no doubt they’ve been rejected by investors at some point. Here are some of the best lessons we learned about fundraising:

• You have to optimize your story. One thing we hadn’t really polished at the beginning was what exactly our company’s story was, and where we saw it going. This needs to be clearly thought through, and framed correctly, in order to resonate with investors.
• Understand where you fit in the ecosystem. One of the best quotes we heard about fundraising is that ‘VC is fractal.’ There are big investors and there are small investors. There are Series A investors and there are seed investors. There are VC funds and there are angels. Each one has a different mandate, a different risk appetite, and different expected returns. There’s no point only aiming for the top investors that everyone goes for: that’s the mistake we made. Knowing where you fit in the fundraising landscape and therefore knowing which kinds of investors to approach is key to getting funded.
• Investors prefer lines to dots. The honest truth is that almost no entrepreneurs secure investment after just one meeting. Don’t get disheartened after an investor tells you, “We need to see more traction.” Stay on their radar and demonstrate that you’re heading in the right direction. Add this investor to an email distribution list, and start sending out regular, monthly updates, for example. You’ll be surprised how many investors will start following your progress and reaching out with meeting requests.
• Momentum is everything. Getting the first investment is hard. But once you get that, everyone else falls into place. By the end of our seed round, we were turning away investors. So think about who is going to be the investor to give you your first cheque, and focus on them.

According to representatives of the startup, a final prototype (with improved load and energy-storage capacity compared to regular batteries) can be presented in Q2 2022.

The most powerful battery in the world

MaxAh uses graphene produced in Ukraine as cathode or anode material for non-water electrolytes of lithium power supplies. It helps improve the load capacity, power distribution, and storage.

“The main focus here is on our local graphene. A basic element of electrodes during our tests is two-layer graphene synthesized in Ukraine. In the future, it will lead us to the vertically integrated production process. Titanium, magnesium, lithium — we have all that in our country. We not only have it, but we are also ready to use it,” MaxAh said.

Moreover, the project is dedicated to the development of power sources based on magnesium spinel, sulfur, iron, and phosphor compounds, not only that specific element. Thanks to that, we extend our variety to get optimal output in the end.

“Our goal is a product for big industries: transport, energy, electronics, space, medicine, defense, etc. Thanks to this approach, we solve three problems: lack of a final product, slow power supply development and production processes, and unbelievably high cost of production. And it is not a motto; it is a fact,” the startup representatives said.

The prototype release is planned for Q2 2022

According to MaxAh, another Ukrainian startup, e-bike manufacturer, Delfast showed interest in batteries with Ukrainian graphene before the test period.

“During the last decade, lithium-ion batteries became very demanded in different industries and areas of our life. They are used in mobile devices, e-vehicles, power-saving systems in the energy industry, and renewable energy. Unfortunately, they cannot solve problems and satisfy needs neither large industrial manufacturers nor end users like you and me,” noted the CEO at MaxAh, Serhii Dubinevych.

According to the plans, the release of a new battery will be at the end of Q2 2022, and the mass production can start in 6-7 months after the prototype presentation. The general development plans are following:

1. Testing different systems and preparing research documentation;
2. Creation of a physical prototype;
3. Additional fundraising;
4. Optimization of the current business plan by taking into account risks and forecasts;
5. Product presentation to a wide audience.

Why it’s interesting

Because of the development of portable electronics and electro cars (most auto producers already announced that they will end the production of ICE vehicles until 2030-2035), the issue of battery capacity and charging speed is increasingly growing.

According to Allied Market Research, the world market of graphene-based lithium-ion batteries will hit $95.6 bln until 2027.

The economic forecasts and demand on devices of both users and manufacturers motivate MaxAh to raise additional funds, commercialize, and scale its inventions.

OBRIO, one of Genesis’s businesses, works on four product directions: Mobile, Web, GameDev, SaaS. Currently, the astrology app Nebula is the largest project of the company and is also the most downloaded app in the US in the astrology niche. It is used by over 13 million people in 50 countries. Besides, it has become the app of the day in App Store in the US and Great Britain and even outpaced Tinder several times.

Launch of the Android version

Although Android is the most popular OS for smartphones, the companies involved with mobile apps development usually invest more effort into the iOS platform. It is quite logical since iOS users normally bring more profit as compared to Android users. However, after the iOS 14.5 release, it became vital to use all opportunities for conducting purchases with clear and timely metrics. 

My work in the OBRIO company and in marketing began in June 2020. I started with marketing for Nebula, the only existing product at that time, which was available only on iOS. Our marketing team comprised three media buyers, each of whom was responsible for their ads platform (one or several). My first experiences were related to Snapchat and TikTok.

These platforms brought us good results but were quite unstable. They are rather suitable for one-time scaling, when one has a top-performing ad creative, than for the correctly organized strategy and stable volumes.

Later on, new products appeared on the project. One of them was Nebula for the Android platform. Thus we had to change the working process of the marketing team. Since then, the focus of each marketer shifted from ad platforms to a particular product. We wanted to make the new products as steeply developing as Nebula iOS was. However, this was impossible without corresponding resources. Furthermore, we had noticed that our team often faced communication difficulties. For instance, some team members could not understand why did we make particular changes? Why did we conduct these tests, not others? This pushed us to create separate marketing mini teams inside OBRIO, those which had to be responsible for Nebula iOS, Nebula Android, and other apps.

It may seem that parting the app versions for different operating systems into a separate product was not logical. The thing is that the Android version was released much later than the version for iOS. When the iOS version was on the scaling stage, outpacing Tinder in the ratings, bitting new records each day, the Android version was only on the MVP stage, and we knew neither the audience nor the economy well. 

Our mini teams were quite small in size. Back then, we lacked a product manager for all apps and an analyst. A marketer was in response for choosing which ad platforms to invest time in to reach business aims. On the level of mini teams, we also identified problems of the products and brainstormed ideas to solve them.

Prioritization and ideas testing 

We estimated the pool of available ideas according to the ICE framework (crossed out). We TRIED to estimate the pool of available ideas according to the ICE framework. But we discovered that it was somewhat hard to objectively consider the ideas and their impact on the product (even based on the prepared grading scale).

One of the failed plans was to limit the most popular functionality. Nebula contains the section of zodiac compatibility in which the user can check up to 10 zodiac pairs in one session. Our idea formed naturally: what would happen if we restrict the number of checks per day and offer them as the premium functionality? Now it seems quite logical that motivation through restrictions is not the best idea, but now we also have the numbers with test results for complete confidence.

We have learned three lessons out of this case:

1. If you want to make the product successful — you should translate it into value, and do not force a user to believe that it is valuable.
2. When you generate an idea, you should choose the instruments that would help you distinctly estimate its impacts and necessary resources. You need the experience to make those instruments work right. 
3. Each genius idea has to be underpinned by the MVP functionality, according to which you can check the hypothesis. 

Nebula Android pipeline: the problems

To understand, which changes does the product need, one has to carefully analyze previous marketing results and product metrics. Analysis of the pipeline considerably helps in forming ideas and tasks prioritization. 

The Nebula Android pipelines had significant differences from the iOS-version on each stage: conversion from installing to trial was smaller by 1.5 times, conversion from trial to payment — by 2.4. These metrics hugely impacted the efficiency and volumes of purchases as the LTV trial (the effective cost per user who began the trial) was too low to scale volumes with positive ROMI (Return of Marketing Investments).

Additionally, we discovered that above 70% of users who began the trial did it immediately after onboarding. So it was vital to translate the value of the product from the first seconds of usage. 

Apart from the product metrics, the potential obstacle concerned our score in the Play Market. In April 2021, it was 2.9. The users complained that the Android version was not complete, that the subscription was too expensive, and the ads were too many. The score can either motivate a user to download an app or push them to find an alternative. In fact, it represents reputation. The 2.9 score is objectively not too attractive for a user. Especially I would not have trust or wish to try such a product.

We could have chosen to improve only the app content, add new sections, but decided to focus on two metrics instead — conversion from installing to trial and from trial to subscription. To boost these, we resolved to improve the first two stages — onboarding and user activation. And it gave remarkable results. 

What we did

1. Conversion from trial to subscription 

This was the first step we started working with. We held monetization tests, changed subscription opportunities, prices, and tested different variants of sales screens. But practically, the test groups showed worse results as compared to the actual variants. If there were some which worked better, their benefit still was minor. 

Ordering compatibility reports was one of the most popular services among our users at that time. The report was completed by astrologers based on parters’ data and gave detailed information about the relations of two people.  Our idea was to present our subscribers with the basic compatibility report for free. It was also completed by astrologers and provided accurate information (but did not take into account all personal data, was more generalized). The idea did not require major development resources but boosted the conversion from trial to subscription by more than 2 percentage points.   

2. Trial conversion

This number is formed by estimating an app onboarding: the experience of a user during their first usage of the product, its usefulness, and pleasantness. 

At that moment, Nebula Android had the standard onboarding process, which required basic information about the user: name, place, and date of birth. On one hand, the onboarding was simple and understandable. It needed a minimum of personal information, which meant it was secure for a user since we did not collect their detailed data. On the other hand, such onboarding could signify that we provided only basic knowledge which could be found on other resources.

We decided to conduct a test, by adding more questions to better understand the purposes for which users downloaded the app, and later introduce even more unique content and opportunities.

The onboarding consisted of extended questions about diverse life spheres and required more time to pass. However, the test results turned out positive, and the trial conversion was boosted by more than 1 percentage point. 

3. Rating compilation in the app

Besides conducting tests, we also worked over other app features and content. The Play Market score remained low, but we had the hypothesis that it would increase as we improve our product. Nonetheless, we decided to realize the rating pop-up in the app. Mostly, people are more willing to complain about the problems than to express their gratitude. So it was vital for us to receive more user responses to understand if our product was helpful or needed drastic changes. We did not expect that rating collection would change our Play Market score. But when the new version with the pop-ups was released, our score elevated from 2.9 to 4.6 in less than a day. 

All we needed to do was to ask active users about how much they liked our app. 

With such seemingly easy steps, we improved each stage of the pipeline starting with a click on an ad to the activation and users retain. 

Marketing 

Singular improvements, which we made, did not guarantee the growth of the audience. The situation changed drastically only when we applied all the product changes for 100% of users. In approximately a month, the volumes increased 4 times. 

Facebook is the primary source of traffic for Nebula Android. For quite some time, the platform did not provide the required results. The deterring factors besides Facebook itself also included our approach to marketing and the efficiency of ad campaigns. 

We had one question in mind: how can we boost the volumes from Facebook? Back then, almost all the campaigns were launched on “bid cap”, which meant that volumes were minimal. The expenses could reach ~5% of the daily budget during the whole life cycle of the campaign. Meanwhile, the purchases at the “lowest cost”, which could boost our traffic, were expensive, and campaigns burnt out in a few days. However, we had to learn to optimize these exact campaigns, which would help us scale in the long run. Here are several rules which we had defined during this period:

1. If you have any doubts regarding work with the lowest cost — you would better withdraw these campaigns into a separate account or revise the automated rules for the main one to reduce their impact on the lowest cost campaigns. Automatic Facebook rules for ads turning on/off can impact the optimization and restrict you from noticing the positive dynamics.
2. Start with small budgets. I cannot provide exact recommendations, but you should expect approximately ten target actions.
3. Try not to make decisions about campaign shut down during the first day and observe which conversion % you will receive in some time. Our model is subscriptions, and we are optimizing for trials, so at the beginning of working with these campaigns, I watched how the trials lasted in the first 2-3 days. If I see that for 2-3 days in small volumes, the price is approaching the target, I raise the budget. You should take into account that this time gap can be bigger for you since you do not optimize actions, which a user takes immediately (maybe you should better observe the campaign during ~7 days)
4. I do not follow the rule which advises “not to increase by more than 20%” when I see positive dynamics. I can double it to collect more data for a campaign. If your budgets are bigger, you better play safe.
5. Duplicate the companies from the beginning:

• your budget will be divided into smaller portions among several campaigns. If some of them do not optimize, you will lose much less as compared to the losses in the case of bigger investments into one large campaign.
• there is a serious possibility that the indicators by these campaigns would differ. Thus you can choose a “winner” and scale it.
• besides, one company with a small budget will hardly give you the possibility to scale volumes quickly.

Such an experiment has witnessed that campaigns can really be held even during a whole month. The market seasonality also had a positive role. However, we could not have increased the volume and preserved traffic payback without improving the product and rethinking the marketing strategy.

Conclusions 

Here I would like to share several conclusions:

1. Many effective ideas have already been realized — do not be too shy to use them. When one starts working over something new, they desire to generate a new genius idea, that would produce a breakthrough in their industry. This intention is very commendable. But always keep in mind that many working approaches have already been realized, and sometimes all you need is to use them properly. 
2. Numeric books and articles were written about soft skills for a clear reason — communication is vital. Any team sometimes faces problems: developers do not understand how does marketing work and why it is impossible to scale in a day; marketers do not understand why some crucial tasks cannot be realized immediately; analytics launch tests, and someone does not see their purpose. It is important to trace all the cases when someone from the team “did not know” or “did not understand” because this is the marker of miscommunication. In our case, the creation of mini teams helped us better understand the process and each other.
3. Concentration. It is impossible to become successful with a product in which someone devotes 10%, 20%, or even 50% of their time. Success equals 150% of the attention.

I hope you enjoyed reading about our experience in product scaling. By writing this article, I wanted to show that it is vital to cooperate as a team, be quick in making decisions, and be flexible in your work. I will be thankful for any comments and reviews!

Author: Katia Pietukhova, Marketing Specialist at OBRIO

Scallium is an IT team that develops complex solutions for large online retailers and a PIM system for managing product content. In one of the previous cases, the platform was used as an IT foundation in the Epicentr Marketplace development, the biggest Ukrainian retailer.

Marketplace is a conditional concept. They are completely different, and often a company creates a business model with all the marketplace features but does not call its model with this word.

Let’s take this definition – a marketplace is a kind of retail platform where many participants work with each other. One platform usually has many options for interaction.

We at Scallium distinguish 5 stages in the evolution of marketplaces:

1. Classic e-commerce (online store)
2. Dropshipping Platform
3. System Marketplace
4. Scalable Marketplace
5. Ecosystem

You can go in different ways. You can start with a traditional online store and develop an ecosystem step by step. Or you can remain a robust niche store if you don’t want to become a marketplace. Or you can launch a marketplace from scratch without previous stages of traditional retail.

The main thing is to understand the fundamental differences between these stages in terms of managing a business. Then any path will not be overshadowed by problems and losses in profits.

So let’s consider each level in detail.

Level No. 1 – traditional e-commerce

This is not a platform model yet. Value runs linearly from business to consumer. That’s not bad. Many excellent online stores are profitable and growing.

The advantage of the traditional model is a high level of control over all processes. The shortcoming is poor scalability. A business is limited by resources: goods, the number of warehouses, the number of personnel hired, etc.

The online store team provides all operational tasks:

• Marketing
• Product content creation
• Updating price and availability
• Assortment management
• Payment / Issuance of receipts
• Delivery of goods
• Customer service
• Refunds

If you are faced with the task of scaling, an online store has two options:

1. Increase operating costs. But you should keep in mind that the number of control points also grows with the growth of the showcase. The more people in your team, the harder it is to manage them.
2. Increase assortment through dropshipping.

Choosing this strategy, the online store moves to the next level of e-commerce development.

Level No. 2 — dropshipping platform

We call this stage the transition model between traditional e-commerce and marketplace.

At this level, the delivery of the goods is handed over to third-party suppliers. But this is not a marketplace yet, as the processes are not automated. Suppliers often send their product catalogs in excel; then, information is manually uploaded by the content managers of the online store. At the same time, the store owner partly shares the responsibility with the merchants. Still, everything else like assortment management, marketing, transaction support, search for suppliers – remains business responsibility on the side of the storefront owner.

All this managing operations does not allow you to quickly respond to market demands. In addition, such a model is challenging to scale because time is wasted on attracting vendors and expanding the range.

Nevertheless, it is easier to grow here than in the traditional e-commerce stage. The business receives a virtual shelf and at the same time spends fewer resources for assortment range: it does not purchase goods, does not store them in a warehouse. The main task is to accept orders from customers and transfer them to merchants.

Level No. 3 — system marketplace

When a company becomes a marketplace, it no longer sells directly; it organizes a space where others sell. Now business creates conditions for other sellers.

The functions differ from traditional e-commerce even more. Most of the business operations for fulfilling and processing orders are outsourced. Thus, the business focuses on a growth strategy:

It takes time to create conditions and rules for all participants in the marketplace. There can be experiments in the business model and the processes. In this model, fast hypothesis testing is still difficult (unlike the next level), but once the conditions and rules are created, the storefront can scale with hundreds of thousands of sellers. This is an early-stage platform model.

At this level, you will need an IT marketplace platform – we call it a marketplace back-office. But to become a full-fledged marketplace, it is not enough to integrate an IT platform with an online storefront. The changes in your business model must be reflected in the company strategy. After all, a business now has at least two client types: a buyer and a merchant. The need to reform and review the business is the only challenge of this model. Instead, you receive high advantages: scaling and dynamics ability.

Level No. 4 — scalable marketplace

A scalable marketplace differs from the previous stage in a high level of automation.

Most of the processes work independently if you have the necessary IT infrastructure: management of sellers, content, sales analytics, sales and marketing channels automation. IT solutions also implement the logic for calculating bonuses/penalties for suppliers based on automatic SLA (Service Level Agreement) control and marketing tools for sellers like recommended products, product bundles, crossed-out prices, and more.

Business becomes flexible and adaptive. At this level, a complex of IT solutions as one large system helps the business to scale when in the previous level 3, different solutions worked as separate products: a powerful CRM, PIM system, a system for working with orders, BI analytics, and more.

So at this level, the company quickly adjusts to external market challenges and can easily test new hypotheses. Therefore, this model quickly scales. I call it the Agile level of e-commerce development.

Level No. 5 — Retail Ecosystem

An ecosystem is a self-developing platform model – a format that constantly transforms and provides more value for the client.

Let’s look at the example of the Alibaba Group ecosystem.

They have everything from the wholesale platform Alibaba and retail platform Aliexpress to services aimed exclusively at the Chinese market. They launched a video service like Youtube called YouKu, their web browser, logistics, fulfillment, Big Data service, and much more.

In other words, Alibaba covers the entire cycle of different needs from different types of customers. These products make it possible to touch Alibaba Group’s products and services within a single ecosystem.

The thing is platform business model develops permanently and independently.

You have more sellers > you have more products > you have more traffic > you have more sales. Thus it is a sustainable growing circle.

Back in the old days, creating an online store required a lot of money, knowledge, and an expensive IT team. Then ready-made solutions and website constructors appeared in the market. The task has been simplified, and every second business created its online shop.

Today something similar is starting with marketplaces development. Turnkey back-office solutions are already in the market. They help to launch a marketplace relatively painlessly, using someone else’s experience. At the same time, the market is not yet oversaturated; there are many opportunities for consolidation and promotion. This is the perfect time for changes. The main thing to remember is that everything does not end at the marketplace stage, but it’s only just the beginning.

Author: Andrey Pavlenko, CEO of Scallium

The AIN.UA journalist has talked to Arseniy Feshchenko, bird founder and product designer, and learned why LUN needed another apartments search engine, how it develops, and why it will not expand within Ukraine, working only in Kyiv.

How and Why an apartment rental app bird was created

It began in 2017. Every Friday at lunch, a team of four people, including Denis Tsyganok, LUN co-founder, and Arseniy Feshchenko, designer at that time, gathered and dreamed of how the search of the apartment will look in the future. Then they finally visualized their ideas and developed a concept in 2020. They imagined an app where users can choose apartments on a 3D map only. There will be no lists. You can virtually visit each location and buy the favored one for hundreds of thousands of dollars, using Touch ID.

At that time, LUN already has had the Flatfy product for Ukraine — an apartments search engine for the secondary market where you can find an apartment within Ukraine to buy or rent it. So, they decided to do some experiments and create a “future app” based on the 2020 concept under an entirely new brand and for the city of Kyiv only — bird.

“It was much harder to develop and launch an app for LUN or Flatfy because their users would have high expectations. And they started a new product — an apartment rental app bird. Nobody has known it. So, there were no expectations. When there are no expectations, the start is much easier,” said Arseniy Feshchenko, the founder and product designer of bird.

bird app rental features for apartment search

bird works like an aggregator — it collects ads from 24 different real estate rental platforms, including DOM.RIA, Country.ua, OLX, Rieltor.ua, 100rielty.ua, and other smaller agencies. A crucial element of the app and the main part of the search is the 3D map. “As an opposite to websites with a list of apartments and addresses, streets, and metro stations. To understand where they are, you need to copy and paste the address into Google Maps. This all was the main problem we wanted to solve with the map as the biggest advantage of bird,” explained Feshchenko.

The app was launched in December 2018. The first version contained no filter or other navigation buttons — it had only the 3D map with highlighted houses where someone leases apartments. We used the Mapbox solution to create it because Apple and Google Maps could not display a huge number of objects and select some of them.

New features arose after users delivered feedback and their wishes in App Store or via Telegram to the bird team. So, soon after the start, developers added room numbers, budget, renovation, and favorite filters. Now there are coming two most desired filters — “pet-friendly” and “children-friendly.”

In 2019, the app won two Red Dot nominations — Interface & User Experience and Apps. However, Arseniy said that he is not satisfied with the slider bar — a solution that allows you to set a price range by the search:

“The users wanted it so much, but we tried to postpone its release as much as possible. We spent about a year studying it fundamentally and did create it. Because ‘price from’ is a very doubtful parameter. We learned that users want to skip fake ads and irrelevant apartments using it.”

Bird AI — a solution for eliminating fakes

The minimum value of the ‘price from’ is currently equal to 6,000 UAH (approx. $225). Our team wanted to make it better and presented an AI-driven solution on the second bird anniversary. It can check ads and discover fake ones: “One day, we realized that we want to be more than just an apartment search app for the users. That we want to help them all the way during the renting process.”

Thanks to a set of 25 parameters, Bird AI can up to 95% certainty discover fraud ads to be removed from the app. Bird AI was developed in cooperation with the LUN team that specializes in developing AI solutions called Flair. “We trained bird AI to find fake ads according to our database of fakes that we collected manually. It was a pretty complicated task because even a sophisticated real estate expert can’t always find all of them,” Feshchenko recalls.

In addition, bird AI looks for all the ads for the same apartment on different platforms, creating a price range on their basis, and filters proposals with “granny-style design.”

Select function and product monetization

In July 2021, bird has got an update with a new feature in the app — select. It is a section with manually filtered freshly renovated apartments in new buildings with moderate+ prices — from $800. The best thing about the bird select feature is video room tours in the story format. According to Feshchenko, they should replace offline visits because visiting apartments is a big pain in the ass for realtors.

Another problem here could be the communication with realtors. To minimize it, you can book an apartment tour in the bird select section by pressing the button “Book a room tour.” After that, you can schedule your visit via Telegram.

bird select now is the single way to monetize the app. The realtors pay a fee of 12.5% of each rental deal. Currently, there are about 30 apartments in this section. We plan to develop and extend bird to other markets. The app will not work in other cities of Ukraine.

bird is a product that encourages you to break new ground. In Ukraine, we already have a successful app Flatfy and understand what other Ukrainian cities need. We want to make expansions to new markets where we will face many new challenges for sure. At the moment, the development of an Android version or adapting it for iPad is not on the list. Arseniy confirmed the iOS version priority: “We want to move at the maximum speed — that is our motto.”

AIN.UA talked to Gerasimenko to find out why Ahrefs decided to create its search engine, what is the essence of its business model, and how it plans to compete with Google’s monopoly.

Ahrefs is a mini search engine

Ukrainian Dmitry Gerasimenko began working on the future marketing and SEO service Ahrefs in 2010. The company’s product portfolio now includes a set of different tools that together help tens of thousands of clients across the world (Facebook, Netflix, Uber, Ukrainian Rozetka, MacPaw, Reface are among them) to get more traffic from search engines. According to Tech in Asia, Ahrefs annual revenue as of July 2021 was about $100 million.

“Ahrefs quickly became popular because it had unique data that SEO specialists needed,” Gerasimenko told AIN.UA earlier. Competitors updated their index once a month or even rarely, Ahrefs — every 15 minutes. Now the company’s crawler, AhrefsBot, indexes the Internet around the clock and is already the second after GoogleBot by activity on the Internet. The company says it indexes 30 million new pages every 24 hours.

Using the crawler, Ahrefs creates a digital library of information about web pages that stores data about active websites: how they refer to each other and what keywords they rank for in search results, as well as how these and many other metrics change over time.

The same principle works for search engines. In fact, the index created by Ahrefs is their miniature version, only for searching for links. On this basis, creating our own search engine seemed like a logical step.

The alternative to mercantile Google

Google earns $100 billion from its search engine annually, consistently remaining the market leader. “It is difficult to offer something different from the monopoly search engine because it is free and everyone likes it,” reasoned Dmitry Gerasimenko when thinking about the alternative version. Then the Ahrefs founder turned his attention to Wikipedia, which annually has to raise money from people who care about the project for its infrastructure. Then he found a niche where he could compete with mercantile Google — profit sharing. The entrepreneur believes that the only one that can be better than a free search is the one that shares profits with creators.

We want to reward the creators more fairly by letting people do what they love and earn their living from this. We expect that the first million users will confirm our expectations soon after release.

Gerasimenko publicly announced his idea to build a “fair” search engine in 2019 and began building a team at the same time. After a year of work, the pandemic changed Ahrefs’ ambitious plans. So, the company focused on the main product and released Ahrefs Webmaster Tools for those business owners and marketers who do not yet have the budget for professional SEO tools but need to sell through the site.

The team was able to get back to the development earlier this year. Now the company is working on a mobile version of the search engine for Android — design, branding, as well as actively promoting the idea of profit sharing. Soon, Ahrefs plans to have a series of silent launches, which will allow to build a working version of the product and prepare for closed testing. Ahrefs has already invested about $40 million cumulatively in the search engine project.

Business Model & Monetization

The main competitive advantage of the Ahrefs search engine over Google will be the profit-sharing model, in which 90% of profits will be paid to all creators, as well as the privacy of personal data of the users.

“Our search engine business model is designed to encourage valuable content creation. The 90/10 profit-sharing model rewards experts, independent journalists, and passionate people for their work and encourages them to produce high-quality content that will make up any search results page,” Gerasimenko explains.

Accordingly, Ahrefs will earn 10% from its search engine. The company will make profits through advertising and ad-free subscription plans. The entrepreneur marks that the advertising will be relevant to the user’s search queries. The search engine will not earn money from collecting and selling personal data to third parties — Ahrefs does not use third-party search indexes or cookies.

The company truly believes that the business model of its future search engine will revolutionize the search engine market: “When creators realize they can earn real money from an alternative search engine because their content is good and helps other people, there will be a real storm in the search engine market.”

And there’s a real reason for that. Before the company announced the project, Google ex-executives contacted Ahrefs. They wanted to explore the possibility of using the service data in the development of the search engine Neeva. It is fee-based, has no advertising, and its model is based on 20/80 profit sharing. Ahrefs rejected the future competitors. Besides, the company made sure that it was on the right track.

Launching a product like this is a complicated and slow process, especially if you have no experience prior experience with a similar project. One of Nuka’s investors, Ragnar Saas, said, “When building a brand new product, it’s always a ‘mission impossible,’ with people making lots of mistakes every day and the process can take 5-10 times more time and money.” Moreover, according to AIN.UA, the process of preparing the notebooks for release is still going on, although not as fast as previously promised.

It is worth telling about Nuka not because of the notebooks and the delivery delays, but for a completely different reason. That reason concerns the founders of the project.

Officially there are three of them — Kateryna Mikhalko, Nikita Vladykin, and Eugene Shylo. In the summer of 2020, the AIN.UA team noticed that one of the founders, Kateryna, was missing from the photos associated with the company. For some unknown reason, she disappeared from the site and all communication, although previously, there were always three founders at each event.

The story below is not about how the three very young people who conceived the project failed to set up production in China. It is another story about why all documents should be signed, decisions should be officially certified, communication within the project should be transparent and clear to all involved, and personal relationships should not interfere with work.

In the spring of 2018, the media wrote a lot about the startup Nuka. It is an “eternal stationery” – a water-resistant, refillable notebook and pencil that cannot be used up. The founders had a prototype ready, and everything developed very quickly: the startup raised financing from several angels and was preparing a campaign on Kickstarter.

The articles placed a special emphasis on the founders – Nuka was represented by 17-year-old Ukrainians Kateryna Mikhalko and Nikita Vladykin. Later, Eugene Shylo, who was 20 years old at the time, joined them. Then, the project raised over $400,000 via crowdfunding and received funding from investors. Time passed, but the Nuka notebook never appeared. However, AIN.UA sources claimed that the work is actively carried out — there are test samples, and everything is fine.

However, in 2019, when the media stopped writing about the startup, Mikhalko quietly disappeared from the founding team. Everything went so quietly that Kateryna is considered part of the team even now, but she isn’t. In 2020, the editors of AIN.UA first met with Mikhalko and found out her version of the exit from Nuka. Also, we talked to two other founders and investors about what’s going on at Nuka.

The backstory

Nuka started as a project of Kateryna and Nikita in 2016. They were a couple, and they did not hide their relationship. They met back in high school, where they studied in parallel classes, and then both went to KAMA. In 2017, Eugene, whom Nikita had known long before, joined the team.

The first research and prototypes were done using pocket money. When it became clear that the project could become a real business, they decided to incorporate the company. It was decided that all of the cofounders would receive an equal share at Nuka. The corresponding legal document was drawn up only a year later, in April 2018, after Nuka won the startup contest at iForum and received its first $20,000 investment.

The company was registered under US law. At that time, each of the founders received a 30% of Nuka’s shares by vesting: a year of work on the project yielded a small fraction of that share. The founders had to work at Nuka for four years in order to get their full share.

After the iForum, the three founders became public faces. The press service of Volodymyr Groysman, who was Prime Minister of Ukraine at the time, made a story about Nuka, after which many media outlets, including foreign ones, wrote about the project. For the next 3-4 months, the team participated in contests, gave interviews, and at the same time, finalized the product together with Fabricator and Concepter, which became a shareholder of the startup.

In the winter of 2019, Nuka raised funding from angels Denys Yurchenko and Ragnar Saas and began planning to launch a campaign on Kickstarter. In May 2019, Nuka launched the campaign and raised a total of $215,000 (including additional funding on Indiegogo). Everything seemed great — the startup had great prospects and a good product.

But in July 2019, Kateryna Mikhalko left the project. After that, mentions of her as a co-founder of Nuka were removed from the website and all the startup’s social media pages. Her name remained only in the description of the Kickstarter campaign because it could not be edited after publication. Nikita and Eugene continued working together.

Why did Kateryna leave

An official version explained to investors by Nikita, Eugene, and Kateryna herself is some unsolved disputes during the product development.

But sometime later, Mikhalko told AIN.UA the real version of what exactly forced her to leave the company. Just for reference, Kateryna and Nikita were a couple. According to Kateryna, she and Nikita used to quarrel as they were together. “He always claimed it was my fault, so I cannot say that our relationship was good at all; I was under pressure and even more,” said Kateryna. The lawyers advised her not to discover some moments of their relationship.

“I’ve tried to leave many times, and it always led to manipulations with the company,” explained Mikhalko.

The romantic relationship between them ended in December 2018. At that time, Mikhalko had not yet turned 18.

After the breakup, it became difficult for Mikhalko to work at the startup. Nikita, she said, pushed her away from managing Nuka: he did not take her to meetings with partners and did not even inform her that such meetings were planned, and he made some decisions without informing Katerina.

“It is normal that not all of the founders can come to the meetings. That is why partners often did not even ask why I was absent,” said Kateryna.

So, Kateryna concluded that she could directly participate in Nuka’s development only by getting back into a romantic relationship with Nikita. But she didn’t want it because of the experience she’s got. “One day, Nikita just said to me, ‘You can’t come to the office anymore.’ Why? Because it is my decision. Because we do not work together anymore,” told Kateryna AIN.UA.

Eugene communicated mostly with Vladykin, so he has chosen his side, thinks Kateryna. Without getting support, Kateryna decided to leave the company, and it happened in July 2019.

Why I never talked about the reasons why I left?

“I was afraid to become a toxic founder. Now I understand that it’s very bad to hide some facts. My silence did not help the company,” concluded Kateryna and added that she never wanted to hurt the reputation of Nuka.

Nikita denies that he intentionally suspended Mikhalko from her position at Nuka: “We had so many meetings in that time. So, I suppose we could be just desynchronized. I never wanted to hide something from her.”

He believes there was a two-way-bulling between them because of their young age.

“Looking back, I realize that we have had a toxic relationship where both of us tried to boost self-esteem at the expense of the other. It should not be in a family. It is not normal; many people are not ready for a new relationship until they don’t fix their current internal problems,” explained Nikita Vladykin.

They involved Eugene in this conflict without his will. Their quarrels often have expanded from the personal to the work environment.

“Sometimes, it was hard to make a decision. Kate and Nikita never wanted to concede anything to each other in both personal life and work; they couldn’t split them because of their young age,” said Eugene Shylo.

According to him, the situation was at its peak when the team went to CES. After they returned, Kateryna used to get less involved in the work. So, in fact, Mikhalko did not cooperate with Nikita and Eugene anymore after they returned from the USA.

The problem failed to be solved. And finally, according to Eugene, in April 2019, Kate has initiated a meeting with co-founders, where she resigned from her position. She assured all that it was her free will, and she went not because someone forced her to leave, Eugene added. “In case of conflicts, she used to say that we force her to leave the company, but we never pretended to constrain her to leave the project,” Eugene added.

According to Kateryna, Eugene was aware of the real cause of her resignation, but he supported his friend.

According to the information of AIN.UA, some investors also knew the reason why Kateryna left.

Shares

After Kateryna left her executive position, she still owned the startup shares.

So, the Nuka shares belong to the founders (20% each, effective winter 2020) based on vesting requirements and the investors: Ragnar Saas, Denys Yurchenko, Concepter, and Biosphere Ventures (Vlad Huristrimba and Andriy Zdesenko).

But Nikita claims that Tyslenko is not a shareholder anymore. Vladykin explained: “We have reviewed [the Tyslenko’s stake in Nuka] … The legalization is in progress now, as we agreed by shaking our hands.”

It’s worth mentioning that Eugene was not aware of that agreement because he said that Vlad Tyslenko still was a shareholder of Nuka even though Concepter changed the owner [Editor’s note: Ajax bought the engineering team only]. The AIN.UA editor spoke with two founders separately, and some of their answers do vary indeed.

In 2020, there was an obvious lack of funding for development. The team had a deal with present and new investors about a new investment that should be followed by another large round. But then the deal failed during due diligence. The problem is that in 2019 when Mikhalko resigned, the team has made no legal changes. So now Kateryna has 20% of Nuka instead of the supposed 5%, claimed the current executives.

Here is Eugene’s answer to the question ‘How could it be possible?’: “We thought we discussed and processed all the staff. At that meeting [in April 2019], everybody was OK and was thinking clearly about this issue. Kate invited us to that meeting, and we thought we had a deal.”

According to Eugene, he and Nikita tried to agree with Mikhalko to divide the shares honestly. But she declined their offer, and sometime later, she started to ignore their messages and emails.

“Under such circumstances, the further investments in Nuka are doubtful. If in the early stage of the company development 1/5 of shares belongs to an inactive founder,” claimed Nikita. “Give us the part that will allow us to raise funds. We would sell it to the investors, and the value of your part will increase — you will get rich together with us. And if you won’t, we will just shut the business down.” That was our idea, but the win-win situation did not happen. Kate’s answer was, ‘I won’t do anything.’

In a previous conversation with AIN.UA, Kateryna did not deny having a stake in Nuka. She confirmed that the current startup management offered her to sell her shares and quit the business. They should have involved a foreign investor for that. “After I asked them to give me the name, they refused without explaining a reason,” Kateryna said. “I wanted to know who would buy my stake. I wanted to know if the investor realized the whole situation.”

According to Kateryna, neither Nikita nor Eugene never showed her an official final financial statement. “I was ready to support them, but I must have an insight of the project with full information. Eugene has shown me a document in Notion only once, but it was a mix of numbers, not approved and not confirmed. I do not know how the money is spent, whether they paid taxes or not, etc.” added Kateryna. “At the moment, I am searching for ways to solve the conflict in the legal field,” said Kateryna.

According to Nikita and Eugene, they have legalized the resignation of Mikhalko with a resolution of the majority in 2021. They also confirmed her right on the 16% of the company.

To solve the problem with new investments, the management of Nuka decided to establish a brand-new company (it does already exist, AIN.UA has a confirmation). Now its founders wait for the approval of a new bank account. The shares will be divided between all shareholders as in the former company, but only Kateryna’s stake has been changed.

Vladykin said to the AIN.UA editor that the new legal entity under Nuka’s name would be represented only by two founders — him and Eugene. Kate is supposed to be a shareholder too (according to Nikita, she earned 5.4% of the company while working at Nuka). But the size of her stake is subject to further discussion. Nikita said Kate’s father represented her during the negotiations. They discussed the full or part purchase of Kateryna’s stake.

Mikhalko was surprised to hear about a new company. “You [editor of AIN.UA] are the first person who told me about the registration of a new legal entity. Nobody told me that, the same about changing my stake. I think this plan should make both current and future investors feel uncertain. Regarding negotiations with my father, I can only say there are me and my lawyer, and we have got no new requests. To continue the negotiation process, I asked them to show me the statements for the period when I was off-board to know how they have spent money. But they didn’t.”

She said she would like to end this story with Nuka as soon as possible and leave it behind. Now she is busy with other educational projects.

The editorial board of AIN.UA asked two investors (not affiliated with Nuka) if it is OK to register a new company without notifying one of the shareholders. Both of them wanted to keep their anonymity. The first one thinks it is a bad practice. But it will be hard to prove something in courts, especially in the case if the company didn’t mention that opportunity in their agreements. His investment firm would write off such an investment. The second one thinks that every investor has only one interest — profit. If the founders would solve the problem and start the business, most likely, the investors will have nothing against it. The main thing is that the product will be developing.

What is about statements

The financial reports of Nuka are a weakness of the project. Interestingly, after the Kickstarter, no report was received by any other investor except Ragnar Saas.

“The Nuka team has sent me reports only a few times, but I have not seen anything doubtful in their finances. When you develop a brand-new product, it is always a ‘mission impossible’ where people always make a lot of mistakes, and it could take 5 to 10 times more time and money,” explained Saas for AIN.UA.

Nikita and Eugene claim that the investors didn’t care about the absence of reports, except for Ragnar. Vladykin also said that he sends statements to Ragnar because he didn’t want to disappoint him: “I felt like I was at school telling the teacher that I’ve not made my homework.”

That’s why Nikita sent reports only when Nuka succeeded. And only for Ragnar. For example, in Summer 2020, the funds raised from the investors and via crowdfunding were not enough to finish the product. In order to not shut down the project, Nikita organized another crowdfunding campaign on a Taiwan platform and raised about $210,000. “I was very proud of that success. In such a small market at a miserable cost, we managed to raise so much! I shared it [in the report to Ragnar],” he said.

According to Nikita, the last statement was in December 2020; however, Ragnar knows everything about what is happening at Nuka. Other investors have got the information from Nikita via phone. Eugene confirms that Nikita has had calls nearly every three months.

The rest of the investors could not confirm this information to AIN.UA and added that there were indeed no regular reports from Nuka. One investor confirmed to AIN.UA that he also does not understand what is happening within the project and how the startup is developing in general. He hasn’t got any status updates for a long time. One of the interviewees of AIN.UA thinks that the problem with financial statements could be that the startup management hasn’t been accurate with numbers in the early stage. It means there is no chance to get old reports because they need to create them from scratch.

Together with Eugene and Nikita, ten people worked on the project. One of them is an experienced developer who works for Nuka full-time and, according to Nikita, he has a good market salary. Nikita said that they also involved chemistry scientists, a metal physicist, and other specialists in the project.

Mikhalko has never got any dividends or a wage from the project.

Where is the product?

According to all team members, the Nuka notepads and pencils are difficult products to implement and took a long time to be finalized. After it is final, you should organize the mass production. And this stage was on hold for a very long time because of the Covid.

According to Kate, just two years ago, when she left Nuka, the startup had final test samples of notebooks from Chinese plants, but the contract for delivery of the first charge hasn’t been concluded. What happened next, she does not know, as she did not receive any status updates of the project.

“When we launched the Kickstarter campaign, we had a good product that could not be realized because of some engineering and technical limits,” said Nikita. “The product was final, and we resolved all the technical issues only in the middle of 2020.”

According to Eugene, the prototype was almost completely rebuilt. It was needed because otherwise, the product wouldn’t have all the functions declared by the team. In theory, it should do everything. But practically, it was much harder to realize all of them.

Several independent sources confirmed to AIN.UA that they saw the finished notebooks, but they could not say if this is a test sample or a final product.

According to Nikita, now Nuka has 12 different suppliers in China who are responsible for the manufacturing of separate parts of the product.

The AIN.UA editor had more conversations with Nikita and Eugene. Last time Nikita assured her that the production of the first charge of 300 units should be in the final stage. The delivery must start at the end of May. However, Eugene has also stated that the delivery of this charge could fail. According to him, the company is in a crisis, it has had no money for five months, and new investments in Nuka are impossible because of that problem with shares.

In July, Nikita announced that the Taiwan partners helped to start the production.

An important note: sometimes people think Kickstarter (or another platform) is a shop where you can buy a good. It’s not true because it’s about raising money to launch a product. Some get it right away, some need time, some make mistakes and lose money. Therefore, the launch of a product, if the complexity of its production justifies it, can take longer.

Now Nuka pays no salaries to founders and most of the employees. The company also can’t give them options because of a mess with the shares. They negotiate with investors the new round. If the new company is successfully registered, the negotiations will go on. Nikita and Eugene try to fulfill their obligations regarding the production and delivery of the products with their own means.

“We took a loan, made a deal with partners, and they wanted to help us,” explained Nikita. “Our plan is simple — we want to manufacture the product. Therefore, we need to solve the problem with the Cap Table and raise at least a minimum amount of money according to our plan.”

In 2018, one of the familiar investors of the AIN.UA editorial board told us that he never thought about investment in Nuka. The reason is the founders. Two of them, a pair, are young people who just started to realize themselves, and the third one is a friend of one of the two.

“You should not build the business with your friends and family members. Here we have a combo; so, it will go bad for them in the future,” the investor said back in 2018.

According to Kateryna, she finished her story with Nuka in 2019 and is working on other projects. A source close to her said that she only wants to end her ties with the startup as soon as possible. Nikita and Eugene are still working on Nuka and are still preparing the first batch.

This and all photos in the article by Oleksandr Kozachenko.

MacPaw’s office is located in the Toronto Business Center, Kyiv. The company moved here in July 2014 and occupied a tiny space on the fifth floor. With the team growing, the office space was enlarging too. In 2016, the company opened a new part of the office. In 2019, it added space on the second floor that used to belong to the Setapp team.

Now, the total space is already 11,000 sq ft. The Ukrainian Baraban Design Studio worked on the design of the MacPaw office. The old part has mostly complementary colors, while the part on the secind floor has a more minimalist design and is full of light tones. 

Working Space

“MacPaw’s team is generally working in the open space. There are separate offices only for legal and accounting people due to the specifics of their work,” says the company’s representative.

MacPaw’s employees are using Apple devices, and depending on their role, they get either MacBook or MacBook Pro. One can request additional screens, mice, keyboards, or drawers. Everybody has the same armchairs with a lifelong warranty. All desks have an adjustable height. As a rule, all furniture is produced in Italy.

There are plenty of meeting rooms that could be booked on Google Calendar by any worker: ten big ones and twelve small ones. Moreover, there are transformable meeting rooms that could be turned into the conference room.

Additionally, there are a few meeting rooms with futuristic glass that can interchange between transparency and an opaque state. In each meeting room, the employees can draw on the walls, use different charges, and utilize smart conferencing tools SOVA.

There is a nice spacious terrace overlooking the city on the 5th floor where employees can work or take their meals. There used to be summer parties and barbecues before the lockdown. And even though all events have a smaller scale now, there are still parties for rookies each quartal so that they can get to know the whole team.

There is an exhibition of vintage Mac computers in the older part of the office opened in 2017. AIN.UA was there and made a detailed photo essay. 

MacPaw has a spacious gym where professional coaches run classes. One of them is also a health and nutrition expert. There are groups for karate, stretching, and yoga. You can work out on your own at any time – the gym has enough exercise equipment for that, and there is a punching bag. There are men’s and women’s locker rooms and showers near the gym. During the quarantine period, the company organized online workouts. For those who want to work and work out simultaneously, MacPaw has a desk with a treadmill.

The office has a library with books available for ordering through the office manager. Also, there are meditation rooms (where employees can sleep), a massage chair, and a projector for presentations and movie nights. In the kitchen, the employees can have a coffee or tea, eat some granola or cereals. Seasonal fruit is provided for the entire team on Tuesdays. There is a wine cabinet.

Interestingly, MacPaw has its internal “currency” called Fixes. It was named after Fixel, one of two cats living in the office. The other cat is called Hoover. Cats are wandering around the office during the daytime, and the last leaving employee closes them in the special room.  

Five Fixes are equal to ten US Dollars. Each employee gets one Fix at the end of the week. Additionally, one can get more Fixes for helping co-workers. Fixes can be spent in special Fix-machines with snacks or could be changed for some Apple products or subscriptions in the AppStore. During the lockdown, the currency was circulating online.

How to get a job at MacPaw

According to the company’s policy, there are technical and value-based stages of applicants’ selection. It all starts with a screening call. Then applicants are invited to do the test task in the office. The successful ones are sent for the interview at the technical department. It is worth mentioning that the selection process can take up to two or, in some cases, up to six months. 

For the first three months, newcomers are supervised by buddies, other company employees who are responsible for their social integration. The probation period is three months. But there are some cases when it is extended. At the time of the publication of this photo essay, MacPaw was looking for both technical and non-technical specialists like QA, macOS/iOS, Front-End developers, product designers, recruiters, affiliate managers, and PR specialists.  

There are also internships available at MacPaw. The company has got 60 interns for the last five years. And 25 of them are now MacPaw’s team members. Meanwhile, 69 employees have worked as mentors for them, and nine of them are ex-interns. In summer 2021, the team is hosting 21 interns in 13 different roles. 

MacPaw’s core values are passion, people, honesty, quality, continuous improvement, design. According to the company’s representatives, they are now working on a new, more concise formulation of the values that would still contain the core of it.

Working Conditions

MacPaw employees are provided with additional benefits including:

• a full medical insurance package
• English classes
• a separate budget for self-improvement
• a recovery paid leave in case of the employee’s burn-out
• a sabbatical, one and half months paid leave for the employees who have worked for more than five years in the company
• a year and a half maternity leave for women and two weeks leave for men who become fathers
• two-day hackathons are happening every six months where people can work on their own projects and solutions
• a pets-friendly office

What lockdown has changed

In March 2020, MacPaw moved all employees to a remote working model. To work more comfortably, people could take all the equipment they needed including computers and armchairs.  

After a year since the pandemic started, the company is operating in a mixed-mode. People can come to the office upon the need or their will. The communication is done through Gmail and Slack. Once a month, MacPaw organizes meetings with C-levels.

According to the company’s statement, they are still growing and due to the possible lack of working spaces decided to cancel the system of fixed working desks.

Ever since the Covid-19, there have been hand sanitizers, thermometers for self-checking, gloves, and masks. Additionally, MacPaw has defibrillators. There are special pieces of training done for the employees to learn how to use them in case of emergency.

As a response to the pandemic, there is a special supporting podcast “Mental Health Теревені” (Mental Health Talks) dedicated to the trendy topics of burnout, distance work, socialization, etc.

MacPaw Space

In 2021, MacPaw announced the opening of the MacPaw Space, a creative space with an Apple devices museum. The total space would be 3540 sq ft. AIN.UA has a  detailed story on it. During a guided tour around the office, we could see the whole of the future Space. 

Audi e-tron Q4 came out with a unique technology — a visual navigation system on a windshield head-up display. Besides Audi, only two other brands have similar technology — Mercedes and VW (VW and Škoda). The system installed on Audi helps drivers navigate the road in an entirely new way and is technologically superior to the solutions available in Mercedes and VW. Few people know that the system was developed in Ukraine.

It all started at Luxoft

Andrey Golubinskiy, Viktor Sdobnikov, and Olga Mirkina met at Luxoft, one of the most prominent outsourcing companies in Ukraine. All of them were involved in projects for car manufacturers. Today, software for the automotive industry is also made by other Ukrainian outsourcers, such as GlobalLogic, EPAM, TietoEVRY (Infopulse). However, the first embedded and in-vehicle infotainment systems were conceived in Odesa’s Luxoft back in 2006.  

“The first software for the foreign automotive industry in Ukraine was developed by Luxoft’s Ukrainian engineers in 2006. For example, navigation systems for premium cars of the German market were made in Odesa,” says Viktor.

The idea for the Apostera was born back in 2012 with a concept that seemed fantastic at the time. Andrey and Viktor were driving in a car through Germany and expressively told their customer where the world was going and what the navigation of the future would be like.

