{j: Mind.Systems} CEO Elena Shostak shares her experience in conducting various projects, working with customers from different countries, and building a strong team.

On {j: Mind.systems} operating model

The {j: Mind.systems} company was founded more than two years ago as a technology partner for the software development of internal projects of the TECHIIA holding.

Over time, the company began to grow, increase expertise in various domains, expand the technological stack, thereby attracting new projects. Today {j: Mind.Systems} is a self-sufficient company that works with customers from all over the world. In the company’s portfolio, you can find both outsource and outstaff projects for the implementation of which various approaches and methodologies were used.

“{J: Mind.Systems} is not only technological expertise but also experience in developing and launching various products,” says Elena Shostak. – As for technological expertise, our customers can always count on the optimal implementation of the project architecture. The second, but no less important task is to analyze the concept of the product itself. Market research, competitors, and, if necessary, the creation of the marketing strategy for the product. We are focused on the result and interested in the product to work out perfectly, maintain its development, and strengthen its position on the market.”

The {j: Mind.Systems} product team consists of Product Owners, Business Analysts, Product Designer and, if necessary, Scrum Master or Agile Coach. The main assignments of the team are the determination of the key functions and tasks of the product, development of a product strategy, work with a backlog, requirements set up due to their priorities, customer and the technical team communication, project progress evaluation, etc.

“When a customer comes to us with his idea, our team performs a thorough analysis of the product in order to offer the best option for its implementation. Often we are faced with the need to refine the idea in order to increase its competitiveness on the market or make it attractive to investors. The expertise of our team allows us to introduce absolutely any technology, from streaming using VR to artificial intelligence,” says Elena Shostak.

Here is how {j: Mind.systems} solve complex problems

It’s better to give an answer using some examples. Just like it’s often happening in many IT companies {j: Mind.Systems} faced with the need to develop a product as soon as possible. The development of this particular product by several service companies lasted about 4 years, but the product was never launched. 

As a result, {j: Mind.Systems} finalized the product’s business model, optimized the architecture, reviewed the technology stack and services used, selected a team, and built up a marketing strategy.

Here is another example. Last year, the {j: Mind.Systems} team was contacted by a customer, who had not previously encountered the development of their own IT product but was consumed with the idea of a promising online business. Having no technical background, he absolutely did not know where to start and how to build the necessary processes. In {j: Mind.Systems}, we approached the development of MVP for this client with all the responsibility, describing all necessary functionality to attract investments, and in the short term, we successfully presented the complete product.

“We do not cease to follow innovations and advanced technologies, constantly expanding our technological stack. Today, the {j: Mind.Systems} team is working with AI, ML, Big Data, AR / VR, Blockchain and has no plans for stopping. For the training and growth of our specialists, we have developed the Competence and Expertise Center based on our company,” says Elena Shostak.

Each {j: Mind.Systems} project is supervised by an Account Manager, so-called SPO (Single Point of Contact), who always stays in touch with the customer. In turn, the Product Owner is responsible for communication between the team and the customer. All {j: Mind.Systems} developers are fluent in English, which allows them to communicate directly with the customer and the customer’s team.

Ready to invest in a good idea

{j: Mind.Systems} work with various companies, starting from start-ups and up to large market players from different countries of Europe, the United States, and Asia. The company is ready to take on a project of any complexity if it has an original idea and development perspective.

“One of the projects with a promising idea is a live-streaming platform with the ability to broadcast a 360º video stream. Today we are actively expanding the team for this project and will be glad to see candidates who are interested in this domain,” says Elena Shostak

In addition to standard outsource and outstaff projects, the company practices co-investing in interesting ideas. In February this year, {j: Mind.Systems} has launched a large project from one of the co-founders of the company. At the moment, the project is at the active development stage and will soon be ready to hit the market.

Team formation

As it was mentioned earlier, {j: Mind.Systems} works with projects of different complexity, which implies the availability of high-level expertise in the company. That is why the recruitment department is aimed at finding experienced and qualified specialists.

“We are very thorough in hiring new team members. In addition to several stages of technical interviews, our HR team communicates with the candidate to ensure that his or her views are consistent with the values of our company. As a leader, it’s important for me to form a strong team to grow our company and develop new markets,” says Elena Shostak.