“We talked enthusiastically about the fact that soon we wouldn’t have to take our eyes off the road to look at the map. That we would be looking through the windshield, and there would be instructions right on it – how to get to the pharmacy, for example. There would be no need to count the exits or compare buildings in real life and on the map. Just imagine: the car stops suddenly, and the driver says smilingly, ‘here is the pharmacy, get out,'” Viktor said, laughing.

At that time, there was no technology that would make it possible to implement the idea. It was postponed but not forgotten. Andrey and Viktor had worked in the automotive industry for ten years and understood the fundamental problem of modern navigation, which no one has yet been able to solve qualitatively.

In 2018, Apostera solved it.

From point A to point B

In 2012, there were already quality navigators with detailed maps and smart routes in the market. It seemed that there was nothing more to disrupt in this sector. But Apostera’s founders were plagued by one problem.

The approach to road navigation hadn’t changed for 30 years. People looked at their navigators the same way they looked at paper maps before smartphones. The driver had to compare two pictures all the time: the road he sees in front of them through the windshield and its digital copy on the navigator screen.

“For example, you need a hospital. You enter its address in the navigator, drive along the route, and see the building in front of you. You need to understand whether this is what you need or not. You switch from the road to the map and compare the two buildings – the real one and the virtual one,” explains Andrey.

This is mental work that a person has to do very quickly in order to avoid getting into an accident. It takes up to 90% of our thinking resource, leaving only 10% for the road. But this is not enough. In the past roads were quite simple, but nowadays, in megalopolises such as Shanghai, Los Angeles, Tokyo, or Kyiv, the road infrastructure is very complicated – interchanges, tunnels, heavy traffic, etc.

When we get distracted by the map, we lose control of the situation in front of the car, and it changes dynamically: someone changes lanes, someone brakes, someone crosses the road at undesignated places.

“The number one cause of accidents in the world is a distraction from the road. At the top of all distractions are those related to navigation systems, including those on a smartphone. In the UK alone, according to a study conducted a few years ago, there were over 300,000 accidents related to the use of GPS navigation systems,” says Viktor.

And if you follow the road closely without looking at the navigator, you risk missing some tricky junction – it would take you 20 minutes to get back on the route, and as a result, you would be late for an important meeting.

The process of driving has become more complicated, but the navigation system has remained the same. Navigation companies create a digital copy of what you see through the windshield. It is as detailed as possible to make the comparison of the two pictures in the driver’s head as quick and easy as possible. But the area is constantly changing: some road repairs have started here, markings have changed there, or a new sign has been added. And even though companies spend billions of dollars on regular map updates, the two pictures will still be different.

“What’s the point of creating a digital copy of what we already see? Instead, we should put digital information on top of the real picture, which will tell us where to go. Thus, avoiding the mental task of comparing the two pictures,” says Andrey.

First steps of Apostera

In 2014, the Luxoft team made a few prototypes of such a system. In addition, they actively communicated with the customer, Daimler, which already had its own internal developments. 

Today, there are two working AR-HUD navigation systems globally with linkage to the real world (simpler options can also be found in VW and Škoda): Audi has the first one, developed by the Ukrainian Apostera. Daimler has the second one, which is internal development. 

Apostera was founded in 2017 by engineers and managers with extensive experience in the automotive industry. “A crowd of men and I,” Olga Mirkina laughs. Most of the founders are still working at Apostera.

It was decided to establish the company in Munich, the capital of the German car industry, the core focus of the company’s developments. The company was registered in a notary office on Marienplatz (Independence Square in Munich), and the founders saw a certain symbolism in this. “Just like Maidan Nezalezhnosti,” says Andrey. 

Initially, the team consisted of about 30 people (including the founders). Quite a lot for a startup, but the product is very complex, and they knew at Apostera that they could not achieve anything with less effort. Investments helped handpick the best engineers and developers, including investments from the Ukrainian SMRK. The seed funding round helped raise $1 million, plus the founders’ funds, which were used to develop a demo version of the platform. It took 1.5 years to accomplish it.

First rejection and the first contract

During their 10 years at Luxoft, the founders of Apostera have acquired acquaintances in the automotive industry. At the time of company’s creation, they secured agreements with a potential investor, who was supposed to become the very first buyer of the system. But as often happens, the partner changed his mind. It was a big blow for Apostera. But the Ukrainians did not intend to give up.

Apostera implemented its first project in China, which wasn’t initially company’s target market. It was an AR HUD augmented reality prototype in conjunction with a major Tier1 in a Chinese automaker’s car.

“In Shanghai, we got to know the Chinese way of doing business,” Olga smiles. “I arrived in heels, in a suit, and they took me to garages. It was sizzling hot weather, there was a bunch of Chinese workers, and the test car was all covered in dust in a dingy, poorly lit garage. So, there I was, crawling inside the car on my knees between the disassembled seats to locate and take a picture of the cable needed to connect our system. It was an interesting experience.

And when it came to testing the system on a test car, their engineers had to put a navigation display there. And to secure it, they sprayed it with polyurethane foam. Yes, a foam!” 

Despite the peculiarities of the Chinese corporate culture, the cooperation turned out to be successful. For Apostera, this project confirmed hypotheses and a test of its design under actual operating conditions. Now they had to conquer Europe.

In 2018, Ukrainians took the product to the Consumer Electronics Show in Las Vegas. They showed the system installed on a real car, and Audi representatives became interested in the development. There, in Las Vegas, Apostera held its first meeting with them and decided to participate in the upcoming Audi tender. The automaker was looking for an augmented reality navigation system developer.

“Imagine a small unknown startup that bursts into a carmaker’s tender and tries to compete with world-class suppliers like Bosch and Continental,” Olga smiles. “But we had a huge advantage: we were the only ones who were ready to show a fully working prototype. Get-in-and-drive type of prototype.” 

So, a few individuals with strong accents and unpronounceable last names drove the test car to the Audi representatives. A couple of weeks before that, other suppliers presented their developments — large companies with a worldwide reputation. Credit should be given to Audi engineers — they decided to give the startup a shot. And they were not wrong: the systems of world suppliers that were shown to them earlier paled by comparison to what the Ukrainians demonstrated.

“One of the engineers, who was sitting in the back during the demo, broke through between the seats and, pointing at the screen, shouted: “We have to have it in production!” says Olga.

As a result, Audi signed a contract with Apostera to supply the technology in the new Audi e-tron Q4. The car was released in May 2021. From that moment on, the cooperation of the Ukrainian team with the German auto group became public information.

“We were impostors. It was challenging to get there. And we could not tell anyone about it for so long. That is why now we are so emotional about it,” admits Viktor.

Thanks to the deal with Audi, Apostera has gained recognition in the market. The company now has contracts with four car brands and tenders for four more contracts. The company is not allowed to disclose the brands yet. However, according to Andrey, these are the leaders of the premium segment of the German and American automotive industry.

What is Apostera’s technology

In the picture that the driver sees through the windshield, Apostera adds information that shows where to go. As if someone had drawn directions over the road. It looks like augmented reality, but not really.

Classic augmented reality is not suitable for navigation. It complements reality without understanding the physics of the environment. Imagine that you are driving on the road, and an important hint pops up on the windshield and completely blocks the view of a pedestrian crossing the road right in front of your car. Behind the classic augmented reality, you would not see the pedestrian and would not have time to hit the brakes.

Therefore, Apostera uses what is called Mixed reality. Before displaying anything, the technology recognizes and analyzes what is happening ahead: cars, pedestrians, roadways. Then, based on the situation at hand and various probabilistic patterns, the system predicts how the situation will change when a prompt appears on the screen. And with these calculations in mind, seamlessly blends augmented objects on top of reality. 

There is another nuance. While driving, you are looking not at the windshield, but through it, into the distance, and your vision is focused on a distance about 15 m in front of the car. Therefore, it is essential that the superimposed information pops up on more remote objects. Classic augmented reality does not take this into account, while Mixed reality does it perfectly.

“Our technology stack is comparable to companies that are engaged in autonomous driving,” Andrey says. “The only difference is that we do not guide a car. We recognize the environment, build its 3D model, and predict where the cars will be to get such a beautiful picture. It is actually a very complex process.“

Looking at the working Apostera system renders, you might think that the arrows and hints are drawn directly on the windshield. In fact, this is the result of a complex projector. In the industry, it is called a head-up display. 

The image originates in this box (picture below), after which it is projected onto the windshield so that the picture is clear, correctly superimposed on reality and is not distorted due to the curved shape of the glass or other factors.

Apostera makes only the software part, while the hardware is supplied by Japanese, American, and European companies, leaders of the head-up display market. But to integrate such a display into a car, you need to make serious changes to its design. For example, the projector is a complex optics – it is pretty large and must be placed in front of the steering wheel to project onto the windshield. To achieve this, Audi had to replace the steering column with a drive-by-wire system and put a projector in its place.

“Now there is no direct connection between the steering wheel to the wheels — it is powered by electronics, which transmits a signal to the chassis via wires,” explains Viktor. “Our feature is seen as very interesting, otherwise they wouldn’t go that far.”

The automaker bears the costs of changes to the design. Every centimeter means a lot of money. In total, it amounts to millions of euros. But the auto groups are ready to do this because otherwise they can lose to their competitors in the long term. The car market is changing rapidly, the price of delay is bankruptcy.

“Cars are becoming shared: one car can be used by me, you, and a stranger. Furthermore, they become electric with long range. Accordingly, over time, there will be much fewer produced car units. It leads to the fact that the market for the automaker could shrink 10 times over the next 10-15 years. And 10-15 years in the automotive industry is a swift revolution. So, they lose their profits from sales. Meanwhile, the companies that have no cars sell software to be embedded in them and take the profit for themselves,” says CTO of Apostera. 

“What automaker will not be affected by these changes? Tesla, because it already makes software for its electric vehicles. It recently presented a new version of the firmware, and most of the drivers paid thousands of dollars to update it. And they will continue to pay.”

Admittedly, head-up displays are not found in all cars as they are rather expensive equipment. For models without them, Apostera offers its technology in a different version. It is a navigator, on which a driver sees not a digital copy of the terrain but the same thing as through the windshield: the video is transmitted to the display from the camera installed on the front of the car. On top of this video, Apostera superimposes a mixed reality with hints. It is closer to the usual navigators, but the problem of comparing two pictures is leveled.

In addition, Apostera is developing a passenger solution. For example, imagine you are driving through the center of Kyiv and see a new restaurant. With your mixed reality tablet, you can quickly find it on the map and order food or book a table. That is, you interact with reality through the screen.

Certification and recognition of Apostera

Back to Audi. Such contracts for a startup that is less than 2 years old (at the time of signing the contract) is an achievement comparable to a flight to Mars. Apostera managed to create a working and popular technology and get a Tier1 supplier status, particularly important in the automotive industry. Such a status is held by global international experts like Valeo, Bosch, or Continental, and a tiny Apostera shares the same level with them.

Let’s take a look at what Tier1 is and why it matters. The entire global automotive industry is divided into three categories: 

1. An automobile manufacturer or Original equipment manufacturer (OEM). For example, General Motors is an OEM. It manufactures cars: it develops design, engine, gearbox, etc.
2. Suppliers of the first tier or Tier1. These are companies that work directly with car manufacturers, supplying them with their individual solutions or equipment. Typically, Tier 1 is large companies with tens of thousands of employees with offices around the world. They take on massive obligations and responsibilities.
3. Suppliers of the second tier or Tier2. They are subcontractors of the first tier. They include service companies and outsourcers who supply software to Tier1 companies.

“To be Tier1, you need to have a number of certificates and permits,” explains Andrey. “There are large companies in the automotive industry that have been operating for decades, and they are still outside the first tier — they just cannot get a certain certificate.”

There is only a handful of certified companies. So, how did the Ukrainian startup do it? While still at Luxoft, the founders of Apostera understood how important certification is for automakers and how to get it. 

The automotive industry is a highly regulated industry along with medicine and aircraft manufacturing. Because the slightest mistake in the code will hit millions of cars and become a threat to the lives of drivers, passengers, and pedestrians. Therefore, before something gets into production, it goes a long way through strictly established processes. The chaos that often reigns in startups is not tolerated here. Every process that takes place in a company must have a precisely written policy that proves that the company knows what it is doing and is responsible for the result. 

To get Tier1 status, it is necessary to certify development processes, at least nine processes from the group of ASPICE processes adopted in the automotive industry. Apostera certified 11: 6 engineering, 4 support processes, and 1 management process, with each having dozens of policies. From the first days, up to 10% of the entire team’s work was devoted to building these processes and intelligently drafting policies. 

To get certified, we hired a German audit company with a good reputation in the market. The certification process itself takes a week: auditors come to conduct the assessment, they sit with the team, ask questions, see if the process really exists and everything works. It costs 10,000-15,000 euros. 

“Compared to the fact that the entire company dedicates 10% of its time in the span of 2-3 years on creating processes, it is not a big amount of money,” says Olga.

It is important to note that at the time when Apostera signed a contract with Audi, we did not have certification yet. But the automaker was so impressed with the prototype that it gave an unknown startup carte blanche and allowed it to show the certificate a year later. “That is a lot of trust,” concluded Viktor.

How much does Apostera earn

Apostera has multiple sources of income. 

1. Apostera charges a fee for each vehicle that uses its technology under a license.
2. The so-called service non-recurring engineering fee (NRE), in simple words, an integration fee. Each car model requires significant platform modifications for the correct integration of software with hardware: everyone has different sensors, maps, and technical requirements. 

The customer pays for the integrations in tranches throughout the project, and the license fee for Apostera is received after vehicles are put into production. It takes 2-3 years from the start of the project to the release of the first car. “Previously, it was generally 4-5 years, so this is very fast for automotive,” Olga notes.

Any contract for Apostera starts with a tender. For example, in November 2020, Apostera applied for tenders with three European and American automakers. If the Ukrainians win them, they will start working around the beginning of 2022. After that, the product will go into production in another 2-2.5 years. That is how long the sales in the automotive industry are. Because of this, there is a gap in the cash flow.

“You can imagine, in a startup with all sorts of technological issues, the question arises that your cash flow will be positive only in a few years,” says Viktor.

But this is the specificity of the automobile industry, and Apostera was ready for this. So, in April 2019, the company attracted investments from ICU as a convertible loan to close the financial gap in the project with Audi. The amount of the deal was not disclosed, but it allowed Apostera to cover operating costs in its maiden project and to achieve positive cash flow.

The company’s revenues are growing rapidly. “If you do not look at last year, where we received the same revenue as the previous one, we can say that we grew twice year-on-year,” says Andrey.

“We are a profitable company since the end of 2018. Since the beginning of the company’s existence, we have already earned more than 14 million euros.”

To date, Apostera has successfully won all tenders in the field of automotive Augmented Reality systems, in which it took part, being ahead of competitors across multiple indicators. Daimler’s technology is an internal development of Mercedes, and the group will most likely not sell it outside. This is a unique advantage over competitors. In turn, for Audi and other automakers, Apostera is an opportunity to compete in the market by introducing fundamentally new approaches to navigation. And here the Apostera product has advantages, namely the linkage of the image to the real world.

Big responsibilities, big ambitions

Apostera now holds three contracts outside of Audi and participates in 4 tenders. Viktor’s chances of winning are very high. Meanwhile,  the load of the team is already estimated to be 150%. Apostera should increase the staff very quickly since the responsibility is like on Tier1 – very high. Although the work on one project has been going on for several years, the product must reach production within the deadline strictly stipulated with the car manufacturer. Deadline violation in automotive is unacceptable.

“Postponing the sale results in millions of euros of financial losses, – Olga explains. – For example, the manufacturer planned to produce 5 million cars over three years. A few-month shift equals 200,000 undelivered cars. And the loss isn’t just in the margin. The people who were waiting for these cars can go and buy them from someone else. Accordingly, it is a failure of a further marketing campaign.”

“The first car will go to the conveyor and will be delivered to the user on time. It is like a full moon – it will happen in a predetermined time, whatever happens,” Viktor concludes.

The company now employs over 100 people. Apostera has four offices, plus a representative branch in Shanghai. Three of them are the R&D centers: in Kyiv, Odesa, and St. Petersburg. The main part of the development is done in Ukraine by about 80 people. Fifty-five of them are in Kyiv, and the rest – in Odesa. There are about ten people in St. Petersburg. The company is also opening a new office in Detroit.

Apostera plans to hire over 50 new employees in the Ukrainian R&D by the end of the year. The open roles include requirements engineers, different developers, testing specialists, and management. “This is considering the modesty factor because we need about 90 people. In other words, we need to double the staff,” says Viktor. “The staff that we have will allow us to simultaneously conduct production projects for five different car brands, but next year, there will be seven of them, and we want even more.”

We are here to solve a particular problem, and what is very important for us is the goal and the reason why we come to work every day or turn on our laptop early in the morning, working remotely. We’re constantly looking for like-minded people and people who are willing to fundamentally change the automotive industry with us. When someone chooses a new company, it is crucial to ask yourself: “Why? What does the company do, for what reason was it created? Life is short to do what you don’t like or to solve a problem that someone has already solved,” Andrey adds.

Most employees work remotely, but test engineers have to go to the office to test all of these systems on automotive equipment. In addition, Apostera engineers have a unique ability to test new cars before they enter the market. This requires acquiring special rights and skills, which is not easy but can be compared to an extreme hobby.

“This is an extreme driving test. Because the test cars aren’t always in the right technical condition, the driver has to be prepared for something to fail – the brakes, the steering wheel, some system – and know exactly what he’s going to do – says Olga Mirkina. – Our engineers go on a business trip to Germany for a few weeks to drive cars that haven’t been sold yet. They’re interested. I think few companies in Ukraine can boast of such a thing.”

Olga was the first one to receive these special driving rights in Apostera and to debug the system on the Mercedes S-Class test.

“In order to turn on our system, we shut down some of the car’s systems – parktronics, a screen with a rear-view mirror, a rear-view camera. The car itself is huge, heavy, and difficult to maneuver. As a result, I crashed it,” Mirkina says.

“I spent twenty-four hours getting ready to call the customer and tell them I crashed their car. I mustered up my courage, sent a picture, and said: ‘How are we going to show your top management the demo now?’ To which they replied: ‘Oh, it is no big deal, is it the back door? Well, someone will close it with themselves.'”

Apostera has at least a dozen of these test cars. They all have something to be remembered for. One of them speeded up and got about 10 tickets in the name of the customer. The other one had a disk damaged and because of its specific size, it was needed to urgently look for a replacement all over Austria. One was accidentally pumped with oil so much that the battery stopped charging. 

The only thing that always worked well was the Apostera demo system.

What’s next

Today Tier1-suppliers come to Apostera with a partnership offer, and car manufacturers are consulted even before the tender announcement.

“We are known all over America, Europe, and Korea. We participate in almost all the tenders from car manufacturers on the subject of AR,” Olga says.

When asked whether the founders had received offers to buy Apostera, Viktor and Olga look at each other and don’t answer for a minute.

Then, Viktor says, “Of course, just imagine, a car manufacturer is ready to invest millions in an AR navigation technology, and it will. On the other hand, there is Apostera with a strategic R&D, which is on the market with an offer of current interest both today and in three years coming. The market of heads up-displays is at the stage of formation and, according to forecasts, this market will grow intensely in the next 5-7 years for automotive devices.”

How did the idea come about

Globally, many companies use neuromarketing, that is, the assessment of feelings and user engagement in a product using their physiological data. For example, the well-known game development corporation Valve (Counter-Strike, Dota 2, Left 4 Dead) works with OpenBCI and Tobii to read the emotions of players who are testing games. It is done using eye-tracking and other biometric data (you can read more about the scientific side of neuromarketing research here).

According to the company’s co-founder, the idea came about when the Neurotrack.tech team was looking for how to accurately measure the effectiveness of the interface when developing a website or application for a customer.

“We’ve heard about neuromarketing before, but in a rather abstract way. At the same time, we had and still have a strong R&D team with extensive experience in content promotion. For example, our team has been making YouTube videos trending since the dawn of the platform. Then we decided to try neuromarketing: it turned out that almost no one in Ukraine does it. We began to piece together hardware, software, and so on to combine all this into a single complex,” says Vitaliy Miniaylo, co-founder of the IT company Neurotrack.tech.

It was supposed to be a product that encompasses neurophysiology, marketing, and neural networks. The company’s co-founder is now writing a thesis on the theoretical and methodological foundations of creating artificial intelligence systems at the Kyiv Polytechnic Institute. The team has eight developers in the field of neural networks and ML.

Scientists in the field of neurophysiology also cooperate with the company: Sergii Tukaev, a senior researcher at the Institute of Biology and Medicine of the National Taras Shevchenko University of Kyiv, Sergii Danilov, a candidate of biological sciences and an EEG and iitracking expert, and Viktoria Kravchenko, a candidate of biological sciences.

How it works

The team has assembled a working device in the form of a “smart helmet,” with various sensors and software, with the help of which it conducts neuromarketing research, tests different hypotheses, and fulfills commercial orders.

The complex of devices by Neurotrack.tech is a set of equipment that includes various sensors, a helmet, and eye-tracking devices (the set may vary depending on the research). The sensors and helmet are put on the user’s head and arm, and the user watches the necessary ads, music videos, or the site interface.

The device includes:

• an electroencephalograph that reads the electrical activity of the brain: with its help, data is taken by which it is possible to understand the level of involvement and attention of the user, as well as, with some approximation, the emotions that they are experiencing;
• an eye tracker or a camera that reads the user’s eye movement, the direction, and fixation of the gaze: with the help of this data, you can see how the user’s gaze moved across the picture, where it stopped and lingered;
• device for measuring heart rate;
• assessment of facial expressions (this tool is used less often than others);
• they also measure the galvanic skin response (bioelectric activity of the skin to measure the work of the sweat glands).

Together with programs for processing this data, it all works this way: the user gets seated in a chair, then the team puts on sensors and shows the user, for example, a music video or an advertising video. At the same time, the team monitors EEG indicators, measures the pulse, and monitors the pupils’ dilation and eye movements. That is how the first raw data is received, which is processed and cleaned of noise. Scientists-neurophysiologists are working on the data, and the output is data based on which conclusions can already be drawn.

EEG data show how much a person was involved in viewing at a particular moment, what emotions they experienced. Data from the eye tracker: where the person was looking and where their gaze lingered. Also, such a camera can measure the diameter of the pupil. The team learns to classify emotions, track eye movements, etc., more accurately using neural networks.

Data processing

To access the raw data, the team uses proprietary software (connected via API). Based on mathematical models and machine learning, this raw data processes and predicts emotions, interest, and other metrics. The company is still working on the accuracy of the forecast and assessment.

For example, working with EEG and eye tracker data:

• removal of artifacts and noise;
• analysis of the spectral and spatial characteristics of the signal;
• depending on the frequency, strength and place of brain activation, conclusions are drawn about the cause of the signal (the team determines the degree of interest, involvement, etc.).

How it looks

Here is an example of how EEG data is taken for neuromarketing research (video from the company’s YouTube). It is raw data that requires processing to then present the result of the study to the customer in an understandable language. So far, neurophysiologists are working with EEG data “manually”, but over time the company expects to automate this process.

Here’s how iTracking works: The red lines and circles show the direction of the eye movement. The bigger the circle, the longer the user has been looking at the same point.

The editor of AIN.UA tested the device on herself. She did not manage to record EEG because of the hairstyle, but the device recorded eye movement, focusing of the gaze at certain points, as well as the pulse and the galvanic reaction of the skin. The latter reaction shows how the amount of sweat on the surface of the skin changes and can serve as additional data to clarify the feeling a person is experiencing.

In the future, the price of such an “out-of-the-box” device could be several thousand dollars.

Who are the clients

Vitaliy Miniaylo says that such data, unlike, for example, polls and focus groups, gives access to the true reactions and feelings of people who will watch an advertisement, listen to a music video, or play a game. This data can be interesting for marketing agencies, online stores, video, music, and game production studios.

He gave the example of several cases of using such a device. For example, it was used to analyze how listeners reacted to new songs by a famous artist. And this is an example of the fact that the reactions that users voice and what they actually experience can be different.

“We made a ranking of songs by the famous Ukrainian singer. For example, when users shared their reactions to the song with dirty words in its title, some of them wrote that they didn’t like it, probably thinking that it’s inappropriate for a song to have such a name. But at the same time, we saw from the EEG that their brains responded positively to the song, suggesting they actually liked it,” says Minyaylo.

The company has also told us about a case with one of the major Ukrainian banks which ordered neuromarketing research. The task was to assess how readers perceive the bank’s banner ads on several news websites and identify the elements attracting the most attention. The research used eye-tracking followed by interviews with respondents to gain a better understanding of their experience. They said that the style of the banners was nice, and the ads were clearly visible on the website. At the same time, only 10% of respondents could remember who the advertiser was. Eye-tracking helped mark out the following reasons:

1. Too much superfluous explanatory information on the banners.
2. The focus on the single word “free” and mixing of the name of that free service
   with the main text.
3. The use of redundant visual objects – the buttons “Order” and “Open.”
4. Improper accentuation: the human face photo occupied ⅓ of the entire image,
   while the information on the banners was about transaction bonuses.

The bank was recommended to:

1. Remove faces and redundant buttons “Order” and “Open” from the banners.
2. Position the information about the service itself in the foreground, with a note that it is free, below.
3. Use words and images that the audience will associate with a bank of choice.

When those amendments were applied, the bank’s recognizeability increased, as well as the reaction on the advertised service. The overall information reading rate for one of the banners grew from 27% to 58%.

The complex for neuromarketing research is not the only service that the company is working on. Some other projects planned to be developed by Neurotrack.tech are a cashier-free shop with eye-tracking cameras; a device assessing how many people actually looked on a billboard and what emotions they had while watching, and other ideas.

The company estimates that neuromarketing will become common practice over time. “Our idea for this solution is to come in one box and, over time, become part of creators’ culture for generating the content,” the founder explains.

Tokar spoke about his experience in an interview with DOU. AIN.UA selected the key points.

Alexey started his career at FORM as a development manager, and a year and a half later, he became the head of the entire engineering department. He was responsible for the system’s stability, personnel development, and interaction in his department and the company. Managers were constantly interested in labor productivity. At some point, an engineer’s assessment was reduced to the ratio of the planned volume of work to the actual completed work.

“It is difficult to calculate how many hours an engineer spends developing. One cannot say that an engineer continuously benefits the company from 9 am to 6 pm. On the other hand, it is not always possible to switch to the “that’s it, no more work and no more decisions” mode when you come home. Sometimes ideas come up in the shower in the evening or while brushing your teeth in the morning. Accordingly, this is also working time”, says Alexey. 

Based on these thoughts, Tokar suggested introducing a 4-day work week as an experiment. For that, he chose one team that showed a more or less stable and predictable result and decided to try to improve it even more.

The essence of the experiment

The idea was this: the team has two weeks of development; if it completes all the tasks during the next two weeks, it will receive two additional days off. If the team again fulfills the planned volume together with the extra days off, they receive two more days off for the next two weeks. And if it does not have time to cope with the tasks, they go back to a 5-day work week for the next two weeks. 

At the same time, the salary of employees does not change.

The outcome

The experiment began in July 2019 — it was supposed to last three months. If during this time Alexey sees that the team does not burn out and the productivity increases — a 4-day work week is introduced in other teams of the engineering department.

“At first, it was painful: in the first two months, the team received only two weeks with additional days off. The rest of the time, something did not work out – the employees did not have time to handle the assigned tasks fully. The result is work in the evenings and sometimes on weekends. Even when the specialists had a rest on Friday, they continued to work to be in time,” says Tokar.

In the third month, people adapted and worked a 4-day work week for almost a month. They liked the new schedule. The specialists performed the same amount of work they did during a 5-day work week, while the predictability of the result increased by 10%: if earlier the team could guarantee the result by 80-90%, with the 4-day work week, these indicators increased to 92-95%.

The new schedule became the motivation, followed by all other necessary changes. The most challenging part of the move was to set up interaction within the teams. When employees began to focus on the team rather than individual results, they started to change processes for the team rather than individual work. As a result, we got remarkable results.

“It has become much easier and faster to scale, hire new development teams and get results from them. If earlier onboarding of teams took six months, after switching to a 4-day work week, it was reduced to one and a half months, says Alexey.

Another indirect effect is that the number of bugs in production has decreased, and the predictability of release cycles has increased. We worked on these problems for a long time, and the experiment with the schedule helped solve them and led to an excellent result.”

Since November 2019, Alexey has moved four other engineering teams involved in product development to a 4-day work week. 

The problems faced

All teams faced overtime. Often, some people had to work on one of the extra weekends because they didn’t have time to complete all tasks. Others finished pending tasks on Saturdays and Sundays. This negatively affected such employees, who were outraged because of working on weekends, while the rest were relaxing.

The move was most painful for the most responsible employees. Team leads worked on Fridays to have time to close tasks in the 8-day sprint and thus guarantee the next two days off. Over time, everyone has adapted.

“The move to a 4-day work week helped fine-tune the work within the teams: the guys realized where the problems were and could to fix them,” says Alexey.

How the schedule changed as a result

Initially, the concept was as follows: if the employees perform the declared amount of work, they choose any two days off. The guys experimented by choosing, for example, Friday or Monday of the following week as days off – to have four days off in a row. They also tried to have Wednesday off to rest in the middle of the week, but in the end, all the teams decided that the perfect option was to get Friday off and have three days off in a week.

The employees began asking each other, “Did you earn a Friday?” or “What did you do for a Friday?” So “Fridays” became part of the company culture.

Initially, the concept was as follows: if the employees perform the declared amount of work, they choose any two days off. The guys experimented by choosing, for example, Friday or Monday of the following week as days off – to have four days off in a row. They also tried to have Wednesday off to rest in the middle of the week, but in the end, all the teams decided that the perfect option was to get Friday off and have three days off in a week.

The employees began asking each other, “Did you earn a Friday?” or “What did you do for a Friday?” So “Fridays” became part of the company culture.

Implementing the new working rules in the engineering teams that deal with support and infrastructure was more difficult. They interact directly with users and can’t refuse to provide services on Fridays. Therefore, another model was chosen for them: one person was on duty on an extra day off, and everyone else worked for four days. Each time the duty officer in the team changed.

So, the main change in the company was that Fridays became days without meetings. Even if some teams occasionally do not meet deadlines and work five days a week, they still do not have Friday meetings.

A fatigued engineer is a bad engineer

When a 4-day schedule was implemented, the rest of the engineering teams started wondering how else the process could be optimized. If employees work four days a week and deliver a 100% result, maybe if they worked five days a week, they could get 120%?

The financial management asked why we continue to pay the employees the way we used to when they work 20% less.

“We had to negotiate and explain that a fatigued engineer is a bad engineer, that the burned-out employees wouldn’t produce results. After about a year, top management stopped asking such questions, and for the last year, we have been working for four days a week,” Alexey recalls.

What is featuring in the App Store all about?

Featuring is about promoting mobile applications and games in the form of topical collections in the App Store application. It is a list of Apple’s recommendations. You can see these lists on the home screen when you open the App Store, so it’s a great honor to be there.  

In fact, App Store advertises your  application or a game for free. The Apple team describes your product and chooses  the principle according to which these lists are made.

Each country has its own App Store with its own ranking of games and apps since its users have their own country-specific preferences and needs. Headway was featured in the education category 92 times in the UK, India, Australia, and Canada. Also, in the UK and Ireland, Headway received the “App of the Day” status four times – that is, the Headway logo and name were the first things people saw when they opened the App Store.

Who might want to get featured and why?

1. Developers of games and apps. It allows you to introduce yourself, to get organic traffic and installations for free, and, of course, it boosts your reputation. If you’ve been featured, Apple thinks you’re cool.
2. Users. The topical collections help you quickly find the app you need if you don’t have a specific one in mind. The “App of the Day” prompts the user to download a completely new product.
3. Apple. To get featured, a team must come up with a great product. That improves the quality of the apps listed in the App Store and helps meet the needs of every user.

What do you need to do to get featured?

• File a request by filling out a special form on the Apple website. Indicate a name, describe a product, and provide a link. 
• Of course, you have to get ready by getting rid of design bugs and shortcomings as best you can. After you are done, update screenshots and product descriptions in the App Store and take care of negative comments. 
• It is very important to write a great cover story “About the product” that will sell or won’t sell your product to the editors of the App Store collections.
• And then wait. If the application is approved (that is, the editor has found your product worthy of attention), the developers will get access to a page in Apple Connect where they need to present the product in detail by the indicated deadline.
• Allow time to moderate your content. If you submit your application an hour before the deadline, it is highly likely you will be late. We ran the risk of missing the deadline because we did not take into account the ban on showing devices that refer to Apple in visual materials. And given the fact that our episode was about a smartphone (which looks like an iPhone by default), we had to do everything over again and within the shortest time possible. You will be provided with a to-do/not-to-do checklist to be studied.

Five factors to consider if you want to get featured

1. The promise of the product is confirmed by numbers, namely, the number of downloads, ratings, and earnings;
2. An app has a unique story, a technical solution, or a specific problem it solves. This could be a note-taking app, a handy solution for millions, or a fitness tracker for disabled swimmers.
3. The app has been localized in many countries.
4. The app and its App Store page are regularly updated.                
5. The application is nice, understandable, and user-friendly. Amen!

100% paid products are rarely featured. The editor is more likely to choose an app that works by subscription.

Column “Rumor has it.” It is believed that Apple willingly features applications that have iPad and Apple Watch versions. This is an unwritten rule, but practice shows that it works. Relying on this information, we adapted the application for an iPad within three days (and three nights).

Headway did not submit an application – Apple offered us to get featured

An App Store representative contacted us via the email address indicated in the Headway description. We immediately got a page in Apple Connect, were asked to introduce ourselves, and to prepare some visual materials. We had two weeks to do this. It came out of the blue, so we had to work at night and on weekends. We planned every single step and allocated the necessary resources. The entire team pitched in. It was great. Everyone knew what we were doing and, most importantly, why we were doing it. Then I realized that the key to success in getting featured and the success of the product itself depends on teamwork.

As a result, we have been featured 96 times in 144 countries.  

What are the benefits of featuring for Apple?

• To date, featuring has brought 20,000 new organic users. In general, the number of organic views will grow from 50 to 150% on the days of big featuring (that is what we call getting to the home screen or any featuring in a large number of countries).
• A mark on the application page that it was featured as the “Application of the Day.” Since it is visible to potential users, it is likely to increase the number of installations.
• Display priority. When a user is looking for an application that was featured, a block with an editorial article shows up in the search results. It pushes aside the following results, so the probability that the user will notice your app is higher. 

• Apple has offered Headway to place a demo app on company gadgets in offline stores. The default apps are chosen by Apple rather than the store. Headway is now available on iPhones and iPads in Apple stores in over 35 countries, including the UK, US, and China.
• “Friendship” with Apple has boosted brand awareness and reputation. For example, when Apple gives a big presentation, your app might hit the screen and get noticed by a potential audience. I’m sure we are going to see Headway at the WWDC presentation very soon.

Author: Anatolii Denysiuk, Head of UX/UI at Headway

In 2020, backers on Kickstarter started complaining about undelivered devices, and the media (with a dubious reputation) began to spread information that the project was on the verge of closing. All that contradicted the information provided by SolarGaps: hundreds of orders worth millions of dollars, a new factory, worldwide orders, laudatory articles in respected Ukrainian media.

The AIN.UA editors talked to the founder of SolarGaps, Yevgen Erik, other people familiar with the project and found out the situation at the startup.

One minute review

• SolarGaps is a well-known Ukrainian startup. At the end of 2020, messages began to appear on the Internet that things did not go well for the company.
• SolarGaps did have problems with the logistics of orders on Kickstarter, but now, according to the company itself, about 90% of the devices were delivered to backers.
• The startup announced the launch of an innovative factory in Romankiv but failed to launch it. The company has one factory in Bortnychi, which produces about 100 devices per month.
• The company also had funding issues due to the coronavirus, but it received another tranche under the Horizon 2020 program.
• In a nutshell: the company did have problems, but the peak has been passed.

Background

The news about SolarGaps and its smart blinds that generate solar energy broke out for the first time back in 2015. The idea of the project is to install solar blinds on windows, which, in addition to their usual function, will also generate about 100 kilowatts of energy per month for the owner.

In essence, these are solar panels in the form of blinds that are mounted on a window frame and tilt during the day to collect more energy and are controlled from a smartphone. The company said that the energy received could power up computers and other household electrical appliances. The prototype of the device was presented at iForum-2016, which was covered by the media (the editorial staff of AIN.UA also wrote a lot about it).

At first, the company grew off of the money of the founder, Yevgen Erik, who had previously worked in the real estate industry. Later SolarGaps began to attract third-party investments:

• In March 2016, it got itself into the IoT Hub accelerator. Its founder, Roman Kravchenko, invested in the project at no charge.
• In June 2016, Effective Investments invested in the project $200,000 in exchange for 20% (i.e., the startup’s valuation was $1 million). 
• In May 2017, SolarGaps entered the Kickstarter, where it raised $102,000. 
• In October 2017, the company received a non-refundable grant of 50,000 euros from the European Commission under the Horizon 2020 SME program. The company raised €50,000 from the EBRD in the same year through the Climate Innovation Vouchers Programme.
• In April 2019, SolarGaps received a €1 million non-refundable grant from the European Commission under the Horizon 2020 SME program (phase 2). The CIVITTA team acted as a consultant for Horizon 2020.

Kickstarter issues

In November 2020, information appeared on two sites at once (link 1, link 2) that the startup SolarGaps had deceived its investors. In each of the texts, the authors cite one source: numerous user complaints on Kickstarter that the device never reached them. From this, the authors concluded that the startup was done. None of the media outlets approached the company for comment. 

There are indeed negative comments on Kickstarter, with users complaining that the blinds were never delivered. Why this happened – we will tell you a little later. 

Sources in the market told AIN.UA editors that the articles could have been ordered by some of the ill-wishers of the startup (or, for example, by some of the investors due to a conflict with the founder), but we did not find evidence to support that. According to one version, the management of the startup was offered to pay money so that these articles would not appear, but this was not officially confirmed by the company.

Interestingly, a month before that, an article was published in the Ukrainian Forbes, which does not talk about the company’s problems, but its prospects – SolarGaps allegedly had orders worth $2 million. And on November 21, 2020, Ukrainer published a partner report with Greencubator about the SolarGaps factory, telling that the company is doing well, it is developing, and its devices are in demand all over the world.

What’s really going on with SolarGaps

The editor of AIN.UA met with Yevgen Erik and talked to other people familiar with the situation to figure out what was happening with the startup. In short, nothing wrong is going on, and the project continues to work. Not without difficulties, though.

Kickstarter

The company entered Kickstarter with smart blinds in May 2017. It raised $102,354 with $50,000 initially planned. At first, the company shared shipping news more or less regularly on Kickstarter. The last post appeared in August 2019, and updates have stopped since then. In the comments, outraged users who supported the campaign back in 2017 did not receive devices, did not get a refund, and doubted that the startup was still alive.

Such comments were cited as proof that the startup was actually “dead.” In December 2020, after the articles saw the light, the company wrote an update that they sent 20 more devices to users. And under that post, there were several comments from those who had not yet received the devices.

Why did it happen so?

According to one version, the reason is technological: the blinds were in development and were not entirely ready for use. A source familiar with the situation told AIN.UA that in 2019 the company was looking for investments, but one of the investors did not get a working device in a year. Some of the blinds “burned out” during installation, and other times they did not work because of a spare part. This data is confirmed by one of the company’s ex-employees: they say, earlier SolarGaps lost customers because it sent them samples that had glitches. According to the same source, this situation has now improved.  

The founder of the company, Yevgen Erik, partly agrees with that: “At first, our product was really raw. And 110 volts in US power outlets turned out to be a challenge for us since at that time there were no certified motors and micro-inverters.” But according to him, already in 2019, the electronics in the blinds were redone entirely, and the product became suitable for mass production.

According to the second version, which is announced by the company (and which is confirmed by former employees), delays in deliveries were also caused by logistics issues. “There were problems: we wrote to backers, they did not reply for a long time, some were silent for as long as half a year. Or the device was shipped into the country, and the user refused to pay the customs clearance,” says one of the former employees of the company, who wished to remain anonymous.

It is confirmed by the head of the company Yevgen Erik. According to him, entering Kickstarter was initially a mistake, as was the focus on the B2C segment. The product is technologically complex, and some users failed to install the product properly, the formats of the sockets did not fit, there were malfunctions in the application. But in terms of a PR, going on Kickstarter worked well.

“The reality is often like this: if you make hardware, then what you spend on the product is 1.5 to 2 times more expensive than what you raise on Kickstarter,” he says.

As AIN.UA found out, the company had problems with delivery in some countries due to customs clearance rules: for example, users from Mexico complained about customs clearance price; in the UAE, the clearance cost was 100% of the product’s price.

According to Kickstarter rules, the startup was supposed to deliver the devices to the US for free, and each delivery cost $300. During the lockdown, the company sent delivery letters to backers, and many remained unanswered. Quarantine restrictions also complicated delivery in 2020. Nevertheless, according to Erik, the company completed 90% of deliveries to Kickstarter backers across the United States (as of the end of April 2021).

Investments and finance

According to Erik, the company entered the year 2019 actively. It had large ongoing B2B projects: the World Trade Center and the Port of Barcelona (at the time of publication, the blinds were already installed there), the Spanish network of nursing homes, B2B clients in Switzerland, an energy company in Germany. 

In the same year, the company announced that it had received a €1 million grant from the Horizon 2020 program. The amount is paid in tranches, and the company was supposed to receive the next payment in the spring of 2020, but it was delayed until October due to the coronavirus.

“Until October, we were quite worn down, financially too. I invested my money and took out loans to save the company. We were forced to cut employees’ salaries by 50%,” says Erik (according to AIN.UA, some SolarGaps top managers refused salaries during that period altogether). 

At the same time, negotiations on B2B projects were slow, and with the start of the lockdown, most of these projects froze: only one of them was worth 500,000 euros. The company counted on the money but did not receive it. 

The situation improved in November when the company received the next grant tranche. Until the tranche, the company was kept afloat thanks to the funding from the Ukrainian Startup Fund ($50,000). 

The company has not attracted venture capital lately. According to the founder, it was mainly because it is generally more difficult for a hardware startup to do this. He talked about how he traveled to Silicon Valley and talked there with investors who told him bluntly that hardware was not of interest at the time. 

According to several sources of AIN.UA, it could also be due to the fact that one of SolarGaps’ early investors, Andrey Kolodiuk, has an undivided 10% share in the company (its American office), which scares off potential investors. 

According to SolarGaps presentation materials for 2018, 88% of the Ukrainian legal entity Solargeps LLC belongs to Yevgen Erik, 7% to Roman Kravchenko, and 5% to Denis Krutko. In the American SolarGaps Ltd., 55.14% belongs to Yevgen Erik, and the rest is distributed between private investors and employees (this also includes the undivided share of early angels). 

The company’s founder did not comment on the presence of an undivided share and difficulty in negotiations with investors. This is indirectly confirmed by the fact that, according to AIN.UA, until some point, the startup tried not to raise money since this would mean an increase in the mentioned share.

The Factory

Difficulties with investments affected the production of the company. The company has a working factory in Bortnychi. In July 2019, the company announced the launch of a new innovative factory in the village of Romankiv, near Kyiv.

In the articles of Forbes and Ukrainer, Yevgen Erik pointed out that this is a working factory, which carries out orders for international customers. “In July 2019, Erik opened a factory in the village of Romankiv near Kyiv, which employs five people, and they produce 200 devices per month. The factory has already been overwhelmed with orders worth $2 million,” the material says.

As it turned out, the information is not true.

That is how the factory looked in November 2020. Judging by a meter high grass, it is clear that there has been no activity for a long time.

The AIN.UA correspondent visited the factory in November 2020 to find out how things were at the time. From its appearance, it was clear that the building had long been abandoned. At the time of arrival, the person in charge of renting the premises was on the site. He was showing the building to potential tenants. The AIN.UA correspondent also introduced himself as an interested person looking for a spacious warehouse near Kyiv. The landlord agreed to give the entire building, except for a small room, for $2,500/month. That small room that was not available for rent was used to store SolarGaps equipment put into boxes.

The landlord confirmed that for some time there was a production facility of SolarGaps. Still, for almost the entire 2020, no activity took place, and the company owed several thousand dollars in rent.

There is no factory in Romankiv. 

In a conversation with AIN.UA, Yevgen Erik said that the company indeed planned to build a “dream factory” there, but a month after it moved in there, the electricity was cut off in the building, and it is still not available there. Right in front of the editor of AIN.UA, Erik allegedly called the building owner, and he confirmed his words about problems with electricity. But this does not negate the fact that there is no production or factory in Romankiv, while the company tells the world otherwise.

Erik estimates the launch of such production at $2 million, but the startup still needs a second factory: according to the head, this will reduce the cost of blinds and make it possible to sell them to large B2B clients. Therefore, to create a factory, they plan to initiate a crowdfunding campaign and attract investors.  

The factory in Bortnychi currently produces about 100 systems per month. SolarGaps has now reoriented itself to the B2B segment. At the same time, hotels, shopping centers, and other public facilities that might be interested in the technology are constrained by quarantine in many countries.

“We have done a great job, and this lockdown is like a blow to the head, from which it is difficult to recover,” says the head of the company. 

The pandemic affected the company’s financial health and production: several critical employees for production contracted the coronavirus at various times. Several different sources confirmed this to AIN.UA, noting that the coronavirus gravely crippled the team and its founder.

What does SolarGaps plan to do?

In a conversation with AIN.UA, Yevgen Erik did not hide the fact that the SolarGaps project is incredibly complex. The company entered the B2B segment and made a mistake: installing such blinds is not the same as fixing two sensors on the wall with double-sided adhesive tape. Now SolarGaps is focused on b2b, where the projects are more extensive.

“We plan to supply the order to Tata Power in India, to the Goethe Institute in Belgium. We are thinking about three pilot projects in Europe and Ukraine, to make at least one of them a bright building with public access. The result will be a wow effect that everyone can feel,” says Yevgen Erik.

According to Erik, after the tranche in October, SolarGaps the company has sufficient resources for the year ahead, together with further funds in the region of €150,000-200,000 to finance a pilot project in Europe – installing blinds in some prominent building, which could then be shown to clients as an example of working technology. Currently, the company is negotiating with India’s Tata Power, which plans to install blinds on a building in Mumbai.

“My goal is to build a company like Sonnen, which produces energy storage batteries for homes in Germany. It is an example to me of what a startup in the energy industry should be,” says the company’s founder.

SolarGaps is also thinking about launching a factory in Poland. To finance this project, the company has applied for a Polish grant and is also looking for partners; for example, it discussed the launch of a joint factory with Daniel Tonkopiy from Delfast (Tonkopiy confirmed this information to AIN.UA).

The founder of SolarGaps says that while studying at Singularity University, he met Drew Baglino, Tesla’s technical director, and he liked the company’s product. “He was interested in SolarGaps and we discussed the possibility of using Tesla Powerwall batteries to store generated energy,” he said. The SolarGaps founder writes Baglino from time to time, but the letters remain unanswered.

According to Erik, selling the product to Tesla would be the perfect exit for the company. But Tesla doesn’t acquire startups right now. Erik himself continues to work on SolarGaps; the company doesn’t shut down.

What is used in Kyiv

Video surveillance has been working in Kyiv for many years. The main project for the installation of cameras and other monitoring equipment in Kyiv is called “Bezpechne Misto” (“The Safe City”) and works as part of the Kyiv Smart City initiative. Back in 2017, the Kyiv authorities claimed that the CCTV system had proved effective; then, there were about 4,000 cameras working in the city. At that time, the mayor Vitali Klitschko, in a speech broadcast by the Newsone channel, mentioned an incident when a child was kidnapped from a kindergarten but later found with the help of CCTV records and brought back home.

In 2020, the number of cameras in the city’s surveillance system was about 2,000. According to official figures, this system has helped reduce the number of crimes in the city: the crime situation has improved by 37%.

What are the thousands of cameras for? They watch leisure areas, parks and streets, monitor road traffic, look after schools and kindergartens, recognize people’s faces. Last year, there was even a move in the Kyiv City State Administration (KCSA) to buy cameras that would measure people’s temperature in the crowd in order to fight the coronavirus (the tender for the purchase of the equipment was later canceled due to its technical flaws and the uproar about the unnecessary spending of public funds). According to Liga.Tech citing Kyiv Smart City as its source, by the end of 2019, the city had spent nearly ₴450M to develop such a surveillance system.

Often, both the cameras and their software are supplied by the same Chinese manufacturer, Hikvision. This can be seen from the tenders for the purchase of CCTV equipment that the KCSA conducts through its subsidiary, “Informatika,” such as:

• The tender for the intelligent traffic cameras held in April, 2021, that resulted in an agreement worth about ₴2.6M; procurement items: Hikvision iDS-TCD203-A IP cameras.
• The 2019 launch of a new analytical module for the “Bezpechne Misto” system, which searches for criminals in the crowd: the camera images are collated with a database of offenders and when there is a match, the operator receives an alert signal. This module is part of the Unified Data Center complex, with the software and hardware developed by Hikvision.
• The agreement worth ₴6.9M which provides for the purchase of Hikvision DS-2CD3686G2T face recognition cameras to be used for video surveillance in the Kyiv metro, etc.