For example, now {j: Mind.Systems} is searching for a Product Owner for one of the projects. Most often, it takes much less time to close such a vacancy than to search for a strong technical specialist, but not for this project. Taking into account the specifics of the tasks, the company considered about 200 candidates and only a few reached the final stages of the interview. The {j: Mind.Systems} guarantees that all specialists who join the team will work on interesting projects and solve complex problems using advanced technologies.

“One of the main values of our company is knowledge sharing and the growth of our team. For this, we have formed the Competence Center, we practice mentoring programs and knowledge exchange with employees of the entire TECHIIA holding. The possibility of continuous training and work on complex projects allows our specialists to pump professional skills at a fairly fast pace. For example, one of our employees managed to grow from a Junior to a confident Senior developer in a short period of time,” says Elena Shostak.

At {j: Mind.Systems} everyone with no exception is powered by Apple’s latest generation technology. In addition to modern equipment, the company’s specialists have the opportunity to work on a flexible schedule or remotely, attend various training courses, workshops, conferences, improve the level of English with a native speaker, etc.

“Another principle of the company is openness. We are building a company with a flat structure and transparency at all levels,” says Elena Shostak, “for us it is important to share updates and plans with the team. The top management of the company regularly holds meetings where we share the latest news, make plans and set goals for the nearest future, introduce newcomers to the team, and discuss the introduction of new technologies.”

In addition to regular meetings, the company practices “Coffee with SEO” – these are meetings over a cup of coffee, during which the guys can personally chat with the CEO, ask their questions and offer their ideas for the development of the company.

With the advent of new projects, the {j: Mind.Systems} company began to grow rapidly. Up to 10 people a month are joining our team. At the moment, the company has around 50 specialists, and by the fall we plan to expand to up to 100 people.

“Despite the fact that we are a fairly young company, we did not encounter the quarantine difficulties. Literally, in February, we launched a major project that allowed us to scale the development team and improve our expertise in new directions. Today we continue to explore promising markets and are ready for new challenges,” says Elena Shostak.

Ukrainian tournament operator WePlay! Esports organized a professional Dota Pro Circuit series tournament in Bukovel, that the international media called the gold standard of events in its category. A custom approach and original thematic competitions allowed the organizer to become one of the most outstanding players in the business.

Esports is the new black

2020 Summer Olympics will be held in Tokyo. Two days before that, the esports world championship will be held there, organized by the technology giant Intel together with the International Olympic Committee. Yet there is no background for any computer game to be included in the Olympic program, and the IOC itself has ambiguously expressed on this subject. Nevertheless, the growing popularity of esports among a young audience leaves no doubt that very soon the championships in esports-disciplines will become the main sports events in the world. Regardless of whether this happens in conjunction with existing institutions or without them.

The Dota 2 World Cup finals at The International 2019 at peak times was viewed by two million people. And these are official figures only (the Chinese audience, which is tens of millions viewer, was not counted). Of course, these figures are far from the one hundred millionth Super Bowl audience or the final of the World Cup with its half a billion viewers, but the most important indicator for investors, the growth rates, esports will cover in the nearest future. The audience growth between The International 2018 and 2019 was 63%, but even the two-time growth that occurred in previous years is not uncommon for nascent sports.

Business Insider estimates the global esports audience at 450 million people, half of which is the regular game-viewers, and the rest watch games from time to time. Compared to traditional sports, according to the Washington Post, the Dota 2 World Cup in 2018 was viewed by more people than Wimbledon, Daytona 500, Tour de France and U.S. Open, and the last three where lower in terms of the prize pool. Income generated by the industry exceeded the milestone of one billion US dollars, and the volume of investments in just one year from 2017 to 2018, according to Deloitte, grew by a whopping 837%: from half a billion to $4.5 billion.

Obstacles to Success

At the dawn of esports, the average viewer accustomed to a clear streamlining of national and international leagues in traditional sports, was not always clear which of the many tournaments to watch. Tournament operators experimented with formats, and esports organizations often took part in the competitions based on internal rather than sports logistics.

A notable breakthrough in the last decade has been facilitated by several factors, like the development and popularity of MOBA games (primarily Dota 2 and LoL), and an increase in prize pools. Video games themselves have become a full-fledged part of the cultural agenda, and young gamers have grown and gained a really remarkable value.