According to Liga.Tech, most of the city’s cameras are of this brand. According to Hikvision representative Anatoly Storozhko, quoted by the online magazine, the advantage of this equipment is that data analytics is carried out in the device, and it is only possible to send metadata – processing results – to the server. That saves time and computing devices of servers.

However, Hikvision’s solutions have security issues, which have been discussed for a long time.

Why there are problems with the Hikvision cameras

Hikvision is one of the leading manufacturers of video surveillance systems in the world. But Hikvision equipment has several peculiarities. First, it was prohibited in Europe and the US for its involvement in human rights abuses. Secondly, cybersecurity and video surveillance experts have repeatedly reported about the backdoors found in these cameras. Let’s analyze each of these particularities.

Human rights violations and sanctions

Hikvision is a supplier of equipment to Chinese “re-education camps” where Uyghurs are held. The European Parliament installed Hikvision cameras to measure temperatures in 2020. However, because of the situation in the camps in April 2021, 89.4% of MEPs voted to remove the equipment. Even before this voting, the media reported that thousands of employees of EU organizations were rejecting this equipment.

In 2020, the Council on Ethics for the Government Pension Fund Global, which invests oil and gas profits in various companies, recommended excluding Hangzhou Hikvision Digital Technology Co Ltd from applicants for the investment. The reason was that “the company is involved in serious human rights violations.”

The company is also under US sanctions. Since 2019, US government agencies are not allowed to purchase and install this equipment. That also means that US businesses, including those in the IT and telecom industries, cannot work with it. For example, ONVIF, a company that develops standardized communication protocols for IP cameras, refused to certify the brand and suspended it from its work.

Security issues

Hikvision cameras have come to the attention of security specialists many times. For example, back in 2016, there were discussions on forums that the cameras have a backdoor that makes it possible to remotely gain full access to the device (admin access), and it is better to disconnect the cameras from the Internet.

In 2017, the US Cybersecurity and Infrastructure Security Agency ICS-CERT confirmed that the cameras are do affected by backdoor. Experts from this agency reported that the DS-2CD2xx2F-I Series, DS-2CD2xx2FWD Series, DS-2CD4xx5 Series, and other camera models have a vulnerability that allows remote access to the device without requiring special “hacking” skills from the performer. Even before this announcement, Hikvision cameras had been repeatedly featured in reports about security risks (examples: 1,2,3). The company responded to the ICS-CERT report by releasing an update to the camera software.

However, the vulnerability problem remained. For example, in 2019, Lithuanian researcher Tomas Savenas wrote about a vulnerability in Hikvision devices that allows obtaining admin rights and passwords of all system users in plain text.

“I had a couple of requests to test local network security and I have seen vulnerable Hikvision cameras. An exploit is a publicly available and simple HTTP request. Full disclosure of this backdoor you can find here,” he writes.

Secur, which provides security systems, says that backdoors in Hikvision cameras have generally been shut down since 2017, but the sanctions (including the suspension of ONVIF membership) are still relevant. “Backdoors are periodically detected, they are closed, new ones are discovered, it’s an endless cycle,” the company says. It should be noted that Hikvision’s products have a higher priority among security professionals compared to other surveillance equipment vendors.

The main reason is that it is viewed as an instrument of the geopolitical influence of China. It is believed that the company is created and controlled by this state.

According to Bloomberg and other media, the company is 42% state-owned. The state-owned China Electronics Technology Group (CETC) controls its shares through its subsidiaries, the China Electronics Technology HIK Group Co., LTD (CETHIK) and CETC No. 52 Research Institute. At the same time, Hikvision positions itself as an independent company.

You can check the vulnerability of such cameras using the search engine shodan.io, which searches for vulnerable devices online – enter the brand name Hikvision and see how many devices are in the public domain with IP addresses. And knowing the IP address, an attacker can google the hacking algorithm.

As IPVM, a specialized American service, which tests the security cameras, told AIN.UA, the more expensive cameras Hikvision (with Ultra or Pro in the name), as a solution for urban surveillance, have advantages compared with other brands: quality, relative reliability. But in terms of software, Hikvision is weaker than the competitors. “Their recorders and video recording management system do not have as many features and are not as easy to use in the city as Milestone or Genetec, which are used more often,” says IPVM.

As for the face recognition module mentioned in the article, IPVM has never tested the Hikvision software separately. But tests of cameras with face recognition features used in Kyiv showed that they do not work particularly well. As for potential links with China, the company says the following:

“We can’t confidently answer it without knowing what firmware version is used and how it is configured. If their cloud connection is turned on (Hik-Connect), there will be outgoing requests, but they are not always to China. In our testing (a couple of years old now), the requests went to US-based Amazon Web Services servers. It is worth mentioning, though, that once data reaches the cloud (AWS), we cannot see how it’s accessed, so it could be accessed from anywhere. So it isn’t impossible that data goes back to China, but we have not verified this,” the company says.

Comment of KCSA about the cameras

KCSA in it response to AIN.UA said the following:

• Due to the fact that since the beginning of the video surveillance system and the cloud platform of the data center in Kyiv, the Hikvision equipment was used, further, in the specifications, the requirements for technical compatibility with it were indicated.
• The video surveillance system in Kyiv has a comprehensive information protection system. The certificate of conformity for it is registered in the State Service for Special Communications No. 20798 and is valid until 2024.
• In the city data center on Dehtiarivska Street, there is a system of information protection that meets the requirements of normative documents for technical protection of information and is certified by the certificate of the State Service for Special Communications No. 20979, which is valid until 2024.
• Now, there are 6,705 cameras, including 224 specialized cameras for face recognition, in the video surveillance system of Kyiv.

In the year of Reface’s existence, we have received over 100 million installations and have been at the top in stores in 80+ countries, including the US. 72% of this traffic is organic. But before we got that kind of success, we went through a series of marketing ups and downs. I gathered the most important conclusions in this text.

Better quick than deliberated

When I first came to Reface, I said: “Guys, let’s take it slow, let’s gradually expand into new regions. We start with Ukraine, then we go to Poland, and so on the fifth iteration we reach the USA.” Each iteration will help us to test new mechanics, learn to work with user return, procurement and analytics better.

But the reality was different. I didn’t take into account the fact that the world is highly globalized and becoming viral in, let’s say, Vietnam means that in two weeks you are already popular in the United States. It is almost impossible to control this process. The app started to skyrocket in different countries, so there was no time to think, and it had to be supported by traffic.

We had to act quickly, making risky decisions. It was risky because our tools didn’t allow us to analyze everything in detail. Data in different sources often differed up to 50%. But if we did a lot of thinking, we wouldn’t be able to get to the first 50 million installations so fast.

Everything has to be measured

We are now striving to measure everything.

For example, RevenueCat helps to keep extended analytics on our subscriptions. With AppsFlyer we analyze traffic to understand where people come from. Amplitude is a product analytics tool that helps to see links and build hypotheses for product development. Tableau allows us to visualize all our activity, and Sensor Tower—to monitor competitors by their traffic, activity in stores, etc.

We use Youscan to track potential viral regions that can be warmed up by purchase. For example, this was the case in Thailand when a TikTok сhallenge got viral, which we had nothing to do with. Thousands of Thai people started posting GIFs and videos where they refaced themselves into Disney princesses. We put a paid promo in this region, we came up with themed creatives, we added content to the app, and we got more organics than we could.

Marketing and backend go hand in hand

As soon as we turned on paid traffic, we got a funny case in the Vietnamese market: for one paid user there were 70 free. That was cool, but while the marketing department was cheering up with every new Vietnamese, backend guys stayed up all night trying to keep their servers.

So we had to shut down the traffic and leave only the organics. Later, we inadvertently created the same problem by sending off unapproved text messages. Bottom line: almost every marketing activity needs to be discussed with the backend guys, so they can at least prepare for it. Plans of your own can be very damaging.

Spam works but does not scale

At first, we looked at social media not as a tool for creating community (something we’re working on now), but as a tool to reach out to celebrities and become a little more viral.

We started texting important сelebreties and their surroundings, hoping they’d notice us. This was done by our colleague Danil, whom we called the Editor of Edinstvennaya [Ed. Note: Ukrainian magazine for women] for the fact that the dude was very actively researching who is friends with whom, learned the latest updates from the lives of stars, and mentioned them in our stories. And it worked really well.

We managed to accidentally find a man who does a lot of content with Snoop Dogg, and the rapper actively repost his content. That’s how we appeared on Snoop Dogg’s feed for free, and he still publishes a lot of Reface videos. If we were to turn to influencers directly, our monthly budget would rise to $500k per month (or even more). So it’s great if you have the opportunity to interest the celebrity with something other than money.

However, we later received a bunch of complaints, and one day we got a page with 150,000 followers banned. So we realized that this kind of approach doesn’t really scale up because you don’t want to turn your Instagram into a spam machine: you don’t build complex communication on it.

Paid traffic can eat away at organic traffic

When we reached the top 1 in the US App Store, we thought, since we stand above YouTube, TikTok, and other cool applications, now we will have even more organic traffic. In general, there were more installations, but mostly due to our paid traffic. Then I first learned about the term “cannibalization of traffic.”

A large number of installations can lead to a top, but this does not guarantee organic growth. I used to think it was linear and simple: we increase traffic and make more money.

Actually, it’s more complicated than that. In the case of cannibalization of traffic, it is important to understand: with a sufficiently high budget and sufficient virality of your application, it is easy to get into the situation where you buy a user who could come to the store within a week and install your application for free. So, you paid for nothing.

Now we focus on the benchmark when for one paid user comes 2+ free ones. If we notice that this ratio is declining somewhere, it is a wake-up call  — we have grown too fast in purchases for a certain region.

How we build a marketing team

The marketing team was initially staffed with people on the principle of “oh, cool dude, let’s get him, he’s going to help us.” So we formed a team of five people where everyone does everything.

That’s not a bad thing. It’s important to have people like that when you start, but then, you have to divide up the responsibilities. Now we have three directions: user acquisition, product marketing, and brand, and there are people assigned to each with specific metrics and individual challenges.

There are three main principles that are close to our hearts:

1. Treat every idea as a hypothesis

Initially, we think about how to test the idea with as little effort and energy as possible. If it is confirmed, we scale it up and move on.

In addition, it’s important for us not just to iterate hypotheses but to document them. That way, we are prepared for the fact that if a new person joins the team in a year, they will be able to dig through everything we have done so far and keep running at the same pace as us.

2. Make mistakes and learn more

No one else in the world has the marketing experience for the social platform we’re building. So all we can do now is make mistakes and learn more from our mistakes. Some of them can be costly, but if we don’t learn from them, their cost becomes even higher.

3. More action, less presentations

At the marketing level, we have zero tolerance for presentations and strategies. We even joke that one presentation is two proven hypotheses, but generally speaking, it is true.

Presentations are like a huge book that you prepare for a month, and then you don’t know what to do with it. That’s why we avoid presentations, but for systematization, we use more understandable tools – Miro, Sheets, Notion.

Author: Yevhen Leibov, Head of Marketing Reface

In 2011, 95% of the market was accounted for by wired systems, whereas in 2021, wireless solutions cover about 70%–80%, and Ajax itself holds a leading position in the segment. Today, the company’s devices protect over 850,000 users in 120+ countries worldwide. Remarkably, all the company’s products are developed and manufactured in Ukraine. Its facilities include R&D offices in Kharkiv, Kyiv, and Vinnytsia, as well as two factories in Kyiv.

The AIN.UA editorial team has visited the main production site of Ajax Systems, situated in the capital. The company’s representatives have shared the principal processes of gadget development and demonstrated all the assembly stages.

Ajax Systems’ facilities

The main factory manufactures all 33 devices in the Ajax product range. Considering that the production facility is closely linked to the R&D department, and they both occupy the same premises, it is the place where the manufacturing of all new devices starts.

The new factory on the Left Bank, which Ajax opened in November 2020, specializes in the production of DoorProtect and DoorProtect Plus window/door opening detectors, SpaceControl key fobs, FireProtect, and FireProtect Plus fire detectors, and ReX signal range extenders. It is planned that in the future, both factories will duplicate each other’s project work and manufacture the entire project range.

Interestingly, in 2016, the factory on Skliarenko Street occupied only one of six floors. In 2021, the facility occupies five floors, which is 4,920 m². At the same time, the production site on the Left Bank has an area of 1,840 m², and Ajax Systems’ warehouse premises occupy 4,300 m² in total.

As of 2021, Ajax Systems employs over 1,800 staff, of whom 1,010 are involved in the production, including 687 employees at the main site and 323 more on the Left Bank. The R&D department is a separate entity; in 2021, the company employs about 350 engineers.

Where it all begins

The Ajax R&D center, specifically the Device Department, is responsible for the development of all devices and detectors. The development process for all devices is usually structured as follows. The business team generates an idea: what kind of device should be developed. Then, technical and product requirements to that idea are drawn up. They are passed on to the developers, who decide how and on which basis the device will work, considering the requirements. Following that, the research stage begins, during which similar/competing solutions are tested, and the main components are selected: sensors, processors, camera modules, etc.

After the research stage, the device team and lead present their concept to a wide audience of R&D professionals – it is like “defending a project.” Thus, ideas pass an additional filter and are further refined. And then, the industrial design stage begins. The industrial designer receives the input constraints: for example, the front should have a Fresnel lens on it, the camera in the detector should be oriented at such and such an angle, etc. Based on those requirements, the design of the device is created. But sometimes Ajax works backward: when there are no particular external constraints, the design is created first, and then the complete set is “embedded” into it.

In parallel, the scheme is worked out, and the software is programmed. After that, a printed circuit board (PCB) is developed. Then, depending on the needs, the device casing is printed on a 3D printer or manufactured by hard tooling: the company orders molds not for mass production but simpler and cheaper ones and casts prototypes from plastic. As a result, it gets prototypes in the final design.

Following that, the prototypes undergo extensive testing performed by developers and QA. If something doesn’t take off, it is readjusted, and new prototypes are assembled. And if everything works as expected, a big milestone follows, which takes a lot of money: molds are ordered for the final plastic. The pilot batch is assembled with the final casing and final boards, and this “gear” is used to test the release candidate of the firmware.

Everything ends with beta testing. First, there is a closed beta: devices are distributed among the employees. Then an open beta follows; for that, there is a selection of active users (both in Ukraine and abroad). After that, the device goes into mass production.

The development cycle draws heavily on the device. Ajax can make something simple or based on established technologies in six months. The most complex devices took eighteen months to develop, according to the company’s comments.

How the production is organized

It takes nine hours to make one device. But, since the factory handles devices in batches, the manufacture of one batch of final product units requires 3 to 4 days. First of all, components arrive; they are received at a remote storage depot, laid out, after which they undergo incoming inspection. Two truckloads can be inspected in a day. Ajax Systems works with Swiss, American, Japanese, Chinese, and Dutch brands, having established direct contacts with them. All new Chinese suppliers are subject to approval by the CEO, the company comments. After the incoming inspection, the materials become available for processing.

All Ajax Systems devices go through 4 main production departments: the surface mounting department, assembly department, semi-finished product department, and finished product department.

Surface Mounting (SMT)

This department is responsible for surface mounting components onto PCBs. This kind of mounting is carried out on SMT lines: the printer applies soldering paste to the PCB, the mounter places the components on the board, and then the board is soldered in the soldering furnace. SMT lines produce more PCBs than there are devices in the Ajax product range: this is necessary because some products of the company contain multiple boards each. Usually, a project is launched for 10,000 or 15,000 PCB units, and a working shift at the production area is at least 6 hours long.

Then, there is the AOI, which controls the quality of the soldering. The area has control islands, where one in ten PCBs is checked. As explained by the company, this helps selectively monitor whether the components are placed following the necessary points on the board.

There is a visual/optical inspection at the end of one of the SMT lines. The scanner checks a produced circuit board against the reference photo. If everything is fine, it proceeds to the next stage; if something goes wrong, the QA team re-examines the board to find out the cause and sends it back for re-soldering if necessary. After that, the board goes through another kind of inspection and returns to the route.

The department keeps records. The results are summed up daily – how many PCBs have been made. Performance is measured at each stage and displayed on monitors. This is to understand what buffers exist between the areas to ensure a smooth workflow, the Ajax representatives explain.

Assembly Department

Finished boards are sent to the assembly department, where DIP components are manually soldered onto them. On average, one person can solder around 500 devices per shift. The through-hole mounting is handled by several teams, and each is responsible for a separate device. Ajax notes that the production meets the EU quality standards and uses only lead-free solder alloy.

For components that are difficult to solder, production tools produced at the factory are used. They help lay out the boards and components at the right height and angle. It is noteworthy that all the factory employees wear green antistatic bracelets since the board is destroyed when static occurs.

The production follows the 5S workspace organization system. Each workplace is zoned, so there is space for a soldering station, components, etc. When the shift is over, employees clean their workplace. Ajax notes that by adhering to this method, work has become faster and more efficient.

After the board is soldered, it goes to the varnish area. This is necessary to protect the components from possible condensation that may occur when consumers use them. At the factory, there are manual (when the stenciled varnish is applied) and machine varnish coatings, which speeds up the process significantly.

After the boards are varnished, they are placed in dryers. Drying takes about 4-6 hours. Accordingly, when the varnish dries out, the board is ready for the next stage.

Semi-finished Product Department

Varnished boards are sent to the semi-finished product department. It consists of a test section, where the PCBs get a unique QR code and are flashed, and an assembly section.

In the test site, the board goes through certain control stages. On average, this test takes about 16-20 seconds per unit. If the program sees an error, the PCB is not flashed and takes the test several more times as described in the manual. If it fails, it is sent to the production repair area, where all problems are found and fixed, and then the board is returned to the production flow. It passes the test and only then is transferred to the packing and assembly lines. There are four of them in the main Ajax factory.

At the assembly area, specialists initially do many small operations. For example, they insert buttons or gaskets into the plastic between the case. Each assembler is responsible for a specific set of actions to deliver a finished device at the end of the line. It takes a minute to assemble one product; however, the conveyor line can produce 600 devices of one type or, for instance, 900 devices of another type per day.

There is quality control at all stages of assembly: every employee must check the item for quality before performing their task. The finished product is forwarded to the department of finished products.

Finished Product Department

The first section is a long-test area, through which 100% of Ajax devices go. Here sensors are assigned to the hub, and the employees perform manipulations with the products to check them programmatically.

There is also a production room where the intelligent control panel of the hubs is tested. They are connected to all communication channels, and the battery is tested as well. Moreover, the devices are tested physically in special test rooms. For example, to test the device operation in the dark, the factory has a “black room,” a space with black walls where no light can enter. Thus, the devices are calibrated to proceed further to the quality control section.

At the quality control area, the finished device is once again tested programmatically. Here the workers also check whether the device has passed all the previous stages. While the test is in progress, a visual check is carried out – the product is checked for scratches, gaps under the case, inclusions in plastic, its graininess, and other parameters. Each controller performs certain steps. For example, if it is a MotionCam, they need to swipe a hand in front of the device three times, and so on. When the program sees that the manipulation has been done, they proceed with the check. When the program does not let through the device, it is returned to the skipped stage. If everything is fine, the device is sent to the packaging area.

Overall, the company’s devices go through 11 stages of control. The defect rate is only 0.1 – 0.3%. Production is organized in such a way as to minimize the likelihood of defects and block their transfer from one stage to the other, as Ajax adds. The in-circuit test is used where visual inspection is not possible, such as after soldering and programming. The quality system works from incoming inspection of all the incoming components and semi-finished products to acceptance tests before packaging the finished products.

At the packaging area, the workers fold boxes, pack assembly kits, and add instructions. It is noteworthy that during packing, each assembly kit has to be weighed. A fully assembled product is weighed separately. At this stage, all the necessary stickers and QR codes are attached.

At the end of the process, we get a complete Ajax product. At the end of the line, all devices are scanned and sent to the database, from which you can see how many packed devices are ready for shipment. The production capacity of Ajax Systems is 25,000 items per shift. This means that each of the areas serves 25,000 units during one shift.

Hiring and Working Conditions

Ajax states that it is important to hire employees quickly and efficiently at the same time. They need to be adapted and trained. At the very beginning, candidates will have a short interview with a recruitment consultant, get a small test task, and have an interview with a foreman in the production facility (the department where the candidate will work in). If a person passes an interview, they can go through staff onboarding the next day.

The onboarding day starts with an Intro (a training on product, company, quality, health, and safety), followed by signing the documents and a tour around the production facility. The next day, the candidate becomes an employee, and their senior colleagues (foremen) help them adapt to the workplace.

Further, the newcomer will have a one-month probation period. The person is given a checklist, which has to be filled out during this period. It helps the newcomer to get acquainted with the different stages of production and learn certain skills. After the probation period and successful certification, the person is introduced to their position. There is a referral program – an employee can invite a friend and, after their friend goes through the probation period, they will receive a monetary reward.

The production facility has a grading system. After the certification, everyone confirms their qualifications or improves them. The first certification is carried out three months after the start of work, other ones – every six months. Based on the results of the assessment, the employee is assigned a grade. And this is the way they can influence their level of income. At all the production stages, senior employees can switch people between operations. Thus, everyone can try themselves at different stages.

Most of the employees work from 9 a.m. to 6 p.m.; however, some areas work 24/7. For example, SMT installation specialists work in shifts: the machines stop only for readjustments and maintenance. The same schedule works for the test and long-test departments.

Work during the quarantine

With the imposition of the lockdown due to the coronavirus pandemic, Ajax Systems continued its work. The company launched transportation to subway stations, disinfected workplaces, and informed employees about the necessary protective measures. As noted by the management of Ajax, at this time, they worked according to the strategy of “no layoffs” – the staff was not laid off, but new team members were not recruited as well. At the same time, the salaries of the employees remained the same. Those who self-isolated kept their jobs.

Despite some difficulties with parts and components delivery to factories, the Ajax factory actively produced devices. Ajax started recruiting new employees after the easing of quarantine restrictions. The production has doubled: if in January 2020, there were 456 employees, in December, its number grew to 1,000. The company’s goal for 2021 is to recruit 1,000 more employees to work at the new factory on Boryspilska.

Ajax noted that it planned to hold the second Ajax Special Event, a large online presentation of the company’s new products in 2021. It is going to present several new products; however, the company does not disclose detailed information.

Products and clients of the startup

The paper toothbrush is Effa’s most famous product; the team has won contests with it, and Reuters, DW, and other media outlets have written about it. According to Daria, Effa’s goal is to replace disposable products with environmentally friendly ones. The startup is prioritising the promotion of its toothbrushes: everyone brushes their teeth every day, and such a product is the easiest way to explain what the startup does and strives for.

The main clients of the startup are companies from the travel industry (hotels, airlines, cruise ships), but there are also clients from the corporate sector, such as Netflix, who need these toothbrushes for employees in offices.

“We also work with institutional or government procurement – for hospitals, refugee camps, and prisons. This segment will open for us in the future when production volumes allow us to reduce the product price, but we are already communicating with several social organizations (UNICEF and others),” says Daria.

The startup makes regular deliveries to its big clients every three months: to do this, Effa works with distributors in the regions where their clients are located. They pick up the product from the warehouses and distribute it themselves.

How it acquired Netflix as a client

According to Daria, the team managed to enter the market with the product at the right time. On the one hand, the coronavirus has caused an increase in the demand for single-use products. On the other hand, almost all the world’s industries are now switching to eco-products. The co-founder of the startup says that both the design and the product website are important. While studying in the Startup Wise Guys accelerator program, the team completed a module on lead generation and sales on Linkedin and now uses its lessons.

The fact that the startup participated in international projects like the eco-innovation competition Clim@ in Frankfurt, where it made the top five, the ClimateLaunchPad green business ideas competition, and so on, also helped it find clients. That, in turn, resulted in publications in the media.

“A separate sales tool is, of course, the media. As soon as a good article about us is published by a reputable media outlet, we are bombarded with letters,” says Daria.

That is how the startup got Netflix as a client. According to the co-founder of the startup, Netflix representatives were interested in the Effa product themselves: they were looking for an environmentally friendly solution for their offices, and the only alternatives available on the market were bamboo toothbrushes, which are not very environmentally friendly. They found articles about the Ukrainian startup and decided to get in touch with it.

As a result, Netflix bought the toothbrushes not only for the offices but also for actors on castings. It turned out that the company uses about 6,000 toothbrushes a month for these purposes. So after negotiations, the startup started supplying the brushes not only to offices but also to Netflix movie sets.

How Marriott became a client

As with Marriott, the startup tried to sell its product to hotels. Daria is responsible for sales, and it was she who negotiated with Marriott. In this case, LinkedIn worked well as a sales channel. As Daria says, to sell through this social media, you need to follow several basic steps:

• The person who will be engaged in sales through LinkedIn has to develop their profile: a good photo, position in the company, the profile of which should also be active.
• You need to be active on LinkedIn, read and understand the area of sales, subscribe to opinion shapers in this area, read specialized media, write posts, and like the posts of others. “This is the only way you will become an insider of a specific area. In a couple of weeks of working through a specific market segment on LinkedIn, you will realize that there are actually not so many key people there,” says Daria.
• You need to subscribe to online events: according to Daria, this is one of the best sales pipelines: after all, people who actively use LinkedIn subscribe to online events and are ready to share their opinions and expertise. You can see the list of event visitors and add them to your friends list.
• After researching the market, you need to find a person in the company who should write about sales. Writing to CEO is often a bad idea; such messages will just get lost. “It’s important to think about whose problematic aspects in the company you are solving,” says Daria. You shouldn’t become friends without a small intro message. And don’t try to sell your product straight away. You’d rather ask the person for their opinion about the product, ask a few questions.
• You should not add many people at once if your profile isn’t properly built: the algorithms of LinkedIn are configured in such a way that if too many users don’t accept your request, your profile may be blocked.
• First, it’s better to work with leads manually to understand how it all works. And after that, you can try lead generation software. “The main thing is to remember that after the first reply to your message, you need to proceed to correspondence via email or assign a call. The next thing is correct account management,” advises Daria.

In the case of Marriott, this was the approach that worked. Daria actively developed her LinkedIn and company profiles, made posts, and got likes. She also studied the market and those things that were important particularly to this company. And it turned out that sustainability (environmentally friendly and self-sufficient development) was one of the main goals of Marriott for the years 2021-2025, and the company started giving priority to microsuppliers of products. “This was a sign for us that we urgently needed to contact them,” states Daria.

She determined who might be responsible for purchasing products in the company and mailed outa number of letters referring to the post on microsuppliers. As soon as the manager of The Jaffa Hotel (part of the Marriott chain) in Israel responded, he was sent an email with a customized presentation, and then a call was made. After the call, we sent the client a PR package of 10 hotel-branded brushes. And we signed a contract with one of the Marriott hotels.

“When a client sees that their brand respected so much, the price is no longer so important to them,” says Daria.

The startup recently raised a round and plans to spend the funds to develop other eco-products.

AIN.UA has compiled a brief history of Kutskir and his project, based on open sources.

A bit of a biography

Ivan Kutskir is 30 years old. He was born in Ukraine but moved to the Czech Republic in 2002.

“I was born in Ukraine and lived there until I was 11. I have very fond memories of it. I read and speak Ukrainian well, but I am already struggling with typing in Cyrillic because I have never used it: when I was living in Ukraine, there were no computers or smartphones. At least once a year, I come to Zakarpattia, where my grandparents live. And last summer, I visited Kyiv for the first time in my life,” Ivan said in a commentary to AIN.UA.

After finishing school, Ivan received a master’s degree in theoretical computer science and artificial intelligence in Prague.

Before Photopea, Ivan was involved in the development of flash games that infested the Internet in the early 2000s. Such games were monetized by displaying banner ads in them. In the future, his deep understanding of this monetization model would stand Kutskir in good stead for his graphics web editor.

In his work, Ivan was using Photoshop a lot and came to know it really well. At some point, he wondered if he could parse .psd files in the browser. He created a simple web tool that allowed to open a .psd and download all layers separately. That was just the beginning: the programmer got very enthusiastic about developing a free Photoshop analog that would work entirely in the browser.

At the time, Kutskir was working on 20 other projects. However, Photopea was the most pleasant to work on, so he decided to focus on it. “ I know I’m building a unique tool, and it motivates me to continue,” he told Lunadio in an interview.

Photopea: from $0.0 to $1M per year

Ivan started working on the Photopea project 7 years ago, and he started to monetize it 4 years ago. Now, the application has become his main source of income: during 2020, Ivan made $500,000 off Photopea.

Photopea has three sources of income:

• almost 90% of the money comes from displaying ads in the application
• there are also premium subscriptions that users can buy to use Photopea without seeing any advertisement
• the licence sale: Photopea can be customized to your own project and integrated through an API. Kutskir charges monthly fees for such integrations

The startup’s revenue is growing steadily. Over the past 12 months, Ivan has earned nearly $1 million for the first time. He spoke about it in his commentary on Hacker News. Screenshots of his comments were published by the serial entrepreneur Pieter Levels, known for such projects as Nomad List and Remote OK.

“I love this project in so many ways: bootstrapped, no funding; vanilla, no frameworks; solo, no team – $1M/y revenue. Power of the internet and individual curiosity and persistence to just make something work. I use Photopea.com myself almost every day for years,” Level writes.

“When you start your own project, you never know if it will ever make $250k a year. But if you get hired, you can be quite sure that you will never make more than $250k a year,” Ivan notes.

He has managed to earn still more, and that without being hired. Photopea grew rapidly: in 2018, it brought in just $20,000 annually, whereas, in two years, this figure increased 25 times!

No office, no employees, no marketing

Photopea currently has 300,000 active users per day. On average, they spend 45,000 hours a day on the app. However, Kutskir’s financial expenses to maintain the project are very modest: $45 a year for the server.

“It’s all rendered in the user’s browser. There is no database, no backend. I only pay for the hosting of Javascript scripts and static files.,” Kutskir said in an interview.

The project has no other expenses: no office, no employees. Ivan has been working on Photopea all these seven years alone.

In the beginning, I thought it’s a disadvantage. I didn’t want my customer to know I’m the only one working on this. I was afraid of their reaction when they would find out it’s only me using an old $500 notebook.

But over time, Kutskir’s opinion changed. He realized he shouldn’t be ashamed that no one helps him. On the contrary, it’s an advantage.

Photopea also has no marketing budgets and no promotion strategy. Most people come by word of mouth, from organic search. Everything that Kutskir does is sharing new features on Reddit, Twitter, Facebook, and Hacker News from time to time.

Several years ago, Ivan published a project on Product Hunt and got absolutely no results. Last year, a random user of Photopea, who has only ten followers on the platform, reposted the project, and it immediately entered into the top 4 projects of the week with over 1,000 upvotes. That is why Ivan does not develop complicated marketing strategies – he uses a different approach for project growth.

“Start with a small product, and add more features on the go. I’ve learned it’s good to launch your projects or features before you are 100% satisfied with that. I still do that now. I’m not trying to do all things perfectly. I launch it as soon as it works, and then I wait for user feedback,” he told.

Kutskir collects requests for new features on GitHub. People use it to report bugs and make suggestions. Curiously enough, 80% of Photopea users have GitHub accounts just for this purpose. Ivan picks the most inspiring requests and starts to implement them.

There is no secret sauce behind it. It’s all about building what people want.

Today, Depositphotos is a group of content-related projects: a photo/video stock, an online advertising template editor, on-demand studio pavilions, entertainment YouTube channels, and media.

“I want to become a global content platform, with our team retaining control over the business and developing further. As a marketplace, we have traveled quite a long way. As creators of our own content, we are just getting started. We are constantly experimenting,” says Dmitry Sergeev, founder and CEO of the Depositphotos group of companies.

AIN.UA tells the full story of Depositphotos: not only about its success, but also about downfalls and crises, missed opportunities, project closures, and new endeavors that have not yielded a profit yet, but can once become The Next Big Thing.

The first entrepreneurial experience

Dmitry Sergeev first learned about the Internet in 1999. Back then, there were no ICQ, QIP, or Skype, and Google had just been launched. He earned his initial capital by making websites and simple online ads, buying and reselling all sorts of traffic.

“It is a pretty special feeling for an Internet entrepreneur back at the time: you whip up some stuff in an HTML editor to later upload it via a dial-up connection so that it can earn you some money.

Your wife is close by, the baby is crying in the kitchen, and then suddenly, you get a check for that from the US. You don’t know where to go: which bank will cash it. The check is for $52 – and that’s a hell of money! Because you have earned this money through a plug, to put it crudely,” Sergeev recalls.

Sergeev’s first significant project was the file hosting service DepositFiles. The entrepreneur explains its success quite simply: they entered the niche at the right time, riding on the hype, and offered users an interface that was convenient and easy to understand. Back then, there were some large online storage providers already, so Sergeev just took the existing model and improved it.

“We didn’t work with pirates or porn resources, nor did we generate traffic on purpose – we just made the whole thing a little better than others,” Sergeev comments.

Initially, there was just one programmer working on DepositFiles, besides Sergeev. He had come from Dnipro (still called Dnipropetrovsk back then), and he single-handedly, working in Sergeev’s kitchen, managed to do what is done by whole development offices nowadays: a project with millions of users per month.

Like everyone, they profited off download speed. It was deliberately limited, and if the file was large, a free user could wait 24 hours for it to load. But by paying a small amount of money via SMS – generally, less than $1 – he or she would get high speed and multiple transmission streams. Today this model is called “freemium;” the vast majority of mobile and desktop applications are monetized through micropayments.

DepositFiles soon rose to the top 5 but never took the lead. However, Google, PayPal, and other today’s Internet giants worked with the Ukrainian company, and some potential investors offered to unite.

A basement is a Ukrainian-style garage 

The office was based in an old Khrushchev-style residential building not far from the Okruzhna beltway. DepositFiles was becoming widely known, and people wanted to work there, so Sergeev started to hire “people off the street” for the project. They were coming to the interview from all across Ukraine and even from other CIS countries. The team grew to 8 people, so the “khrushchyovka” felt too small.

Even before his online business, Sergeev had bought a basement on a downtown street, Mezhyhirska; he wanted to open a nightclub there but did not have enough money and failed to agree with the neighbors. So he decided to convert it into an office. A friend helped him with refurbishment, and the employees moved the furniture and belongings themselves in a van.

This basement was where the company’s corporate culture began to take shape, although the term was not yet in use in those days. The walls were decorated in the style of the then-popular House, M.D. series.

The absence of windows, the monotonous hum of the engine, and the exhaust system did not bother anyone: it was a place where they stayed late into the night, celebrated the New Year and birthdays.

At the same time, several people slowly and enthusiastically were working on Depositphotos.

“We were constantly trying something new, testing some kinds of models. A photobank was one of such experiments,” the entrepreneur says.

A beautiful adventure comes to an end

In the early 2000s, the file-hosting sector began to collapse amid the anti-piracy drive. Sergeev tried to transform DepositFiles and redirect its enormous traffic to the social media sector. At that time, VKontakte was booming on Runet, and the team tried to occupy this niche, but the attempt was unsuccessful. People just wanted to download or send over a file. And there was a lot of “trash” among those files, as Sergeev puts it.

“We were constantly receiving letters demanding to remove something. We were deleting files by hundreds of thousands every day; it was very bad,” Sergeev recalls.

“You couldn’t call DepositFiles piracy. It was a beautiful adventure. As soon as it became clear that the market was in trouble, I withdrew from the business.”

Many similar projects had been sold for hundreds of millions of dollars. Sergeev was less lucky. He sold DepositFiles not to make money but to get rid of the burden in Sergeev’s telling. DepositFiles was sold as a set of scripts and a user base-priced at approximately 0.03 cents apiece. Sergeev does not reveal the exact amount. Media have previously suggested a sum in the region of $2 million, but the entrepreneur calls that an overestimate.

“I was lucky to pick the right moment and find a buyer. Following that, file-sharing platforms ceased to exist as a business sector, and the remaining projects were sold for a song – if they were sold at all.”

Sergeev admits he has not visited the DepositFiles website for nearly ten years. Today any mass-scale uncontrolled file sharing is banned, so the model that was followed by DepositFiles, RapidShare, and other file hosting services that were popular back in the Aughties, is gone for good. Silicon Valley has come up with a new file sharing method: cloud storage platforms like Dropbox or Google Drive. Copyright has prevailed.

New Deposit. The beginning

The sale of DepositFiles was completed in 2009. The same year, Sergeev launched a new project with a similar name, the photobank Depositphotos.

This time again he did not offer anything revolutionary: by the time Depositphotos was launched, there had been some large photobanks on the market: GettyImages, Istockphoto (later bought by GettyImages), and others. They were also selling box scripts allowing users to build their own photobank. One such script was used as a foundation to build Depositphotos. Sergeev bought it for $250.

He admits he did not pay much attention to Depositphotos for a long time – just visited it to see how it was going and kept himself busy elsewhere. Meanwhile, the service was acquiring unique designs, features, and a user interface of its own.

As a way to attract photographers, they were simply paid for uploads: 10 cents per shot, which added up to tens and hundreds of dollars per person. According to Sergeev, about a million dollars were spent to stock up on photographs. Another $150,000 was put into the office and salaries.

Users were drawn in for a free trial period.

“Now it is a standard model that no Internet project can launch without. But back in the days, it was viewed as something next to fraud. You asked for their credit card details in advance, then people forgot to unsubscribe, you charge them money, and PayPal comes to you to find out who you are,” Dmitry recounts.

Many of those attracted by the free trial stayed, and Depositphotos hit its stride. An unsophisticated SEO brought good organic traffic to the website. The brand continuity also helped: everybody on the Internet knew DepositFiles, as it was the fifth most visited file hosting service in the world, and people were interested to see what the new project was all about.

Competitors did not hesitate to take advantage of DepositFiles’ “pirate” aura.

“They slung mud at us on web forums, signaling that the photobank market was being invaded by Russian pirates, who would now rob you. We mobilized our PR guys to deal with this wave of negativity properly from the start. And eventually, it worked in our favor because Depositphotos is actually pure copyright.”

Shares for sale. Expensive!

Depositphotos was growing “out of pocket” for two years, following which, TMT Investments put $3 million into the company in exchange for a 27% stake in 2011. Back then, the entire business was valued at $10 million.

Now, Sergeev says, he regrets not having raised investments earlier. But in 2009–2010, he vastly overvalued his company: when Depositphotos was 20 times smaller, Sergeev asked investors for 20 times more funding.

“When Instagram was acquired for a billion, I couldn’t sleep at night: I didn’t understand how this rubbish can be acquired for such huge sums of money. Riding on the hype, we went to a roadshow and put the value at $250 million while earning $1 million per year. When they asked us why so much, we told them, because! They replied they would think about it – and didn’t invest.”

One of the most generous offers that Depositphotos declined was to enter at 30% with a valuation of $50 million. This would be a $15 million investment, much more than the company eventually raised.

Another offer that Sergeev rashly declined had come from Fotolia, already a popular photo service at that time. Its founder Oleg Tscheltzoff wanted to buy part of the Ukrainian photobank’s stock at an early stage, but Dmitry would not sell.

After a while, Fotolia itself was sold to the giant Adobe for almost a billion dollars.

“If we had agreed then, it could have been a nice deal. I would make more money than I have now,” Sergeev recalls.

Depositphotos goes out into the world

Depositphotos used TMT Investments’ money to hire PR experts, prepare first bases for users, and enter all forums. The service attracted attention in the USA; Americans started to invite the company to conferences and offer partnerships.

“On top of that, Getty Images wanted to buy us,” Sergeev recalls. Obviously, he did not sell the service.

In 2011, Depositphotos already had 40 employees, and there was no room for all in the basement. Sergeev rented another semi-basement office nearby and then – several apartments. The team kept growing, and Depositphotos moved to a 5-story building in Podil. Within it, the company grew to 150 people.

In 2012, Yevgen Sysoyev, AVentures’ managing partner, joined the Board of Directors. It was he who explained to Sergeev that it had been a mistake to decline the above offers. He also introduced the founder to several journalists: Depositphotos began active life in the public eye.

By that time, the company’s annual earnings had already reached $6 million. Depositphotos had organic growth of 100% per month. In 2013, Forbes Ukraine valued Depositphotos at $100 million. As for Sergeev himself, he said that $70–75 million was a more realistic figure.

Depositphotos raised the next round of investment in 2015 when it received $4 million from the EBRD and $1 million from TNT. In March 2016, the company was valued at $82 million during TNT’s partial cashout: the fund sold a part of its stake to an undisclosed European investor. According to Sergeev, before 2017, Depositphotos was growing at an annual rate of 50%.

Other projects

Despite his success with Depositphotos and an increasing amount of work, Sergeev remained true to his entrepreneurial habit of trying new things all the time. In 2013, he attempted to harness the fast-growing smartphone market and launched Clashot, a bank of amateur photos. But the app didn’t make it a scalable project.

“We can acknowledge our failure. Although it seemed to me then that I had invented a new Facebook,” Dmitry says.

“Literally all photobanks, with no exceptions, did the same thing, but no one was able to monetize the collected content.”

During the ICO hype, Sergeev wanted to reanimate Clashot, but part of the Board did not approve of the initiative. The project was shut down and archived.

In 2014, Depositphotos turned to the media industry and began to publish an online art and photography magazine, Bird In Flight. It was headed by Eugene Safonov, the first editor-in-chief of The Village’s Ukrainian version. The launch of a specialized magazine gave Depositphotos an opportunity to raise brand awareness in the Russian and Ukrainian markets.

The edition was successful: BiF was praised as the best in its subject area. Inspired by this success, Sergeev launched another media outlet: WAS, an online popular history magazine with BiF’s Ivan Siyak as editor-in-chief.

In addition to WAS, the company launched two more projects in 2017: the Lightfield photo studios and the Crello image editor.

“Crello was a logical step in the development of Depositphotos within the content sector. We had a photobank with a colossal amount of images. Then our market was invaded by Adobe which bought Fotolia with a bank of 60 million images, for $800 million. Photobanks responded by launching online editing tools, so-called ‘browser photoshops.’ Shutterstock was the first one to do it. We also launched our own editor, Crello.”

By using templates, Crello allows you to put together ads and promotional materials, with no design skills required. At launch, the service was completely free. According to Sergeev, about 60,000 new users registered with Crello on launch day. At first, the editor grew by 100% per year while gradually introducing paid features. This led to a slowdown in the growth.

With a 2,500 square meter area, Lighfield was the largest photo studio in Ukraine and Eastern Europe. Depositphotos had invested UAH 40 million in its launch and planned to put up another 150 million, eventually investing about a third of this amount. But the plans changed in 2020.

Lightfield had two business streams. The first one was something like a coworking space for photographers, with an option to rent equipment and premises or organize a full working cycle of photo and video production. Lightfield also worked as a production facility for major customers: it handled large orders from agencies and companies. To do it, the company employed its own specialists and producers.

Everything went well until late 2019 when the world was hit by the coronavirus pandemic.

The pandemic changes the plans

Lightfield was affected by the pandemic more than Sergeev’s other projects. Projects were shut down, and studio pavilions stood idle. Neither did the coworking space pay off: for a photographer, an hour of work in Lightfield cost UAH 400, but these earnings were too little.

“With those immense spaces, we were just standing by and paying for them,” says Sergeev.

We decided that, instead of closing the project, we should reinvent it. We laid off part of the employees, half of the premises were given up. The remaining part was used to shoot stock content: short-themed clips that users could combine to create complete videos for sale. It was then that Sergeev paused to think: why not create the end product independently?

“Having produced stock content on a wholesale scale, we shoot a lot and have a wealth of experience in it, anyway. We are familiar with the greater part of the filming process. We have begun making our video content more sophisticated and are trying to reach a wider audience with it. Now, it is a range of channels on YouTube, Instagram, Facebook, and TikTok. It is the only text for now; we shall see what can grow out of it.”

One of such projects will be the YouTube channel “How it WAS: popular history,” a reincarnation of the closed WAS. The magazine has lost all advertising revenue, and its investor has decided to remodel it.

According to Sergeev, this area has required but minimal investment: so far, they have been delivering the very cheapest DIY entertainment content; if it works out, the team will go for more complex filming.

Bird In Flight has suffered less than WAS: according to Sergeev, its adverting revenue has fallen dramatically, but not to zero. Today BiF pays back 50% to 70% of the allocated budget.

“BiF is quite complex content. It may pay off, but it doesn’t have to. The project has different objectives,” Dmitry says.

BiF has 20 editorial staff, its readership comprising about a million users. Sergeev has no plans to disband the project.

Crello also continues to develop, currently being an unprofitable startup. And that in addition to being quite expensive: according to Sergeev, nearly a third of Depositphotos’ budget is spent on Crello.

Crello remained free of charge from its launch until 2019 when the board decided to start monetizing it. This led to a churn of users.

“Canva costs $9 per month with a trial period of 30 days, and we offer $8 per month with a trial period of 15 days. But in terms of the product, Canva is ten steps ahead,” Sergeev explains.

Crello has now turned to the freemium model: the basic service is free of charge, but some features are only available for a fee. This way, Sergeev wants to gain customer traction.

“I am sure that now profit is not the most important thing for Crello. In our pursuit of money traction, we risk losing time and missing the market. We need to become more visible, and we are getting closer to that,” he explains.

“Now we need a user base more than money. We need to gain a firmer foothold in the market, and then we can start the monetization.”

Before the pandemic, Sergeev planned to raise investments in Crello, but he has dropped the idea now: “Until there is clear traction, it will be very difficult to talk to investors. Money-wise, you gain a 20% annual growth rate, but the user base is shrinking. Or the user base is growing rapidly, whereas monetization is falling. This would raise many questions. Investors should see a clear strategy and the point.”

Tough times

The pandemic has taken a terrible toll on the small and medium-sized businesses that Depositphotos focuses on. Sales fell by up to 20%, depending on the market, with the maximum drop in March and April. In March, the most noticeable slowdown occurred in the EU (Italy, Spain, and Poland), and in April, in Russia and the CIS. Besides the global pandemic, the Latin region experienced a political and financial crisis related to the devaluation of the Brazilian currency.

The sales recovered only by September 2020. According to Sergeev, there was even a slight increase of about 10% compared to last year.

However, very few employees use the company’s 3,500-square-meter office, costing the company almost $500,000 a year. In fact, 90% of the employees work from home, but Sergeev refuses to give up the office.

Depositphotos currently employs 450 people, with about 400 of them working in Kyiv. Although Depositphotos is legally a US group of companies with offices in Ukraine, the US, the UK, Germany, Russia, Poland, Italy, and Cyprus, in fact, it is a Ukrainian company.

“There are about 50 people in all these counties. In this way, we keep the minimum required for the proper legal structure of the European representation and business security in general.

In Cyprus, we have 20+ people – the Depositphotos sales department, part of the Crello marketing team, and part of the Crello developers hired outside of Ukraine. In the US, we have an API team, sales representatives, and management. There are also a few representatives in Western and Eastern Europe, England, China. There are up to 20 people for all Western regions and Asia,” Sergeev explains.

The foreign staff may soon grow significantly. Despite the difficulties the pandemic has caused, it has its advantages.

“We do like hiring all over the world now, and it’s becoming the norm. Previously, you had to show a job candidate the office, a coffee machine, a sea view from the window, a parking lot, nametags, smoothies, and a three-course lunch, and a lot of people turned their noses up and said, “It’s hot in here.” And if you wanted the staff to come to you from Spain or Egypt, you had to surprise them with some meeting room and a sleeping bag right there. And now everyone has an equal footing, a kitchen. I don’t know how long we can operate like this. But I have the feeling it has gotten better.

By the way, I also have a small child sitting on my lap most of the time while I work. So I would not say that I like remote working just because I’m so privileged and have a bigger apartment,” Sergeev says.

Unconquered China

The pandemic is not the only difficulty; the competition has also intensified. Canva entered the market with huge resources, which, among other things, provides a free image database in its service. FreePic with $250 million from good investment firms, a newcomer Storyblocks, and others – all of them eat away market share, slowing the growth of Depositphotos and other players.

“I can’t say what market share we have today. If we talk only about micro stocks, the volume of the global market is about $12 billion a year, and we occupy up to 1% of the market,” Sergeev estimates.

The primary income of Depositphotos comes from the markets of English-speaking countries (including the US) and Europe, which account for 65% of the company’s business. Ukraine and the CIS countries, where Depositphotos has a leading position, 12% of the company’s income, take second place. The rest comes from Asia and Latin America. According to Sergeev’s estimates, China could double the company’s turnover if Depositphotos entered that market directly. The market is huge and rich, and there is a significant uncovered demand for the service. But all attempts by Depositphotos to open a representative office in China have failed. Therefore, the company still works there through resellers, similarly to the largest competitors, including Canva.

“An American or Ukrainian cannot start a company in the PRC; only a Chinese citizen can do it. You have to go there, look for people who won’t steal your business, get a license, and register a company. All this takes a very long time,” says Sergeev.

But that’s not the most challenging part. China has its regulatory agency, similar to Roskomnadzor, which closes down everything without warning from time to time. Not just any particular page, but the whole project at once.

What’s next?

Now the growth of Depositphotos has significantly slowed down. If in 2019 the service grew by 20% compared to 2018, then in 2020, Sergeev does not expect the result to be more than 10-15%. Nevertheless, the company has enough income to support itself and its startups.

In December 2020, Depositphotos rebranded for the first time since its founding. The new visual identity for the company was developed by the CREVV agency. It changed the logo, font, communication, and positioning. “Ordinary Stock for Unordinary People” is the new concept of the rebranded Depositphotos now.

“In the 11 years that our service has been in operation, we have been able to understand our users well. They are brave in their expressions. At the same time, they are in constant search not only for inspiration and ideas but also for simple and effective solutions for their tasks. That’s why we have strengthened our communication with a new visual identity, which is based on simplicity and creativity, emphasizing the diversity of the content of our platform,” explained Depositphotos CMO Alina Volchek, who was in charge of the rebranding.

Sergeev has no plans to leave the business and calls himself an “involved founder,” that is, a founder who personally leads the team. Sometimes he does this haphazardly, but it has worked so far. However, he says that he has never received any offers to buy the business that would satisfy him.

“I don’t see an opportunity to get out of the business at the current moment. You can get out a little bit, lose control and start building a rocket to Mars and then it turns out that this niche is occupied.

When the time comes to get out, I will get out. When there are more powerful ideas for the future and serious proposals, I think I will agree. But not right now. I feel the way things work, and I realize that right now is not the time.

I’m thankful for the current investors who are also with me and don’t want to exit the business and reject the offers that they receive sometimes,” Sergeev explains.

AIN.UA’s editor has contacted the meme’s author (who chose to remain unnamed) administering the @in_ukraine_we_dont_say accounts on Instagram and Twitter and asked her about how she came up with the idea, how fast the community grows, and where she gets new ideas for her posts.

How the @in_ukraine_we_dont_say was born

I am an active Twitter user, that is my favourite social network. As for the “we don’t say” meme, it has been around on Twitter in different variations since long ago; it has had various flavors, ideas – some funny, some beautiful, curious, whatever – but there has been nothing about Ukraine there.

On the Independence Day of Ukraine, I tried to think up some cool tweet about the Ukrainian language; I fancied something beautiful and patriotic, but nothing occured to me except for funny things, because, as my friends say, funny things are all I can do. This is how the first joking tweets came to be; and there were so many ideas, but I did not want to post 10 tweets to my account, and so, I created a separate page.

Of course, no one suspected that this would succeed – I rather did it for fun. I came up with an idea, and I just wanted to express it. This is microbloggers’ common trouble – it is not enough for them to tell the joke to their friends – they have to tell it to all on Twitter!

In the first three hours, the Twitter account gained about 500 followers. My friends advised me to create an Instagram account. This was just what they said, “There are few people on Twitter, and you will write it all just for fun. On the Gram, you can enable at least some sort of monetization, if the account becomes popular, you can promote something helpful, etc.”

Where the ideas come from

I receive 30% of the ideas from my followers (those on Twitter are tagged in the publications). The other 70% are just quotes, words, songs, and situations from my life, the life of my friends and family. I mean, essentially, this is all that floats around any ordinary Ukrainian; but here it is written down, that is why it must have stricken a chord for many people – because it is lifelike – or not so. I don’t know 🙂

Now, I am far from Ukraine and my loved ones, and I feel a 70 lvl yearning. A typical Ukrainian heartache. I miss my granddad, my grandma and her phrases, those situations, songs, that lifestyle – Ukraine in general. So, this page was rather created with that kind of emotions.

The time that I put into @in_ukraine_we_dont_say does not count, because this is all being done on inspiration. I am an ordinary person; I am young; I work at the office, marketing department; I have a Twitter blog; I love Ukrainian music, my homeland – Dnieper Ukraine, and cute animals. Nothing extraordinary, totally like everyone else.

How the community has grown

I created the Twitter and Instagram accounts on August 24. The one on Twitter grew quite rapidly, gathering about 2,000 followers in one day. Now it has 9,000 followers.

The InThe Instagram account gathered about a thousand followers on the very first day, and in 8 days, there were 51,000 of them.

The average post reach is approximately 50,000 views. The top post has almost 100,000 views. The second most popular one, 70,000.

It is like a miracle. But I would not say this has happened by a stroke of luck. From the very beginning my friends, microbloggers, helped the idea to survive and come to fruition. A casual phrase, “Hi, I’m creating a page. Please RT something, if you like it” to the four Ukrainian Twitter “thousanders” – @almost_bergman, @zhlobiha, @hromtastic, @womansadevil – and we set the ball rolling.

Every day there were 4,000 to 7,000 new followers on Instagram, as well as constant reposts, reposts, reposts… A whole lot of pleasant things in direct messages, but some negative stuff also. People were indignant about “ukraine” with no initial capital, against the backdrop of the war with Russia. I got some really emotional messages saying that I was “waging a war on my own country.”

The reality is, by contrast, that the page aims to promote everything Ukrainian, as something cool, cute, something really unique and funny (in a good way). Our nation has a wonderful sense of humor, which we have retained throughout our sad history. In my opinion, this is truly a gem, one of the top Ukrainian strengths – the ability to endure everything with a humorous attitude.

Anyway, there were, of course, more pleasant things and gratitude than negativity.

Monetization

We have already had one advertising collaboration with a pizza chain. I made a mistake in the post, writing “піцца” instead of “піца” (Ukr. pizza), which was pointed out by some 300 people. Well, now all of our readers will know how to write “pizza” in Ukrainian ??

We have also had a collab with Book Forum Lviv, but on a “post for post” basis.

There are many advertising offers, but we do not want to stray away from the concept, and not every ad fits it. And I do not want to advertize everything.

Now, we are preparing another collaboration, with a stronger cultural aspect. It is awesome to have an opportunity to do good and promote some cool Ukrainian stuff.

If people lose interest in the page, we will be glad that at least there has been such a chance, so now we are trying to make the most of it.

AIN.UA’s editor tells the project’s story.

What does GeoStorm do?

GeoStorm Technology, founded in 2020, spun off Carpe Diem Solutions, an Israeli developer of IoT solutions, with Ukrainian and Israeli co-founders. The company was started by Oleg Dryzhak, Gennadiy Zhuga, and Andriy Semeniaka (the latter two co-founders are senior researchers and Radio electronics specialists at Kharkiv National University of Radio Electronics, NURE). It has offices in Tel Aviv and an R&D center in Kharkiv. The team comprises 13 employees.

What do they work on?

The company operates in the field of climate forecasting and control. The team is developing a technology that enables it to recognize real-time extreme weather activity.

According to the developers, the accuracy is quite high: the speed of a weather formation’s movement is read to within 0.1 m/s, and the critical parameters surveillance time is within 1 minute.

The company’s representatives explain that during 2019 only, climate change caused 409 natural disasters globally, costing $232 billion of damage. Many large high-tech companies keep an eye on the advances in this field.

Google has revealed its plans to launch technology with new AI models, which allows forecasting the weather instantly. IBM has announced a service called IBM Weather Signals, based on its own AI system Watson and designed to aid business planning.

According to Oleg Dryzhak’s comment to AIN.UA’s editors, the company is developing and selling a digital signal processing (DSP) module with ALFA algorithms installed. Such modules are usually installed on radars designed to measure the weather at weather stations, maritime vessels, air services, etc.

Such algorithms provide for:

• the filtering of noises which prevent accurate precipitation and wind speed readings (for example, interference from 5G and LTE towers);
• faster radar data processing;
• exact weather event mapping: for example, such data would allow a farmer to determine which of his or her fields could be threatened by hail, and which not.

“The weather forecasting is carried out using complex computing models and supercomputers receiving data from radars and processing them for up to 6 hours. And we do it just immediately on the motherboard, modernizing the customer’s radar,” one of the co-founders explains.

Data from these radars are processed by artificial intelligence systems, also developed by the startup’s team.

How do they plan to generate profits?

According to the project’s co-founder, the first income of the company is selling DSP modules with algorithms that are integrated into a customer’s software and supercomputers (if any).

The team applied for participation in the accelerator MassChallenge, taking into account the results of its graduates: 89% are still active or have made an exit, more than $6 billion of raised investments, $3 billion in revenue.

“The goals we set for the period of the program are to check the value offer and the business model, develop sales and partnerships, attract experts to the team,” says the co-founder.

Currently, the startup conducts pilot tests of its technology with weather stations in Israel and Europe, and the ClimaCell weather platform, as well as negotiates with radar manufacturers.

What is Mawi Pipeline

Mawi Pipeline is a Y-shaped adapter made on a 3D printer that connects to the ventilator and makes it possible to connect several patients at once (the standard machine makes it possible to connect only one person). This is a kind of mechanical splitter that separates the air flows by splitting it into 2 tubes.

The developers uploaded the manufacturing blueprints online. To receive files, you must register on the website. 

The developers claim that the device can be printed on any domestic or industrial 3D printer. The size of the nozzle (print head) should be 0.4 mm. As a material, it is recommended to use a hypoallergenic medical plastic, pre-certified according to the standards. The cost of one connector, as informed by MAWI, will be about $10.

The idea of creating this product came up against the backdrop of an extended period of deliveries of mechanical ventilation: due to high demand, the waiting list extended to months. The concept of the contraption is not new. In 2006, a description of such a device appeared in the public domain. It was uploaded by a Canadian doctor. The demand for the contraption was not there since there was no particular need for such technology. 

The MAWI team decided to improve and further develop the device, as well as test it under real-life conditions. Now about 10 people are working on the project: technology team, production, certification in other countries, communication with media and requests coming from Ukraine as well as other countries.

Mawi Pipeline testing

Pipeline testing took place on various ventilators, the initiative was supported by several Kyiv hospitals. The first tests revealed many inaccuracies. Some elements had to be refined and some had to be replaced. It also became clear that the safest and most effective is the branching of the connector into 2 tubes, and not into 4 or more.

“In Ukraine, there are mostly not the most advanced ventilation devices that do not work at full capacity. Therefore, we adapted the device and improved it so that Pipeline could work in Ukraine as much as possible under various real-life conditions.”

After introducing changes to the connector, the developers conducted new tests and, as they themselves assure, the device showed itself well.

Safety

According to MAWI, the capacity of the ventilator is excessive in use. The standard of use when connecting is 400-500 mg per person, the device is capable of delivering 1500-2000 mg. For this reason, as they say in MAWI, the use of a connector for two people should not reduce the effectiveness of the procedure. It should also be noted that only people with similar lung sizes can be connected to the same device. That is, it makes it impossible to connect an adult and a child. 

A practitioner, on condition of anonymity, shared with AIN.UA an opinion about such a device. According to him, that is not for no reason that ventilators are designed to serve the only one person: it is important not just to connect the patient, but to set all parameters as precisely as possible. The chances that two completely identical patients will be in the same room are small. And in the event that the power of the device is averaged, and not set to required parameters, it can harm, not help. In addition, there is a risk of infection transmission from one patient to another. Therefore, it is necessary to carry out a lot of additional tests before allowing the use of such devices.

Demand

At this stage, the project undergoes certification in the European Union and the USA. There is a prospect to get a certificate in Ukraine, but it is not a goal for the team. The startup considers the United States as the main market. It has already sent there 100 Mawi Pipeline connectors. Italy, Britain, and a few Asian countries are also interested in the project.

The team also announced that it is ready to produce and deliver free connectors to hospitals that admit patients infected with COVID-19. For this purpose, institutions are asked to fill out an application form on the Mawi Pipeline website.

Ethnicity estimate mask

Ethnicity estimate mask for Instagram by Gradient is a fresh example of the company’s viral content. The essence of the new mask is that the users allegedly pass a virtual DNA test, which determines their ethnicity. The mask is available in the application, you can download it for iOS and Android. After the test, a photo with results can be saved to the gallery or published on social media.

Who’s your twin

Who’s your twin mask is the first huge viral success story of Gradient. Back in 2019, a startup created a feature that allowed users to find their celebrity lookalikes: for that, you just had to upload your photo and in a few seconds the application would show Who’s your twin. The mask immediately gained immense popularity, and the corresponding pictures appeared in all social media.

Gradient

One of the founders of Gradient is Ukrainian Vladislav Urazov. Before that, Urazov worked in the founding team of the Teleport application. The application allows you to ‘try on’ various impressions on your selfie. Teleport became viral, it had enormous outreach and spread widely around the world. And in 2017, in the wake of success, Snap acquired it for US$ 8 million. Bogdan Matveev, who was CTO at Teleport, became Vladislav’s new Gradient partner. They are developing the project together.

The company almost immediately was fine-tuned to create viral masks and mechanics like ethnicity estimate mask, which allowed it to quickly gain an audience. A week after the release in September 2019, it had 2 million downloads in the App Store and 1 million downloads in the Google Play Market.

According to the Gradient team, the company creates all the masks with the help of artificial intelligence. Also, as Urazov assures, the team does not collect any user data: the application, according to him, is completely safe.

In 2017, Firefly Aerospace was relaunched by the serial entrepreneur Max Polyakov. According to various estimates, the company has raised between $75 million and $100 million of investments. The idea of the enterprise is not to send big and expensive rockets into space but to use light and commercially viable launch vehicles to deliver small payloads into orbit.

Firefly Aerospace is headquartered in Austin, Texas, and its R&D center is located in Ukrainian Dnipro. There, the company conducts research and studies experimental products in the field of industrial technology.

AIN.UA editorial office has prepared a photo report from Firefly Aerospace’s Dnipro facility.

According to SpaceWorks, nearly 300 satellites weighing between 1 and 50 kg each, are delivered to space annually. Research, data collection, and certain communication tasks have long been handled even by smaller space vehicles.

However, the advancement of the sector is still hampered by the delivery methods – the light ones have to adjust to the rare launches of heavy-lift Falcon or Airlane class rockets; besides, for many of them, Low Earth Orbit is enough. The Alpha launch vehicle by Firefly Aerospace is intended to address the issue – while the launch of SpaceX’s Falcon 9 costs between $60 million and $100 million, for Firefly Aerospace’s Alpha $15 million is enough.

The Alpha rocket is designed to launch payloads of up to 1 metric ton to a height of 200 km maximum, and those of approximately 600 kg into Sun Synchronous Orbit, which is 500 km. The company is now also developing the Beta launch vehicle consisting of three Alpha cores and a modernized upper-stage engine. It will cost $35 million per launch, delivering payloads of up to 4 metric tons into Low Earth Orbit, those of up to 3 metric tons into Sun Synchronous Orbit, and those of 1 metric ton into Geostationary Orbit.

In Dnipro, Firefly Aerospace occupies 4000 m² premises that previously belonged to the plant “Sfera”. This is not a plant in the conventional sense. Firefly Aerospace is a product company that makes money off not selling rockets or technologies but delivering cargoes. That is why the facility serves not for manufacturing production samples, but for R&D, searching for new, and optimizing existing, technical methods of producing space rocket components.

Here, researchers develop rocket automation aggregates, parts of combustion chambers and turbo-pumps. For example, the first Alpha rocket has already been provided with electro-pneumatic valves for the engine’s pneumatic unit and air-operated valves for feeding the propellant components. The next steps will be the test firing at a special stand, already under construction, and the complete cycle of rocket propulsion systems in Ukraine.

“With the adoption of the law No.1071 allowing private companies to engage in space activities in Ukraine, it became possible to conduct test firings: that’s a pro. In practice, the bureaucracy in obtaining permission documentation for export hasn’t grow less yet, but I hope for the better.”

Oleksandr Dondyk, Director of Firefly Aerospace’s Dnipro facility

As of 2020, the Ukrainian team of Firefly Aerospace consists of 200 people. These are projecting engineers, design engineers, technicians, lathe and milling machine operators, millwrights and test engineers. Notably, 40% are design engineers. 19 of them are Candidates of Sciences, one is Doctor of Sciences. The workers are between 30 and 35 years old, on average. For the most part, they were invited from a related industry (e. g. Yuzhnoye Design Office and PA Yuzhmash). Besides, there are some Physics and Technology graduates from OH DNU, a university in Dnipro, which, historically, has prepared rocket and space equipment specialists.

The facility is divided into four zones: the blank production area, the area for the additional machining of blanks to bring them to the fitting dimensions, the quality control and testing area, and the work management area.

The 3D-printing area. Here, they print with various metal powders, chiefly with Inconel, a nickel-chromium-based superalloy.

In the 3D printer, a laser beam fuses the metal into blanks.

Depowdering unit for 3D-printed parts. Here, the pressure is applied to remove metallic dust from the workpiece.

Traditionally, part blanks were fabricated by casting, pressing, forging, rolling and other methods. But these have a number of restrictions for the manufacturing of complex parts, especially those with complex internal contours, narrow channels or thin walls. Properly harnessed, additive manufacturing allows to circumvent some of the restrictions, simplify the technology, as well as reduce the time and cost of producing parts. What was previously done (and is, in places, still done) for 3 months, is done in 3 days at the Firefly facility. Combined with new technology, top-level equipment for the additional machining of blanks, and supercomputers for modeling, this is of value, and everyone in the world is heading for it, each in his own way.

Oleksandr Dondyk, Director of Firefly Aerospace’s Dnipro facility

Blank machining area

Milling

Four-axis milling of the parts of a turbo-pump assembly (TPA), a pump installed onto every rocket engine, for the simultaneous feeding of the fuel and the oxidizer: kerosene and oxygen, in this case.

Milling of the valve body. Valves serve to control not only the propellant feed but also the feed of the compressed air, nitrogen, and helium carried by a rocket. Helium is usually used instead of air in high-altitude stages – it has higher energy content, better compressibility, more of it can be pumped into a cylinder, and it is also low temperature resistant.

The machine is used to bring down to size the exhaust manifold of a turbo-pump assembly, through which the hot gases, i. e. the combustion products which drive the turbine, are emitted. One shaft holds the turbine to which the gas is fed, next is the oxidizer pump, and next, the fuel pump. And all these are connected with a single shaft and are fully synchronized with each other – the two pumps and one hot chamber driving the two pumps.

Milling of a plate-type workpiece.

Turning and milling operations with welding mountings on a five-axis machining center. In the photo, there is a support element on the machine, made at the same machine.

A five-axis machining center is a machine allowing to handle large parts, with very high speeds of metal cutting and the precision within 5 microns. “One of the best inventions in metal machining,” its operator tells us.

Turning process

Milling of a plate-type workpiece.

Turning of a valve body part. This is where the 3D-printed blank is forced into the “coupling size” – down to the microns, part to part.

The turret of a machining center with CNC – such turret can bear multiple tools at once, which automatically work and switch according to the algorithm.

Inner boring of a hole in the valve part on the machining center with CNC.

Other processing methods

Robotic welding complex. Argon arc welding [Editor’s note: also known as tungsten inert gas (TIG) welding] of valve parts.

Muffle furnace for the heat treatment of metal – tempering, softening and aging of Inconel, titanium and other stainless alloys, at the temperature of about 1,300 ℃.

The process of retrieving the container with parts from the furnace. For example, titanium requires heat treatment.

The process of the heat treatment of metal. It involves the cyclic heating of parts, and then, their deep chilling (the temperature is below −70 ℃). Depending on the type of work stock, there can be between 1 and 4 heating-cooling cycles.

Blank cutting at a band saw.

Quality control and testing

Measuring arm at the assembly section. The process of measuring the geometry of the TPA parts.

The measuring arm. The process of measuring the geometry of the TPA parts.

The process of controlling the geometrical parameters with a coordinate-measuring machine.

The automatic unit testing area.

Electronics

Electrotechnical laboratory. Here is where the electronic stuffing of the rocket engine test control center and the telemetry data analysis system were created.

The process of winding electrical coils for solenoid-operated valves. A coil-winding machine. It allows applying the winding with turns touching, tensely, without damaging the insulation coating of the wire. Coils produced at the facility are resistant to water, cold (−70 ℃), and heat (+120 ℃).

Job openings

The Dnipro facility is constantly looking for trained personnel. Now, there are eight job openings.

How Agrolabs Started

The founders of the company Michael Lazarenko and Maksym Horinov are old school friends. Maksym has already had experience in the biotech business: the company Biozashchita, which grew predatory insects like ticks, wasps, or bumblebees to get rid of parasites. And Michael had experience in creating hardware startups.

“We didn’t plan to launch a ‘long’ startup, we rather thought about the possibility of making money. We decided to make devices for agriculture, as I had experience in hardware, and Maksym had connections with distributors,” Michael says.

Over time, it turned out that the devices for farmers the partners were thinking over, would have to be developed much longer than planned. Therefore, they decided to deal with them in full time. In late 2017, they registered the company, and in early 2018 they began the work.

Work on a soil analyzer

At first, the team wanted to make a robot that would spray the plants autonomously. It took about 3.5 months to develop it, but the team realized that the process could take a long time. While it was working on the robot, the team realized that greenhouses have another problem: there is no equipment to analyze plant watering. “We talked to farmers, and they said that they are interested in it,” Michael says.

They put off the robot and started working on another device: a substrate composition analyzer, on which plants are grown in greenhouses.

“There was a plan to make the device in 3 months and bring it to the market. As a result, we did it for 10 months,” the co-founder of the project says.

This device was produced entirely at Ukrainian plants. There were some difficulties: in the beginning, the company got 5 or 6 batches of constructions which simply could not be assembled. “It was so that parts were incorrectly welded at the plant, we indicated that it was welded incorrectly, they promised to fix that, but again did everything wrong,” Michael tells.

But in the end, the product was developed, and the company started selling it in October 2018.

It’s a device called Agrolabs W-Sens. In greenhouses, plants are grown not in soil but plastic containers containing substrate, this device analyses the composition of the substrate. It shows the farmer the results of watering the plant and the state of the root system, reflected in the parameters of humidity, drainage, EC, PH, etc.

In such a way, for example, you can determine when the plant is receiving too much water, not getting enough fertilizer, etc. According to the co-founders, such an analysis could result in savings of $5.500 per hectare of greenhouse per year. The company calculated this figure from a real case, where a greenhouse was watering plants with more than the necessary amount of nutrient fluid. And with the help of an analyzer, it found excessive watering.

How was the “door for bumblebees” made

According to the founders, farmers spend about $700 million a year to buy bumblebees: the yield from pollinated and non-pollinated plants can differ by half. This is a rather big market, but it is not quite obvious. And it has its own problems.

Bumblebee producers grow them in laboratories, then pack them into boxes, and send them around the world. The farmer receives bumblebees and sets a hive with them in the greenhouse. Bumblebees live for 8 weeks, after that, it is necessary to buy new ones. It is necessary to install 15-25 hives per hectare.

“What is the problem? Bumblebees are very complex creatures, they must be properly protected. The hives must be covered so that, for example, insects do not fly to the lamps. But if the farm has 20 hectares, it is difficult to close such a number of hives at the same time. Our device closes and opens the exit from the hive automatically,” Michael tells.

Similar devices are already on the market, so Agrolabs B-Control added the ability to count bumblebees that fly out or fly into the hive. According to the company, this is important, because, for example, after a flight from India to Ukraine, bumblebees may not be very active, and this affects the pollination of plants, and ultimately the crop.

As a matter of fact, Agrolabs B-Control is an automatic hive door having an ability to count its inhabitants. The device runs on a single charge for 8 weeks (just as long as bumblebees live).

How it participated in the accelerator in Hong Kong

This device can be bought now. So far, circuit boards for bumblebee analyzers are being printed at a plant in Kyiv, but the company wants to increase production, so it is negotiating with three plants from China.

In order to get to know the Chinese market better, in 2019 the company filed for participation in the Hong Kong accelerator Brinc and opened an office in Hong Kong.

According to Michael, the accelerator helped the company a lot to find an investor. Now the company has closed a deal with the Australian fund Artesian Venture Partners for $100,000 and expects to attract a seed round from the same investor.

“At Brinc startups are actively being introduced to plants, production processes, and there are lectures on working in the Chinese market. They opened for us a new world of Hong Kong,” Michael says.

There is another reason to participate in the accelerator: they help to find partners in the local market. “Relations with Chinese plants need to be built. I do not believe that anything can be done from Ukraine at all. If you didn’t come to the plant, didn’t look at the line, didn’t have lunch with them, it would be hard to figure out everything,” he says.

The startup was running the program in the accelerator just during the active stage of protests in Hong Kong, but, according to the founders, it had hardly ever an influence: only in the first week of December it was difficult to get to the office due to blocked roads.

Agrolabs business performance and plans for the future

The first year the company developed bootstrap. Now it is self-supporting, but so far unprofitable: all income is being invested in business development.

The company earned about $70,000 from the first device that analyzes the substrate first year, and another $25,000 is expected from pre-orders for it. In total, the company received about $345,000 in sales and pre-orders for the first year of operation.

Agrolabs has already had large customers, for example, the British Driscoll’s, the world’s largest producer of berries, with an annual turnover of $2.8 billion. The team met them at the Greentech exhibition in Amsterdam. In test mode, it works with the bumblebee producer Biobest.

In the coming year, the team is going to raise the seed round. The money will be used to employ new employees (10 people currently work in the company), new agrotechnical products working on machine learning and data science and opening a sales office in the EU. R&D is planned to be developed in Kyiv and Dnipro.

The company has recently received a government grant (about $65,000) in Hong Kong through the Cyberport Incubation Program. This amount is allocated free of charge for 2 years, participants are also provided with a free office and assistance in finding investments.

The company also plans to spend these funds on a new product which has already been under development. This is a wireless IoT system that allows you to connect sensors available on the market and autonomously collect data from them in real-time. With the help of it, it is possible to connect up to 250 sensors per hectare.

In total, Noom has raised $114.7 million in investments. The investors of the project include Sequoia Capital, Samsung Ventures, Aglaé Ventures, etc.

Forbes told the story of the startup, and AIN.UA chose highlights.

Inception

Ukrainian-born Artem Petakov graduated from Princeton University, where he studied psychology and computer science. Then he worked at Microsoft, and later – at Google.

In 2008, he and Saeju Jeong came up with an idea to create an application that would “disrupt the weight loss industry.” It took 8 years to develop it: they founded the company in 2008, and Noom was launched only in 2016. Over the past few years, they have been trying to keep up with the demand for the product and release new versions based on user data.

In 4 years, Noom has more than 50 million downloads, and its revenue for the last year increased four times – to $237 million compared to $61 million in 2018. In 2017, the app earned only $12 million.

Not another weight loss application

The market for digital weight-loss tools is saturated—last year the U.S. market was worth $1.4 billion and is expected to grow.

In the App Store, there are over 200 weight loss applications, including Under Armour’s MyFitnessPal, popular Fitbit and Calm, which offer both physical and mental activities.

These apps are cheaper on a monthly subscription than Noom, which ranks 23rd among health apps in the Apple Store, and its rating in Google Play is 3.9.

According to Petakov, Noom is more like meditation apps such as Headspace or Calm than Weight Watchers for weight control. Noom does not count calories and does not tell the user what to eat and what not to eat. Instead, the app tries to learn the user’s habits, find out what is at the root of their addictions, and help to cope with them.

Subscription fee

Users can buy a subscription to Noom for a period from one month to one year. The trial version is for 14 days and costs from $1 to $18. The average monthly price of a subscription is higher or lower, based on the duration of the program a user selects.

But the company says a four-month package at $129 is most popular, thus a month of use of the service will cost $32.25.

The second-most-popular package is a six-month program at $149 (or $24.83 a month). Shorter plans of one month and two months are $59 and $99, respectively.

How does Noom work?

Noom uses artificial intelligence, evidence-based guidelines of physiology, psychology, and cognitive-behavioral therapy.

“Because we’re changing the brain, our outcomes are durable, 60% of users one year after being on Noom are still maintaining their weight loss,” Petakov says. 

During the four-month program, the average weight loss for people who complete it is 7.5% of their body weight.

Noom users fill in questionnaires and establish goals such as loss of weight or centimeters in the waist. The questions are quite specific and range from a family history of diseases like diabetes or heart disease to what time of day a user tends to eat.

Noom’s coaches help users to achieve their goals, and they can communicate using a messaging feature of the app. Users can also track weight, blood pressure and blood sugar levels, and compile nutrition and exercise history. There is also a food database that includes 3.7 million items.

The team

In late 2019, Noom hired 1,000 coaches to deal with the “holiday rush” when people start taking active care of their health and body. As a result, the number of employees has grown to 1,800.

Noom says that more than 90% of employees are full time and have benefits. The head office is in New York.

Around 100 people of all employees aren’t coaches.

One such box costs UAH 97,000, however, according to Serbin, it is almost 3 times cheaper than the comparable European model. AIN.UA editor explains the project details.

About Silentbox and its purpose

“Many of us work in open space offices and are always confronted with noisy office space, problems with overloaded meeting rooms, and the lack of the ability to make a call without booking a meeting room or hiding on the staircase or kitchen,” says Svyatoslav.

It is this problem that silent boxes solve. However, in the IT-companies in which Svyatoslav used to work, there was nothing like that.

Startup background

Idea and hypotheses testing

Once at a European exhibition Svyatoslav saw office cubicles of a Finnish manufacturer that solved the noise problem in offices. But they cost $ 10,000 apiece.

“I began to collect information and study acoustics, sound insulation, and sound absorption. I shared the idea with one experienced design engineer who convinced me that in Ukraine there are enough necessary materials and machines to assemble a high-quality prototype of the box,” says Serbin.

Svyatoslav decided to give it a try. His brother has his own small workshop in Kyiv (he is engaged in the production of display letters from polystyrene foam), where they decided to assemble the first prototype. The investment was relatively small (as a result, they invested about $ 10,000 of own funds).

Serbin did everything in due order: a kanban board, a Gantt chart, worked out the name, drew a logo. Before launching anything into production, he made a landing on which he used a photo of the box of a manufacturer from the U.S. and launched an advertisement on Facebook to check the demand.

“The cost of one lead was about UAH 50-80. Having received 10 leads and after calling potential customers, I found out their needs and expectations from such a product. We can say that I had a ‘Jobs to be done’ session.

In addition, I made a deal with one client to put the box for testing for free – the client paid only for transportation and assembly,” said Svyatoslav.

First fail

When Serbin came to the workshop with all the plans and charts, it turned out that the prototype in Autocad and the actual production were two big differences.

“Firstly, it is not so easy to find acoustic materials with the right characteristics. Secondly, there was a question of quality of assembly – gaps, cracks…

The sound insulation of the first cabin was weak, but the cost was minimal.”

The first prototype of the box was assembled in the free time from the main work – in the evenings. It took several months. Then we took it to the client (large IT company) and mounted it. The client already had several tops of the line Finnish boxes, and although they cost 10 times more than Ukrainian ones, the difference in quality played a role – soon the client returned the box to Serbin.

Svyatoslav was down but decided not to give up and remake the product. This time without trying to save on anything.

Second try

It took another three months for the brothers to work on the mistakes.

“We decided to use the best in sound insulation that we found on the market. For example, instead of thick glass, we have a complex triplex of different thicknesses. We also refused to use mineral wool in favor of a more expensive analog – cotton wool, which is safe for health and provides good sound insulation,” says Svyatoslav.

Inside, the box is trimmed with a thick felt layer that absorbs the echo, improves audibility in the box. We added reinforced ventilation, which, along with the light, automatically turns on the motion sensor.”

According to Serbin, 95% of the sound stays in the box, while the Silentbox price is 2-3 times that of comparable European models with the same quality of materials.

Plans of Silentbox

Currently, the startup is at the stage of launching mass production. So far the brothers do not make batches of boxes to keep in the warehouse, instead, they assemble them on order with a delivery time of 15 days. An order can already be placed on the site.

The display unit is installed in the HUB 4.0 coworking in Podil district, where everyone can try it out.

“We actively engage partners – these are mainly interior design studios and architects who use our solutions in their projects. Because b2b sales are long and often you need to make space for boxes at the office design stage,” says Svyatoslav.

He is also looking for investors who would help a startup move beyond Ukraine. First of all, they would like to expand to neighboring markets. According to Svyatoslav, this is a real opportunity, given that Ukrainian boxes are significantly cheaper than their European counterparts while providing the same level of quality.

In November all rooms were commissioned and officially opened. Now it is Ukraine’s largest coworking in terms of area and potential capacity.

It was not made by novices. Spaces is a Dutch brand, one of the divisions of IWG Corporation, the world’s largest office real estate operator. In Ukraine, the company previously worked only under the Regus brand with locations across 8 business centers in Kyiv.

Spaces’ spaces are bigger and more affordable. The company puts emphasis not only on attracting large residents but startups as well. Journalist of AIN.UA explains how the first Ukrainian Spaces is organized from within and what you need to know about it.

Organization of space and pricing policy

Kyiv’s Spaces features floor-by-floor zoning.

• The first floor is reserved for general use. There is an area for residents without a fixed workplace, the so-called hot desks. In addition, everyone who pays for offices can relax or work here. There is also a reception, cafes, meeting rooms and Skype-rooms, and a closed coworking.
• The second floor houses a capacious event hall that can accommodate 100 people, meeting rooms (for 10 to 40 people), and only a handful of offices.
• The third floor and above are completely occupied by team offices.
• The eighth and ninth floors are entirely available for rent for one customer.The eighth floor already has a resident – a large IT company, whose names have not yet been disclosed. The ninth floor at the time of writing of this article was vacant.

In total, by early December, the occupancy rate at Kyiv’s Spaces was 40%. The company plans to bring the figure to 100% within one year. According to estimates of the company’s representatives, full occupancy of each of the office floors will be about 100-120 workplaces.

• The price of the offices starts at $700 + VAT. Further rates vary greatly. The price already includes furniture, utility bills, Internet, telephony, daily cleaning.
• There are many offices, as well as planning options: most are designed for teams with 3 to 40 people. The fee is based on the area, not the number of employees.
• If a client is ready to sign a contract for a long period, discounts are possible. If a long-term contract is terminated prematurely, a penalty must be paid.

But permanent residents with their offices are not the only visitors. Below are other ways to work in Spaces:

• Flexible visits. You can work in Spaces for a few days without long-term commitments. You will have to pay $19 + VAT for a day, and $86 + VAT for a working week.
• Business club. It is a member’s card that gives access to all IWG spaces all over the globe: over 3,500 locations across 120 countries. However, you can use it to work only in hot desk mode from 9 a.m. to 8 p.m., in other words, you won’t have a fixed workplace. You can buy this card in the Ukrainian Spaces starting $89 + VAT. Residents of offices and coworking get it for free as a bonus.
• Fixed workplace. Spaces has two closed coworking areas. It is an intermediate option between a hot desk and a standard office. There a client is given a separate workplace and a locker, 24/7 access, the ability to register the legal address of the company in Spaces. The cost of this option is $369 + VAT per month.

You need to pay separately to use a meeting room (there are options that can accommodate 6 to 40 people). Price: starting at $27 + VAT per hour.

Anyone can book a meeting room, but Spaces residents can get a small discount. To do this, make a reservation through a proprietary mobile application.

Although, as one of the residents shared in a comment to AIN.UA, the process is not fully automated. If you book later than 6 PM and on weekends, you need to receive confirmation at the reception. If you are busy the entire day attending meetings, it’s not always convenient.

The look of Spaces coworking

Spaces has universal visual standards around the world: light colors, simple furniture, plenty of space and details.

The design of the Kyiv location was approved by the parent company from the Netherlands, furniture was also brought from abroad. Inside there is a lot of free space, greenery, and light wood. And also books in English and Russian, which were selected by the Ukrainian team.

Due to the peculiarities of the architecture of the building, the Spaces on the first and second floors are particularly spacious: the ceiling height exceeds 3 meters, and the ventilation is not covered by decorative panels.

Offices above do not boast that much space – the ceilings are much lower. There are other features that the building dictates. Offices overlooking Independence Maidan and the Central Post Office building are more expensive. Those on the other side face the courtyard and the construction site.

The offices are separated by frosted glass partitions and wide corridors. Each floor has its own small kitchen, print area, and toilets.

In the offices they rent, residents can make minor changes, install new equipment or, for example, attach their logos to walls. To help teams in Spaces there is a dedicated manager, he helps with maintenance and organizational issues.

According to Yulia Litvinenko, head of Spaces and Regus in Ukraine, brands have different positioning. They differ visually and exude different vibe:

Regus is a more enterprise business and shapes a more business style. Spaces also attracts large corporations, but it is especially effective for startup companies that feel freedom to act because they have the opportunity to choose the format of work: a plethora of Skype rooms, sofas, armchairs of various shapes and windows that offer different views, areas for negotiations and meetings.

She also says that Spaces puts a big emphasis on community and communication between residents. In the future, weekly Friday events will be launched for that purpose: traditional happy hours with wine and networking or speeches by inspiring speakers.

Spaces also hopes that their customers will exchange contacts with each other and create new projects together.

Details and prospects of Spaces project

So far, Spaces is working on filling the space. But there remains work on the amenities. Thus, in 2020, the team plans to open the roof for free visiting, as well as make a terrace on the 5^th floor.

In addition, Kyiv Spaces collaborates with U-Cycle, the Kyiv Cyclists Association. Coworking is certified by the Bike Friendly Company program and is marked on the pam of bike-friendly locations. There is a bicycle parking, and in the summer they will open a shower, put a washing machine and a dryer.

This will help residents who travel by bike. The parking for cars is already working: there are 13 spaces, a permanent rental will cost $350 + VAT per month.

Yulia Litvinenko says that the company plans to launch other Spaces locations in Kyiv and other cities. They are on the lookout for technically equipped buildings, in which the residents will feel comfortable.

The model house by Haus.me is installed at UNIT.City. It is the smallest house of the company’s declared series of houses – 40 sq.m (there are also models 80 and 160 sq.m. big). The house has already been sold – the park plans to place an innovative sales department in it for its residential complex that is currently under construction. In the meantime, Maksym shows us the interior and exterior.

“Haus.me is a turnkey product. A person buys it the same as a yacht – with furniture, appliances, bedding, and cups. Just put it on the grass or any flat surface and its ready for you to move in,” he says.

Lego-like House

According to Maksym, Haus.me is a constructor. It consists entirely of pre-fabricated modules. To assemble it, you do not need to hire specially trained people – any team of workers armed with screwdrivers can handle it. You just need to follow the instructions, like you do to assemble IKEA furniture. Thanks to this, the house is not only easy to assemble (assembling it from scratch takes from 7 to 14 days) but also cheaper than the construction of permanent buildings.

“The biggest problem that the construction world is currently facing is significantly increased payroll costs. In America, it accounts for an average of about 65% of the cost of the building, in Ukraine, it is 30-35%. This is a lot. We reached the labor cost in the first pilot project at the level of 4.3%,” says Herbut.

The house is assembled at the production site of Haus.me or its franchisee partners (there are 2 of them to date), after which it is delivered to the buyer in a ready-made condition.

The manufacturer gives up to 15 years guarantee for separate units of the house. Even if one of them fails, it can be replaced, like a cube in the Lego constructor. And even the courier who will deliver the unit will be able to replace it – Maksym claims: 

“The house is built so that we won’t go anywhere to perform maintenance works. A German branded drive with a door closer for 750 euros puts us away by 10 years from repairing the shelf above the sofa. The door unit’s cost is as much as $6,000, but we give a 15-year manufacturer’s warranty on it.” 

The Exterior

The case is entirely made of fiberglass frameless technology. Yachts are also made from this material, and the technology is used in the construction of civil aircraft. The material boasts high heat-insulating and earthquake-resistant properties. 

All connections are seamless; only double-glazed windows are glued in – like a windshield in a car body. Such windows can withstand a hurricane or an earthquake, and the windows won’t crack, Maksym asserts. 

“We did not immediately come to this. The first three houses we built were equipped with classic windows. Once, the lifting frame broke and one house fell from the crane. As a result of the fall, all the glasses broke. We thought to ourselves, is it possible to make sure that even when the house falls, the windows remain intact? So we invented the technology and patented it,” he says. 

According to Maksym, windows in PassivDom houses have record-high thermal insulation performance. The total window thickness is about 250 mm, it has 6 energy-saving tempered glasses. Window design is protected by an international patent.

“This is the warmest mass-produced window in the world to date. In 2016, we applied to the Guinness Book of Records, they approved, said that we needed to document it – it cost us $1,700, which we did not have at that time. So we stopped pursuing the matter,” he recalls.

The door is also made of glass, it opens by fingerprint, face recognition or through the application. 

The Interior

Everything we see inside the house is included in the basic package. The room is made in the studio style, only the bathroom is located in a separate room. However, the kitchen can also be “closed”, like a cupboard, if at the moment it is not needed.

The kitchen is equipped with a full-size refrigerator, coffee machine, microwave, multicooker, and dishwasher space. All class A devices (5+), to save energy. There are enough cupboards to store dishes and small household appliances. The tabletop is made of artificial stone (quartzite).

Lighting and climate control are voice-controlled.

“When you sit down to watch a movie, just say ‘turn on the video’ – the projector drops down, the windows close (in the basic configuration the window is covered with a DLC-film, the window becomes dull). You can also turn on the music,” says Herbut.

The ceiling and wall panels are made of fabrics, the floor is matted, made of natural walnut. This creates soft acoustics and, despite the fact that the house has a lot of glossy surfaces, there is no echo in the room.

The bathroom is fully functional and surprisingly capacious. With shower and full-size washbasin. All taps, mixers, light switches are equipped with proximity sensors.

Water is supplied from the water supply, but there is an option for an autonomous supply. To do this, an additional module with a 2-ton water tank is connected to the house. It is filled by a system that generates water from the air. At the same time, another shower is installed in such a bathroom – it circulates water, saving up to 80% of the resource (such technologies are used by NASA). 

Autonomous sewage system is made in the form of an additional unit with a septic tank integrated into it. It can work both independently and can be equally hooked up to an external sewer.

It all costs an additional $40,000. But such a house can be put even in the mountains, even in the middle of the desert, or just on the beach. 

An air quality control system, a heat pump, and an air conditioning system are above the kitchen. It allows users to adjust the temperature, humidity, indoor air quality (carbon dioxide level, odors, formaldehyde, dust, ionization, ultraviolet, etc.). 

“We can guarantee that the house is 99.9% protected from any bacteria and viruses, even if a person with the flu comes inside. The same system applies to water: if the water that enters the house is very dirty, and outside there is a fire, carbon monoxide and so on – you are safe inside. By the way, the fiberglass from which the facade is made does not burn,” says Maksym.

All systems can be controlled using remotes located throughout the house, voice or through a mobile application.

Smart house

The closed technical compartment contains a water purification and disinfection system, a 100-liter boiler, a reverse osmosis system that supplies drinking water to the kitchen, and other important utility systems. 

Power control system is also installed here. The house is powered by lithium iron phosphate batteries, for which Haus.me gives a 10-year guarantee. 

“Globally, there are only three manufacturers who make batteries for 5,000-7,000 cycles. For comparison: lithium-ion batteries in electric vehicles have up to 1,000 cycles,” Maksym explained.

Nearby lies the “brain” of the house. Voice control and a door that opens with “face” – this is far from all that it can do. According to Maksym, it is a complex system that analyzes the state of the environment and patterns of human behavior, captured from many sensors in real time (there are about a hundred of them in total).

Thanks to this, the house can, among other things:

• Determine exactly how many people are in it. Based on this information, it regulates the energy consumption for heating / cooling the room. 
• Close the tap, door or refrigerator if the owner forgets to do it. All this is to save energy.
• Automatically adjust lighting based on the needs and preferences of a person.

All house systems are connected to the server and transmit data to the cloud. According to Maksym, this is anonymous data – there are no cameras in the house:

“We are heat spots, and the house does not know which of us is who. In general, talking about privacy 12 years after the creation of the iPhone is stupid. Only a word is left of privacy. You have to put up with it.”

The house can be switched to manual control mode to adjust lighting, temperature and other little things yourself. “But who wants Tesla without an autopilot?” says Maksym.

The source of all energy

Haus.me claims that their houses are 100% self-sufficient. And there are no analogs in the world.

“Many can build a beautiful model house with thorough attention to detail. Then stuff it with sensors, which is not rocket science. But if you want to build an autonomous house, you have no right to take energy from somebody else. The house should not be connected to electricity or gas. The only way you can get energy is from the sun,” Herbut explains.

The problem is that besides the roof, there is nowhere to install solar panels. That is, the roof should generate enough energy to not only cool the house in the summer when there is plenty of solar energy but also to heat it in the winter when things are much worse with the generation of energy. 

The roof of a 40-square house cannot generate more than 7 kW per hour on a sunny day. On a cloudy winter day, it will be possible to generate about 1.5 kW per hour. At the same time, heating and other ordinary functions of any other ordinary house require 10-15 kW per hour. 

“You can put a battery that costs a million dollars, and charge it all summer, and drain it all winter. But anyone can build a house worth a million, but we decided to build it for $100,000. To do this, we had to make very warm windows, walls and energy-efficient air conditioning, heating systems, etc., so that mere 1.5 kilowatts would be enough to power everything. Not a single company in the world has done this before us,” says the founder of Haus.me. 

Ins and outs of self-sufficiency

In terms of thermal conductivity, a 23 cm thick fiberglass frame equals to a brick wall 9 meters thick. Five-chamber windows also minimize heat loss. We abandoned the use of wood and steel so that there would be no cold bridges in the house. 

The water-saving system allows you not to warm it in vain when you wash your hands. The automatic closing of the doors does not let the excess cold into the room. A ventilation system with air quality monitoring allows you to take as little fresh air from the street as possible so as not to waste energy on heating it, but instead work with what is already available.

The house saves literally on everything, using the heat not only from the sun but also from the human body. When talking, a person releases approximately 150 W/h of heat. Three will generate 450 W/h, and if there are 6 people in the house at the same time, then at -20 °C outside there is no need to heat the room. 

“Imagine that in winter 5 people enter the house, but the house does not know about it and heats the room. It’s an evening on the street, the sun is no longer there, the electricity accumulated during the day is wasted to heat the air, and the five of us heated it so much that you have to turn on the cooling, wasting precious energy. In order to prevent such nonsense, we developed a software that understands the situation in real time and spends energy only on what is really essential,” says Herbut. 

– All these inconspicuous nuances allowed us to reduce the heat loss of this house to 860 Watts at -20 °C outside. It is 20 times less than in an ordinary apartment. We managed to fit into 1.5 kW and still save a little bit in reserve, which you can use to sustain the house for another week, even if the house is covered with snow.”

You can use the application to check exactly how much energy is stored in the batteries. There are statistics of everything that happens in the house: how energy is spent and on what, how ventilation works, how much energy is generated per day, etc. All information is reflected in graphs.

Zombie-proof house from Ukraine

In Ukraine, the smallest Haus.me house costs from $80,000 to $190,000 depending on the configuration. Of this price, $50,000 is the frame, the rest is the filling.

“All the electronics here is three times more expensive than the house itself. All components are from Germany, Sweden, America. Only parquet and canvas on the ceiling are made in Ukraine,” explains Herbut.

In the US, a price for such a house starts at $199,999 and up to a million. Given the mobility and the lack of the need to obtain building permits – it is quite a good offer for Americans.

According to Maksym, the company has more than 14,000 requests from potential buyers from around the world. Most of them are in California and New York, where the housing market is oversaturated. Haus.me is mainly interested in people in the age categories of 25-35 and 65-75 years. For older people, this is a hassle-free housing, and for young people – a competitor to a trailer or a lifelong mortgage.

“All applications came by themselves – from publications. We haven’t spent a dime on advertising since the company’s founding and didn’t nudge the audience in any way,” says Herbut. 

It all happened by accident. In 2016, Maksym and the team made the first prototype and brought it to the KyivBuild 23 exhibition. In order to attract attention to the project, Herbut posted ironic descriptions of various configurations of the house on the PassivDom website. One of them was the “Zombie Apocalypse House”, which was offered with additional protection against hacking, a supply of toilet paper, a dummy of a Kalashnikov assault rifle and a gift copy of the Bible.

This post caught the eye of a journalist from TechCrunch, who then wrote an article about “Zombie proof house from Ukraine.”

“Back then I did not know what a startup is, nor what kind of an outlet TechCrunch was. A friend called me and asked, “What did you do to get the U.S. Singularity University to repost the TechCrunch article about you?” And the next day, 7 million visitors came to our website and immediately crashed it,” says Maksym. 

Following TechCrunch, Business Insider, Financial Times, BBC and others wrote about the Ukrainian zombie-proof house. The article has a long tail that still stretches from Haus.me.

Business model and sales

The company has 28 manufacturing partners who make house segments for Haus.me, as well as two partners who assemble and sell ready-made houses.

“We provide them with leads from our website and charge a small margin for each house sold. But the main model is connecting to our smart house system. That is, in the future, our main income will be from software, not from the house,” says Herbut. 

The service package includes (these are the basic services, for each individual country they may be different, says Maksym):

1. Control of remote access to the house – the ability to give access inside, manage the house and its systems in the mode of leasing the house.
2. Security – video surveillance around the house, face recognition, alarm notifications, notification of security and fire services.
3. Cloud-based storage of data, settings, media content – an iCloud analog with the ability to transfer settings, applications and content to new houses or to other Haus.me houses that you rent, for example, in another location.
4. Round-the-clock monitoring of all house systems by the control center (for b2b and the elderly).
5. Extended warranty – full coverage of all house needs, service, maintenance, filter replacement, software update.

Currently, all services are available for $66 per month, including television, video surveillance and security. In the future, a minimum of services will be provided free of charge, and a Maksymum package will cost up to $300.

The sales plan for 2020 is 30 houses. And before the end of this year, Haus.me plans to manufacture and sell only 6 houses. The company needs to get certification in the United States to deliver the houses to their clients. According to Herbut, this process will take a few months for each state.

In Ukraine, certification is not needed. “It is not a major building, there are no connections to the power grids, you do not need a project for gas or electricity. Have a land plot? Go ahead and mount it!” says Maksym.