Valve, the owner of the Steam digital store, made a king’s move in 2011 and organized the first The International Dota 2 tournament with a really significant budget, the winning team won one million dollars. This amount contrasted sharply with the prize pool, for example, World Cyber Games – at that time the main e-sports championship, where players fought for $300,000 in as many as ten disciplines. Millionaires and overnight stars, by the way, then became the players of the Ukrainian NAVI team. 

A few years later, The International moved to the seventeen-thousand KeyArena in Seattle, and the prize pool, now additionally raised by players from around the world, will exceed $10 million. There was no turning back now, the real deal began. In an attempt to increase the overall level of tournaments during the calendar year, Valve came up with the Major format: tournaments with a millionth prize pool, half of which will be covered by the company itself, and the remaining amount by the tournament operator. The Minor format was introduced with the same rules, thereafter, with a smaller prize pool.

The density of the tournament grid has contributed to the overall progress of the industry, e-sports organizations have become real hubs and brought together under their flags, teams in several – often more than ten – disciplines, hired trainers, psychologists, and physiotherapists. Tournament operators, whether ESL and DreamHack or young and progressive ones like WePlay! Esports got a chance to take the competition to a whole new level.

WePlay! Esports recipe for success 

WePlay! Bukovel Minor 2020, yet the largest tournament from WePlay! Esports ended a little over a month ago. In the final, the European team Nigma (they also won The International 2017 as part of Team Liquid) defeated the top Chinese team Royal Never Give Up. Bukovel tourists who learned about the tournament from outdoor advertising at the resort came to see celebrities: Miracle- (Amer al-Barkavi, one of the best Dota 2 players in history) and Dendi (Danil Ishutin, the most famous Ukrainian Dota 2 player).

To get the right to host a tournament in Bukovel as part of the elite DPC series (Dota Pro Circuit is a series of competitions within the calendar year, rating points of which are taken into account before The International), to the WePlay! team I had to go to a tender from Valve and come up with a concept stronger than that of competitors. The best tournament operators compete for the right to host such tournaments around the world – from Los Angeles and Stockholm to Singapore and Kuala Lumpur.

WePlay! Esports relies on solid, well-thought-out thematic events in which offline experience works in synergy with the online one. Such were the Forge of Masters CS: GO tournaments and Bukovel Minor was the same. Given the dates (January 9-12), they decided to bring the whole Christmas spirit. Commentators covered with blankets drank cocoa, carols were allover the place, a picture of the gaming field in seasonal winter style was replaced by photos of the Carpathians taken from the drone. The incredible atmosphere of intimacy and coziness of the Bukovel minor led to the memory of the legendary tournaments from the Beyond the Summit team when the players lived, communicated and competed in a large house in Los Angeles. WePlay! itself calles its approach to organizing tournaments ‘esportainment’, it is a combination of esports and entertainment.

The concept appealed to the audience, and WePlay! Bukovel Minor was the most successful Minor series tournament in history, and the Dot Esports portal called the Bukovel tournament the gold standard for all future Dota 2 tournaments.

“Esports is a promising business. The audience of both players and spectators is constantly growing. Media rights are becoming more expensive, and the geography of the market is constantly expanding. Setting the “gold standard”, we strive to develop the market and make it even more attractive for partners,” said Oleg Krot, Managing Partner at TECHIIA Holding.

The efforts of the organizers were visible to the naked eye, not at every major tournament you can be entertained by the choir and bunch of pyrotechnics. On social networks, to support PepsiCo, Secretlab and other sponsors, memes and viral videos were running. By the beginning of the tournament, a limited series of stuffed-toy merchandise from WP Merchandise was created.

“Everyone understands that marketing decisions that are aimed at 35+ audience, almost do not affect the younger generation. Esports allows you to reach young people with unique sponsorship activations that organically fit your broadcasts and can even be integrated into the game itself. Many sponsors come to esports just in order to reach out to an audience inaccessible elsewhere,” says Oleh Humeniuk, the general manager of WePlay! Esports.

Of course, before getting the opportunity to conduct a DPC tournament, the WePlay! team had to become noticeable for Valve. Dota 2, Counter-Strike and Artifact tournaments had already been organized, the team also participated in the production of last year’s The International stream. Including the WePlay! Bukovel Minor, the company has already held fourteen tournaments with a total prize pool of more than a million dollars and more than 15 million hours of broadcasting.