The company has already created more than 400 jobs and continues to expand its staff to help people around the globe find jobs more effectively.

AIN.UA tells the most detailed story of Jooble – from the moment of its inception in the dormitory of the Kyiv Polytechnic Institute to the present day.

Two programmer friends

Roman and Evgeniy met in Kherson, at the physical and technical lyceum, where they studied together from grades 9 to 11. For three years they shared one desk, participated in mathematics, computer science and physics olympiads, and then entered the same faculty of the Kyiv Polytechnic Institute – computer science and computer engineering. And, of course, they shared a room in the dormitory.

“We both already knew how to code well enough, and the first year at the institute was such a disappointment for us! Because we realized that there was nothing new to learn there,” recalls Prokofiev. 

Therefore, we both got a job during the first year at the institute: Roman has got a job at a very young product company Terrasoft, where he became the fifth employee, and Zhenya – at the nascent Ukrainian outsourcing, Innovative marketing company. 

“At that time, there were very few product companies in Ukraine. And I got the opportunity to see first-hand how the code that programmers write turns into money,” Roman recalls.

He worked for a year at Terrasoft, after which he decided to create a product himself.

A Million Dollar Student

Prokofiev saw an opportunity in the pharmaceutical industry: large pharmaceutical companies, employing hundreds of medical sales representatives throughout Ukraine, still kept their records in Excel. Prokofiev decided to offer a software solution – the so-called geographical management system.

At that time, no one made such solutions in Ukraine, and the price of Western products started from half a million dollars. Roman offered an alternative at 5-10 times cheaper – from $ 20,000 to $ 100,000, depending on the configuration. He registered his own development company and named it TeamSoft.

The first six months, Roman worked alone. He rented a two-room apartment on Garmatnaya and opened an office in it.

“It was a building of old dilapidated housing stock. There I wrote the code from 8 AM to 12 AM. Often I stayed at night and slept on the couch – the main thing was to visit the dormitory 3-4 times, take a shower, because the shower did not work in that apartment,” Roman recalls.

The first customer of TeamSoft was Novo Nordisk, the world’s largest insulin manufacturer, the second was the Darnitsa pharmaceutical plant, and that was the beginning of an upward trend.

“I put on a jacket and went to negotiate with the CEOs of large companies. I was heavier back then than I am now, I looked solid in a suit and managed to make an impression of a serious contractor. At the same time, I was a second-year student,” Prokofiev recalls. 

This did not prevent Roman from building a strong local leader: 60% of all medical representatives in Ukraine used his software product. The company went beyond Ukraine. It kicked off its operations in Russia, Kazakhstan as well as other CIS countries.

However, Prokofiev did not leave the institute.

“My parents did not have a higher education, so they had a pipe dream for their children to have that education. Therefore, I stayed full-time, I passed every exam, received a diploma, handed it to my parents and said: “Your dream has come true.” That was the last time I held the diploma in my hands,” Roman said.

Closer to business

In the meantime, Zhenya became a very skilled low-level programmer, however, he realized that he was far from where the money was. In order to communicate more with businesses and understand their needs, he quit Innovative Marketing and went on to introduce electronic document management. Later, he began selling a CRM-system by Microsoft.

“It was very difficult for him to quit programming and engage in sales, but he did it for the sake of development because he wanted to work for himself,” recalls Roman. 

One day, two friends, as usual, had lunch at Zdorovenki Buly on Khreshchatyk, and Sobakarev shared with Roman a business idea – to make a news aggregator. He took a moment to think about it. Roman agreed, but with a twist.

“I was not and I am not a consumer of news now. I don’t understand why people read the news at all,” says Prokofiev. – At that moment I was just looking for an employee in my team and realized that I was spending some unrealistic amount of time doing that. The services that were available at that time did not help: the filters were terrible, a lot of duplicates, the search was disgusting, there was no relevance. Therefore, I suggested to Zhenya to create a job search engine instead of a news search engine. He thought about it and agreed.”

We discussed the concept right on the spot. And after 6 months, in October 2006, we introduced Jooble to the world.

Like Google, but for jobs

The first version of Jooble was written in a dormitory. The students didn’t do any market analysis – they simply came up with the idea and started implementing it. Only after a year and a half did they learn that such a product had already existed in the USA for a long time – and because of it, Jooble has not yet entered the American market.

The name was changed right on the last day before the big launch. Initially, they wanted to name the search engine Joogle – like Google, only taking the first letter from the word Job. Then one of their female friends proposed to delve deeper into the topic and call the service Jooble.

“We immediately rushed to check the domain, and it turned out that Jooble was available. This is how we got the name. The concept was ours, but the final touches were done by our friends,” Roman explained. 

They didn’t bother with the business model too – pay per clicks from direct employers. At that time popular job sites had a fixed rate for vacancy placements. “We thought this was unfair to the employer. Because it is not clear what you will receive for these conditional 200 hryvnias: your vacancy could be viewed by 10 candidates or 10,000. Therefore, we decided that our placement will be free – only the click on the vacancy is paid,” recalls Prokofiev.

According to him, subsequently, IT companies grew very fond of this model. “They didn’t have the concept of “implementing a budget” – they had the task of finding a person and spend as little money as possible. And we helped them to achieve that,” says Roman.

The story of the white rabbit

“How did the rabbit come about? This question is asked so often that we would have to come up with some kind of corporate legend,” laughs Prokofiev. But the real story is pretty trite.

One day, Zhenya returned to the hostel at 5 in the morning and brought with him a plush toy – a white rabbit. Roman was surprised:

“Sobakarev is a stern man, and to see him holding a rabbit is like seeing me in a ballet tutu. He said, “I was at a birthday party and I liked this rabbit so much! Let’s make a logo with it!”

Prokofiev sent his partner to sleep it off. In the morning Yevgeniy not only did not forget about the idea, but he zealously defended it. Many IT companies have an animal on the logo: a penguin for Linux, a fox for Mozilla, a spider for Doctor Web, a bat for The Bat. “We thought that such an image is easier to remember than the name – associative memory works easier. Therefore, it was decided that the rabbit should be incorporated into the logo,” says Prokofiev.

We gave the task of developing our logo to a freelancer. Job search is not a fun topic, so it was expected that the options would be concise and austere. The logo was supposed to be such so that it could be easily printed on any product. But the artist saw the Jooble rabbit in his own way. 

“When we received the first three versions of the logo, I probably never laughed like that again in my life. Those were some kind of freaky cartoon-type rabbits with carrots…

We wrote to the designer, “Dude, are you out of your mind? Have you seen the terms of reference at all?” After those comments he changed his game – he immediately sent us a new logo – and right to the point. That is the logo we use today. We didn’t even experiment with colors – the designer sent it in blue, and so we left it. And we have never changed it since,” says Roman.

Traffic from metro

The students decided to attract the first users from their turf – they decided to spread printed advertisements on campuses.

They ordered stickers, and when Prokofiev came to pick them up, an employee of a printing company said that his daughter found work on Jooble.

“I remember that day like it was yesterday. Back then I thought to myself, “Wow, there’s even no advertisements yet and we already have feedback,” he recalls. 

Stickers were distributed on campuses, and they also bought advertising in the metro – we had to pay about $5,000 for an A4 banner. “We initially did everything honestly. Advertising was bought directly through the Metro administration or advertising agencies. We did no harm to Metro’s properties,” says Prokofiev.

Prior to advertising, Jooble had about 200 organic visitors a day. After advertisements were posted, this figure soared to about 3,000 visitors per day.

However, this figure did not grow for the next 1.5-2 years. Hard times were waiting for Jooble and its founders.

The death valley

Jooble reached zero balance between its expenses and income six months into its existence, but when it reached the breakeven point, it stuck on it. About two years the company did not earn anything – all the money was consumed. 

The Jooble team shared the same floor with TeamSoft – Prokofiev would visit his wife to say hello for a few minutes and find out how things were, and then he would come back to make money. Zhenya – on the contrary – put all his time and energy into Jooble. 

“It was a difficult two years, especially for Zhenya. He had a real “Death Valley”: he worked at Jooble full time for a salary of UAH 3,000, of which he rented a room for UAH 1,500 and lived off the remaining amount. At the same time, he could go outsourcing at any time and get $500-600 easily,” Roman recalls.

During that time Prokofiev invested in Jooble about $ 50,000 of his own funds earned in TeamSoft. Nevertheless, from the very beginning, the partners indicated that they own the Jooble “50 / 50”. “We agreed that when the company begins to make a profit, Zhenya will return my investment. And that is how it was,” says Prokofiev.

A real company on 25 square meters

It was 2008 when Zhenya and Roman finally hacked the Internet – as it turned out, Google was in charge of everything on the Internet.

“The moment of growth happened when we realized that the largest source of audience on the Internet is Google. We realized that we need to be able to rank in search engines. That when a user wants to find work, the first place he/she goes to check is Google. And if you’re not on Google, you don’t exist,” recalls Prokofiev.

The partners began to look for ways to get into Google and gain a foothold there. When their experiments were successful, Jooble began to grow rapidly – each year the amount of traffic to the site increased 4 times. 

At that time the company already employed 12 people – 3 developers, 5 sales managers, accounting and support (two people from the first team still work in the company). 

Jooble moved to a separate from TeamSoft office – on Shutova Street, 9, between the Beresteyskaya and the Shuliavskaya metro stations. The team rented a 25 square meters of space inside a renovated building of an abandoned factory, in which they managed to fit 12 desktops and a kitchenette.

“We used to enter it one by one, like crabs, moving to our respective desks. The view from the window – scattered scrap metal. It was great,” Roman smiles, “On the upside, we ordered the blinds with our signature rabbit painted on it. We felt very proud. Once you enter you immediately realized that you entered a real company, not some shady office.”

Kick in the pants

Having barely survived the lack of growth, Jooble faced yet another crisis – the very global economic collapse of 2008-2009. Ukrainian companies began to massively cut costs – primarily staff costs. Nobody hired new people (except crisis managers, but these vacancies were not enough to keep Jooble afloat). 

“The market dried out literally in just two months, and our entire model collapsed,” Roman recalls. “We realized that we had only two options: either we are closing everything now, we are firing everyone and leaving one person who will support the server remotely, or we are trying to explore other markets.” 

We chose the second option – when you are standing on the edge of the abyss, you don’t really worry about risks. And already in January, they realized that they were right. The product, tested in Ukraine, proved to be excellent in Russia, Kazakhstan, and Belarus (they decided to start with tapping into the Russian-speaking market first).

One of the largest job sites in Russia, HeadHunter, began working with Jooble back in 2012. “At that time there were not many aggregators on the market, so we connected to everyone who was at least somewhat noticeable in traffic. At that time, Jooble was one of the top 5 traffic aggregators in the Russian Federation,” says Maxim Grozov, Head of Digital Marketing at hh.ru.

According to him, today Jooble has more than 20% of the total traffic of job aggregators for hh.ru. “At the same time, the aggregator is within high-efficiency margin in terms of the cost of desired actions, when compared with other partners,” Grozov emphasized.

Overcoming difficulties rallied the Jooble team.

“I remember the guys decided to tap into the English-speaking market before the end of 2009 at all costs. And then, the day is December 31, New Year’s Eve, eight o’clock on the clock, but no one goes home. Everyone is waiting for the English version to be uploaded. We waited until it came through, then drank a glass of champagne and only then everyone ran to their homes,” Roman recalls. 

The next market was Poland. For Jooble, it was very exciting, because firstly, no one knew Polish, and secondly, it was necessary to significantly rework the support platform in order for diacritical signs to work. Nevertheless, the launch in Poland was the most successful in the history of Jooble – the site literally “fired off”. 

“It had a wow effect on us. We launched in the country without knowing the language, yet we still managed to offer value. It was very cool,” recalls Prokofiev.

After that, Jooble began to confidently advance through Europe. 

Big story of Jooble

Thanks to successes outside Ukraine, it became clear how to scale this business. At the same time, scaling TeamSoft was much more difficult, since b2b has very long sales. Contracts – for hundreds of thousands of dollars each, but decisions on them could take from six months to two years.

Therefore, in 2009, Prokofiev left the TeamSoft business to operationally join his wife at Jooble.

“I saw that we could make a big story out of Jooble,” says Roman.

Today, Jooble is present in 71 countries (Western Europe, South America, Asia, and Eastern Europe). The geography of income is quite diversified – no country brings more than 7% of the total revenue. 

Over the past year, the company, according to Roman, has doubled. Jooble has become the second most visited job search site in the world: more than 90 million visits over the past month, about 850 million over the past year.

The company does not disclose any financial indicators. “We understand how this can harm us, and we take advantage of the fact that we are a private company,” explains Prokofiev. However, according to him, all employees see how revenues are changing every week.

From partners to competitors

In the midst of the crisis – the end of 2008 and the beginning of 2009 – the partners decided to change the business model in Ukraine, and instead of payments per click, they began to sell the audience to employment sites.

“Since we had dozens of clients in one country and not tens of thousands, one manager could easily communicate with each of them: reach them, sell and make fairly large contracts,” explains Prokofiev.

Jooble collaborated with Work.ua and Robota.ua – Ukraine’s largest job sites to date. “We transferred all our vacancies to the general Jooble feed, and in return received an audience. At first, it was free, then Jooble began charging for part of the transitions, then the price of each transition continued to grow year on year. At the same time, the percentage of the new audience that we received gradually decreased,” recalls Artur Mikhno, CEO of Work.ua. 

This went on for almost 10 years, but at some point, Work.ua noticed that they began to receive few new audiences, at the same time competition with other projects intensified and bids (the auction system at Jooble) grew even bigger. 

“It was around 2016-17, Work.ua was a market leader and had the largest database of unique vacancies. We realized that by transferring all our unique content to a third-party site, we are actually growing ourselves a competitor in the search results, and paying for each transition has also fueled competition in Google Adwords. At that moment we decided that it was time to change this situation,” says Mikhno. Work.ua decided to suspend cooperation with both Jooble and other job aggregators.

At the same time, Indeed.com, the world’s largest aggregator, announced that it is becoming a job site and allows posting jobs directly. The competition was advancing. Jooble decided it was time to review its model.

Only vacancies, only hardcore

In early 2019, Jooble launched a product for employers in Ukraine: companies can post vacancies, paying only for views. According to Roman, Ukrainian employers really like that they can pay for the result, and not for the hope that they will get it. Today, the service is used by thousands of customers, predominantly large brands: Sushiya, Silpo, etc.

They are not in a hurry to scale the model to other markets. “We know a lot about scaling. Therefore, we must first run all the business processes here, and then proceed to tap into other markets,” says Prokofiev.

Also, having gone beyond the borders of their native country, Jooble removed the resume section, deciding to focus exclusively on vacancies. “We saw that the resume base thing does not work anywhere, not only in Ukraine. This was before the GDPR – now it cannot be done at all. But even then, there were too few resumes that could be used to aggregate contacts to even bother,” Roman explained.

Jooble 2.0

At the time of its launch, Jooble was twice as capable as it is now – it could fetch you not only vacancies but resumes too. Since then, it has changed a lot – first of all, it has grown wiser thanks to big data and machine learning. Back then such terms did not exist – the search algorithms were quite simple – they selected results by keywords. Now they are learning from user behavior.

For example, a person enters a request for a driver – and they are shown 5,000 vacancies. But a taxi driver, a tractor driver and a driver for a diplomat are three different professions. Moreover, all of them match the above request. How can a search engine understand exactly what vacancies a user is looking for in each specific case? 

“When you have a large amount of data – you know what your users like, what vacancies they looked at before and on which they spent more time – each next time you provide your users with a more relevant result,” explains Prokofiev.

The second significant change is the number of sources that Jooble is indexing today. In 2006, it all started with about 20 job sites. Now Jooble is present in 71 countries – that is more than 200,000 sources, among which are not only job sites – but also vacancy sections of corporate blogs of PayPal, IBM, Google, and others. 

“We find a very long tail, which is difficult for the user to find themselves – for this they would need to go to 100 different sites. But they can come to us and get a selection of all those vacancies,” says Roman.

According to Arthur Mikhno, such advanced aggregation technology is one of the main advantages of Jooble.

“In the United States, unlike Ukraine, most of the vacancies are not posted on job sites, but are published directly on corporate sites. Of course, in this case, a tool like Jooble can come in handy.

However, the advantages have a downside: the user does not have a single interface for interacting with employers – each vacancy may turn out to be a redirect to some other site. For some users this can be quite exhausting: without a single account, the ability to easily send a single created resume, see a single statistic for all actions, etc.

12-year-long development

These are just the most global changes that Jooble’s product underwent – not counting the myriad of minor improvements. And the work is still in full swing today at Jooble’s office. 

“A product is like repairing your apartment. It cannot be finished. I remember our friends asking us at the dormitory:

— What are you doing there?

— Well, we are making a website.

— How come? But you have already launched it, what else is there to do? Do something serious for a change.

Here we are, 12 years later, and we are still building the site,” Roman laughs.

For the sake of an example, Prokofiev puts mobile traffic: it became a revelation for Jooble that it accounts for about 70% of all visits. Accordingly, a need arises: how to respond to a vacancy through a mobile phone – few people have a resume on their phone. Or how to make the search results even more relevant, so that a seasoned programmer doesn’t get vacancies for juniors. 

All this requires continuous changes in the software product. The development never ends.

Jooble doesn’t need investments

Jooble has only one external minority investor – Horizon Capital, the largest private equity fund in Ukraine, invested in the company back in 2014. In addition to Jooble the list of IT companies in Horizon’s investment portfolio includes Rozetka, Genesis, Ajax, and other companies from traditional industries.  

As Ruslan Furtas, investment director at Horizon Capital, told AIN.UA, the fund watched Jooble for a while before investing. By that time, Jooble already had solid traction and fulfilling global ambitions: the company was in the top 5 vertical search players, and their technology was in demand both in already developed and in emerging world markets.

“The founders of Jooble had a simple and clear strategy for international expansion. We liked the cost and time for new localizations, unit economics and the payback period of such projects. This made Jooble stand out among the other companies that we were looking at back then,” says the investor.

At first, Jooble was not an obvious investment for the fund. At that time Horizon Capital had expertise in working with marketplaces and message boards, but not in online recruiting. However, according to Furtas, the fund is very pleased with the presence of Jooble in its portfolio. The global market for online recruiting services today is estimated at $ 8.5 billion and continues to grow by 15% due to the emergence of new channels. Moreover, the segment of job search engines is growing faster than any other.

“The founders are very invested in the product, and this investment has already paid off. Today, Jooble is one of the largest job aggregators in the world in terms of user metrics and traffic, and the company’s crawling technology is one of the most advanced in the world, if not the best,” concluded Horizon Capital’s investment director.

400+ employees and the new Jooble office

Today Jooble employs 425 people: 225 in the office, 200 work remotely – from all over Ukraine.

“I don’t remember very well how the team grew. I remember exactly how we began to scale from the moment we went beyond Ukraine – every three years we made x3 in revenue. But this growth was not always accompanied by an expansion of staff,” Roman recalls. 

The process of team growth can be clearly illustrated by the change of offices of Jooble, and there were quite a few of them. 

From a 25 square meters room we moved to a larger room, but in the same building. “We then took 65 square meters. It was an open space, and there were already 25 people there,” says Prokofiev. 

The next office was three times larger – 190 square meters, and yet Jooble “grew” out of it in just a year and a half, after which the company moved to Klovsky descent, where it stayed for another 5 years in a 600 square meters space.

These 5 years, from 2014 to 2017, the number of Jooble team members remained within 100 people. But over the past two years, the staff has sharply tripled and continues to grow. Everyone is already quite tired of plastic open spaces in typical business centers, so Roman and Zhenya decided to find a space and repair it to fit their needs from scratch. 

“Zhenya and I clearly knew what we want. We want 6 meter high ceilings, and so that a distance to the metro station is maximum 5 minutes walking, and that the station should be no further than three from the interchange station. All real estate agents then told us: “We, of course, will try and look,” and began showing us high-rise business centers. And when you enter one you realize that you have already developed an allergy to Armstrong panels and chrome-plated elevators,” recalls Roman.

“Do It Yourself” office of Jooble

In October 2017, Jooble gathered employees for an office party during which the owners shared with employees their vision of the new office. It was clear at that point that a finished building that met all the requirements could not be found, so they had an idea – to take a dilapidated building and rebuild it into an office. 

“I remember how our partner entered the request “Loft Kyiv” into Google Images, downloaded the first available image from OLX and inserted it into the presentation. When we finally found a suitable building, it turned out that the space was the same one as in our presentation!” says Prokofiev. 

It was already planned to accommodate a furniture market in it, but partners came to the owners and convinced them to change their minds. The lease was signed for 5 years. 

“Of course, we did the numbers, taking into account rent and renovations, and we believe that in 5 years we can easily pour gasoline all over here and set fire to everything. It will be the same as if all this time we rented a ready-made office in a business center of B, B+ grade. But we hope to stay here much longer,” said Roman.

The renovations were carried out in accordance with the requests of employees – the new space has everything that they requested on 57 pages of the Google document. Well, almost everything. They also asked for a pole and barbecue place, but for the first one the ceilings are too high, and for the second was a no go from firefighters. 

Each employee has their own drawer unit and a large desk, there are rooms for sleeping, a basketball field, yoga rooms, 21 meeting rooms, and even an amphitheater. “Someone dropped a photo with a note saying “Look, what a cool amphitheater, let’s make one.” And we made one, we really did,” laughs Prokofiev.

They moved into the new 2,800 square meters office a year ago. In March, AIN.UA showed it in an exclusive report, and since then new work areas have appeared in it.

“We already want to look for another office, because, given our hiring plan, this one is already packed to its capacity,” Roman smiles.

Few people know, but since recently Jooble also has a small office in Uzhhorod – for only 16 people. This is a team that works with the Hungarian market on a new model from Ukraine – in test mode. 

The company has no offices outside the country. “When we will launch full-fledged cost per click sales to direct employers abroad, then there will be a need to open regional offices because it is impossible to find the right number of people in Ukraine with such knowledge of languages and the necessary soft skills,” explains Prokofiev.

Jooble’s competitors

Today, Ukrainian Jooble is in the top 500 most visited sites in the world. It ranks second among the job search sites. The only competitor ahead of Jooble – Japanese giant of American origin Indeed. 

“We do not set ourselves the goal of overtaking or surpassing anyone, because this does not go in line with the value we offer. Our value is to help people find work. We became No 2 bypassing everyone else because we were thinking about how to give value to our users,” says Prokofiev.

According to him, Jooble conducts a monthly analysis of competitors – these are only 12 companies that are indeed noticeable in the market. Among them, Jobrapido, Trovit, and others are predominantly of Japanese origin, with billions of capitalization. In European countries, Ukrainians present strong competition. But they were still poorly represented in the English-speaking markets, which Jooble intends to change.

“We had never focused on them until 2019. The competition scared us off,” Roman explains. “In 2019, this has changed, we see that our product works better than others even in highly competitive markets. Our users spend more time on our site than on the sites of our competitors, and the bounce rate is significantly lower. We have focused on wealthy Western markets, for example, the UK’s market, where the company has shown three-fold growth over the past six months.” 

“The main bottleneck is in our heads. For a very long time we thought that our product could not compete in the English-speaking markets, but the results in the UK speak to the contrary. Therefore, this is now one of the great upside potentials for Jooble,” says Prokofiev.

“We choose Ukraine”

Having barely become a more or less large business, Ukrainian technology companies are beginning to insist that they are international, avoiding the narrative about their roots. This is easy to understand: some don’t want to lose their customers from Russia, where the market is very large and high-paying, some don’t want to lose dollars from the Valley – the American capitalists do not want to risk investing in a country in a state of permanent war with Russia and corrupt officials.

Jooble has never sought to sever its bond with its homeland. Prokofiev repeatedly emphasized in his interviews and comments that the company will remain a resident of Ukraine and does not plan to leave it.

“We have never experienced any kind of discomfort when we told foreign clients that we were from Ukraine. We have a rather big business in Russia, and when the conflict started, not a single Russian partner went crazy because we were from Kyiv,” he says. “We have chosen Ukraine for ourselves. We are staying here.”  

Entrepreneurs often complain that nothing is changing in the country. However, Prokofiev does not share this sentiment, “I remember what happened in 2004 when I started my first business. When you come to the tax office, and there’s a huge queue of people, everyone shouts and swears at each other, nobody knows anything… Then you have to spend 4 hours there only to understand what is happening and where you should go. Whereas now you come to the tax office, take your ticket to the electronic line, after 15 minutes you calmly submit all the documents. For me personally the progress is enormous in terms of the service that the state gives to business,” comments Roman. 

Of course, there are problems that require immediate attention from the government. First of all, in his opinion, these are the so-called “masquerades” in IT, which so far have not been curbed by any legislative initiatives. Some are ready to fight, defending their rights, and some find it easier to buy their way out – and this is a truly abnormal situation,” Prokofiev believes.

“If we are here, then our task is to improve whatever surrounds us. Convert an abandoned factory building into a beautiful office, give people comfortable working conditions – same as they do it overseas. This is our contribution as a business to the country. 

We like to be proud that the Ukrainian company Jooble can compete neck and neck with Western competitors who have investors with bottomless bags of money and access to graduates of the best universities in the world. That a team from Ukraine created a product that defeated them. 

And we want to tell this story so that people understand that everything is possible.

Many entrepreneurs say, “If I were in the Valley, they would give me a million dollars…” If you cannot build a product, a million dollars will not help you. It can only streamline your success or delay your defeat.

You can succeed, no matter the country or circumstances.”

Two in a boat +400 people

Today, 12 years later, Zhenya and Roman are still working at Jooble full time. They, just like their employees, come to work every day, go to meetings, sweat over the product.

If you visit Jooble office, you can see how Roman is typing something intently on his laptop, sitting in the far corner of the open space, and in a meeting room at a meeting of one of their teams, Zhenya is sitting on the floor with a laptop and carefully listening to the report. It is impossible to immediately suspect these two executives in a large company. 

The partners do not have any division of roles into CEO, CTO, etc. Conventionally, Roman is more involved in sales and marketing, and Zhenya is responsible for everything related to IT and the product itself. But when a problem arises requiring immediate intervention, both founders plunge into it together to find the most suitable solution.

Over the years, there have never been any conflicts between Prokofiev and Sobakarev. According to Roman, partly that is due to the fact that as far as Jooble is concerned they are equal partners with equal shares. 

“Two founders is the most comfortable situation. Microsoft, Apple, Google – all these companies had two founders with originally equal shares. When you and your partner share the company 50 / 50, there are no other options left but to come to an agreement. Otherwise, you cannot move forward. 

This allows you to avoid any conflicts, but only if the partners share the same goals and ambitions. If one wants to build a unicorn, and the second wants to earn enough money to afford an apartment and a car, that is going to be hard,” Roman explains.

He and Yevgeniy share, they have 100% goals match. 

To early to retire

Selling the company and retiring with bags of money – the founders of Jooble do not have such plans. Yevgeniy and Roman stay in the company to grow it 10 times larger in the next three years. Not in terms of the audience, but in terms of its revenues. 

“I’m talking about revenue not for the sake of revenue, but as an affirmation of value. The more you earn, the more value you give to your users and customers,” Roman explains. 

We see that Jooble has the potential to grow 10-fold. And we have an entrepreneurial vigor to make it happen. We face new challenges every month. It drives us. It allows us to stay in the flow. And we are obsessed with what we do.”

About Tradalaxy

Tradalaxy is an online platform that provides all the necessary functionality for SMEs to start selling globally. Here you can sell any product that is not subject to an export/import ban (weapons, nuclear power) and is not an animal product. The latter is the fundamental rule of the platform.

Aside from that, Tradalaxy allows trading any goods: food and agricultural products, clothing and footwear, sports and recreation goods, cosmetics and electronics, and many other products. “This can be everything: from, for example, linen textiles or solar cell holders to tents or dried apples,” the company says.

Tradalaxy says that local companies often don’t know where to start to enter global markets because they don’t have sufficient expertise and consider export trade to be the exclusive province of multinational corporations. The platform will help them to become a global business.

Our task is to tell the world about the qualitative advantages of Ukrainian products, as well as to minimize the possible risks of international transactions.

Oleksandr Yudytskyi, CEO at Tradalaxy

Registration on the platform

While registration on Tradalaxy, the company is required to provide the following documents:

• Exclusive Rights of Trademark Owner
• Certificates that certify that the company operations are compliant and meet standards (e.g. ISO or PETA). You can select them from the platform database or the own ones can be uploaded.
• Confirmation of the office existence, information about the team and information about the company, which will be available for customers to view.
• Verification of the phone number.

Tradalaxy notes that they will not store user sensitive data on their own – this will be done by partner services: “For example, for payment, there are Fondy (in Ukraine), Stripe, Escrow, and others. These companies have successfully completed transactions of more than $10 billion and guarantee high-security standards. ”

The service will also provide the opportunity to create your own store based on a platform that will work on a subdomain – for example, steel.tradalaxy.com (where steel is the name of the company): “Companies can use their own store separately from the marketplace. It’s connected to Google Shopping and indexed directly.”

Delivery

According to the creators of Tradalaxy, internal services have been built-in to the platform that will deal with logistics. Among them there are container delivery and express mail for small-sized cargo (DHL, USPS): “The seller will not have to bother with a finding of a port, paying for shipping and monitoring it.”

Limitations and restrictions

One of the main problems faced by the creators of Tradalaxy is the import-export regulations of specific states. The team notes that the target audience of the service is business from countries between which free trade agreements are in force (for example, between Ukraine and the EU or Canada). According to the regulations of such agreements, restrictions on the import and export of most goods are prohibited.

However, there are non-tariff trade restrictions, in particular, duty-free quotas. When these quotas are exhausted, delivery is carried out at common customs tariffs, and this increases the cost of production for the buyer.

“Unfortunately, there is no automated monitoring of such data,” Oleksandr Yudytskyi says. “Therefore, the buyer and seller must consider this situation. Possible solutions for the parties are to use the services of 3PL providers and customs brokers at the negotiation stage to understand the situation with a particular product group, or to address the situation on their own.”

Tradalaxy plans to monitor such restrictions and publish the information on the company’s resources, and then – target it to specific users.

“Also, in order to automatically specify these restrictions, we integrated the HS code mapping into the module for adding goods, which the customs services of countries use to determine restrictions and tariffs for products,” the company said.

Current performance and plans

Currently, sellers continue to register on the platform – there are already more than a hundred of them, according to the company. And sales directly will start closer to November.

In addition to Ukraine, Tradalaxy has been launched in France and Canada. Until the end of 2019, the creators plan to connect to the platform the rest of the European Union, the Pacific Partnership countries (Australia, Mexico, Japan, Singapore, and others), as well as Israel and Turkey.

Our priority markets are countries that pursue an open international trade policy and aim to take advantage of free trade agreements. There are very new and interesting trade directions for us, such as Canada-the EU, where a free trade agreement has been in force for only two years and is only gaining momentum. In the direction of the EU-Japan, such an agreement has been valid only from February 2019.

Company

The Tradalaxy platform is run by the company of the same name founded in Canada in 2017. Currently, it employs more than 30 people, who work in two offices – in Toronto and Kyiv. In order to organize work in the Ukrainian office, the team founded a local LLC. The Kyiv representative office employs more than 20 people – this is a technical team, project management, business analytics.

Tradalaxy was founded by Ukrainian Oleksandr Yudytskyi. He is a lawyer in international, antitrust and competition law. Since 2015, Yudytskyi has been permanently residing in Toronto, where, in addition to working on the platform, he also advises on international trade and strategies for entering companies and goods into new markets.

According to Yudytskyi, the company is developing through its own investments, financing from a Canadian investor and borrowed funds from a Canadian bank.

How did UNI.UA come about

Aleksey Rozenkov and Roman Kirdanov both work in the field of copyright protection. Kirdanov is the managing partner at IPS, a company that develops and implements IP management systems. Rozenkov worked in various companies in this field.

The idea to create a project in the sphere of Ukrainian art came to partners when they noticed that Ukraine is not present in Google Arts & Culture. In 2015, IPS created a record-keeping system for intellectual property, collection, and distribution of royalties, and in 2018, UNI.UA was built on its basis. The project received support from the Ukrainian Cultural Fund.

What is UNI.UA

The online platform consists of three sections:

1. Registry of objects of art or national treasure.
2. An e-commerce mechanism for the sale of licenses for the use of such objects (royalty collection).
3. The mechanism for distribution of royalties between copyright holders.

What is its mission

The mission of UNI.UA is to connect consumers with copyright holders. Moreover, not only in the Ukrainian market but internationally. As the founders of the project put it, currently there are many intermediaries between the parties, which makes the working mechanism long and opaque. The marketplace will bring them face to face.

UNI.UA marketplace allows authors to earn money off their work and make themselves known to the world. And museums and owners of private collections can monetize their wealth.

Roman Kirdanov comments:

“According to the Ministry of Culture, in Ukraine, there are 3,000 museums – of which only 4 are digitized. That is, the majority of objects of creativity do not have digital copies for reproduction. All documentation is in hard copies only.

Movie archives – more than 60 km of film. Such objects have their own lifespan, even if all storage conditions are met. Digital copies are a more reliable way to preserve the country’s cultural heritage.

In the Ukrainian archives, you can stumble upon records of Sosyura reciting his poems, audiobooks of Agatha Christie with a licensed British translation, unique shots of the Lumiere brothers… We know that theoretically, it is there, but we have never seen it. All these objects must be carefully protected from the risk of physical destruction and they should be made available to the public.

In the modern world, the value of cultural heritage remains uncertain, because the product itself is missing. However, having digital copies of objects, we are able to promote them as a product and create additional value.”

Monetization

The marketplace acts as a Proxy in the transaction between the copyright holder and the consumer, and for performing this function it receives 10% of the cost of the purchased license, half the price of the current market.

What can you buy on UNI.UA

Today, the platform works with four basic types of intellectual property: music, audiovisual works, photographs and paintings (digital copies).

The Ukrkinohronika SE, Odessa Art Museum, Rokstar LLC and private photographers have already put their digital copies up on the site. The founders also encourage Ukrainian museums, galleries, publishers, and production studios to collaborate.

Who can buy such licenses

Anyone for commercial (production studios, advertising agencies, television channels, manufacturers of souvenir products) or non-commercial use (for training, research, etc.).

They will have direct access to digital copies of copyrighted objects online.

How much can objects of art cost

The cost of the license is determined by its owner. Non-commercial use does not require a license, so the price will include only the cost of preparing a digital copy.

“We took into account that the global intellectual property market is worth $182 billion, according to Forbes. This market is one of those that are growing rapidly. It grows at a rate of 20% per year, comments Roman.

Accordingly, authors, in order to determine the cost of their work, must analyze the general data sets in this area, and then do one of the following:

• indicate the price themselves;
• indicate that the price will be negotiable;
• indicate that the price will be determined by the market. Then the system displays the average market price, depending on the region, the features of the object as well as other factors.

Basically, if authors will regularly publish their works, they will quickly understand the cost, based on the existing demand.”

Who came up with the idea

Volodymyr is a marketer by education, and his first job was as a marketing manager (later he grew to a position of the director). Volodymyr was a member of the AIESEC youth organization: everyone was suggested there to prepare branded email signatures in two languages. He liked the idea and tried to implement it in the workplace: to create such signatures for all 25 top executives of the company.

But it turned out to be not that easy, “At first it was necessary to make a design, then approve it with the director, then coordinate the implementation process with our tech specialists. In the end, I had to go and create it myself on each computer,” says the startup co-founder.

Then he realized that, on the one hand, such signatures could be really helpful to companies in terms of promoting their brand and attracting new customers. On the other hand, very few employees are interested in doing this on their own. So the idea came up to create his own customizable corporate mail signature service.

How the project developed

Volodymyr has long pondered the project but being a
non-technical person, he could not implement it himself. Six months later, he found an acquaintance who helped make the first version of the product: a very simple service where simple signatures with minimal features could be created. At that time, it had only four templates for signatures, it was impossible to change the picture, colors, banners. But it was already enough to check if that would work.

At the beginning of 2015, the team launched the site, did minimal SEO optimization. By that time, Volodymyr had already quit his previous job to take up the project fully. He found a programmer for the project who could help on a part-time basis and a student girl for marketing tasks.

Six months into the project the site was already receiving about 500 people a day, and about 100 of them were creating free signatures. In the first year, it managed to grow to 1,000-1,500 visitors a day, who generated about 200 signatures. The service was promoted, among other things, by its viral nature: a banner with a link to the service was added to each free signature. At the same time, the startup began to receive the first applications from companies for the corporate version of the service: they asked if it was possible to create similar signatures in a centralized way and configure them.

And for the next six months, the team worked on developing a paid version where you can create accounts for companies where they could set up branded signatures for employees. For example, a company director could register himself, create 5-10 signatures and send to his subordinates, and this whole process took just several minutes.

The appearance of signature editor in 2015, 2017, and 2019:

What obstacles you had to overcome

The startup developed without investment, from personal savings, the investments of friends and family that I managed to raise. The team was hoping for a paid version because there were a lot of requests from the business.

“I was hoping that when we launched the paid version, they would all say: Hooray, finally, the customers will instantly come and give us loads of money. But on the day we launched the paid version, we didn’t have sales as we expected,” Volodymyr recalls.

Some customers did not wait for the launch and made their own signatures, some went to competitors. The paid version was launched towards the end of 2015, according to the co-founder, it was a kind of test for the team: they expected to profit a lot from it, but it did not happen. At the same time, the number of free users and traffic to the site grew. At the time of launch of the paid version, there were already under 2,000 users, who were creating 400-500 signatures a day (now the traffic has grown to 8,000 a day).

Another problem was related to technology. Initially, PHP was chosen for the project implementation, so it was easier to find developers to work with it. But later it turned out that clients were asking for additional features that simply could not be implemented in PHP.

“I had to rewrite everything from scratch, it was expensive and took more than a year. But the third version was released on Rubi on Rails,” says Volodymyr.

How the project attracted clients

Search engine optimization and content marketing remain the main channel for the product: customers find the service through Google, through reviews, through other sites that write about tips for marketers. For example, in 2016, American Forbes included the service in the list of recommended, and after its publication, the service was mentioned by multiple other media. Earnings from the project at that time already allowed to hire sales and support. Examples of reviews about our service can be viewed here and here.

According to Volodymyr, that’s how customers from big companies like Lyft or Nestle started using it: when a marketing person starts looking for a centralized signature solution, they find referral sites, apply for a product demo, and then it all depends on the internal needs and bureaucracy of the company. For example, Lyft now has about 4,000 signatures in a corporate account, but the startup had to work on a project agreement and coordination from October 2018 to May 2019.

Not all companies implement such signatures in a centralized manner. “There is a franchise company that has five different templates depending on the franchise, location, etc., and about 3,000 users. There are companies that implement such signatures in individual countries, such as Coca-Cola. We also negotiated with Auchan, they wanted to do it centrally, but their bureaucracy did not allow it to do so. That is why we will start working with them from Poland,” says Volodymyr.

According to him, several Ukrainian companies, such as banks, have also approached the startup, but they still use very outdated e-mail clients, the ones that were used in the U.S. in the 80-90s, so we were not able to offer our solution.

Monetization model

The startup relies on a subscription model. It sells subscriptions for packages of 25 to 100 signatures (36 to 99 per month). We offer discounts for educational institutions and NGOs. We are planning a special package for startups.

We have not yet reached the point of profitability, but earnings allow us to develop further. According to the co-founder, the cost of getting the lead on average is half the amount it brings to the company. All the money is invested in product development.

During its existence 9,854 paid accounts have been created in the service (one account is used for managing many signatures), 500 signatures are created daily with the help of it, the number of new paid subscriptions is 2,800 per month.

Increase in service traffic from its kick-off to July 2019:

From the beginning, the startup tried to develop only from the customers’ money. But now, scaling the team requires investment. That is why the team applied to participate in 500 startups.

From the beginning, according to the co-founder, they wanted to get into some industry accelerator, the top 3 U.S. accelerators were not even considered. But it so happened that representatives of 500 startups came to Lviv, talked with the team and they liked the project. Newoldstamp was selected from among 2,000 applicants. The team learned the news that the startup entered the program a few weeks before the start: during that time, it was necessary to set up the remote work, get visas and tickets.

According to Volodymyr, participation in the accelerator will help the startup find investors and understand how to grow further. “Growing the company and its clientele is our main challenge at the moment. The investment will help us hire professionals and run advertising campaigns. The U.S.-based accelerators are fixated on educating startups and connecting them with investors. It is here that we can learn how to properly scale SaaS solutions. And I am talking not about doubling it but making it ten times as big in a span of a year. We want to tap into a global market,” he says.

***

Who and when founded ICU

ICU is one of the largest investment companies in Ukraine. It was founded in 2007 by immigrants from a Ukrainian subsidiary of the Dutch ING Bank – Valeria Gontareva and Makar Pasenyuk. 

• In 2007, Gontareva became the acting head of ING in Ukraine. After working in this position for several months, she wrote a letter of resignation to start her own investment business.
• British hedge fund Autonomy Capital Research LLP agreed to become an investor in her project. It invested $10 million in the ICU’s Real Estate Fund and purchased 24.99% in equity of the group. 
• Together with Gontareva, the founder of the company is an investment banker Makar Pasenuk. An important role in the development of the company was also played by Konstantin Stetsenko, who was responsible for the group’s trading operations in the stock market. 

Forbes dedicated a separate editorial piece to each of these “troika” at some point. Gontareva was called one of the best investors in the debt securities of Ukrainian issuers, Makar Pasenyuk was described as one of the best investment bankers in the country who made deals totaling more than $9 billion, and Konstantin Stetsenko was described as one of the best securities traders on the Ukrainian stock market. 

What does ICU do

After the crisis of 2008–2009, the group successfully invested in debt securities of state issuers, in particular banks, which allowed the company’s Funds to receive more than one hundred percent profitability. Later, the ICU focused on government bonds. A few years after its founding, the company firmly established itself as one of the leading players on the Ukrainian stock market. Almost every year the company was number one in the industry-specific ratings.

In 2014, when Petro Poroshenko became president of Ukraine, employees of ICU received the highest government posts:

• Valeria Gontareva headed the National Bank of Ukraine,
• Volodymyr Demchyshyn became Minister of Energy of Ukraine,
• Dmitry Vovk became head of the National Commission for State Regulation of Energy and Public Utilities.

The departure of key people from the company did not hinder its development. At the same time, Pasenyuk practically became one of the key asset managers of the president. The company also worked on transferring the Roshen Corporation to a blind trust. 

The company also got into a number of investigative journalism stories: 

• ICU was called Poroshenko’s aide when he tried to buy the “112” channel. The company itself denies the charges.
• Journalists wrote about fictitious ICU deals with government bonds.
• In March 2018, it became known that Cypriot Xomeric became the largest shareholder of Burger King in Russia, having bought nearly 17% of its shares from VTB. Xomeric Founder is a foundation tied to the ICU group. 

As indicated on the company’s website, the company is currently managing assets to the tune of $500 million, as well as assets of a number of pension funds. ICU is also a member of UVCA.

AIN.UA’s own editor explains the ins and outs of the new company.

What will InSoft Software do

InSoft Software will develop ‘turnkey’ software and will provide consulting services, that is, help customers launch software products on the market and support them.

Currently, InSoft Software is developing a marketing strategy and preparing an international roadshow.

What UFuture and InSoft Partners do and what connects them

InSoft Partners is an investment management company that invests in IT businesses and provides support services for mergers and acquisitions (M&A advisory).

UFuture is an investment group of Ukrainian entrepreneur Vasyl Khmelnytsky. It includes infrastructure and innovation businesses:

• UDP development company,
• Igor Sikorsky Kyiv International Airport,
• national outdoor advertising operator “RTM-Ukraine”,
• industrial park “Bila Tserkva”,
• renewable energy investment and development company UDP Renewables,
• Biopharma pharmaceutical company,
• innovation parks UNIT.City (part of which is UNIT Factory programming school) and LvivTech.City.

InSoft Partners and Khmelnytsky already have a joint IT-related project — the career center X.Teams. It operates under the aegis of UNIT Factory and helps students and graduates of the programming school to launch startups, intern in Ukrainian and foreign companies, get employment search assistance.

Development of InSoft Software

InSoft Software will take the conventional approach and will grow at the expense of acquisitions of small IT companies on the market with their subsequent merging into a single structure. This is how Luxoft, GlobalLogic, Sigma Software and other international outsourcers with large R&D in Ukraine developed. InSoft Partners will be responsible for finding and acquiring suitable assets.

“By combining a deep understanding of the processes of IT companies with M&A skills, we are planning to implement a roll-up strategy that market players have been discussing for 10 years. In addition, we (…) know how to transform the classic software development outsourcing model to get margins that are significantly higher than the market average,” comments Vitaly Gorovoy, managing partner of InSoft Partners.

InSoft Software already holds two controlling stakes in small Ukrainian outsourcing companies: web developer Lenal (according to the IT Association of Ukraine, with 75 employees in Kyiv and Tallinn) and Kharkiv’s Rozdoum (according to DOU, with 20 to 80 specialists).

Why Khmelnytsky needs an IT outsourcer

Vasyl Khmelnytsky is a Ukrainian billionaire whose primary portfolio consists of development projects. In the community he is known for two attempts to enter the creative industry through industrial parks: the first was unsuccessful (Bionic Hill), and the second is experiencing rather rapid growth (UNIT.City) and ‘sprouts out’ on the way. Khmelnytsky participated in both projects as an investor (via the charitable foundation K.Fund) and a developer (via the developer UDP).

Earlier in an interview with AIN.UA Khmelnytsky said that he does not hold any assets in IT companies. Today he announced that he has decided to explore outsourcing after all. According to Khmelnytsky, he was attracted by the impressive growth rate of the IT industry in Ukraine.

“It has been showing annual growth of 20-26% for quite some time now. It generates billions in revenue,” he said, adding that InSoft Software plans to become one of the largest national players.

UFuture’s press release reads that as part of InSoft Software Khmelnytsky’s investment group will look for strategic partners and “will contribute to the organic growth of the joint business” by leveraging its “international network of contacts.”

Inception

Pix began working on the backpack back in 2016. Initially, a team comprised Ivan Kaunov (former CTO, who left the project) and Sergii Iezdin (CMO). Later, Margaret Rimek joined the team as CEO. The team wanted to revamp an urban backpack by adding a display.

“We were thinking of what it could be. We exchanged ideas and made a decision. We realized that this is the way for backpack owners to express themselves,” Rimek recalls.

One of the initial backpack prototypes

At that moment the team toiled at DIY Lab. Not long before that the founders had closed their previous project and were looking for fresh ideas. Pix backpack became their new project. “DIY Lab awarded a $1,000 grant to us to validate the hypothesis. The money went on the prototype development and participation in a few exhibitions,” Ivan Kaunov says.

The team worked in that mode for a year and a half. This time allowed the entrepreneurs to finalize the idea and the prototype. The results allowed Pix to get investments from IoT Hub accelerator and move to it. The investments covered the creation of backpack prototypes, develop software, and lay the marketing foundation for the next step — Kickstarter and then Indiegogo campaign.

Pix notes that a Kickstarter campaign is a great way to boost the demand for the product and define its target audience. That is why the team decided to go this way. Pix launched the campaign in August 2018, and within a month the project raised $150,000, which is four times more than the initial goal. Later, the startup launched its campaign on Indiegogo where it raised approximately $165,000. Following that the team had to deliver the backpack to almost 1,100 backers across 50 countries.

Pix team

Setting up manufacturing in China and delivering on time

From the beginning, Pix was thinking of manufacturing in China. The team did their calculations and decided that it would be cheaper to make backpacks this way largely due to the wide selection of parts. Plus – the scale. “In China, we could count on a thousand backpacks per week. In Ukraine, that number would take months to manufacture,” Kaunov says.

Fact-finding

Before commencing the manufacturing, the Pix did not have experience working with China. That is why the team gathered all possible information, met and talked to potential partners, as well as looked for the information on the Internet.

Margaret Rimek notes that the most valuable were the meetings with seasoned Ukrainian entrepreneurs: “IoT Hub shared contacts of Ukrainian entrepreneurs with manufacturing experience in China. It is rather a small, but professional community comprising many Ukrainian hardware startups. We held dozens of meetings and accumulated a lot of information. This way we were able to prepare ourselves for the trip to China.”

Creating a finished product beforehand

Even before the manufacturing had begun, Pix already had about 80 backpacks. Most importantly, these were not prototypes, but full-fledged products that could be sold. The idea was to go to China with the ready-made molds and show them to factories. The team is unequivocal in saying that it was one of the most important decisions as far as the manufacturing goes. The startup did not lose time to make tweaks to the product, and instead, it focused on quality control only.

Trip to China

Before going to China the team tried to locate factories on the Internet through Alibaba and the likes. It was in vain: many factories simply have no website, and those that have a website show different prices. “We even contacted one of the clothing factories and sent them the molds. As a result, their work was horrible. At that moment all out doubts about the necessity of going to China were dispelled,” Rimek recalls.

Setting up manufacturing in China without visiting the country is extremely difficult. If you have an ordinary product and you know that the Chinese produce similar products — you can try. However, if you want to create something truly unique, you have to go and set it up in person.

China International Import Expo 2019, Shanghai

Visiting exhibitions

The team aligned their trip to China with one of the largest backpack and bags manufacturing fairs — Canton Fair 2018. The team believes it was a good decision because they managed to get a few warm contacts and set up a connection with multiple factories. The selection process followed.

The startup selected several factories and asked them to manufacture sample backpacks. “And the intricacies began: some replied in after a week, some produced in 35 months, some asked an exorbitant price,” Ivan Kaunov recalls. Eventually, Pix managed to find a factory that met all the criteria.

Communication is paramount in China. Firstly, it is the knowledge of English, not many know it here. We managed to find partners who knew the language. Secondly, the approach itself is also important. Some say that they can do the product within three days come rain or shine, while others say that they do not work weekends.

Precise process planning

The Pix team divided the manufacture into three stages: one factory produced electronics, the other made it into ready-made parts, the third one manufactured backpacks and assembled everything together. According to Kaunov, this was due to several reasons. First, it helped avoid plagiarism by Chinese companies. Second, it allowed for more quality and cheaper manufacturing.

“Our selected factories did not communicate with each other, so we did not worry about copycats. In addition, if we asked a factory to make the backpack with electronics, it would not do it independently. They would outsource it to their colleagues and add their mark-up,” Kaunov says.

Quality control

In total, Pix had four iterations of backpack fabrication. The team underlines that you should treat the results very seriously. “We thought that they would make a perfect backpack for us on the first try. That was not the case. Following the first iteration, we had about 50 comments on the product. We spent three hours explaining what had to be altered. The factory manager said that we were the most demanding client they ever had. We just tried to achieve the best match with our molds,” Margaret Rimek recalls.

Cooperation on site

While the team was in China, they met Andrei Glizhinskiy, hardware product expert. At the time, Glizhinskiy had already been there five years, he knew the language and local mentality. These skills made him perfect for Pix, and the team put him in charge of quality control.

They say that this encounter had a significant, if not crucial, impact on the manufacturing process. Glizhinskiy was able to supervise the Chinese factories on site. That is paramount, as Margaret Rimek puts it because without consistent control local factories will be less efficient. Ultimately, Glizhinskiy replaced Ivan Kaunov as the CTO.

When you make something in Chine, you have to be close to factories and go through the work process together. As soon as you leave the process unattended, whatever can go wrong, will go wrong: timings get messed up, wrong paint job, wrong fabrication. There are very few chances to impact the process remotely.

The startup visits CES

Manufacturing speed allowed to send the first batch of product to the backers only by January 2019, which is as little as 4 months after the completion of Kickstarter. Such a result was possible only due to high-quality preparation long before the start of the campaign. Already in January of 2019, the startup was attending the largest electronics exhibition, CES.

Margaret Rimek notes that the fact that the startup managed to deliver the product to its backers on time became huge leverage at the exhibition. “We wanted to go to CES in January 2018, but back then we only had a prototype. The IoT Hub team, which has experience participating in CES, explained to us then that the trip at that stage would not give us anything, because CES is about selling. This time we came with a finished product and fulfilled our commitment before the backers – an excellent position to start selling.”

At CES Pix managed to secure several contracts with partners. The startup notes that part of the second batch, which will be produced in May 2019, was ordered back in January at CES. In addition, the team still gets feedback from the exhibition.

We used a life hack: we took pictures of the business cards we received at CES and immediately forwarded them to our assistant in Kyiv. The latter prepared the letters in the spirit of “We’ve just talked, let’s continue the negotiations.” Thanks to this, we were able to secure the attention of potential distributors on Pix and finalize deals immediately upon returning to Ukraine.

Now Pix is manufacturing the second batch of backpacks and is simultaneously working on its marketing promotion. When everything is ready, the team will launch sales on Amazon and its website. In addition, the startup is also negotiating the sale of backpacks in retail stores around the world and has already begun working on a new product.

Jooble was founded by Roman Prokofyev and Evgeniy Sobakarev in 2006 (company’s story is available here). As opposed to many IT companies that either hastily register themselves overseas or transfer their head offices to the U.S. after barely getting to their feet and begin calling themselves an ‘American company’, Jooble has always positioned itself as a Ukrainian company.

“Our goal is to help find a job for anyone, regardless of their location, language, faith, a color of skin or their beliefs”

Although Jooble’s product, a popular job aggregator, works on 71 markets, the main and only office of the company has been located here in Kyiv since the first day. Jooble has no other locations or offices overseas. Unlike its main competitor Indeed – the largest American job aggregator with offices all over the globe. Despite its modest infrastructure as compared with Indeed, Ukrainian Jooble is the second most visited job aggregator in the world.

The new office of Ukrainian Jooble is located at 71 Kostyantynivska Street. The company moved in here in September of the last year. Before that, they had a place at Klovska, “Carnegie Center” business center. They were renting a part of the 16^th floor with a stunning view of the Kyiv cityscape. But over the past five years, the company has grown from 50 to 150 employees (that includes developers, sales, support, data scientists, marketing, etc) and the space became scarce.

Currently, the company has around 80 vacancies. They are mainly looking for salesforce and technical staff, but their primary focus is on finding country managers – i.e. people with a good grasp of foreign languages. There are also a few freelancers working for Jooble.

A million euros’ tab for abandoned factory renovations

A tour of the new office was given to us by Anastasia Parfe, Team Leader of Sales and Link-building team. The company has overhauled the site from scratch and converted it from concrete ruins into a modern loft. There are three floors with the total area of 2,800 sq.m., with main space occupied by a spacious open space on the second floor.

“In the beginning, we were looking for a turnkey building, but nothing would meet our requirements,” explains Anastasia. Firstly, we wanted to have it closer to the metro – 10 mins walk tops. Secondly, we wanted to have enough space, not only to accommodate all the existing employees but to be able to expand in the future, to have space to accommodate new people.

Then we began looking for a space that we could retrofit to our needs. This led us to an old abandoned ceramics factory.

“The place was basically with bare walls, broken windows, and flying pigeons.”

…and now it displays a motorcycle belonging to one of the employees as a part of interior design.

Repair works in the new office began on November 10, 2017, and continued for 9 months. Jooble invested 1 million euros in renovations and finishing.

Even though the views from windows of the new office are no match with sunsets at Klovska, this is partially offset by interior garden right in the center of the open space. The garden serves as a wow effect and merely as a green space at Jooble.

“When we were just planning the renovations, we created a file where employees could share their suggestions. We had quite a few peculiar suggestions: like a dancing pole or a huge inflatable rabbit. But then we got a suggestion to create a relaxation place where people could take a break from their screens and switch to something pleasant,” Anastasia continues.

All the plants here are real. And to properly upkeep their garden Jooble has hired a florist who visits the premises twice a week and takes good care of the greenery. In fact, the entire space is equipped with air humidifiers, as they say, it is important for IT folks.

“Lair” and cosmos

According to Anastasia, they faced two issues in the old office. First, the toilets – they had only two, which was not enough for a team of 100+ persons. Second issue – lack of conference rooms “It was impossible to arrange meetings when we had only three conference rooms that were always occupied.”

Currently, Jooble’s office has 16 conference rooms (10 small and 6 large). Each room has its own space-related name. For instance, “Black hole” or “Event horizon.” And one of the walls is adorned with a giant mural of an astronaut.

Unlike office at Klovska, the new office boasts many utility spaces. First of all, the employees got their own gym. Now Jooble has yoga, stretch and various other sports groups with regular group training sessions. Professional coaches visit the office mornings or evenings. Half their fee is covered by the company, and the rest is covered by members of a relevant group.

Jooble’s corporate parties and teambuilding events with professional bartenders and DJs are held in the “Lair” bar on the ground floor. Employees can visit the bar with their friends during off hours, celebrate their birthdays as well as other holidays and call their friends that are not from Jooble. The only thing is that you’ll have to mix your cocktails yourself.

“Corporate events are an important part of the team’s life. We go abroad often. Last December we visited Egypt, last January we were in Poland, before that we visited Bukovel, and climbed Hoverla in summer. All expenses covered by the company.”

On top of offsite corporate events, usually held one or twice a year, as well as New Year’s party and company’s Birthday celebrations, Jooble has the so-called “Birthday boy/girl days.” On the last day of a season, for instance, spring or fall, the company celebrates birthdays of all the employees who were born during that period.

Brightest photos from corporate events are featured on the wall

Jooble does not provide free lunches, but their kitchen always has coffee and tea for their employees, as well as some snacks, such as sausages and cheese, crackers and sweets, fruits and vegetables. “We tried to provide catering, but it didn’t catch on. Our employees usually go out for lunch or heat up their own food in the kitchen.”

There’s a place to read a book, event area, mini library, and showers.

“Once I woke up and there was no water at home. I came to the office at 7 AM to take a shower and freshen myself up before the work,” Anastasia reminisces.

Flexible schedule and strict KPIs

In Jooble, like in many modern companies, people can come to work any time they want – it can be at 7 AM or 11 AM. However, the eight-hour workday rule is still in place. Also, the company has the so-called ‘sick leave without medical certificate’ system, that is when an employee gets sick, the company sends him/her home to recuperate and does not demand a medical certificate signed by a doctor.

Jooble’s new office also boasts several nap rooms. We sneak peeked at one and found no one there, although the bed was unmade.

Employee performance is assessed through team’s and personal KPI. All teams have different KPI assessment schemes. “For instance, KPIs of managers are measured in points with a maximum weekly score of 100 points.” Then, the results for a specific period show the most effective and non-effective employees and team leaders. And to keep up the competitive spirit and incentivize the best, the company has monitors installed right under the roof of the open space streaming KPIs in real time.

The third floor of the office is occupied by accounting and finances – the only detached space from the rest of the open space. Founders Roma and Zhenya do not hide in offices with leather armchairs: they still come to the office every day and work like everybody else. And sometimes they work standing: Jooble has dedicated standing workplaces.

According to Anastasia, the company did not make all the desks ‘standing’ because there’s just no demand for that. However, if an employee needs anything, he/she just need to tell about it.

According to him, this approach is the future of entrepreneurship. The entrepreneur came up with the name and the idea back in 2014, however, he was not able to put it to life immediately.

It is my dream — I had thought about this format before I even began my previous project. Initially, I wanted to create not only a business space for residents, but a bright and large hub. It had to have all the necessary facilities for people to have fun and flourish. In other words, I wanted everyone to live their lives and feel themselves needed. We did not make it happen initially, but if we persevere, I am confident we will make it happen eventually.

Ilia Kenigstein. Hereinafter – photos by Olha Zakrevska / AIN.UA

People are informally calling the project ‘Creative States of Ukraine.’ The area of the first location, on the 14^th floor of ‘Senator’ business center, is about 2,100 sq.m. Capacity is up to 400 residents. Interior is done in Art Deco and recreates scenes from the 40s and 50s New York.

The main wall of the lounge area is adorned with a mural, the hall is furnished with leather and fabric upholstered sofas, coffee tables, and oversized armchairs. The distinctive feature of the space is the bar counter. Another eye-catcher is a retro Jukebox. Windows are overlooking Pechersk and other local areas.

All that has been developed by an in-house team of designers. It was decided not to engage third-party studios. Firstly, says Kengistein, it allowed to save funds, secondly, not all contractors have sufficient expertise.

Creative States, Lounge Area

Details matter in this co-working. For instance, one of the conference rooms has a modular table — it allows converting the room into a small lecture hall and eliminates the need for a movable wall. It helps to save costs and optimize space.

The same approach applies to the fittings: conference rooms are equipped with Logitech conference cams. They capture all participants and automatically zoom in speakers as well as provide sound and allow to share the screen on a TV. In the future, it is planned to equip the rooms with Google Home smart speakers and set up custom integrations. For instance, residents would be able to schedule meetings or call an office manager through voice commands.

How It Works

Majority of residents will be accommodated in mini offices. There are 55 mini offices in coworking and they occupy most of the space. Offices are kind of makeshift: there are quite large spaces that can be remodeled, there are rooms for small teams (1-10 persons) and even one-man office. In addition, there are 6 conference rooms: three big halls and three smaller rooms.

Conference room, Creative States

It is expected that 50-60 persons will visit the project individually, without corporate agreement. However, the space will be closed for random passers-by — you can get access only on a monthly basis, there will be no daily or weekly access. Creative States is pursuing the idea of a community that is closed from the outside but open from the inside.

Individual workspace

The workspace is already 70% sold, and there are no plans to make it 100%. According to Kenigstein, they strive to give companies space for development — if needed, companies can occupy new spaces or move to bigger offices. The most flexible format is provided by the so-called suite offices with spaces that can be restructured and with walls that can be branded.

One of the Suite offices

A special area is a co-selling or shared space for sales managers. It can accommodate up to 25 specialists and is separated from the lounge with a movable wall. This workspace features active noise canceling. It works just like noise-canceling headphones, but for an entire room: speakers produce a specific white noise. Human ear gets used to it within 15 seconds, and it allows to reduce the noise coming into\from the room by 50%. The cost of this solution is unknown, but we are talking about ‘reasonable cost’, says Kenigstein.

Co-selling space

He emphasizes that sound insulation is actually a weak spot of modern Ukrainian coworking workspaces — that is why they made extra efforts in order to soundproof conference rooms, offices and a co-selling area at Creative States.

They’ve also invested in network infrastructure: workspaces come with Cisco solutions worth tens of thousands of dollars. There are as many as twenty stations available. Each station can accommodate 400 to 600 users with several devices each. In addition, Wi-Fi routers will perform two functions: they will also indicate an approximate location of residents in the coworking.

Resident companies have not yet been announced publicly — all we know is that they include both tech startups and companies, as well as traditional businesses.

They, in turn, undertake to comply with the internal code of conduct. The purpose of the document is to rid the space of toxic and problematic participants. For instance, internal headhunting is strictly prohibited.

We are a great choice for companies with up to 100 employees. Larger teams shape their own culture and require their own space, while coworking is a great option for growing businesses.

Another principle of the project is the absence of hard selling. Residents are not required to sign long-term agreements. According to Kenigstein, companies should have an option to move in, expand or leave promptly. In turn, Creative States view themselves as a services provider and do not intend to cross that line — there won’t be any acceleration programs or similar commotion in the coworking.

However, residents will not be left solely to themselves. On Fridays, the coworking will have ‘Happy hours’ after 6 p.m. during which residents will be able to enjoy a drink and relax to ambient music. On Wednesdays, they are planning to invite famous speakers to speak on subjects, as Kenigstein puts it ‘ranging from Scrum implementation case studies to backyard barbecues.’

Events will be held in the morning before the workday begins, and residents will be able to have breakfast while listening to a lecture. The key is no pomposity or stateliness, says the head of the project. Even to celebrate their opening they are going to replace ‘ribbon cutting’ with a party.

What’s Next

Creative States are not planning to limit themselves with a single ‘state’. Creators of the project are planning to open two more spaces by the end of 2019. Due to competition, not much information has been disclosed so far. The second coworking is going to copycat the concept of the first one — about 2,000 sq.m., business center, downtown Kyiv.

The third location is going to be a far cry. As Ilia Kenigstein explained it, the area is going to reach up to 6,000 sq.m. with the capacity to accommodate up to 1,000 people. This is going to be a separately standing building with its own adjacent territory. Furthermore, the team is planning to expand the project activities beyond the coworking business based on the third coworking. It is not clear what the team is going to do, but it is going to be related to learning or education space for kids. According to Kenigstein, the demand for this service is easy to forecast — children of most residents are 2 to 6 years old.

The maiden workspace of Creative States has already made a step towards reaching out to children. There’s a separate conference room for kids in coworking with a lower table and armchairs. One wall of the room is adorned with paintings while the other is writable. There’s even a separate toilet for kids, and ladies’ room is equipped with a changing table. As Ilia Kenigstein puts it “It is unfortunate that the table is installed only there. Changing tables should be in men’s toilet as well, but the society is yet to understand this.”

Children’s Conference Room

Another initiative is still in the making — they want to launch a hire a nanny service in Creative States. A dedicated person would spend a day with a child while parents would be able to work.

Price Policy

Creative States position themselves as a coworking of upper tier, but not a premium segment. Price per workstation — starting $300 (hot desks) and starting $390 (offices). There are more expensive offers on the market, but the States are confident that such positioning is adequate for the project.

In addition, the firs residents got some extra perks: some got a great deal for singing long-term agreement (for half a year), some were allowed to move into an office for 10 persons with only 8 employees — this way the companies literally got room for growth. Moreover, Creative States do not share the idea of ‘extra charges’, when on top of a fixed rent residents pay for additional services, like access to a printer or scanner.

Kitchen in mid-20th Century Retro American Diner Style

As far as investments are concerned, creating space from scratch is a matter of approximately $500-600 per square meter. According to Kenigstein, this indicator is below market average due to previous experience of the team, relatively low organizational expenses and in-house design development. He did not respond to the question about the amount invested directly, but explained the following:

In order to launch a similar coworking space one will need to have at least $1 million. The amount includes not only the necessary repairs, but also installation of equipment, salaries, marketing costs, etc.

According to preliminary calculations, it will take 4 years to recoup the investments made in the project. In his conversation with AIN.UA reporter Ilia Kenigstein preferred not to disclose the identity of the project’s investor. According to him, they have developed strong partnership relations. Day-to-day business is primarily run by Kenigstein.

The entrepreneur emphasizes that this time he has an ironclad protection against the risk of losing his influence and share in the project: all agreements and terms have been scrutinized and underwent multiple legal and personal review. He says:

You should never neglect agreements. If you cannot reach a general consensus — don’t rush it, put it on hold and resume work when all issues are taken care of.

According to OpenDataBot, legal name of the project is Kreatyvnyi Shtat Senator (Creative State Senator) LLC with shares in the hands of two holders. 60% belong to К.А.N LLC with ultimate beneficiary via Austrian firm Deverte Holding GmbH is Aleksandr Spektor, the owner of Senator business center.

Another 40% belongs to Kreatyvna Krayina (Creative Country) LLC, which is solely owned by Ilia Kenigstein.

The Future of Coworking Spaces

Ilia Kenigstein is not worried about business prospects. In his forecasts he relies on statistics. According to the most modest calculations, Ukraine has around 150k IT specialists with roughly half of that number living in Kyiv and vicinity. This is a market with 70-80k potential clients — it has room for a few dozen new large locations.

It is possible to ‘nip off’ 10k people from the market already at this stage. 20k is more difficult, but still possible. We are not talking here about behemoth companies, like the largest outsourcers.

He is also confident that 8-10 years from now virtually all businesses would transition to coworkings. Offices would only be viable for behemoths that are capable of building own campuses and facilities.

Needs of others would be met by the new format. In addition to being simple, it would make things easier for businesses: a bank or an IT company would not have to have an expertise in designing spaces, arranging for office equipment and catering. And whereas now a coworking at best occupies a single floor of a business center, in the nearest future it would be able to devour an entire building.

During the conversation, Vlad Nozdrachev, the founder and head of Superludi, asks to immediately identify the positioning: this company does not belong to Andriy Fedoriv, however, Vlad is one of the partners in the Fedoriv agency. “If you see that the button does not work or something is not right somewhere on the website, do not write to Andrey, contact me,” says Nozdrachev. Superludi is his project, in which Fedoriv is an investor and a strategic partner.

The idea to start creating an educational project appeared in 2017. According to Nozdrachev, there are two versions of the launch: an official and an unofficial one.

“Andrei Fedoriv spoke a lot. At one point, we realized that the score of speeches goes to dozens, the reports are repeated. There was an idea to somehow scale it, once there was a request, and at the same time we wanted to connect other people who were “super” in their areas: super in business, in sports, in relationships. So, the idea to launch Superludi appeared.

There is a less popular version: I somehow came up with the idea of ​​running a content department. The audience of this department would not be massive, but rather consisted of potential customers: through the content we would let know that you should not be afraid of bold decisions, and there are those who can prove it,” explains Nozdrachev.

Putting it all together, we decided to launch the project Superludi in 2017. The first lecturer was Andriy Fedoriv with a large eight-hour marketing report.

In preparation, says Nozdrachev, they managed to have their eyes blackened. First, the course was recorded for four months. “Andriy came to the office at 6-7 am, while there was no one. He turned on Rammstein, put his energy together and we started recording.” Since no one had any particular experience of recording many hours of courses, the content was constantly updated, the markers went one by one, and this took a lot of time.

However, it turned out that writing everything down is only half the battle: it still needs to be sold. “And here we realized that we did not have anything set up: the site, payments, customer acquisition, amount of money it would cost us, the team. In the beginning, it was utter chaos,” recalls Nozdrachev. A separate difficulty was the recruitment of the team, the search for competent people. “Everyone for some reason thinks I’m angry, they are afraid to work with me. I need to smile more,” Nozdrachev laughs while shooting, complaining about the difficult search for really good frames. But the experience gained was not in vain. The second course with Nina Levchuk, who talked about building a personal brand, was recorded in just one week.

They put an atypically high price tag for Ukraine, starting from $200, and for an extra charge they provided additional bonuses. And the customers paid.

Nozdrachev does not give exact figures, however, he assures: several tens of thousands of dollars were spent on everything. But sales have gone on hundreds of thousands. The bill paid goes to thousands of people. Due to the fact that the courses were online, they were able to sell them not only within native Ukraine. The sales went well in neighboring countries, as well as Germany.

New format

Despite the success, Nozdrachev did not continue the story with the development of long hours-long courses from one speaker. At one point, the sale of the Fedoriv and Levchuk courses was closed, you cannot buy them now. The Superludi team announced that they are preparing for a big relaunch in a new format, and there is no such thing in Ukraine.

Why did Nozdrachev stop selling what was already making money? First, the story is difficult to scale since finding people who are willing to spend dozens of hours on a course filming is difficult, plus you need to take only the best. As a result, the future of this story seemed uninteresting to the company’s founder. Secondly, having restarted Superludi, Nozdrachev went, as he himself assures, to a qualitatively new level in the preparation of content. “I no longer wanted to sell what we did before,” explains the entrepreneur.

The new format provides a major change in the material feed. Firstly, there will be no more hours of speeches by one speaker. Each of the Superludi has a course from one and a half to two hours, divided into several short blocks from a couple to 10-15 minutes. All of it has additional text materials, they help to better understand the material. Nozdrachev quarterly releases a block of four courses, essentially four speakers, each of which presents a specific topic. The first courses that will be shown are by Volodymyr Popereshnyuk, Andriy Fedoriv, ​​Andriy Zdesenko and Edgar Kaminsky. It is known that Yevhen Chichvarkin and Vasyl Khmelnitsky have already been shot for the next year.

New seasons were filmed on expensive RED cameras, and the choice of a contractor was a real challenge: few were willing to take on the project. As a result, the team gathered on their own and it gave its profit. As Nozdrachev says, the picture quality is incomparably higher in comparison with the first season. Along with it, there were new costs and expenses: the estimate for shooting a single speaker in some cases reached about $10,000.

The monetization model has also changed. If earlier you could buy an access to a set of lectures of one person, now an access immediately includes the price for four courses, but for a certain time only– a quarter. As soon as 90 days pass, access is closed. In order to stimulate a new payment, Nozdrachev plans to add 4-5 new courses every quarter, after which the user will have an incentive to extend access.

“Look around: people often pay 10,000 UAH for a ticket to a conference, where they, among 500 other people, sit in an uncomfortable chair and listen to the most famous speaker talking about motivation or about something else of little use. Here, a person receives information from top speakers, in super quality, with a lot of additional materials in any place convenient for him or her. It costs money,” Nozdrachev says. In addition, he had already checked his hypothesis: the lectures of Fedoriv and Levchuk were sold well.

There are plenty of competitors. They will fight for the client with everyone who does similar online projects: there are not so many of them in Ukraine, but they still exist. A large reservoir is business conferences, there have been a lot of those lately. And last but not least, YouTube bloggers – there is a lot of them on the market. However, Nozdrachev is sure that education is on the rise now, so there is enough space for everyone. In addition, as the founder of Superludi says, he was inspired to create such a product by his “aversion to the classical education market”: “I have seen enough people who can scream at their listeners or rub them into nonsense. And it does not matter that a person has no experience in business – for some reason they are listened to, although this does not make sense. We do things differently.”

***

After the conversation, Nozdrachev is going to go to the location, to the new office of Superludi, which is under construction now. This is the last year when he needs to combine two jobs, the teamhelps him in it. “I am in Fedoriv, ​​and in the educational business. This is difficult and can only be done if you assemble the team correctly, build all the processes,” he adds. Before the relaunch, Nozdrachev is visibly nervous, but he confidently answers the question about the future. “I know exactly where we will be in December 2019,” says Vlad, immediately responding to the answer to the question “where?” – “We have preliminary agreements with potential partners in three different cities to launch the same product, but with their local entrepreneurs. We sell them expertise, knowledge, we help them, and everything else depends on them. We will get a great synergy. In addition, there are ideas for other products. However, their announcements will come later,” Nozdrachev concludes.

There is the first repair in many years in the main post office in the center of the capital, known to all Kyivans and visitors. The creator of Rozetka, Vladyslav Chechetkin, posted page a photograph of a room with peeling walls on his Facebook and added a post: “There will be a garden city… A new Rozetka store on Maidan.” Ironically, at the dawn of the ’90s, there was a “Place of collective access to the Internet” of Ukrposhta located in the same room. History has made a spin and brought the country’s largest online store here, which has become an analog of Amazon for many Ukrainian shoppers. And thus, it marked the reverse transition online in offline or, instead, the dissolution of these business models in each other.

However, what does Rozetka do on the territory of Ukrposhta? Recently, Chechetkin’s company agreed with the post office to lease a part of its main premises of 1,500 square meters. The conditions are mutually beneficial: the fee indexed every year (only 70 million UAH over five years, that is, the average cost per square meter is $28 per month at the current rate, which corresponds to the market rates), and the tenant makes repairs at his own expense. However, the main thing is that the management of the company was able to attract the store to the pool of its customers, and now millions of Rozetka clients have received the option of delivering goods through Ukrposhta.

“Perhaps, for the first time in the company’s history, it is managed by a team, for which efficiency is not just a slogan, but a real task in the daily agenda.”

For the latter, it is essential not only to make money but also to get rid of high square meters in maintenance. The company has 1.3 million square meters of liquid real estate, of which the fifth part not used. Last year, taxes on maintenance of premises amounted to approximately 400 million UAH. In the future, Ukrposhta wants to sell or lease part of its real estate fund, and to direct money to the development of modern infrastructure. Perhaps, for the first time in the company’s history, it is managed by a team, for which efficiency is not just a slogan, but a real task in the daily agenda.

“Igor is not afraid to take responsibility. It is atypical and especially important for a state-owned company,” first deputy director of Ukrposhta,” Oleksandr Pertsovskyi.

They have already tried to reform Ukrposhta, however, neither the political nor personal will of the leaders was enough for the positive outcome. Experienced say that one of the predecessors of Ihor Smelyanskyi, the current CEO of the company, managed not to sign a single document to avoid any situations for almost a year in the position. Smelyanskyi processed all the documents that put on his desk by the next morning. “Igor is not afraid to take responsibility. It is atypical and especially important for the state-owned company,” says Oleksandr Pertsovskyi, first deputy director of Ukrposhta,  about the boss. Smelyanskyi calls himself an anti-crisis manager. “I was invited as a person who can achieve results in difficult short-term conditions,” that’s the way he sees his mission.

MISSION POSSIBLE

The front works for the “postal” Dante are rather big. Ukrposhta is the second largest company in the country after Ukrzaliznytsia (it employs 76,000 people). The scale of its activities is larger than that of the entire banking system of Ukraine, which is 11,500 branches of the post office versus 10,000 at banks, with the number of the latter reduced. At the same time, the company’s position in the critical market of shipments within the country hopelessly fell behind the private competitors. For example, in 2016, it sent 18 million parcels, while the leading competitor, Nova Poshta, shipped 120 million packages. So far, the gap is slowing down: this year Nova Poshta plans to serve 170 million items, and Ukrposhta, which crossed the 20-million-mark last year, expects to deliver 50 million parcels.

“If Ukrposhta were a benchmark for us, we would go bankrupt in a month.” Сo-founder of Nova Poshta, Vyacheslav Klimov

Vyacheslav Klimov, a co-founder of Nova Poshta, said more than once that he did not even consider the state operator as a competitor. “If Ukrposhta were a benchmark for us, we would go bankrupt in a month,” he said in a recent interview. “Our NPS (Net Promoter Score is the consumer loyalty) is growing; queues are shrinking with increasing of delivery volumes, we receive 99% of calls to the contact center from the first call and respond to 95% of customer complaints in social networks within the first hour we receive them. The number of branches is growing: only in August 50 units were opened, now there are more than 2,440 of them. This year, we launched the Kyiv Innovation Terminal for quick sorting of packages, received a loan from the European Bank for Reconstruction and Development, and started building a second one in Khmelnytskyi. When Ukrposhta shows a similar result, we can talk about competition,” Klimov explained to AIN.UA.

Perhaps, the main argument from all of the above is the level of service: for a service company, losing this parameter is almost equivalent to a complete defeat. Prerequisites for the backwardness of Ukrposhta have been accumulating over the years – worn out fixed assets, irrelevant technical equipment. And most importantly, most employees seem to be stuck in the era of the USSR with its rude and unobtrusive service and the absence of any incentives for development.

“And only in 2015, we seriously believed that the mail is over, that it should operate for another six months, and they must be closed,” Infrastructure Minister Volodymyr Omelyan.

Nevertheless, after the arrival of a new management team to Ukrposhta, changes in the company became noticeable not only because of the activity in the media and social networks (which is criticized because of its excess). Chatbot and mobile application, integration via API and monitoring of NPS, bonuses, and KPI – all this sounded almost like the colonization of Mars about the state-owned company until recently. Ukrposhta is changing quite noticeably, even if it is far from the main competitors. “There are changes. And they are possible even in “hopeless” state-owned companies. And only in 2015, we seriously believed that this mailing service is dead, that it should operate for another six months, and then it must be closed,” Infrastructure Minister Volodymyr Omelyan commented on the company’s success.

What is the secret of Smelyanskyi and how did he manage to do what the others have not mastered?

LOW START

On the first working day of the new head of Ukrposhta, correspondents, television cameras and a black Lexus were waiting for him at the main entrance – such is the custom. However, the manager slipped unnoticed by everyone from the back door, wearing inconspicuous jeans and a backpack on his shoulder. His work started 15 days earlier and “not according to the instructions,” meaning not in the office, but on the “last mile,” in one of the sorting offices to get a better understanding of how everything works and where the problems are. “In Ukraine, you can win when you shake the system unexpectedly,” explains a top manager. It is difficult to “shake the system” on your own, so Smelyanskyi raised as a professional in the Western corporate world, brought a team along with him.

“In the first days of work, the variety struck. Colleagues joined the management team of Ukrposhta from various industries, starting from banks and telecom to logistics and metallurgy,” says Pertsovskyi. For example, Lilia Bushing, Deputy Director General for Personnel, previously worked at Tetra Pak Ukraine and “Metinvest”, Deputy Procurement Director, Oleksandr Nachod, used to work at “Prozzoro” and the agricultural holding “Mriya”; Deputy Business Development Manager, Maxym Rabinovich, came from Nova Poshta (prior to this he worked in Kyivenergo and DTEK). Pertsovskyi himself came to Kyiv straight from Singapore, where he was engaged in the development of the consulting area of ​​DHL.

“In Ukraine, you can win when you shake the system unexpectedly.” General Director of Ukrposhta, Igor Smelyanskyi

Before the change of team, communication within the company was abysmal, says Smelyanskyi. “There were 127 HR systems, that is, to find out how much we spend on staff, which is 75% of expenses, it took us two weeks. There were 124 payment systems, 22,000 computers, and 1,000 servers. The staff did not talk to each other, but in case of nuclear war, they very well prepared, the enemy would not pass,” the CEO jokes. Of course, all this turned out to be fiction: the average age of the “iron” is 14 years, while only 18% of the departments computerized. The fifth part of employees was in the “red zone,” that is, those who couldn’t be retrained and forced to smile. “Enemy” leaked at the first opportunity, the attack of the Petya virus in 2017 brought mail a 100 million UAH loss.

To restore order, it was necessary to centralize the management using the back office and logistics. It was essential to strengthened sales and service functions in the field. “Today, we hold open competitions for the position of regional leaders, who were previously akin to noble estates,” says Pertsovskyi. Sometimes dismissing those who do not correspond to the new image of the company takes as long as six months.

“Igor’s basic merit is that he created the conditions under which independent teams appeared for various Ukrposhta businesses not only at the level of their deputies but also in the regions. Moreover, these teams have common values ​​and a clear vision of where to run, which has digitized into specific indicators regarding quantity and quality,” says Yulia Pavlenko, director of international operations at Ukrposhta.

Igor Smelyanskyi, General Director of PJSC Ukrposhta

How rough is Smelyanskyi as a manager? He believes that he’s quite tough. “The last decision is always with me. Democracy is good, but reform requires one person who makes decisions. Then you can achieve faster results. Remember Lee Kuan Yew, whom everyone admires, but he is not a Democrat at all,” he says. Employees do not fully agree. “I don’t notice any authoritarianism behind him. Unless, when discussions are held up or in a team with extreme opinions, he decides his own hands, without trying to hide behind the majority opinion simply,” says Pertsovskyi.

The issue of procurement had to resolve in a quite authoritarian way. In the first two months, Smelyanskyi and the team not only stopped some suspicious transactions but also achieved a revision of prices under current contracts. Initially, it expected that on an annualized basis the savings in procurement would be at least 50 million UAH, however, by the end of 2017, the company reported savings in work with suppliers of 370 million UAH. “The main condition for the effective procurement of state-owned companies is the ability to carry them out without external intervention, and here is the great merit of Smelyanskyi,” said Oleksandr Nakhod, who spoke about the first reforms.

ABLE TO SURPRISE

In addition to building a capable team, among his main achievements as CEO of Ukrposhta, Igor Smelyanskyi notes improving the image of the state-owned company and laying the foundation for a radical restructuring of the infrastructure. In the first case, we are talking about the rebranding, which the company conducted last spring. They changed the logo, slogan, and overall design. Inside the company, the change of image is considered a significant achievement of the marketing and customer support team. “Started with the legacy of belligerent, I would say, customer perception and negative NPS. However, they began to aim immediately at large-scale results to jump over their heads. We were able to interest top partnership agencies that helped pro-bono with the large-scale rebranding,” summarizes Pertsovskyi. As Smelyanskyi assures, in two years NPS jumped from -5 to +20. Also, some digital services (even the chatbot) launched earlier than those of competitors.

The new image and the slogan “Able to Surprise” is matching the same tasks of the program of opening branches of a new format, the automated and comfortable for the client ones. Have the latest efforts been appreciated? “Perhaps, rebranding is an example of the coolest thing they have done. At first, I thought the way many other people did: what is it done for? It seems like throwing money away. However, later, when I got into the new department myself, I understood that the image means a lot. There is a feeling of something more modern and progressive,” says Dmytro Pokotilo, owner of the F.UA store. “My wife received SMS-notification from Ukrposhta about the parcel that has arrived. The word “surprise” hardly explains her emotions,” a Facebook comment similar to many others two years ago. Today many people get used to the fact that the mail is still surprising them.

Computerization can be an example of infrastructure improvements (8,300 computers purchased in 2 years) and switching to mobile offices in villages, for which the post office purchased over 500 vehicles.

The international delivery team has achieved a lot. A lot of new services launched for exporters and those who buy goods in foreign stores. For example, the exporter’s personal account and online customs invoice processing, an automated cumulative discount system, tracking international parcels outside Ukraine, online reclamations and payment of compensation to a bank card, free advice from a customs broker, and others.

“Making the operation through the website/API has reduced the customer service time from 8.5 to 3.5 minutes. And after the integration of the online payment function, this time will be reduced,” says Yulia Pavlenko, who also deals with the E-export school initiative. The school was created to train exporters, mainly SMEs of the craft theme for them to open new markets for themselves and trade more effectively abroad.

“It was scary to start working with Ukrposhta, but it really became much easier to register and track the package with your account, now you don’t have to wait in all these huge queues,” says Oleg Kovalik, the owner of the “Sribnyk” trademark, who was inspired by Ukrposhta module to start trading also on eBay and Amazon, besides Etsy. “We started from a position where imports dominated. But the international team was very inspired to “leveling the skew,” Pertsovskyi notes. According to Pavlenko, exports grew by 37% in 2017.

FIGHT FOR E-COMMERCE

Of course, not everything is as smooth and rosy as it may seem. Behind the showcase of big ambitions and small but beautiful victories, there are many problems, enormous work and a series of defeats. For example, the start of active employment with e-commerce can be listed as one of the dynamic teamwork achievements. Dozens of market leaders and small online stores began to offer delivery Ukrposhta.  Among them are Rozetka, Prom, Lamoda, f.ua, boutique, Parfums.ua, Yakaboo, Makeup, and others. “Previously, the delivery of Ukrposhta was akin to a lottery; it was a sort of surprise whether you would or will not receive your parcel. E-commerce leaders were not ready to play such a Russian roulette and losing customers,” says Pertsovskyi. Now the company has introduced guaranteed express delivery the next day, and it is doing its best to meet deadlines. Also, with the help of IT integration tools, there is a goal to make the exchange of information about orders and the generation of labels as simple as possible through the API of Ukrposhta. However, the path to this update was a long one and, and it seems that it is far from over.

“Previously, the delivery of Ukrposhta was akin to a lottery; it was a sort of surprise whether you would or will not receive your parcel. E-commerce leaders were not ready to play such a Russian roulette and losing customers.” First deputy director of Ukrposhta, Oleksandr Pertsovskyi.

“We tried to start working with them since 2014, however, there were only conversations going on. Back then, they lacked software automation. A year ago, only the new team found out what we needed; they said that everything would be ready by the new year and we will be able to connect. Contrary, everything was just terrible and very raw, the number of mistakes was wild — consignment bills done in a crooked way. They fixed errors only by August. Now it has been doing well for a month already; there are no complaints. However, it’s too early to talk about the results now,” says Dmytro Pokotilo.

“Of course, there are still a lot of questions, and it feels that the company is still far from being in the best shape. But we get tremendous help from people at Ukrposhta, and there is hope that they will get out of the Soviet Union standard way of thinking,” says Vladyslav Chechetkin, who tells us about the impressions of working with the company.

“They are trying hard to improve quality and delivery. Plus, they react to constructive feedback about their work,” adds Oksana Zvigun, CEO of Lamoda.ua, confirming that the company sees Ukrposhta as a long-term partner.

RUNNING WITH OBSTACLES

There have not yet been a quantum leap in the development of Ukrposhta, and it could not have happened in such a short time. But what could prevent it from happening in the future?

The excess of regulators and the inflexibility of the state structure do not give an opportunity to reform it as promptly as a private one. “When you are the head of a state company, you have many “friends.” NABU, SBU, Statefinaudit, and others. There are things that we cannot do as a state-owned company,” says Smelyanskyi. For example, Ukrposhta cannot give customers special discounts, by law, this will be considered a corruption component. A separate nightmare of any salesperson is a cumbersome, incomprehensible and inefficient tariff system. “We had 35 stamp tariffs. I said: let’s make five stamps, and we will not have to deal with garbage,” the head of Ukrposhta tells the story from the first year of work. The tariffs have to be agreed upon by the trade union association, the AMCU, the Ministry of Justice, the Ministry of Infrastructure and the Ministry of Economy. “They are all philatelists of the country. Everyone has their own opinion of what the stamps should be like,” Smelyanskyi jokes.

“We had 35 stamp tariffs. I said: let’s make 5, and we will not have to deal with garbage” Igor Smelyanskyi, General Director of PJSC ” Ukrposhta”

The company stumbles on such things at every turn. For a long time, it was up to the GFS to decide whether Ukrposhta would be able to lower the price of shipping from China. Because of the ban to work with private postal operators, it was necessary to bring parcels from China through the Baltic countries or Belarus. Because of this, delivery times stretched to 20-30 days. The company sought to lift the absurd ban for two years, and it finally happened only in May.

Now it is possible to build direct delivery channels for up to 14 days. However, in combination with an inflexible tariff policy, this niche could have been lost altogether. “Our competitors actively contacted Ukrposhta partners, offering a waste tariff. Traditionally, the inflexible state-owned company would lose customers. However, my partners and I proposed new solutions, for example, combining the advantages of monitored delivery with the availability of an unregistered delivery (an example of such a product is AliExpress Saver),” says Pertsovskyi. As a result, the position in the niche maintained.

Inflexibility illustrates the problem of offices. Ukrposhta likes to boast that it is the largest service company in the country because of the number of branches. Not all of them are repayable and convenient to the customer. “Analyzing our presence in specific cities, we noted many “white spots” (for example, in actively developing suburbs of Kyiv and on the left bank of the capital). In these locations we open new offices,” confirms Pertsovskyi. However, sometimes even the optimization of offices with the transfer of personnel from partial to full rates is accompanied by battles. It is happening in the same way now, for example, in the villages of the Chernihiv region, where an experiment is conducted with “mobile branches” on wheels.

Vyacheslav Klimov says that Nova Poshta gives 5-6 months to each opened department. If during this time it does not pay back, then it is closed or transferred to another place. Ukrposhta can only dream of such a speed of response to the market situation. More precisely, it can’t, because there always will remain a social function behind it.

EXCHANGE OF COURTESY

Despite attempts to impress the opposite, competitors noticed the transformation of Ukrposhta. Nova Poshta uses the weak points of the company, for example, dependence on regulators. It complained about company in the AMCU, suspecting of abuse of state aid. Later, through the National Bank, it it challenged a competitor obtaining a license to transfer money in national currency. Why do they do it, if a private company does not even see a competitor in the state post?

“All our appeals are aimed at creating equal conditions for Ukrainian business. We are in favor of equal opportunities for everyone so that not only the state operator could receive licenses for financial services so that all market players could rent state property on the same conditions,” explains Vyacheslav Klimov. There is a downside in being a state company, and it has not escaped opponents.

“The presence of a state player in the market with special working conditions from the state is noticeable, but this is not about fair competition. Many market players ship parcels, but we play on chess fields of different sizes,” Klimov concludes. The words about the benefits of Smelyanskyi, who has not been able to achieve a revision of the ruinously low tariffs for the delivery of pensions for two years, can only make one smile.

“The service “Express delivery” in cities with a population over one million and delivery from online stores is a field with lush grass, where only Nova Poshta was a leader until now.”

Has Ukrposhta crossed the road to a competitor? At least, it’s trying to do so. The service “Express delivery” in cities with population over one million and delivery from online stores is a field with lush grass, where only Nova Poshta was a leader until now (the closest competitors, for example, “Mist-Express”, could not compete with it neither in coverage nor in consumer trust rate.) According to Ukrposhta, today 90% of the shipments in Kyiv are delivered on the same day, that is, as part of the Express tariff (unlike the cheaper Standard, where the time frames are wider). Stores are also quite satisfied that an alternative appeared in the delivery. “This is an added convenience for customers,” Vladyslav Chechetkin explains the decision to attract the state post. However, according to him, the new operator has attracted to the same new stream of customers. “We see that most customers who order from us through Ukrposhta have never bought from us before,” he notes.

“There is no high-quality and cheap delivery, as well as semi-fresh sturgeon.” Сo-founder of Nova Poshta, Vyacheslav Klimov.

According to Dmytro Pokotylo, the delivery rates for two envelopes are almost the same. It is only tiny packages (up to 500 grams) that are much more advantageous to send by Ukrposhta. “At NP, they are costly,” notes Pokotylo. “We never compete with price. Becoming a discounter for which price is key in the business model is not included in our plans. There is no high-quality and cheap delivery, as well as semi-fresh sturgeon,” they say in Nova Posta, asserting that the difference in delivery is only 8-11 UAH with much higher reliability indicators.

 DREAMS ABOUT THE BANK

The only thing that Smelyanskyi has not been able to accomplish yet is to make the company profitable. More precisely, on the contrary, Ukrposhta began to show losses with him, even though it had previously worked with a small profit or to zero. At the end of 2017, the loss amounted to 206 million UAH, for six months of 2018 it exceeded half a billion. There are many reasons to that: same non-flexible tariffs, a large load on the payroll fund, the need for significant investments in infrastructure. However, the goal of making a profit regarding technical backwardness should not be a priority, according to CEO. “What is important for a country: to show a profit or develop infrastructure?” he asks.

However, Smelyanskyi knows how to increase revenue. Financial services bring up to 40% of income in, which means they need to become a bank, as decided in Ukrposhta. For the third year, the company has been engaged in hot debates with the National Bank and parliamentarians, arguing that nothing is threatening to the banking system. There are a lot of arguments against it, both regulators and banks object to it. The law draft, which will allow the company to achieve the desired goal, has been in parliament for a long time and has been recommended only for the first reading so far.

Igor Smelyanskyi, General Director of PJSC Ukrposhta

How will the company benefit from a banking license? It is not going to issue loans, take deposits and conduct other activities of a full-fledged bank. We are talking only about creating an insured bank, whose clients can open current postal accounts and pay for postal and other services with non-cash. Mainly it is necessary to reduce the transaction and processing costs of Ukrposhta: the lion’s share of payments now made in cash. 17 million people today live in the villages that do not have bank branches, as calculated in the state operator. 6.5 million of those people do not have access to bank transfer, and the potential market demand is there. “Only for the use of agricultural land, we transport UAH 2.5 billion in cash annually,” the CEO states. The total turnover of paper money in the Ukrposhta is 100 billion UAH per year, says ICU analyst Mykhaylo Demkiv. This is not only pensions and payment for periodicals, but also the turnover of goods from the sale of household goods.

“There are concerns that the law will enable the company to perform part of its banking functions without a license and its attendant obligations. An exception for one market participant may distort competition,” Demkiv explains the bankers’ arguments.

“Historically, I do not perceive the word “no,” therefore, despite all the odds, we will go towards the goal.” Igor Smelyanskyi, General Director of PJSC Ukrposhta

The bank is one of the unfinished undertakings to which the Smelyanskyi team plans to devote further reforms — one of the areas in which there is no complete satisfaction with its results, the head of Ukrposhta calls personnel policy. “I think many decisions could be much tougher,” he says. Also, among the immediate plans for the future, there is the restructuring of the network of logistics centers, which, in the opinion of the top manager, is a subject to ruthless reduction and restructuring: 5-6 centers should remain among the current 36 ones. Here, the EIB analysts, who have developed a logistics strategy for Ukrposhta are in solidarity with him.

“Have we stopped? Of course not. Historically, I do not perceive the word “no,” therefore, despite all the odds, we will go towards the goal,” says Smelyanskyi. And if force majeure will not stop us on our way, Ukrposhta may well become a successful case study about what a state company can achieve if it plays according to fair business rules.

“Why is it (3G and 4G technology – editorial team) still not introduced? The answer is simple: corruption. But I am convinced that 4G is not just a communication technology. This is the impetus for economy, which fills budget, reforms public procurement and so on,” President Poroshenko stated in the summer of 2014. There was no 3G in Ukraine yet.

The head of state himself launched the introduction of 4G a year after this announcement. In late July 2015, he signed the decree by which he requested the National Commission for the State Regulation of Communications and Informatization to develop a plan for the introduction of the fourth generation of mobile communication.

4G/3G/GSM World Coverage map. Source: WTZ

In the case of 3G, the difficulty was that the military used the fraction of frequencies appropriate for this standard. It was necessary to conduct a conversion to clear the required bands. In view of this, there were delays in the launch of 3G in such regional centers as Zhytomyr, where the third-generation communication appeared only in July 2017.

In the case of frequencies for 4G, the suitable bands were unevenly distributed between military, analogue television and current operators. The working group of 7 operators (Kyivstar, Vodafone, lifecell, International Telecommunications, Datagroup, Intellectual Communications (Giraffe) and First Investment Union) invited Analysys Mason (Britain) in order to make head or tail of Ukrainian radio frequency spectrum.

The most popular band for LTE is 1800 MHz. In Ukraine, the Big Three operators – Kyivstar, Vodafone Ukraine and lifecell – use these frequencies for GSM mobile communication, GPRS and EDGE voice and mobile traffic. At the same time, the frequencies are unevenly distributed between the operators. More than half of the spectrum in these bands was controlled by Kyivstar due to Beeline and Golden Telecom takeover. However, according to the provisions of the effective Law “On Telecommunications”, the largest operator could not just set 4G on these frequencies. For this purpose, it would be necessary to obtain an appropriate license.

One way to redistribute the spectrum between the telecommunication competitors and enable them to launch LTE on it was to amend the legislation. In August 2016, the Verkhovna Rada submitted a new draft law “On Radio Frequency Resource”. Among other things, it was intended for introduction of technological neutrality. It is the principle, pursuant to which operators can use their frequencies for the communication standard regardless of what is stated in the license. “If we do not adopt these draft laws, then we will create a setback in the introduction of 4G in Ukraine at least for a year and a half,” Oleksandr Danchenko, head of the Verkhovna Rada Committee on Informatization and IT, said in the interview with AIN.UA.

But things, as often happens, didn’t go as planned. The draft law of Danchenko eventually went no further than the relevant committee and was first withdrawn, then introduced again. The last record on its status is dated May 16, 2017.

Frequencies in the morning, money in the evening

The mobile operators, to whom the emergence of 3G gave a serious impetus to development, decided not to idle their time away. At the end of September 2016, it became known that the Big Three independently intends to make an arrangement and redistribute the available frequencies among themselves.

However, the state regulation could not be dispensed with in this matter. Even in case of a successful exchange, the operators could not launch the standard in 1800 MHz band as the license did not allow it. They would have either to wait for the adoption of a new law on RFR stuck in the Rada or to transfer the frequencies to the state represented by the National Commission for the State Regulation of Communications and Informatization and obtain new 4G licenses for these frequencies.

Nevertheless, the Big Three was not the first to take this step. In November 2016, another operator joined the game. This operator is hardly known to an ordinary Ukrainian. MMDS Ukraine, owned by SCM of Rinat Akhmetov, had a license for frequencies in 2600 MHz band.

These are not such popular frequencies for LTE in the world. In addition, the base stations in this band have a three times smaller radius of action. Therefore, Ukrainian mobile operators are likely to use frequencies as auxiliary ones and only in large cities like Kyiv, Dnipro, Odesa.

Akhmetov’s company agreed to return 80 MHz band to the state, but not gratuitously. In exchange for taking such a step, the company will receive up to 25% (UAH 572 million) compensation for the 2600 MHz band licenses fee. The compensation is equal to 2.288 billion UAH. Such compensation will give a good earning to Akhmetov’s business. The amount of compensation is 147 times higher than the one MMDS Ukraine paid for using frequencies that would eventually return to the state, wrote Economic Truth. The 80 MHz band costed the oligarch’s company only 3.4 million UAH from 2010 onwards.

At the same time, according to Economic Truth, Akhmetov’s company had only 8,000 clients and was present only in 13 regions, while the license covered the whole country. The situation looks as if MMDS Ukraine was just waiting for the frequencies to be needed for a real deployment of 4G in order to earn compensation.

It remained unclear until the summer of 2017 whether such a model would work or not. Part of the reason for this was the disagreement between the Ministry of Justice, which was supposed to approve the terms of the tender, and the National Commission for the State Regulation of Communications and Informatization, which developed these terms.

In the meantime, in March 2017, the Big Three also agreed to transfer to the state the frequencies in 1800 MHz band (total 2х75 MHz). “This is not a simple decision for us. In fact, we are
a “donor”, since we own the largest number of frequencies in 1800 MHz band, which are obtained transparently and legally,” Peter Chernyshov, head of Kyivstar, said then. The National Commission for the State Regulation of Communications and Informatization assigned to the operators the right of the first repurchase of a part of the frequencies (2×60 MHz) – this very condition became the object of criticism of the Ministry of Justice. The remaining 2×15 MHz were to be put up for an open tender.

In August 2017, the Cabinet of Ministers has finally approved all necessary documents for the holding of an auction. The Ministry of Justice signed the 4G tender procedure in September. The telecom-regulator promised to take tenders until the end of the year.

The cherished news about the tender date appeared in early November last year. As planned, the first tender deals with frequencies in the 2500-2700 MHz band and MMDS Ukraine provided the availability of these frequencies. From November 13 to December 22, the National Commission for the State Regulation of Communications and Informatization opened the reception of proposals from the operators and revealed them on January 26.

The date of the main tender for frequencies in the 1710-1785 MHz and 1805-1880 MHz bands was set at the meeting on December 21. The reveal of the operators’ proposals was set for the end of February and the bids for the cherished frequencies themselves were set for early March.

How much 4G costs

2600 MHz band

Public servants of the Cabinet of Ministers and other high officials have repeatedly stated that the sale of licenses for a new standard of communication will not only improve the quality of the Internet access, but also fill the treasury up. As stated by Stepan Kubiv, Deputy Prime Minister, the state should receive from tenders at least 6.3 billion UAH.

As for the licenses for the frequencies in 2600 MHz band, the initial price offers of Kyivstar, Vodafone Ukraine and lifecell were announced on January 26.

There are seven positions put out to the tender:

• Item No. 1 (20 MHz): frequencies 2540-2545, 2565-2570/2660-2665, 2685-2690 MHz
• Item No. 2 (10 MHz): frequencies of 2535-2540 / 2655-2660 MHz
• Item No. 3 (10 MHz): 2530-2535/2650-2655 MHz
• Item No. 4 (10 MHz): 2525-2530/2645-2650 MHz
• Item No. 5 (10 MHz): 2520-2525/2640-2645 MHz
• Item No. 6 (10 MHz): 2510-2515/2630-2635 MHz
• Item No. 7 (10 MHz): 2515-2520/2635-2640 MHz

Vodafone offered the most for the first item – UAH 572 million. Kyivstar plans to buy out the next three at a price of UAH 293 million each. Lifecell intends to purchase the items No. 5, No. 6 and No. 7, having estimated these frequency band sections in UAH 286 million each.

MMDS Ukraine will be the first one to certainly make a pretty penny out of the tender. According to the terms of the tender, their compensation, which according to the Conversion Plan should not exceed 25% of the cost of the license (573 million UAH), was slightly reduced by the National Commission for the State Regulation of Communications and Informatization to 500,092,180 UAH.

Based on the pricing offers, the state will receive a minimum of 2.309 billion UAH.

Operators will pay a minimum of 2.809092 billion UAH for the licenses and conversion of frequencies.

How much each individual operator will pay is contingent on the outcome of the trading by voice. If there are no surprises and the Big Three participants will receive those lots for which they offered the maximum value, the payments will be distributed as follows:

• Kyivstar offered 293 million for each of the items No. 2,3,4. The cost of conversion will be 62,511,523 UAH each. In total, the operator will have to pay a minimum of 1,660,534,569 UAH.
• Vodafone Ukraine offered UAH 572 million UAH for the item No. 1. The cost of conversion is 125,23,046 UAH. In total, the operator will pay at least 697,023,046 UAH.
• Lifecell offered 286 million UAH for each of the lots No. 5, 6, 7. The cost of conversion is 62,511,523 UAH each. In total, the operator will pay a minimum of 1,450,534,569 UAH.

In theory, the operators’ proposals can grow during the trading by voice and they will have to pay more. What happens in practice will be known on January 31.

1800 MHz band

There definitely will be competition between the Big Three during the tender for the 1800 MHz band licenses, as the main LTE coverage will be deployed in this band.

According to the terms of the tender, the following 6 items will be put out:

• Item No. 1 (30 MHz): 1710-1725/1805-1820 MHz (lifecell)
• Item No. 2 (50 MHz): 1725-1750/1820-1845 MHz (Kyivstar)
• Item No. 3 (40 MHz): 1750-1770/1845-1865 MHz (Vodafone Ukraine)
• Item No. 4 (10 MHz): 1770-1775/1865-1870 MHz
• Item No. 5 (10 MHz): 1780-1785/1875-1880 MHz
• Item No. 6 (10 MHz): 1775-1780/1870-1875 MHz

The first three will be reserved for the specific operators so that they can support the operation of the GSM network. Kyivstar, Vodafone Ukraine and lifecell will be able to repurchase at the starting price the part of the spectrum assigned for them. Item No. 1 (30 MHz) will go to lifecell for 795 million UAH, item No. 2 (50 MHz) – to Kyivstar for 1.325 billion UAH, item No. 3 (40 MHz) – to Vodafone Ukraine for 1.060 billion UAH.

The starting price of the last three items of 10 MHz is 265 million UAH each. The operators wanted the National Commission for the State Regulation of Communications and Informatization to arrange additional items along with their main bands. So, they would form a continuous band of the spectrum, which is necessary for the deployment of 4G. Well, then each of the Big Three would take its item and the trades would become a formality. In this case, the state would receive about 4 billion UAH for the licenses.

But the regulator “cut” the frequencies in such a way as to create a situation where a hypothetical fourth player might appear in the competition. Theoretically, this player could buy items No. 4-6 and get a continuous band equivalent to the one owned by lifecell. The telecom market experts interviewed by Liga.net do not believe in the appearance of the fourth player since it would have had to build infrastructure from the ground up to billions of hryvnias. However, such an approach of the National Commission for the State Regulation of Communications and Informatization will force Kyivstar, Vodafone Ukraine and lifecell to compete for a tender for an additional segment of the spectrum closely situated to their main band.

Without a consideration of how the prices of additional items will grow over the course of trading in early March, the state will make 3.975 billion UAH.

If the tender run true to form, and Kyivstar, Vodafone Ukraine and lifecell receive each of the assigned items plus one of the three additional ones, then Kyivstar, as the largest “donor” of frequencies, will receive compensation from its two market colleagues. Vodafone Ukraine will have to pay a competitor 25,453,073.66 UAH, and lifecell – 82,117,244.25 UAH. In aggregate Kyivstar will receive the compensation of 107,570,317.91 UAH.

Consequently, each of the operators will pay in the tender for frequencies in 1800 MHz band such a minimum amount:

• Kyivstar –1,482,570,317.91 UAH (taking into account the compensations from other operators);
• Vodafone Ukraine –1,350,453,073.66 UAH (taking into account the compensation payments to Kyivstar);
• Lifecell –1,142,117,244.25 UAH (taking into account the compensation payments to Kyivstar);

The check, please

If you sum up all the payments, then the state, without taking into account the possible increase in rates during the trades, will gain from the sale of licenses: 6.284 billion UAH.

• MMDS Ukraine, the final beneficiary of which is Rinat Akhmetov, will receive 500,092,180 UAH.
• Kyivstar will pay for the 4G licenses and conversion at least 3,147,07,569 UAH.
• Vodafone Ukraine will receive a check for at least 2,470,068,346 UAH.
• Lifecell will pay at least 2,187,651,569 UAH.

For comparison, almost three years ago lifecell (Astelit at that time) paid 3 billion 355 million 400,000 UAH for the 3G license, Vodafone Ukraine (MTS Ukraine at that time) – 2 billion 715 million, Kyivstar –2 billion 700 million UAH. In addition, all three operators also paid 1.6 billion UAH for the conversion of the military frequency. 10.5 billion UAH in total.

The creation of Nova Poshta in 2001 was not preceded by serious market research and traditional business procedures: its founders Vladimir Popereshnyuk and Vyacheslav Klimov had practically no entrepreneurial experience. Nevertheless, they had a desire to meet the client’s needs – to manage his/her understandable, but not yet solved “pain”.

It started with the banal transportation of goods: Vladimir’s family was engaged in the production of confectionery, and the work of the future Nova Poshta partners was to transport sweets from one city to another. At that time, the company competed not with other express deliveries (there weren’t any competitors on the Ukrainian market), but with train conductors and intercity Ikarus bus drivers.

Contrary to the obvious guesswork, the company did not try to compete with Ukrposhta. “Ukrposhta has never been a benchmark for us,” comments Klimov. “The only common thing we have is the word “poshta”. We focused on fast service and high-quality delivery. Therefore, we did not pay attention to them.”

Vyacheslav Klimov

In Ukrposhta AIN.UA was told that they really work with a wider audience. “We provide services to residents of all localities, while our competitors are concentrated in large and medium-sized cities. The cost of sending by Ukrposhta is 30-40% lower than by other postal and logistics companies. Our main competitors are concentrated on the premium segment of express delivery – the next day delivery, but not everyone needs the next day delivery at a high price,” assures Igor Smelyansky, Acting Director General of Ukrposhta. “Nowadays, the main trend is the growth of the e-commerce market. So, with an ever-growing volume, all domestic players of postal and logistics services market will have enough space.”

A little later, Popereshnyuk and Klimov became interested in the indicators of the express delivery market in the US and Europe and realized that in Ukraine this niche is absolutely free, and demand – though it is unconscious – is enormous. Initially, Nova Poshta invested $7,000 (at that time – UAH 15,000-20,000), and, according to Klimov, these were the only money raised to the company from outside (by the way, this was also the savings of the founders’ families)

First problems

Today Nova Poshta has more than 2,300 offices and 23,000 employees (for comparison, Ukrposhta has 11,500 offices and 73,000 employees). Hardly anyone would think that the first NP orders were delivered by partisan methods and often were even unprofitable. The company made a commitment to deliver in 24 hours, which sometimes led to sending a courier to another city by train or hiring trucks for bulky cargo.

Four months after the startup, the company got the first large customer – there was submitted an order for the return of 200 kg of wooden packaging from the smoked fish from the Kyiv pre-trial detention center.

A few years later, Popereshnyuk and Klimov entered the International Business Institute, where they got acquainted with the marketing director of the Mobilochka chain. For a long time the company has become one of the largest customers of Nova Poshta.

The same customer caused the first serious challenges in logistics. For example, at some point the management of Mobilochka demanded to deliver goods to any point in Ukraine before noon. At first, the task seemed impossible, but without such clients, according to Klimov, business could not develop.

Considering that the company has been increasing 30-50% annually over the last 7 years, they have withstood the challenge of Mobilochka. “According to the classics of management, a growth of over 20% for 12 months is a mega stress for the company, we have been working for a long time at the limit of infrastructure. Of course, the system can malfunction from time to time,” explains Klimov, when we ask why there are so many complaints about the service under each post on the pages of the company.

“We set a very high level of expectations. Whereas previously it was enough for a client to guarantee the delivery and the possibility of cargo tracking, now, in addition to delivery, consumers want a lot of additional services: online services for managing a parcel, delivery outside Ukraine, same day delivery, etc.,” adds Vladimir Popereshnyuk.

The company monitors not only the metrics for service quality, but also shares it in open access. “We regularly publish quality indicators on the website of the company. The latest data are as follows:

We also regularly measure the SSI (Service Satisfaction Index) and NPS (Net Promoter Score). Now these indicators are 8 out of 9 (SSI) and 63% (NPS).” NPS data was provided by UMG agency, the study was conducted on request of NP.

In the press service of the postal and logistics operator Meest Express, one of the NP competitors, we were told that practically the same indicators guide them: cargo damage – no more than 0.05%, cargo losses – about 0.01% and on-time delivery – up to 98%. The company declined to comment how many parcels were delivered by Meest Express in 2016.

Nova Poshta in figures

One of the key decisions having influenced the development of the company is considered to be the creation of the service offices network. “Back then, our colleagues on the market were ironic towards this. They believed that it was enough to open a warehouse at the entrance to the city,” remembers Popereshnyuk. “Nowadays there are about 200 offices in Kyiv. Sometimes, from the window of one office the sign of the other can be seen.” The partners explain that it was done on purpose: if offices are within easy walking distance, delivery will stop being a stress for а client.

The founders of the company tell: for the first ten years they were the main force of strategic decisions, but now the vector is shifting towards management.

“We are still ideologists, authors of many market and technological ideas. This is as it should be. The history of the world’s successful businesses proves it,” explains the state of affairs Klimov, “No matter how competent a manager is, you need someone who can generate even an absurd idea and be its driver.”

Today, many large-scale changes in the company occur without deep involvement of the founders. “The mobile application project was implemented exclusively by management, the creation of the National Terminal is entirely the idea of our directors and their teams,” lists Popereshnyuk, noting that the National Terminal is the largest investment in the history of the company.

“At the same time, we, as concerned owners, can get involved in making solutions that, at first glance, seem very tactical. For example, we participated in the selection of design jackets for drivers. It seems that this is a tactic, but this is a great decision and we want to participate in it,” boasts Klimov.

Crisis and rebranding

In 2005, Nova Posta felt the consequences of a real competition – several companies dealing with express delivery entered the market. Perhaps Mist Express was the most noticeable. They had foreign investment and Western technology.

It became more difficult to fight not only for customers, but also for own employees. Klimov admits (however, without naming specific companies): one of the newly-made competitors started offering to the employees of Nova Poshta the salaries 3-4 times higher than their current ones. The management had to invent new methods of encouragement: the drivers were offered piecework pay, which depended on the number of parcels delivered.

The financial crisis of 2008 ruined the turnover of Nova Posta by 30%. But it turned out that you can also benefit from the crisis. While the company’s competitors cut spending on development, Nova Poshta invested in marketing and hiring sales managers. For several months the company stopped earning money, but already in December 2008 it showed growth again.

The crisis was not the only time when the company had to react to damage from outside.

In 2014, due to the annexation of the Crimea and military operations in Donbass, Klimov and Popereshnyuk lost 15% of their business in Ukraine.

However, soon the losses were compensated as the company entered the market of Georgia and Moldova. At the same time, the Humanitarian Mail of Ukraine was launched. The initiative has made it possible to close the demand for the delivery of humanitarian aid to the front-line zone. The company works with more than 150 volunteer organizations. During the whole existence of the program, together with these organizations, it delivered more than 13,000 tons of humanitarian cargo free of charge. The program exists today.

At that time, they conducted a large-scale rebranding – NP acquired a new logo, packaging and other visual identity elements. We trusted the work to be done by the Kyiv branding agency Fedoriv. Andrey Fedoriv, Head of the agency, said, “In May 2014 only visible identity elements were shown at the presentation, the whole rebranding program lasted several years.”

“We started working with NP in the summer of 2013. They addressed to us to get an advertising campaign. We suggested that we postpone this task and first rebrand the company. They had a good product, but the brand did not match,” remembers Andrey Fedoriv. “The owners accepted the offer, but with one condition – they forbade changing the company’s current logo.”

The strategists of Fedoriv conducted research and proposed an idea about the delivery of the future. Klimov and Popereshnyuk liked the idea and approved it right at the meeting. The only hitch remained with the logo: it depicted a wax seal, which did not match the image of a dynamic company that never sleeps. In the period from May to October 2014, the company completely “changed”.

Fedoriv said that his agency has been working with NP so far. Now there are several projects in work, including those related to communication within the company and further development strategy.

Working with the negative

In the autumn of 2016, Nova Poshta faced a problem: the percentage of complaints about parcels delivery delays and quality of service has increased many-fold. That is around the same time the company launched a delivery service from China. “We faced incredible operational difficulties. These were different cargoes, different customers who did not expect that the delivery of Chinese parcels would be executed by Nova Poshta. In addition, Nova Poshta accustomed clients to the next day deliveries. And our audience was not ready to wait three weeks, even if it was about sending out packages from China,” comments Klimov.

“We, as the executors of the Last mile in Ukraine, could not influence the processes of transportation of goods on the territory of China, it was carried out by SF Express, our local partner,” recalls Liliya Zagrebelnaya, PR-director of Nova Poshta. She says that the problems were also related to the translation of addresses and often they had to call customers in order to clarify the details. It took a lot of time.

The number of requests, multiplied by the size of the company, provoked changes in the work of the remote customer service department. Today responses are received through all channels: in offices, through the site, the contact center, comments or messages in social networks. “All requests are recorded in CRM. The system allows recording the history of communication with each client. Therefore, when we receive calls, an operator already looks through previous conversations. Moreover, since recently, he/she deals with the client’s issue on his/her own – finds out the circumstances of the address, contacts the right people in the company, keeps in touch with the client,” said Liliya Zagrebelnaya, PR-director.

Sometimes, curious incidents take place in call centers, in the company they become its own folklore. One of these stories occurred last year in December. The client wanted to know the status of her package – her daughter’s New Year gift. The girl was curious who her mother was talking to on the phone, and she answered that she was talking to the Snow Maiden about the gift from Grandfather Frost. The daughter snatched the phone from her mother and the contact center operator had to play the role of the Snow Maiden and sing the song.

Innovations

In 2016, the company was on the 1,428 place in the ranking of the top-5000 fastest growing European companies compiled by Inc. magazine.

“Today, Nova Poshta Company is pulling up several related industries, for example, we work with our other client – OLX,” told AIN.UA. Andrei Fedoriv, the marketing expert. “A huge number of e-commerce companies, small and medium-sized businesses in Ukraine also develop because we have good logistics in our country. This is especially noticeable in comparison with projects in other countries, for example, in Kazakhstan or Uzbekistan.”

Ivan Portnoy, Head of the marketplace Prom.ua, also agrees with him. His company unites 720,000 internet entrepreneurs selling 89 million goods and services. 74% of marketplace transactions are made by commercial delivery services, although it is impossible to calculate how many of them were made by Nova Posta.

“For example, in Belarus online stores have to build their own logistics, because in this country there are almost no commercial delivery services and courier services cannot accept payment for purchases instead of store employees. This leads to an increase in the cost of Internet shopping for the end user and hinders the development of the e-commerce market as a whole,” comments Ivan Portnoy, Head of the marketplace Prom.ua. “It is not profitable for small and medium-sized businesses in Ukraine to create their own delivery services and have staff couriers. It’s much more profitable to use logistics services.”

In such conditions, the aspiration of Nova Poshta to introduce innovations is understandable. In this regard, they have role models. For example, Amazon, one of the most prominent players in express delivery, is nowadays called the most innovative company in the world thanks to the introduction of robots in logistics, use of drones, automation of product labeling, online services, etc.

“We still do not shoot our own series, like Amazon Studios does, but we are increasingly looking for solutions to our problems in technology. In early 2018, in area of the Circular road in Kyiv the National Terminal will be launched. The total area of the first stage alone is 15,000 square meters, and, according to preliminary estimations, this will allow processing 600 trucks and sorting over 400,000 barcodes of goods per day,” Popereshnyuk introduces the idea.

After a full launch, the terminal will sort cargo at a speed of 4 m/s, which is the equivalent of 14.4 km/h. For comparison: conventional sorting belt operates at a speed of 0.7 m/s or 2.52 km/h. Later, it is planned to open such sorting centers in another seven Ukrainian cities.

“At the National Terminal “Nova Poshta” there is a scanner, which scans a parcel on six sides. Wherever a barcode is glued, it will be read. If this were done manually, the operation would be 10 times slower. It can be recalculated in minutes or money,” Klimov comments, telling that two divisions are responsible for innovations in Nova Poshta. These are the Department of product development and management and the Department of research & development, in total they employ more than 25 people.

The company did not avoid the administrative digital trends like agile (when the development of new processes is split into small phases) and customer journey (when the full customer journey that is being made when making a purchase or using the service is formed) in the development of new services and products. This was the start of the NP Shopping service, which allows you to order products in online stores in the US and Europe. And if in January of that year, at the launch stage, 5,000 orders were processed, in September their number was already 25,000. In 2016 the company delivered more than 110 million packages, about a quarter of this volume is the deliveries for the customers of the e-commerce segment. Ukrposhta sent 18.5 million parcels the same year.

So far, Nova Poshta cannot boast of total robotization (like Amazon), but the first achievements are already done: for example, National Aviation University has developed for Nova Poshta an unmanned vehicle capable of carrying loads of up to 4 kg. The development of an unmanned vehicle for the large loads transportation (from 500 kg to 1 ton) is in the planning stage.

Innovations also encompass sorting of packages. The system Put to Light operates for international parcels. Earlier the sorter needed to read the marking and only then send cargo further along the chain. Now you just need to scan the parcel, then the system Put to Light turn on signals for the sorters, these signals facilitate the process and eliminate errors in the coordination of the cargos.

If we compare the firsthalf of 2017 with the first half of 2016, the number of operations with goods that NP Logistics carried out has increased by 2.6 times. However, the company notes a market deficiency of space. Today, about 300,000 square meters are used for fulfillment in Ukraine, with the exception of warehouses for food offline retail. The company believes this rate to be insufficient, given the annual e-commerce growth rate of 30-50%. “The vacancy of warehouse space in Ukraine now stands about 10%, while there are very few high-quality A class facilities (these are exactly what are needed for fulfillment),” concluded Lisovets.

Recently, Nova Poshta has entered into a cooperation agreement with DPD Group, the second-largest network for the parcels delivery in Europe. This means that in the coming year more than 2,300 departments of Nova Poshta will be integrated with the DPD network (which is more than 28,000 points across Europe).

Figuratively speaking, parents will be able to send a gift to their daughter from the Nova Poshta department No. 1 in Borispol, and she will receive a parcel at the DPD department No. 375 in Brussels.

Klimov and Popereshnyuk are sure that there are no trends that would not be available to Ukraine. The three main directions for the development of express deliveries in the company are: self-service, 24/7 service and digitalization.

Regarding the first one, the company has already started the development of the packstations network. Self-service zones on the basis of packstations have already been accommodated in 15 offices in Kyiv. The company plans to develop their own network in shopping malls, business centers and supermarkets.

One of the closest competitors of Nova Poshta Company – postal and logistics operator Meest Express – is also actively developing the direction of self-service. In October 2017, the Company launched an order delivery program from Ukrainian online stores – Meest Tochka. The service implies that any store, cafe, hairdressing salon or gas station, which joined the program, can serve as an issue point.

“The main task is to minimize human participation in the process. All actions are performed via the recipient’s smartphone. Meest Tochka operators do not even take part in sending in some cases,” was told AIN.UA in the press service of Meest Express.

Now, 114 participants have joined the project, 51 “points” in a dozen cities of Ukraine have been fully launched. At the first stage, Meest Express plans to attract 1,500 participants across the country.

“In Ukrposhta the advantages of commercial services are considered as the possibility of being more flexible, offering significant discounts and working with foreign private postal operators. Ukrposhta, as a state-owned company, does not have such opportunities yet,” Smelyanskiy summed up.

“Customers want the delivery to be mobile and flexible, so communication will become more digital and more contactless. You can manage the package in the mobile application Nova Poshta and receive it via packstation at any convenient time without the help of operators. In the coming years, these services will become more popular than the traditional visit to the office,” Vyacheslav Klimov says.

Since November 2017, you can change the data of recipient, sender and payer through the application. In addition, they added a possibility of registration for business customers (private entrepreneurs, online stores). Previously this option was available only for individuals.

Photos in the article by: Alexander Kozachenko

Idea and project launch

Maxym Shostya, the Founder of CarFinder, most of his life has been keen on cars. By the age of 32, he has managed to change 27 cars and he says that it is not the limit. More than 10 years he has been developing a business in the sphere of equipment repair, and since 2014 he decided to start his own car-related business.

Maxym Shostya notes that for the years of his interest in cars he had his eyes blackened while searching for the cars, and he knows how it is difficult to find a good used car. Maxym Shostya says, “In this sphere there are two types of people. Some of them buy the first car – they need a lot of time to understand how it works. The others already have some experience and understand wat a mess it is. I know that it is a problem for both of them.”

Maxym Shostya, Founder and CEO of CarFinder

Officially, Maxym Shostya launched CarFinder in December of 2014, but he found the first clients in summer of 2015. The entrepreneur tells that he spent about $700 on the project launch: landing costed $300 and $400 he spent on thickness gage – a device to check painted elements.

Maxym Shostya was looking for the first clients among his friends and acquaintances. “The first client, who came to me and paid a full amount, was a director of a legal company. For a year he has been thinking about the idea to change the car, but did not dare due to possible problem. So, I helped him”. Thereafter, the clients approached Maxym Shostya owing to buzz marketing.

Maxym acknowledges that for the first few months he treated CarFinder more as hobby that a serious business. However, in a certain moment he faced a choice – try to make profitable business with CarFinder or abandon this idea. “I have tested the waters and found out that I need to focus on this business or close it down. There always were private consultants on the market, but I didn’t like the idea to be one of them.”

Maxym Shostya decided to focus on CarFinder. According to him, joining of the company by his friend Mykola Samodurov was a critical moment. At that time there was a many years’ experience in car business under his belt – with new cars as well the used ones. Since the beginning of 2016 the partners have built up a team. Maxym Shostya became CEO and was responsible for marketing and sales, and Mykola Samodurov was appointed as CTO: he dealt with engineering solutions and human resource development.

Maxym tells, “It became a turning point in development of CarFinder. Earlier many people did not believe in the project. It pressurized me. And Mykola’s arrival has given a great impetus to us. We became utterly absorbed in our work.”

Fully-operating service

Since the beginning of 2016 CarFinder has started an active development as a service for finding used cars. Maxym Shostya states that with Mykola the company began expanding to other cities. First of all, the partners hired experts in Dnepr and Kharkov, and then started expanding to other localities. In a certain time, CarFinder began to receive positive feedback. At that moment its leaders understood that this idea has the right to life.

In CarFinder they say that feedback from opinion leaders in Facebook was a key aspect for the company’s progress. Maxym Shostya says, “For example, Volodymyr Galika and Yevgen Nekoz contacted us. Owing to their positive feedback, the number of our likes skyrocketed.”

When we deserved a dedicated post by a person with a huge audience, it always gave us a new impetus to development.

By the beginning of 2018 the Kyiv’s office of CarFinder expanded to 7 people, and the company opened representative offices in 16 cities of Ukraine. Founders call CarFinder the all-Ukrainian service and it is not an exaggeration: even if they do not find the car in a city where they have no representative office, the car can be brought to the nearest office.

Now the process of finding a car through the service looks like this. The Client sends a request through the website or one of the social media. Further, according to Maxym Shostya, the team consults with the client and takes a decision whether it is possible to find the car according to the set parameters. If the client’s preferences are feasible, then the team accepts the order.

Mykola Samodurov, Co-Founder and CTO of CarFinder

The employees of CarFinder discuss the whole process of car finding in the special chat in messenger (predominantly in Telegram, and sometimes in Viber). During the day a certain employee of CarFinder monitors the offers on popular platforms (Auto.RIA, OLX) and sends links to the chat. When the client has time, he/she looks through different options and, if he/she likes one of the offered cars, he/she can ask the expert to go to the seller and take a detailed look at the car.

As the company representatives note, one of CarFinder’s distinctions from the competitors is that they use specialized software for analysis of vehicles. For instance, the company is a subscriber of insurance companies’ databases. It helps the employees to obtain information what kind of works were performed for the vehicle using insurance money. It allows understanding whether the car is worth attention or not. Maxym Shostia says, “We cancel half of the visits, because we are able remotely to find out whether the vehicle is not appropriate for us.”

It is not obligatory for the clients to visit the sellers personally – CarFinder’s experts carry out detailed inspection. During such meetings the experts make video report on the vehicle and express their opinion on condition of the vehicle.

In the company they say that one of CarFinder’s tricks is that sitting in the office, let’s say in Kyiv, the Client can look through the cars in Vinnytsia, Mykolaiv and other cities, “It is a significant saving for the client. Let’s imagine how much money the client would spend on travelling to see the cars in different cities.”

We help the client to take a decision as if he/she is staying near the car.

If the client and expert like the car that was found, then there is the second stage – inspection by the official dealer center. This service is paid by the client. By results of the inspection CarFinder makes photo of the Completion Certificate and records comments of the service man.

Moreover, following the approval by the client, the employees of CarFinder can themselves negotiate the price with the seller. Maxym Shostya says, “Every day we communicate with vehicle sellers, therefore, we know this market. We almost always succeed to get lower price and the amount of the discount is much more than the cost of our services.”

The team of CarFinder accompanies the client until final purchase of the car/ They help the client to obtain registration certificate and other documents. In average, it takes about three weeks from sending a request to purchasing a vehicle, and the average cost of the order makes $500.

Customer Relation Service

CarFinder webpage already has more than 100 clients’ feedback and all of them are high estimate. Maxym Shostya says that the team has a few things that they always pay attention to while communicating with people.

One of such things is a commitment to make the process of car selection as transparent as possible. The team of CarFinder sends the links to the found cars in the chat, where they discuss every option with the client. Maxym says that during search for the car the expert continuously express their opinion and recommend what to do in one or another situation, “We even negotiate the price with the sellers in messengers to show all correspondence to the clients. People like us for transparency: they enjoy managing the process of car finding and staying informed of all news.”

CarFinder’s team

Maxym Shostya recognizes that in the company they place great emphasis on communication with clients. According to the entrepreneur they keep close eye on literacy and the way of the employees’ speaking, “I always emphasize at briefings that the team should not speak in “motoring” jargon. We do not like to be associated with standard representatives of this market, but seek to be on the same page with our clients – young people aged 24-35.”

We even practiced dictation in Russian and Ukrainian with one of our candidates. We have employed him just after successful completion of this test.

The other thing that Maxym Shostya draws attention to – work with clients after purchasing the car. The founder of CarFinder tells that the team contacts every client a few times after purchasing the car – in a week, month or three months. “We find out what is going on with the car and whether the client is satisfied with the purchase. Many people buy their first car with us and they do not know the nuances. We provide them with assistance in different situations. For example, we suggest what kind of tires it is better to choose. It also increases loyalty to us.”

Plans for future

For 2017 CarFinder has completed about 200 orders, and the company’s revenue made about 2 million UAH. According to Maxym Shostya, they invested most of the revenue back in business.

As for the team’s plans for 2018- they are going to execute twice more orders and enter the market of Odessa. Besides, CarFinder is expanding beyond the territory of Ukraine – the company hired an expert from Switzerland, who has already helped them to buy and import a few cars to Ukraine. However, it is Ukrainian market that is a priority for CarFinder now. And overseas options are “Plan B” for the company.

In new stores of Allo network a person, who does not closely monitor electronic novelties, can easily believe in existence of “quadcopters, which are specially designed for domestic use” or other technologies from science-fiction movies. In one of the corners of the sales area we can see a couple, discussing whether 20-cv orange robot is capable of lifting TV remote control by its arms, and in the other corner a man moves chaotically, wearing VR helmet and viewing something. Pupils on monowheels pass this guy by.

A 12-year girl is pulling her father by the arm towards the shelf with coffee machines and vacuum cleaning robots, “Let’s go and have a look at the quadcopter on the shelf above the washing machine. It should be specially designed for domestic use. We should find out what it can do.” There is really a quadcopter on the upper shelve. Similar quadcopters are on the table in the middle of the sales area. The consultant is smiling, “It is an ordinary model. We have just put it to the place that was free.”

In new stores of Allo network a person, who does not closely monitor electronic novelties, can easily believe in existence of “quadcopters, which are specially designed for domestic use” or other technologies from science-fiction movies. In one of the corners of the sales area we can see a couple, discussing whether 20-cv orange robot is capable of lifting TV remote control by its arms, and in the other corner a man moves chaotically, wearing VR helmet and viewing something. Pupils on monowheels pass this guy by.

According to Maxim Raskin, one of the owners of Allo network, it is how the tech stores should look like in 2017. Clients’ expectations from offline marketplaces have changed dramatically: if earlier smartphones were bought in the nearest stall of a huge network (the formats were plus-minus the same and it was senseless to look for another sales outlet), now the personal electronics stores are a destination point, and purchase of smartphone or gadget is a much greater event.”

For the period of Allo stores operation many things has been changed in consumer sentiment and target places for purchasing tech products. More attractive prices, an opportunity to choose and compare goods of different sellers as well as no need to leave your house to purchase new iPhone are the factors, which brought consumers to online sector.

According to the data of market research institute GFK, in 2016 household appliances and electronics occupied 60% of total Ukrainian e-commerce market. At the same time, a percentage of online sales of household appliances in Ukraine is higher than the average percentage in the European Union (23.7% against 21.1%). Albeit this statistics mostly covers the dwellers of big cities with high income (a little bit more than 3 million people make purchases online), till the moment e-commerce in tech sector have grown faster than in the others.

• 60% of the market is occupied by household appliances and electronics
• 23.7% of online sales of household appliances
• 3 million of the Ukrainians make online purchases

Until now, a history of Allo has been proving the current trend. The retail network, which was established still in 1998, for almost twenty years has opened stores in 130 cities of Ukraine and hired over 2,600 employees. Further, the company adjusted its course to online sales that made it one of the largest players in e-commerce. It would hardly be possible without decisions that have been taken for the last 10 years.

Merge and acquisition

In 2013 the largest deal for the whole lifetime of the Ukrainian mobile market was closed. Allo, who owned over 500 stores at that moment, acquired Mobilochka network, which had 417 stores in 149 cities. At the moment of the deal, the total share of the company in mobile retail segment, according to “Kommersant” newspaper, made 60%. Allo calls this deal a milestone in the company’s history.

Maxim Raskin comments, “Mobilochka network closed and Allo occupied its locations, offered hiring to employees and handled remained goods. Although, we understood that it was not always optimal costs and we would need to optimize the network. It enabled us to increase the share on the market up to 80%.”

In 2013 the issue of Mobilochka network acquisition by Allo company was discussed not only by media, but also inside the company. Finally they decided to keep both brands as management would like to take the advantage of both successful networks. Dmitriy Derevitskiy, owner of the company, shared his opinion, “In terms of brand recognition, according to our data, Allo had 92% and mobilochka – over 60%. It was obvious that this asset should not be lost. Today, Mobilochka is one of the most successful franchising projects in mobile retail sector of our country. We continue running Allo the same way as it was before.”

• 917 stores were owned by both networks in 2013
• 60% -total percentage of the companies in mobile retail segment at the moment of the deal.
• 92% and 60% – recognition of Allo and Mobilochka brands in 2013.

Merge of brands, apart from obvious expansion of the retail network, enabled the company to get better conditions from suppliers and manufacturers of tech products. An experience in placing new products on the market was useful in this case. For instance, in 2014 Allo started actively selling Nomi products, which was called by some sources the own trade mark of the company. By the way, in Nomi they are not so unambiguous concerning patronage of the Ukrainian network patronage. According to brand manager Sergey Zolotukhin, Nomi is a stand-alone project and Allo is their key distribution channel. It ensures 45% of Nomi sales in Ukraine.

In any case, Nomi product range includes different market segments: budget telephones (in Ukraine the amount of users makes about 1.5 million people), TV sets, power banks, virtual reality helmets and even quadcopters. Nomi is the most illustrative, but not the only example of specific brands promotion.

Maxim Raskin says, “We facilitated entering to the market and development of Nomi and Xiaomi. We have strong positions in cooperation with Sony. However, these brands, having a big proportion in our portfolio, are also successfully sold in other networks. Allo is some kind of springboard, which facilitates promotion of the products and provides significant results. So, for instance, some Xiaomi models became TOP-5 in smartphone sales in Ukraine. Even though the official operation of the company commenced on the Ukrainian market less than one and a half year ago. The ecosystem of Nomy brand, which also started with Allo and now it is a national brand – is one of the largest not just on Ukrainian market. I assume that it would be almost impossible for the company with a small-scale business to boost such a project.”

Merge of brands, apart from obvious expansion of the retail network, enabled the company to get better conditions from suppliers and manufacturers of tech products. An experience in placing new products on the market was useful in this case. For instance, in 2014 Allo started actively selling Nomi products, which was called by some sources the own trade mark of the company. By the way, in Nomi they are not so unambiguous concerning patronage of the Ukrainian network patronage. According to brand manager Sergey Zolotukhin, Nomi is a stand-alone project and Allo is their key distribution channel. It ensures 45% of Nomi sales in Ukraine.

In any case, Nomi product range includes different market segments: budget telephones (in Ukraine the amount of users makes about 1.5 million people), TV sets, power banks, virtual reality helmets and even quadcopters. Nomi is the most illustrative, but not the only example of specific brands promotion.

Maxim Raskin says, “We facilitated entering to the market and development of Nomi and Xiaomi. We have strong positions in cooperation with Sony. However, these brands, having a big proportion in our portfolio, are also successfully sold in other networks. Allo is some kind of springboard, which facilitates promotion of the products and provides significant results. So, for instance, some Xiaomi models became TOP-5 in smartphone sales in Ukraine. Even though the official operation of the company commenced on the Ukrainian market less than one and a half year ago. The ecosystem of Nomy brand, which also started with Allo and now it is a national brand – is one of the largest not just on Ukrainian market. I assume that it would be almost impossible for the company with a small-scale business to boost such a project.”

From niche to the market place

According to forecasts of GFK, in future the growth rates of online sales of household appliance will slow down, and traditional offline categories like clothing, footwear, accessories and goods for children – will, vice versa, gain momentum. In Allo they also share this opinion. In 2016 the company singled out in a separate segment a variety of new categories: goods for children, perfumery and cosmetics, car accessories, interior design items and sports requisites. According to Valentin Kalashnik, President of Ukrainian Direct Marketing Association, online store development from niche store to market place is reasonable if a retailer wishes to be successful. It is quite difficult to generate and maintain traffic for stand-alone niche online store.

Allo’s new categories in 2016

• Goods for children
• Perfumery and cosmetics
• Car accessories
• Interior design items
• Sports requisites

At present, over 120,000 active goods in 1,400 categories are represented on the website allo.ua. Proceeding from the average traffic indicators for the last few years, the company is the second in the list of Ukrainian online stores (price aggregators), giving the first place to Rozetka. The average audience is 8 million visitors per month.

Allo has one more advantage, not so evident at first sight, contributing to expansion to the size of market place – a well-developed network of offline stores. For end consumer it means that he/she can order the goods from the proven seller in Internet and pick it up in the nearest offline store. Additional categories of the goods had a positive impact on Allo: till the end of 2017 the Company will open 15 flagship stores, and the area of such store will grow from 85 sq. m to 350 sq. m. It is not only the area and design of sales outlets that will undergo transformation, but also the arrangement of business processes. Management team singled out different zones of ecosystems and brands, having created the authorized Shop in Shop of the world tech brands as well as separate zones of “smart house”, electric transport, game consoles, acoustic, robots and other gadgets. Such stores also have a large area of Internet orders. All this is implemented to avoid consumer’s discomfort from absence of certain goods in offline shop.

Maxim Raskin comments, “It is quite difficult to compare the indicators of online market share between retailers. The reason is different formats and calculation policies. Lately Click and Collect service is actively developed. It provides an opportunity to pick up the goods, ordered online, in offline stores. For the last couple of years our market share has been between 16% and 18% of overall goods turnover.”

In future the company plans to deal more with mobile commerce. Maxim Raskin comments, “We see great prospects in the trend for increase of the share of mobile users. Still they have comparatively low indicators of conversion. Probably, it is a problem of retailors who have not generated user-friendly purchasing conditions. We approach the issues of chat-bots and AI with caution as we don’t like to cause discomfort to our clients and reduce conversion due to still imperfect systems and tools. Although, for sure, these segments are the future.”

In-house reforms

This year MPP Consulting agency included Allo in rating of 100 the most expensive national trademarks and estimated cost of the brand as equal to $24 million. Allo’s headquarters is still in Dnepr. According to its founders, it causes no management problems, even taking into consideration the company’s size (currently the group of companies has 3,000 employees: 450 – central office and all others – stores and regional offices).

Allo in numbers

• 120,000 available goods on the website
• 3,000 employees
• 8 million visitors per month
• 15 flagship stores
• $24 million – cost of Allo brand

All this became possible owing to introduction of various management approaches. For example, in the company they take Net Promoter Score seriously. It is used to evaluate customers’ readiness for repeated purchasing. According to Maxim Raskin, such things cannot be just the responsibility of marketing department.

He assures us, “The data that we obtain as clients’ feedback, are discussed at the meeting of the Committee, including all directors and President of the Company. Thus, for example, a few years ago Allo has made a conscious decision to the prejudice of current profit. They decided to refuse from “special offer” practice while developing price offers. If we say the client that the product costs 3,000 UAH, that’s how it really is. You should not additionally spend 500 UAH on other things to get the price, as many market players offer. If we say that the client has bonuses in the amount of 300 UAH, it means that he/she can come and buy something using these bonuses, instead of facing additional restrictions, such as a mandatory condition to buy 10 different goods at price of 30 UAH. Using Net Promoter Score we assess all factors: from perception of brands that we sell to the quality of service centers work.”

At the moment the company hasn’t any department of innovations. According to the leaders, it will hardly be established in the nearest time. They say there are many things to be improved besides the innovations. For instance, management of data on customer experience. According to Maxim Raskin in Allo they pay special attention to CRM systems and detailed analysis of ROPO scenarios (Engl. Research online, purchase offline – search for information on the product before its purchasing offline).

A dynamics of sales (especially in the segment of mobile devices) speaks for itself. A part from the net sales of telephones, during the last year the company has activated 1.68 million subscribers of mobile networks. They occupy similar market share in the category of telephone accessories, for instance, headphones. For the same period they have doubled market share in sales of TV-sets, laptops and household appliances. Sales of wearable gadgets have dramatically increased.

Of course, in the company they study the best practices of the major global players. However, it’s not always that they can apply this experience in the Ukrainian realities. Maxim Raskin states, “We analyze rather successful cases in the specific functional areas, than success stories of the company as a whole. For sure, an example of Zappos company is very interesting in terms of business strategy as well as management principles. However…Would this company be able to achieve the same success in Ukraine, with all our restrictions? Is the Ukrainian market enough to get return on investments in Research & Development, like in case with Amazon? These are the rhetorical questions.”

Shadow fighting

In Allo they do not deny that for further growth the company yet has to overcome a number of its own constrains: to accelerate implementation of projects, to simplify business processes, to correct ongoing processes here and now, instead of using long-playing corporate procedures. Although, they believe that the serious limitation of Allo’s business development is imposed by the external factor. Namely: “grey” and “black” tech market.

According to GFK, every fifth tablet, smartphone and laptop that was sold in Ukraine in 2016, had been imported illegally. A share of “grey” supplies of photo cameras, refrigerators and washing machines varies from 25% to 10%.

Maxim Raskin states, “It is the government who should deal with this problem, but, in fact, we address it. It is no secret to anyone that over 60% of all iPhone sales — is a sale of smuggled goods. It costs cheaper just by the reason that no taxes were paid for it. We almost do not make money on iPhone. We often sell it at cost price in order to meet customers’ expectations and prevent market monopolization by “black” sellers.”

“Grey” tech market

• A share of “grey” supplies of photo cameras, refrigerators, washing machines and TV-sets varies from 10% to 25%
• ˃60% of all sold iPhones are smuggled
• 1 of 5 laptops, smartphones and tablets, sold in Ukraine in 2016, were imported illegally

Maxim Raskin is sure, “ AT present, “it is cheaper in the Internet” just if you buy smuggled goods. Most of legal players keep parity prices in online and offline stores. It has limited e-commerce growth rates and development of small players (most often they go underground and sell the goods illegally). It also forced large player to change approaches and shift focus from price wars to Customer Expеrience”

Such policy has borne its fruits. For example, the first batch of iPhones X, which had appeared on the shelves in early December, was sold in the network of stores for three days, despite of the price of 37,999 UAH. However, in Maxim Raskin’s opinion, for the last years pure e-commerce has lost its major competitive advantage over traditional retail – now lower price means that the device is smuggled. Therefore, in the nearest future competition between online and offline commerce will be built around convenience of purchasing process, instead of price.

The format of the morning briefings in modnaKasta has been changed in June, 2016.Now these briefings are called stand-ups. Such meetings do not exceed 15 minutes and all attendees participate while standing. At 9:30 a.m. company’s directors hold stand-ups and at 10:00 a.m. stand-up takes place in every department. It not only helps to cheer up and avoid long meeting, but also ensures circulation of news that is of critical importance for the company, where the number of employees now exceeds 700 people.

Andrey Logvin.

Natalya Logvin, PR Director of the company, explains, If any employee has a problem, hindering the company’s work, in 10 minutes after stand-up we are able to gather a working group and begin to address the problem.

The efficiency of this approach is proved by the fact that presently modnaKasta is the company number one by online sales in closing and footwear segment in Ukraine, with a market share of 30%. How had it been achieved?

Crisis is a growth engine

The 37-year-old founder of modnaKasta Andrey Logvin does not consider himself a fashionista. He says that he is closer to sport and travelling. Of course, it depends on what we mean by the notion fashionista. If it means monitoring the latest trends, new designers collections and leaving your home just with ideal total look no, I am not a fashionista. On the other hand, of course, it is more than one T-shirt and jeans in my wardrobe.

Andrey Logvin studied in Donetsk State University of Management, obtained Masters degree in Kyiv-Mohyla Business School and got legal education in Taras Shevchenko National University of Kyiv. Andrey started his first business (Internet providing) when he was a third-year student. Before launch of modnaKasta he was CEO of mobile operator CDMA Ukraine.

In 2010, when Andrey Logvin and his friend Oleg Skripnichenko got the idea to open up shopping club Brendomaniya (this was a working title of the project), people were scared to buy clothing online by the same reasons as today. Natalya Nazarchuk, the Chief of modnaKasta contact center clarifies, We are used to buy household appliances and gadgets online. As for the clothing, many of us worry that it is impossible to try it on and it will be difficult to return a thing that does not suit.

Later combating these two fears will make a basis for strategy of modnaKasta brand, but in 2010 a unique feature of this business was represented by agiotage and low prices.

At that time, Turkish shopping club Markafoni, headed by entrepreneur Sina Afra (future majority shareholder and ex-Director of eBay Turkey), have already successfully tested business model flash sales (maximum discount or promotion offered by an ecommerce store for a short period of time).

Markafoni sold clothing with a discount from 20% to 90%. New special offers were posted on the website a few times per day and were active from four hours to three days. New clients were brought to the website by the existing subscribers: it was impossible to sign up without recommendation of one of the club members. Business Angel of Sina Afra was actively looking for partners all over the world.

Oleg Skripchenko and Andrey Logvin came to Istanbul and offered cooperation to the businessman. The latter agreed to try and invested 500,000 Euro in this business. In a few months the project was launched. The stocks of famous brands were the key sources of the goods and modnaKasta contributed to make them empty very quickly.

By that time, online clothing stores were no longer news: many Ukrainian fashion retailers managed to open such stores. Thus, a major player of domestic luxury segment Helen Marlen Group became one of the pioneers. This company opened online store in 2010.

Alexey Meleshchuk, CEO of Helen Marlen Group, told, according to the results of the first year of work, share of sales made less than 1%. Now this index varies from month to month within the limits of 10-20%. Nevertheless, after launch of the website, online sales demonstrated active annual growth. Alexey Meleshchuk explains, maximum relative growth (167% in UAH and about 50% in dollar equivalent) was achieved in 2015, after launch of the updated website helen-marlen.com with more user-friendly interface, tailored to sales.

Not just clothing

Initially, the closed nature of the project (sign up by recommendation) helped modnaKasta rapidly to spark interest of the audience. However, soon it started to impede the growth and in 2012 they decided to abandon this model. All other attributes remained the same: it continues to be the project, built on flash sales business model (discount or promotion, offered by an e-commerce store for a short period of time).

Up to now modnaKasta website posts not less than 40 promotional offers per day and most of these offers start at 6 a.m. Natalya Logvin clarifies, When the offers are especially successful, the goods can be fully bought by 10 a.m. This habituates buyers to everyday visits of the website. It is one more component of the game every promotional offer has its deadline. It increases agiotage and results in spontaneous purchases.

Although, fan is not the only driving force, which helped modnaKasta to attract an audience of 5 million subscribers. Andrey Logvin always treated his project as IT company and not as closing store. He says, The nature of e-commerce market is innovations. We are continuously looking for new solutions that will make online shopping cheaper, easier and faster.

Andrey Logvin states, I would like to redress historical injustice when the country with such a number of gifted programmers has no IT company with capitalization, exceeding the threshold of $1 billion.

Every month modnaKasta monitors NPS (net promoter score, demonstrating customer’s willingness to repeated purchases), makes customer survey concerning quality of goods, speed of delivery, usability of website and application. Consumers feedback results in a list of tasks for the next month.

Initially, a major challenge of modnaKasta was to attract attention of suppliers. The Ukrainians enjoyed the project and they demanded new promotional offers. Tatyana Yushchuk, Category Manager, who has been working for the company for more than five years, recalls, We had even to hunt for most of suppliers.Not all partners understood how e-commerce worked and therefore, they didn’t believe in partnership with us. However, when for two promotional days we had sold the amount, which was usually sold by retailers for a month, the situation changed, she adds.

Since 2011 buyers of modnaKasta have ventured to offer clients something else besides clothing and footwear. The first non-core promotional action was kitchenware: at first, baby tableware and then the rest of varieties. A category household goods started fully working in 2014. Now it is one of the most rapidly growing segments.

The most popular brands on the modnaKasta website

New markets

In 2015 they began to sell foodstuff on the website: groceries, snacks and alcohol. According to the global trends, modnaKasta has chosen the right focus. According to the report of Food Marketing Institute and Nielsen, by 2025 costs on online purchase of foodstuff and beverages in the USA could grow up to 25% of overall sales in this segment (now it makes 4,3%). Last year online stores earned about $20.5 billion on foodstuff. According to Digitally Engaged Food Shopper, in ten years 60% of users will spend a quarter of overall budget on foodstuff.

Katerina Mikula, CEO of Lamoda project, tells, The last two years were not easy for retail market in general. During economic crisis most of clients change their purchasing behavior, demonstrating more rational approach to purchases. Now clients monitor discounts more attentively, compare longer and make purchases less spontaneously. According to Katerina Mikula, there is an increased demand for fast fashion – budget collections, which are updated once per season. Following this trend, Lamoda also increased share of brands in the medium price segment (now their assets comprise 1,500 brands and the most popular are Mango, Oodji, Lost Ink, Dorothy Perkins and Sela).

After the crisis, company management faced one more problem: despite adding new category, clients began complaining about poor assortment. Importers became more economical and purchased only those goods, which they could really sell. Old stocks became exhausted and the goods of Ukrainian producers were not enough. Management ventured to offer radical solution: they provided clients with an opportunity to make purchases in American online stores.

Nova Poshta provided a warehouse in New Jersey and the project was launched. It was not the first experience of cooperation between two companies. Oleg Makarenko, Sales Director of Nova Poshta, told AIN.UA, for several years modnaKasta has been staying one of our largest clients and, for sure, the largest one in the area of fashion retail. Similar amounts of delivery are perhaps demonstrated by such marketplaces as Rozetka. This fact proves general trend towards online sales. Oleg Makarenko adds, judging by three largest clients of Nova Poshta in the area of fashion e-commerce (modnaKasta, Le boutique, Lamoda), an increase of deliveries in this segment made 22% for the period January August, 2017, in comparison with the same period of the previous year.

Parcels were often delayed by customs service, and a number of negative feedbacks harmed the reputation of the entire business. On June 1, 2017, when the amount of negative feedback had become critical, the project was suspended.

To put clothing on in 60 seconds

The sales are affected not only by complaints of clients, who used the service, but also by fears of potential audience. According to the survey of BigCommerce (technological company, developing software for e-commerce), 58% of the Americans believe that paid delivery is a minus of online shopping, 49% – impossibility to touch cloth or try it on before purchasing, 34% – complexity of returning the goods, and the same amount of people complain about too long period of waiting for the goods. Emotions of American shoppers are also shared by the Ukrainians.

Reduction in time of delivery and decrease of product returns daily KPI for employees of modnaKasta.

So, we invested in new equipment, which helps to save a few seconds per operation. Recently our warehouse was enriched by new scales, which not only measure weight of the parcel, but also scan its size and automatically add this data to the bar code. The entire operation takes a few seconds. Thus, the parcels arrive in Nova Poshta (the department is located at the same building with warehouse) being measured. It considerably reduces the processing time.

Natalya Logvin explains, We send about 15,000 parcels per day through Nova Poshta. Therefore, it is no wonder that every saved second is important for us.

Until now we have a big problem with content production in Ukraine. Just photos of products are not enough for successful promotional action: every product item should be described in details, size chart should be standardized and a brief guide how to take care of the goods should be added. The more information a consumer obtains before purchasing, the less product returns an online store has.

With increasing number of suppliers, work on content became more and more complicated. Maxim Gorbunov, the Chief of photo studios, tells, I have been working still in the time, when modnaKasta had five photo studios in different parts of the city. We stored photos on flash drive and manually transferred them to server. Time consumption was huge. Then it became necessary to equip our own photo studio and processing center. Now modnaKasta has 12 photo studios, equipped for object and model photography, as well as contend department, where they elaborately describe every product item. Later modnaKasta developed software for preproduction, which allowed sending photos to retoucher in 4 minutes after shutter clicking.

One more barrier impossibility to try the selected thing on before purchasing was partially eliminated by opening a network of Client Service Centers.

The company noticed: many of clients prefer to pick up parcels themselves in the warehouses of Nova Poshta, instead of waiting for address delivery. Therefore, they decided to improve this sector. In 2016 modnaKasta opened ten centers in different districts of Kiev. It was possible not only to try cloth on in such centers, but also to make a return if it does not suit. Moreover, delivery to any of these centers was free that allowed eliminating one more subject of clients complaints. Today 50 Client Service Centers operate in eight cities of Ukraine.

One of modnaKasta centers

These centers do not reduce the amount of returns, but make handling of such returns easier: the information on returns is obtained by suppliers much faster and logistical chain is simplified.

In future, such centers would probably have workshops, where the clients could fit cloth on. Company management believes that clients would rather address to tailor than refuse from purchasing.

Digital fashion

This autumn modnaKasta explored an alien territory. They suggested the key Ukrainian Fashion Weeks – Mercedes-Benz Kiev Fashion Days and Ukrainian Fashion Week testing See now/Buy now format, which was already used by many world brands: Burberry, Tom Ford and Vetements. The rationale of the project is to provide a buyer with an opportunity to order anything they like, right during fashion show. Previously, the collection from fashion show appeared on store shelves only in a few months.

Despite of the fact that the audience of Fashion Week and modnaKasta is very different, designers have willingly agreed to participate in the project. Darya Shapovalova, the Founder of Mercedes-Benz Kiev Fashion Days, is sure, The audience of modnaKasta is 300,000 people daily. Every designer, participating in Fashion Week, thinks exceptionally about sales. In the world, where Louis Vuitton cooperates with Supreme, it is impossible to afford ignorance of communications with mass audience. She believes that the future of retail lies in competent integration of online and offline sales. That is why, when Andrey Logvin suggested at Lvov Jazz Fest launching the project See now/Buy now, the decision was taken promptly.

8 designers from MBKFD and 17 – from UFW agreed to participate in the project. Irina Belyayeva, Project Manager, explained the mechanics of the project, Simultaneously with beginning of show they launched live webcast and opened a page, where the demonstrated things (the photos were taken in advance) where available for sale. According to tradition of modnaKasta, promotional actions continued only 48 hours and thereafter preliminary orders were sent to designers, who had to sew all clothes for the period of three weeks.

Photographing the collections was the most effort-consuming stage in preparing the project. Taking into account that this autumn Fashion Weeks were held one after another (MBKFD started on August 30, and on September 4 we had the first day of UFW), photographers of the company had to work non-stop for almost three weeks.

Maxim Gorbunov, Chief of photo studios, tells us, A team of one studio usually photographs about 200 items per shift. For See now/Buy now we made photographs of not more than 50 items. He explained that requirements to content for Fashion Week were higher than usually: photographing and retouching took more time. Almost all designers provided photographers of modnaKasta with strict instructions, and some designers even came to the studios to be present during photo shoot.

Nevertheless, no one produced any impressive results. Natalya Logvin, who refused to comment financial indices, clarified us, The first experience is not about numbers, but about image and dealing with new audience. She summarized, We suspect that our audience was not ready for the prices, offered by designers.

Project “Market”

modnaKasta scheduled one more experiment for 2017.

Simultaneously with the existing business model, the company is going to occupy a niche of full-fledged marketplace with sustainable assortment.

The assets of this unit will be represented not by stocks, but by up-to-date products that cost a little bit lower than offline products. The categories will be the same: apart from clothing and footwear, they will also sell children’s clothes, toys, sports equipment, household goods, groceries and alcohol.

Notwithstanding the upcoming launch of the project, the company still hasn’t decided on its title. Employees from different departments call it Polka (shelf), Catalogue, but most often they call it Market.

Katerina Mikula, CEO of Lamoda project, tells us, For the last two years a lot of marketplaces have emerged in our category. Lamoda has extended their business model still in March of 2016. They allowed the brands, which were not the official suppliers, to be sold on the website. It was driven, among other things, by the growth of popular goods Made in UA. We wished to see local producers on our website. Lamoda is rapidly gaining momentum among our partners there are 180 trademarks, Ukrainian (Must Have, VOVK, Sova), as well as the world-famous fashion giants like Nike and Women’s Secret. Recently we even created a separate Made in UA tab in the top menu.

In modnaKasta they are sure that launch of Market will attract more solvent audience and will allow considerably to cut time on delivery. Moreover, sustainable assortment will simplify SEO-optimization of portal. Natalya Logvin, PR Director of the company, clarifies us, Now it is not easy for us to work in this direction. Actions of one brand cannot take place more than once per two months. Therefore, search by names of these brands will not bring customers to modnaKasta website. Google poorly ranks us in the search due to small number of permanent categories.

Photo: Alexander Kozachenko

Dmytro Zaporozhets have been interested in software engineering since he was a student of Kharkiv National Automobile and Highway University, majoring in computer-aided diagnosis of motor transport. Entering this higher institution, Dmytro expected that once he would work for design bureau. However, being a third-year student, he realized that they didn’t design Mercedes in Ukraine, as well as that his career prospects are limited to car service. He enjoyed understanding the motor vehicle construction and layout, but not the prospects of lifelong career at auto services company.

At the same, time Dmytro was fascinated by computers and spent most of his spare time on games. He even thought about career of game developer. He learnt С, wrote a copy of two levels of Mario for Windows and began studying software engineering at STEP Computer Academy. Although Dmytro has not graduated the Academy, he became interested in web programming, learnt PHP and HTML, and further – Ruby. In 2011 Dmytro has already been employed by Sphere Software and often applied GitHub in his work.

Today we are all accustomed to GitHub as well as to the fact that it is all right to keep major part of business in a cloud, but at that time the attitude was a little bit different: not all clients were ready to host their products in the cloud, therefore the company applied self-hosted solutions. The problem was that the company had to deal with the 10-year-old self-hosted tools (e.g., GitWeb). They were forced to beg for allotting repository in GitHub within the organization. While working on the project Dmytro and his team encountered the same problem.

“We had no alternative, but GitHub FireWall Edition, which costed starting from $5,000 per year for 20 users. So, we came up with an idea to create an analogue of GitHub, which could be installed on our server. It should be something simple with basic functions: code review, issue tracker, project delivery, adding users with keys to the projects.” Dmytro tells us. He and his colleague Valeriy Sizov commenced working on the project on weekends and in the evenings. The first version of GitLab was released in October of 2011.

Malicious fox

At the beginning the team did not concealed that they were making something similar to GitHub. However, they selected such a name by pure accident: Dmytro and Valery were looking for cheap domains with a short name including git-part. They considered such options as GitHost, GitCode and similar names and found the domain GitLabhq.com for sale, which costed $12 (at that time the projects in the area of hq, for instance, Basecamphq.com, were popular), and the issue with the domain was solved.

GitLab was developed as open source project. Their community included a designer, who drew options for logo. The founders chose a picture with tanuki (a creature from Japanese mythology – werewolf-beast, similar to fox or raccoon, symbolizing well-being). However, in 2015 they decided to change the logo, because the users sent negative feedback stating the icon had unkind look.

“People complained: I work with GitLab 8 hours a day, and this fox on the logo angrily stares at me.” Dmytro Zaporozhets loughs. This time they have found a designer, who specialized in “fox” logos and GitLab’s logo became neutrally abstract.

Business commenced with tweet

Since 2011 a community has begun to develop around GitLab, businessmen also became their users. The Company, where Dmytro Zaporozhets worked as a developer at that time, also started using his service. Sid Sijbrandij (his name is Sitse, but when he moved to the USA, he decided that it would be easier for investors to communicate with Sid), Dutch entrepreneur, was one of the project contributors. In summer of 2012 Dmytro Zaporozhets got a letter, where Sid expressed gratitude for the review and informed that he was going to build SaaS-business based on the service on GitLab.com domain. GitLab operated according to open source license (the MIT license) and it was not contrary to its founders’ interests.

By the end of the year Dmytro Zaporozhets tried to monetize GitLab using donations, but it did not work properly: in the best month the project gathered $100. They also tried to provide support on a paid basis. Although, to earn this way it would complicate the process of installation and updates. By the end of 2012 he still worked full-time, treating GitLab as a hobby. At this moment he realized that he needed to choose: job or his project.

Dmytro tells us, “My heart was in GitLab, but I had financial problems. I wrote in Twitter that I was tired and wished to work on GitLab full time. In a certain time I got a letter from Sid, where he offered me a salary for working on GitLab and helping him with his company. In January of 2013 I started fully to devote my time to the project. Since that time I have been living between two countries: Ukraine and Netherlands.”

In 2014 GitLab has been registered as a company. By 2015 the project has increased to 10 people and by autumn of the same year, after the first seed-round – by 50 people. It is interesting that, unlike multiple Ukrainian projects with Ukrainian cofounders, GitLab does not have any development or R&D office in Ukraine. IT specialists are hired all over the world, from Europe to the USA and Brazil – totally in 39 countries of the world.

The employees work remotely, but a few times a year they meet on summits – half-working and half-entertaining meetings of the entire team. In order to make socialization of the widely disseminated team easier, it became a common practice in GitLab to take virtual coffee breaks: video calls, during which the employees spend their time resting and communicating – similarly as if they were in the office with a cup of coffee.

To lose the first client and to find a business model

GitLab began with self-hosted market. The team saw that many companies started using open source version of GitLab, installing it on their servers. Therefore, GitLab decided that they can sell consulting services, provide assistance in the area of adjustment and customization. The companies-clients often requested to add a couple of functions. This gave birth to the idea of corporate edition “open source version plus a few popular tricks” (something like LDAP authorization protocol). Thus, in summer of 2013 they announced GitLab Enterprise Edition. Since the launch of corporate version the team has realized that it is highly-demanded and this product (and not the consulting and support) became the core business of the company. At the same time, GitLab lost their first client. The reason lied in marketing.

That client was the company, which used GitLab’s service, but further their TOP management decided to transfer the entire company to a single soft. As far as no one knew about GitLab at that moment, the decision was made for the benefit of another service, which was more widely known. According to Dmytro, GitLab always grew in the companies “from the bottom”: a developer installed it on the company’s server, attracted other developers of the department and, in such a manner, a number of users within a company organically increased from the bottom to top. When this number became noticeable, someone from engineering department or bookkeeping contacted GitLab and they bought Enterprise-version, but not this time.

Dmytro states, “It had a strong influence on us. We understood: no matter how good GitLab was, it’s all in vain if nobody knows about our existence. If in future the companies move to single platforms for code hosting and review, we will continue loosing clients and will not be able to grow.”

If there is any place where they could manage to teach the team to grow rapidly and capture the market, it is Silicon Valley.

Y Combinator

Sid proposed to send application to Y Combinator (it was filled in like this). At the beginning the startup encountered fierce competition – they selected literally 1-2% of all submitted applications. Nevertheless, the founders of GitLab were noticed and invited to the interview.

After a few interviews two cofounders were admitted to the program. Although the open core model of GitLab is not very popular among Y Combinator’ projects, a positive role has been played by the developed community (about 800 contributors at that moment) and availability of major clients. Dmytro and Sid have settled in Mountain View that is a 10-minute drive from the incubator. Due to the legendary expensiveness of housing estate in California, they decided to invite a few other employees of GitLab to reside and work together. As a result, eight people resided in a house – almost the whole team of the project at that moment.

Program lasted three months. Every company – participant had to choose the key metrics-numbers that the success is calculated by, to measure it every two weeks and explain such measurements to mentors from Y Combinator. Initially the team chose a number of downloads, but further they replaced it by financial indicators, despite of the fact that mentors considered that it was a bad practice to change metrics in the course of training. However, at that moment, revenue was more important for GitLab that the number of downloads: in contrast to the latter the revenue demonstrates not only the growth of the amount of clients, but also the internal growth of every client. At that time the basic version of GitLab Enterprise Edition costed $39 per user during a year — it was cheap in comparison with the competitors’ prices.

Dmytro says, “Y Combinator facilitated selection of our focus and approach: you have a number, you focus on it and know your numbers. They continuously pushed us forward: better earlier than later, and it doesn’t matter which way. When everyone around you is an entrepreneur and creates crazy things, you need to grow and you are filled with absolutely different mindset –higher, faster and stronger.”

A special value for startups – participants is a demo day at the end of the training, when the TOP investors are invited and a team is allotted 50 minutes for pitch. According to the cofounders, after the demo day all participants received more or less adequate investment offers.

Too much money

It is owing to Y Combinator that the team raised the first round of investments: in July of 2015 they raised $1.5 million from the major funds – 500 Startups, Crunchfund, Sound Ventures of Ashton Kutcher, Liquid 2 Ventures and Khosla Ventures. In September of the same year the startup raised $20 million more from Y Combinator and, finally, this year – $20 million from venture department of Google as a lead-investor. The total amount of the raised investment is estimated as в $45 million, taking into account the fact that the founders haven’t lost control of the project. Dmytro believes, “If it’s ok with your idea of project, its implementation and numbers, the investors from Silicon Valley are quite active and they will be the first to approach you, as incredible as it may sound. All this is a consequence of Y Combinator’s demo day – they have an immense and very effective network.”

Investment contributed to expansion of the team: since spring of 2016 till summer of 2016 the team has increased from 10 to 93 employees. At the moment more than 200 employees work for the company. The clients of the project exceed 100,000 organizations, including NASA, CERN, Alibaba, SpaceX, IBM, Ticketmaster, ING, NASDAQ, Sony, VMWare and Intel. Sid Sijbrandij tells us, “It happened because these companies and organizations themselves were looking for open source solutions. They did not even contact us, but just started using our service.”

I.e., even such kinds of companies encountered GitLab “from the bottom”: initially, ordinary developers commenced using the service, then their teams were attracted and thereby user base progressively increased. However, this time, in contrast to 2013, TechCrunch and Fortune wrote about GitLab, and Forbes considered Dmytro to be among the best 30 IT entrepreneurs of 2016 – the project became well-known.

GitLab grew in terms of revenue and structurally extended: they created new PR and marketing departments, sales team, security and infrastructure departments. Dmytro Zaporozhets says, “Now the market knows about GitLab as alternative software for the enterprise. So, the problem that we had faced in 2014, was eliminated.”

Due to a remarkable growth of project users (more than 3 million projects and 2 million users), they have problems with scaling: if the service hosts repository files for 100 terabytes, not all file systems are able to sustain such load. It means that they need to update the service and build up server base. This is also a reason for uptime improvement: from 99.5 to 99.9. Nevertheless, the biggest challenge is the product.

Dmytro Zaporozhets summarizes, “Our idea is that the developer should come to the office in the morning, open GitLab and have no need in other products. We have to ensure that all undertakings, from chat to deploy, take place on our platforms. We would like to encompass a full range of development and operations, from issue tracker, planning, road maps, development and management to packaging in containers, release, and monitoring. We have exceeded the framework of competition with GitHub long time ago. Our goal for 2018 is to complete DevOps.”

Competera is a SaaS product that provides online stores with recommendations on price policy to maximize the ratio of profits-to-clients. The startup also has a product for manufacturers that allows them to track their goods, analyze their position in various national markets and generally receive vital analytics and insights.

Competera has three founders. Aleksandr Galkin used to work in auditing and IT-consulting. “Aleksandr is our great networking specialist, he’s a very social person, he’s friends with everyone and knows a huge amount of people in various fields and industries. That’s why he’s in charge of all the external communications” – says Andrey Mikhaylov, Competera’s CTO.

Andrey himself spent a lot of time working in IT outsourcing and launched technological products that included SaaS-type services. Logically, he’s responsible for development and product management. Galkin and Mikhaylov were the two initial creators of Competera and were joined by Aleksandr Sazonov during the company’s launch period. Sazonov’s professional history is connected to mergers and acquisitions and the development of real-estate projects. He takes care of the company’s financial, legal and operational processes.

We had a very quick start. It took us just a couple of months to move from an idea to a prototype and we got our first client 5 months after the company concept was finalized, – says Galkin.

The idea was born from finding a solution to a problem that the founders that had encountered themselves. Long before Competera was founded, Mikhaylov launched an online store and was faced with low sales and few clients despite an abundance of goods.

Mikhaylov recounts: “Right before New Year’s, a client called us and said: ‘Your Chanel–5 perfume is 50% more expensive than on your competitors’ websites. What’s up with that?’ We started digging into the issue and realized it’s a technological problem, not a commercial one. We found that there are very few services in the world that help companies deal with this and they are generally quite expensive. I told Aleksandr [Galkin] about the situation and we decided to create our own product to solve this dilemma.”

Approximately 80% of online retailers that Mikhaylov and Galkin talked to had faced the same issue. The founders created their first MVP and moved on to gathering feedback. “We demonstrated the product right away, with almost no visual design.” – says Galkin.

The story of Competera’s first client is an interesting one as well. The company’s analysts discovered a price anomaly on the website of a large online retailer: an electric kettle worth 1170 UAH [$25] had been showing a price of 11 700 UAH [$250] for an entire week.

“We just took a photo of the price discrepancy integrated into the interface of our dashboard and sent the screenshot to the company’s general email. The store (one of Ukraine’s largest online retailers) immediately reached out to us and became our first client within a week.” – Galkin recalls.

The growth of the startup

The company started working in full force in 2014, when its founders registered a legal entity and opened a physical office location. Before that, the team worked in beta-launch mode.

We had one client and we were treating it all as an experiment, – says Galkin.

For approximately one year, the founders had two jobs: Competera and their day job.

On the photo from left to right: Aleksandr Sazonov, Aleksandr Galkin, Andrey Mikhaylov.

The total sum that the three friends invested into the startup launch is hard to name accurately: It’s a difficult calculation because we invested our funds based on necessity, in portions and over a period of time. Since we’ve reached profitability, we’re still reinvesting resources into Competera’s development, – says Sazonov.

By his estimates, the amount of money that the founders directed into their startup is somewhere in the ballpark of several hundred thousand dollars. No investors have been involved yet, but for about two years, the company has been in negotiations with potential backers with smart money.

Galkin notes: We’re looking for investors predominantly based on their networking strength and strategic reach. That’s more important to us than money. And that’s the reason we’re so meticulous in our search.

The client-base of Competera has grown organically: the first online retailers that the startup engaged for feedback on their product later returned to secure Competera’s services. There were no flashy campaigns or mass-advertising ventures and the only PR event that Competera put serious effort into was an industry conference in 2013.

We were pretty fortunate in our booth placement: it was right near the food court, lined by two huge monitors that showed our product. We made a lot of new acquaintances there. Beyond that, our clients just spread our name by word of mouth, recommending us to their friends and colleagues. We’ve also had customers just find us online independently Galkin recounts.

Nowadays, the marketing and sales department of Competera is a team of 8 people: price-analysts (sales managers), a marketing specialist and some journalists/writers.

We strive to create interesting content and teach our user audience of product managers to be effective and efficient. We also regularly attend and speak at conferences. I think these are good investments of time and effort, marketing-wise, – says Galkin.

Competera received its first payment six months after the official product launch. The profits were there, but they grew very gradually. Mikhaylov recalls: Our national currency, the hryvnia (UAH) seriously crashed (devalued) twice over this period, so did the Russian ruble. So, our profits grew slower than the number of clients. There was a short period of time when our earnings didn’t grow at all.

We’ve had instances in the past where we would acquire 10-11 new clients but our profit curve would still go down [due to the regional financial crisis]. That was an interesting graph, let me tell you. The money would just disappear.

Considering the fact that most of Competera’s contracts in 2014 were from the CIS [the post-Soviet region most affected by the current Russian-Ukrainian conflict], the company’s main concern was to simply survive.

Andrey Mikhaylov puts it even more colorfully: It wasn’t just a depressing time, it was more like a horror movie. A financial Texas Chainsaw Massacre.

How Competera works

Competera gathers information on sales, mark-ups and profit margins. It also indexes websites several times a day, similar to what Google and Yandex do, but it focuses only on e-commerce.

We provide clients with deeper insights. We can analyze what kind of sales are taking place, how an online store shows its goods to the customers and so on. And we actually crawl/index websites more often than the large search engines do, – says Galkin.

Every client has his or her own personal account with a dashboard. The latter conveniently shows all the relevant analytics and the company’s market position in one easily accessible spot. When the store diverges from its standard numbers, the system provides recommendations on how to improve the situation or change things up.

The dashboard (based on Competera’s own analysis) is generally used by smaller companies, while larger corporations prefer to integrate API platforms into their own solutions to receive more advanced metrics and data.

We’re closely integrated with other services for the most part. This is an advantage that allows us to acquire even more clients, – says Mikhaylov.

Client accounts are taken care of under the watchful eye of the Customer Success Manager. His task, among other things, is to make sure Competera’s solutions are used in the most effective way possible for each customer, taking individual needs into account.

Product managers that use our tools are generally four times more effective than those who don’t. Our platform empowers managers and analysts to save time and increase data accuracy. This allows for much better decision-making. Before working with us, a manager from a large retailer might have had to spend hours or days re-evaluating prices in the store. With us, it’s a much easier process that can be done several times a day, – says Galkin.

Clients and budgets

Competera is a B2B product. The startup works with medium and large online retailers, as well as with large enterprise companies (via subscription). The rates depend on the volume and amount of data that needs to be monitored by Competera’s tools. The average costs also vary based on the clients location.

We have clients that pay tens of thousands of dollars per month. But we also have smaller businesses that pay several hundred dollars, – Galkin notes.

Annual contracts with large clients amount to hundreds of thousands of dollars, but small retailers might pay only several thousand per year. 80% of Competera’s clients are corporations of considerable size, however.

Galkin explains the reasoning: Nearly all of our clients are large online retailers or branches of global brand networks, since large volumes of transactions benefit more from the efficiency of our solutions. When we enter a new market, we go straight to the big players. When we were just starting out, we had an experiment with online stores of a more modest size. Some of them are still with us, they have small SaaS deals with us with a rate of up to $100. But these clients amount to less than 5% of our base.

The startup decided to stop operating within the field of small and individual businesses due to pragmatic reasons, as Galkin details:

We did a bit of analysis and realized that most of these stores exist from 5 to 8 months. If you go to Hotline [the Ukrainian price aggregator website for electronics] and look at the stores that are selling cellphones for example, the big picture will be quite different from six months ago. 10-15% of the small retailers will survive, the rest will disappear. The math just doesn’t work out for us with clients like that.

Beyond that, smaller online retailers often don’t bother with analytics. That’s something that you start caring about when your company grows. Small businesses are content with using Google Analytics to track website visits, – adds Mikhaylov.

Team and global presence

Competera initially targeted the markets of the U.K., the U.S. and Europe. But to get its first serious paying clients, the startup knew it had to be active on its home turf first.

Time will show whether this was the correct decision and whether we should have bet it all on black and tried to enter the U.S. market at any cost. But with level of salaries that we have, we wouldn’t have been able to accomplish in America what we were able to do here in Ukraine Mikhaylov says.

Competera’s office in Kyiv

Currently, Competera works with businesses from 12 different countries. Less than half of them are from the post-Soviet CIS region. The company has three physical locations: the main HQ is based in Kyiv (Ukraine), and two sales support offices are located in London and St. Petersburg respectively.

Galkin elaborates on Competera’s global presence: We plan to expand our presence in external markets. A U.S. sales support office is in the works at the moment. Our U.K. representative office will grow as well. It’s easy to set up a meeting with nearly every global retail network in London, so that’s extremely convenient.

The development team and the operational management are all based in Ukraine. The total staff of the company has reached 35 people and is expected to reach 50 by the end of the year. The main recruitment focus is on R&D, but the sales department is getting some reinforcement as well.

Mikhaylov notes: As Competera grows, our data processing volume increases. Consequently, we need to be more and more effective in our analytics and data gathering. We began with tens of thousands of prices per day, now we’re working with tens of millions.

The term “marketplace” is used in a broad sense and denotes an online trading platform integrated by a common set of rules of different stringency, explains Mykola Paliyenko, co-owner of Prom.ua (the controlling stake belongs to global media group Naspers headquartered in Cape Town). “This is a model helping business to develop faster,” he says.

According to Prom.ua, the audience of marketplaces is growing faster than the one of traditional online stores. From 2014 to 2016 the audience of traditional online stores added only 4% in traffic, while the one of marketplaces 78%. They also can differ depending on the set of services. “The minimum of services provided by the platform is a price-aggregator (price comparison website services) or bulletin board, the maximum of services is what is called “fulfillment” in the west,” explains in detail Alexander Olshansky, president of Internet Invest Group holding. The extreme conditions, he notes, are the least stable, so online merchants try to experiment by introducing some additional services or by refusing them.

So far, Rozetka, the largest Ukrainian online store, is far ahead of all others. It is the only one of all Ukrainian online retailers offering fulfillment, that is, a full range of services for its partners from storing goods at its warehouse to delivery and after-sales service. So what is the point?

As early as 2013, there were 160,000 unique commodity items in the company’s assortment. Nowadays there are already 1.5 million.

However, it is not enough for the company. The goal is to sell online all products that are in retail. If you focus on Amazon selling almost everything then it is 12 million unique SKUs (Stock Keeping Units) presented on one online platform.

“The processes are not yet ideal. We are torn between clever and beautiful ones,” Vladyslav Chechotkin, Founder and co-owner of Rozetka, is full of self-irony. The company is haunted by the success of OLX (a bulletin board, Naspers affiliated company as well), admits Chechotkin. Although Rozetka, as he says, will never go along the path of an irresponsible ad aggregator, he likes the idea to reduce risks without damaging the assortment. “We want to offer our buyers the maximum quantity of goods and the best choice. That is the strategy” Vladyslav Chechotkin almost repeats the Amazon Founder’s credo. “But not everything we want we can actually sell,” he adds.

Vladyslav Chechotkin at the lecture “What’s eating Ukrainian e-commerce today?”. Photo: Olga Zakrevska

In 2013, the most successful year for e-commerce in terms of turnover, the online retail market grew by 25% compared to 2012 and amounted to about $ 2,2 billion (UAH 16 billion). At the end of the year, Rozetka took 135th place in the Forbes Ukraine rating of retailers with the revenue of UAH 2,13 billion ($ 350 million) and became the largest online store (Allo and Mobilluck stores took the second and the third places respectively).

At that time, Rozetka was already selling on its website various products for outdoor activities, sport and tourism, for children, household goods, games and gifts. The website had 160,000 stock key units. Chechotkin felt quite confident and tried to experiment by displaying certain products at the website. However, the company maintained strongest positions of the traditional categories – engineering and electronics. While the share of Rozetka at overall online market was 13% (Ernst & Young assessment), the share of 35% in the segment of household appliances and electronics assured its absolute leadership.

However, the crisis burst out in 2014 collapsing the market in dollars to 1,5 billion (it grew only slightly in UAH to 16,6 billion). Ukrainians became poorer because of the fall in exchange-rate. An average check in stores has been cut in half. Later the pessimists forecasts would come true: the decline would continue in 2015 pulling back the online commerce market to a volume of $ 1 billion.

With the onset of the crisis in 2014, the experiment of Rozetka with product categories entered an even more active phase. The section “railway and air tickets” was introduced already in February, clothing and footwear appeared on the website in April. These segments are much more profitable than electronics, for instance: the margin in the trade of footwear and clothing can be from 50 to 200%, says Valentin Kalashnyk, president of Ukrainian Association of Direct Marketing. It rarely exceeds 10-15% in the segment of engineering and electronics.

Realizing that the usability of the site is affected because of such an intensive expansion, the management of Rozetka completely updated its design. The new version of the website adjusted more to the expansion of categories was launched in March 2015. “We can no longer be called a specialized electronics supermarket. We are moving towards the actual Internet supermarket, where you can buy almost everything from mobile phone to clothing and seeds for your summer house,” the company’s press service reported.

Rozetka before/after the redesign

Within 2 years, Rozetka introduced the categories of seeds, auto products, jewelry and cosmetics to its product assortment and began selling alcohol. In 2016 the company entered the grocery segment and launched a sale of books, and in January 2017 pharmacy products became available for sale.

Chechotkin claims that the company has already been working on the marketplace model for several years. “A little more than a year ago we released it to the public as an offer for partners,” he said. Today there is a direct link “to sell on Rozetka” on the main page of the website. By clicking on it you will be requested to fill a short application form for partnership.

Long way

When Amazon decided to start selling something other than books, DVDs and CDs were introduced to the product assortment and then Jeff Bezos set his sights on children’s toys and electronics. However, he did not even imagine what difficulties were ahead: these goods required a completely different approach than those that were already familiar to the retailer. In 2000, with the Christmas boom on toys coming up, the head of the company made all possible mistakes in the estimation of both the required range and volume. Still not knowing this, he invested $ 120 million in a new sector and swore to the team that he would personally landfill all the leftover stock using his car should there be any after the holidays. In the end, it would be problematic to implement this, especially considering that Bezos was driving Honda Accord at that time: the company could not manage to sell toys for $ 50 million.

The expansion of Rozetka has not passed ideally either. Competitors assure that Chechotkin was not selling sport goods very well and there did not seem to be a surge in railway and airline ticket prices. “I admit that the traffic of Rozetka could be monetized in this direction. But the way I would do it is very different from how they did it,” says Serhiy Kravets, director of Tickets.ua. “Tickets pay off, but they are not something outstanding for us so far. They generate hundreds of sales a day, not tens of thousands as we expected,” agrees Chechotkin. Rozetka is not interested at all in selling such products like books, for example, he says, as its logistics is simply not tailored to such low-margin products. “Or tires. There are strong players here who have well established processes. It is more profitable for us to cooperate with them and not to enter this market,” he continues.

In general, the head of the company reluctantly talks about the categories he succeeded in and the ones he failed. “And it makes sense, because it is also a competitive advantage if you know what you need to sell by yourself and what should be outsourced,” Alexander Olshansky agrees.

“Quite logically, they have failed. For example, we clearly understand that selling electronics and clothing are absolutely different things. Everything is different: from displaying on the website to communicating with clients and delivery,” Dmitry Pokotilo, Founder of F.ua, notes. He recalls how Fotos (the forefather of F.ua) for a long time has been losing money on delivering large-sized household appliances, until the logistics of the store was adjusted to this category new for the photography equipment seller.

“Why are we doing so well? Perhaps we really love money,” Chechotkin jokes. He also adds that commercial risk is the main point in trade.

“Marketplace fixes this problem for us, the risk whether a product will be sold or not is taken by an entrepreneur,” – the businessman tells.

It is indicated on some products on the Rozetka website that the seller is not Rozetka itself, but one store or another its partner. There are about 30 such stores publicly available on the website, although the head of the company claims that there are several hundred of them. As he said, according to the assortment, most of the products on Rozetka are the products of partners, although in retail trade the greater part is the production of Rozetka. He does not give exact figures, but says that the positions of Rozetka in the field of household appliances, children’s goods, and clothes remain very strong.

According to AIN.UA, the categories of such products as books, car tires and pharmacy goods are almost completely outsourced. In the categories of auto products, footwear, clothing, children’s goods and household utensils, the assortment of Rozetka intersects with its partners ones. How is it possible to compete with one product on the same platform, for example, in clothing? The segment is very large and lucrative, there is enough space for everyone. “For the purposes of discussion, there are expensive ethno brands. Each vyshyvanka costs UAH 10,000. Do I believe that they will be sold? Not sure. But my partner believes, then let him take this risk,” says Chechotkin. The market of organized clothing retail in Ukraine is estimated at about $ 5 billion. Online retailers have only a small part of it, no more than 3% (according to UADM estimations, $ 140 million in 2015). However, given that more and more Ukrainian Internet users prefer to shop online, these figures will obviously increase.

The most significant competitor of Rozetka in terms of marketplace is OLX ad aggregator. The companies compete for the attention of the Internet audience. According to Factum Group Company, in 2016 OLX outrun Rozetka in two key categories audience reach (45% vs. 40%) and average daily share (17% vs. 9%). Why is that important? Sellers use both websites to attract attention to their product. “Sales on Rozetka do not provide us with a special additional revenue, although their percentage is very loyal. The partnership with them serves more to the image purpose, it is like an alternative to promotion in Google,” Artem Kiryahno, head of the online store for clothing trade GrandUA, admits.

In this context, both Rozetka and OLX are akin to online media: they act as advertising platforms and monetize their traffic. However, the conditions are different. OLX places advertisements free of charge, but sells packages for business users, who are not satisfied with the limited number of placements. Prom.ua charges a subscription fee from customers for the period of service.

Rozetka can offer its partners a wide range of services communication with customers, warranty service, delivery and storage at its warehouse. The company does not act as intermediary, but guarantees the quality of goods to buyers by its name and reputation. In doing so, it charges a commission for the effected transaction from partner rather than a fixed fee, as competitors do. “Commission can be different, from a fraction of a percent to tens of percent. It depends on the range of services and the terms of the agreement, which may differ for clients,” says Chechotkin.

Problem logistics

Amazon began its activity under the motto: “to sell as much as possible, to carry as little as possible.” Bezos was obsessed with the idea of creating such a virtual store that would not exist offline. This model was hardly intended for stockpiling and the right to form the assortment was initially delegated to Amazon trading partners and publishing houses. The cost of storing books was also delegated along with this right. But the businessman quickly understood that customers want fast delivery and they had to do it on their own. So the focus of the model shifted to efficient logistics, the company launched a grandiose investment project for the construction of fulfillment centers throughout the USA and later in other countries around the world.

“The construction project of Rozetka is very expensive. It is necessary not only to have funds to buy it, but also the volume of the market, so that it will pay off. We cannot afford this and hardly anyone else can,” Dmitry Pokotilo from F.ua says. We are talking about the huge warehouse complex in Brovary acquired by Rozetka in January this year. The A-class warehouses of a total area of about 49,000 sq. m are located on a plot of 9.5 hectares in 10 km away from Kyiv and 15 km away from Boryspil International Airport. $16 million spent on the purchase is not everything. “Twice as much as we spent on the warehouse, we will spend on its equipment,” the owner of Rozetka says.

The point is that the warehouse will be automated. The dimensions and equipment make it almost unique in Ukraine. They say on the market that even large offline networks do not have something like that. They do not have to, as their business model does not involve creation of such large stores as they trade “off the shelf” and not from warehouse. For comparison, the size of Auchan network in Kyiv Region is 27,000 sq. m, the warehouse of EpiCentre occupies an area of 20,000 sq. m. in Kalynivka urban-type settlement. Fozzy Group uses its own distribution center with an area of 30,000 sq. m (although the total storage area of the group exceeds 100,000 sq. m.), and fulfillment area of Nova Poshta, that is two warehouses in Brovary and Belgorodka, reaches 18,500 sq. m.

“No distributor stores at his warehouse more than 5,000-7,000 names of goods. Perhaps some electronics distributors have up to 10,000 unique products at warehouse. We have 1.5 million items, we sell 250,000 unique SKUs every month. These are completely different challenges, technology and processes,” Chechotkin says.

“Is there something like this in Ukraine? I do not know, I’m not sure. In fact, Rozetka is one of three largest companies in Ukraine (by the number of client transactions) along with PrivatBank and Nova Poshta,” Olshansky believes. According to Chechotkin, logistics is now the most cost-intensive part of the company’s budget: the company spends about $ 1.5 million on it every month.

The purchase of a warehouse and movement towards the marketplace are interrelated processes, confirms co-owner of Rozetka. “We are setting a new logistics and this will allow us to offer full service to our partners,” he says. It is interesting that in this niche his company will have to compete with Nova Poshta, one of its best partners. Not so long ago, Nova Poshta started rendering fulfillment service based on outsourcing. “You can just bring them the product, everything else they do by themselves – sorting, repackaging and delivery to the buyer,” – says Dmitry Pokotilo. Many online and offline retailers are among the company’s clients: Allo, WOG, Nestle, Philip Morris, Garna Mama, Rozetka and others.

However, Nova Posta is not only fulfillment. In fact, it saved Rozetka many troubles that neither Amazon nor many other global online retailers could avoid. We are talking about the most important, “last mile” of delivery delivery to the buyer. “Once Rozetka tried to develop its own delivery, they had a company for this purpose. But it could not manage to compete with Nova Poshta and it was closed down,” the market participant, who asked to remain anonymous, says. Chechotkin partially confirms: yes, Nova Poshta can do it more effectively in terms of economy. Rozetka has not disbanded its delivery service, but limited its activities to the territory of Kyiv, he clarifies.

Nova Poshta made an enormous contribution to the development of e-commerce in Ukraine. You cannot even imagine how big it is,” Chechotkin assures.

“Ask our neighbors in the north or north-east what is the situation with delivery in their countries. They will howl and swear. We do not have that kind of thing.”

Gods of content

What else, besides effective logistics, it is necessary to have to be a marketplace and make money on growth of your partners? In Amazon, huge value has always been seen in creating a convenient infrastructure for website users. At first Bezos invested tremendous funds in the purchase of technology companies and start-ups that could join the structure of the company and raise it to a new level of innovation. During the dot-com crash in 2000-2001, many of them went bankrupt, and Amazon began to develop independently. One of the company’s notable achievements is the 1-Click online shopping system allowing reducing the number of actions a buyer takes before buying up to 1 step. Once Bezos tried long and unsuccessfully to defend his patent right to this system and today hundreds of stores around the world use it (or try to adopt it).

Amazon paid much attention to technologies aimed at attracting users to the website, as well as at analyzing their behavior on it. Two different departments, the editorial and personalization ones, with hundreds of employees have worked on these tasks for a long time. In the first department, copywriters and editors dealt with the buyers, who played the role of product experts and made individual detailed descriptions on them. The second one employed analysts and programmers who worked with dry figures and designed algorithms. When the crisis started and the question of one of the departments dissolution arose in order to cut costs, the editorial department fell victim to it. Tests have shown that the stereotyped recommendations are more effective. Algorithms defeated people.

In Rozetka, there are people working on content: there are about 60 copywriters and editors in the staff, even more people are working on outsourcing. Chechotkin clearly understands how to catch the Internet user on the hook. After all, most people search through the network in order not to buy, but to get information. “We relied on content from the very establishment of the company. Not to brag, but if they start talking about some new trend in e-commerce in terms of content, it means that Rozetka has been in this trend for several years,” the businessman tells. He states that the base of videos, reviews, comments and product descriptions, which was created by Rozetka during its existence, is the largest in the Russian-speaking segment of the Internet. “I agree, they are the gods of content, we can’t reach this too soon,” the representative of one of the competitors, who asked to remain anonymous, confirms. For example, the video channel of the store on YouTube is ahead of e-Bay and Amazon channels in terms of traffic and number of subscribers.

$400,000 Rozetka spends every month on IT development

The technical department of the company employs even more people than the editorial office over 100 developers apart from outsourcing. Chechotkin says that Rozetka spends $400,000 per month on IT development. The company strengthens its IT infrastructure every month, constantly rewrites modules, optimizes load and just physically expands capacity by increasing the number of servers every year. “Perhaps, the infrastructure of the website is the least problematic place for us now,” co-owner of the company states.

Of course, the gap between Amazon and Rozetka is huge, if only because of market volumes and over recent years the American retailer has gone even further. In fact, today it is not only an online store, but also a technology company. In 2015, 55,9% of Amazon’s revenue came from the product of Amazon Web Services, a cloud-based operating system, an e-commerce platform for many companies. It is the logical continuation of marketplace development: IT infrastructure improvement and automation of processes reach such a high level that it allows scaling service and selling it separately as business services.

Does Vladyslav Chechotkin consider such a path for himself? So far, he believes that e-commerce in Ukraine cannot exist without a strong off-line component and intends to develop this direction first of all. However, who knows, maybe one day Rozetka will also become not a trading company, but an IT one.

What did the company begin with? 

Like many other interesting projects – it began with the Founder’s garage in South California. In 2011 James Siminoff, the Founder of the company, has gathered a small group of engineers to work on his idea. Just one year later, in 2012, a team of five guys (three engineers and an intern) presented DoorBot to public. It was a doorbell with a camera and Wi-Fi. While ringing the doorbell, the dwellers of the house could see who visited them.

According to the Founder, it was not easy to manufacture such a product. Especially, taking into consideration the battery that should serve at least a year, video streaming, instant messages and mobile application. However, even with a small number of personnel and lack of funding, the first smart bells were delivered to customers in November 2013 – less than in a year after announcement of the product.

Below is a photo of project Founder with his son and prototype of the device on the production site in Asia in August of 2013.

Only in 2013 the company produced 20,000 pcs of gadgets and delivered it to the customers in 85 countries. Later they changed the name of the product – from too “geek and tech” to understandable Ring. According to the Founder, it should mean a “security ring”, provided by the company’s gadgets around a user’s estate. In 2014 just 42 employees worked for the company.

What are they doing now?

Since Ring has managed to raise a few funding rounds, to increase personnel number and largely expand product line, the total amount of investments, raised by Ring in the course of six rounds, made $209.2 million. Among the investors there are such names as Goldman Sachs, Virgin Group, Qualcomm Ventures and Amazon Alexa Fund. The company’s price  was estimated at $1 billion and it was bought by Amazon at this price. During the last investment round in January of 2017, when the company raised $109 million and was estimated at $445 million, that is double more than in the previous round. Then the funds were spent, among other things, on development of Ring’s R&D office in Kyiv. For today, a total number of employees, according to Crunchbase is up to 1,000”.

The company produces a wide range of products for residential security: apart from smart doorbell with an application, they also produce Ring Spotlight Cams — cameras with motion detectors and a possibility of video streaming at 1080HD, sets of security devices Home Security Kit, etc.:

In January last year they also presented a new generation of the smart bell: Ring Video Doorbell 2. It supports video streaming at 1080HD. This device is equipped with night-vision device, adjustable motion detectors, etc. The company positions all their products as solutions to combat crime in any residential neighborhoods.

How does the Ukrainian office work? 

It became known in 2016 that the company launches an office in Ukraine.

Kyiv laboratory Ring Labs started developing software in the area of machine learning, computer vision, data mining and other spheres of artificial intelligence.

Ring integrated inventions of the Ukrainian engineers into their products. In particular, in Kyiv they analyze video data from Ring’s clouds. This data is used to build neural networks and algorithms to improve the company’s product performance efficiency.

The first employees of the office in Kyiv:

A decision to launch R&D office in Ukraine was taken in order to get easy access to the skilled personnel. Then the company explained to our editorial team, “Ring company was impressed by tech skills of the Ukrainian professionals. Machine Learning, Computer Vision and artificial intelligence as a whole – are very complicated tasks. In the company we believe in the potential of Ukrainian developers, their high skills and unique expertise.”

Here and further – photos of the company’s office and DOU profile

In December of 2016 about 30 employees worked in the Ukrainian office. Now it is about 445 (according to the rating of the largest IT companies).

Ring Ukraine is located in Business Center “Toronto Kyiv” near Olimpiyskaya subway station. When we dealt with office repair and reconstruction, we had an intention to make it similar to offices of the companies in Silicon Valley. The employees are offered bonuses in the form of medical insurance, full-year gym membership, lunches and dinners in the office. Moreover, in the office we have recreation rooms and sleeping areas.

The office is headed by Kira Rudik, COO. In response to our question concerning the future of the Ukrainian office after closing the deal, she replied, “Still we can’t make any official statements.” Now Ring Ukraine is actively seeking for new talents: according to DOU, at the moment they have 11 vacancies, including frontend developers, security engineers, product managers, 3D modelers, etc.

At the time of this article publication we have no information about the future of Rink’s Ukrainian office after the company’s purchasing by Amazon. Our editorial team is waiting for comments of Ring and Amazon.