Moreover, WePlay! Esports became the first tournament operator to host an official Ukrainian-language studio broadcast. The OTT platform has already expressed their interest in this. For example, MEGOGO, on which it was possible to follow the tournament. The tournament’s final games could also be seen in the cinema. The Multiplex network halls in seven cities of Ukraine organized the broadcast, and viewers could watch the broadcast in Ukrainian. Spectators on Twitch and other platforms turned out to be interested in esports content in Ukrainian, and the company continues to develop this direction.

“Traditionally, esports operators in CIS arrange broadcasts of their tournaments in Russian and English, but the minor in the Carpathians made us think about professional studio production of the tournament in Ukrainian. We saw the interest of viewers and partners in the Ukrainian-language broadcast and decided to go for it. Our WePlay! Mad Moon tournament is also in Ukrainian,” says the Managing Partner of WePlay! Esports Yura Lazebnikov.

From February 20, one more tournament of the company started in the Kyiv Expocenter of Ukraine (VDNG). WePlay! Mad Moon on Dota 2 with a $300,000 prize pool, which lasted until February 23 with some of the most famous teams, like Team Secret, Virtus.pro, Nigma, and others. It was possible to follow the tournament at the official studio broadcast of the competition on Twitch.tv.

The market of plush merchandise is quite conservative. Companies have been mastering it for decades, but the Ukrainian WP Merchandise literally in a few years of its existence managed to start working with the top 10 world brands of the gaming industry. A bold approach allowed them to find an empty niche and produce a product of great detail, which was considered impossible to exist in the plush.

Who are WP Merchandise and how they managed to achieve recognition so quickly — Maksim Bobranitskiy, CEO of the company, explains.

If you want to do something well, do it yourself

The idea of making plush attributes came to the future founders of WP Merchandise in 2009, when they decided to organize their esports championship in Kyiv and create a mascot for it. At that time, the choice of gaming merchandise, not only plush one, but in general, was quite poor, and even of bad quality. The organizers sewed a plush beaver, which they and the audience liked a lot.

Then the market research started: not to enter the market immediately and conquer it, but rather to taste the waters. At the same time, while working with WePlay! Esports, the founders used to go to esports tournaments: DreamHack in Sweden and Gamescom in Germany. There’s a massive audience of 200,000-300,000 people, and apart from gaming novelties, you can always find everything from T-shirts and figures to plush and handmade. 

WP Merchandise analyzed everything they saw, compared it to the conducted research, and realized that plush merchandise is, in general, of poor quality and cheap. If a T-shirt or a hoodie can be bought and worn, then figures or plush toys are souvenir items that decorate the house and should be of appropriate quality.

The whole research period, which is nearly ten years long, is a time of development, attempts to make an exciting product and turn it into reality. But for a long time, the idea of making quality merchandise did not evolve: merchandise was made for the internal needs of WePlay! Esports and for partners or sponsors with whom they worked. 

At the same time, there were attempts to cooperate with Riot Games (developers of League of Legends), Valve (owners of online platform Steam, developers of Dota 2 and CS:GO), and Wargaming (developers of the World of Tanks/Warplanes/Warships series). But the actual result of these negotiations was in 2016 — this is the year when WP Merchandise began to exist as a separate business; when the experience gained was enough to sign an international contract with Wargaming. The company developed a collection of 19 items and went through a full cycle: from the creation of a prototype to the retail sales. In 2016, WP Merchandise started cooperation with affiliate networks, online stores (primarily Rozetka), and offline stores.

In 2017, two contracts were already signed: with FS Holding, the holder of licenses for esports teams NAVI and Virtus.pro. Especially for them, the company developed a collection that contains both team mascots and everyday items: cushions and slippers. In the same 2017, WP Merchandise made a prototype for Epic Games: a plush lama from Fortnite (perhaps the most popular game in the world). WP Merchandise didn’t manage to get the license for the product but began to produce toys for internal orders of Epic Games. 

None but the brave deserve the fair

On average, companies work in the merchandising market for 15-20 years — it’s usually a minimum period, after which the company may already have a stable existence, collect orders, and have wide representation in the international market. 

The success story of WP Merchandise has evolved much more rapidly. In 2016, they signed their first contract with Wargaming; in 2017, they were at Gamescom with their booth in the b2b zone and received positive feedback from several international companies: Bandai Namco (with which they are now working), Ubisoft, Kalypso, Abysse Corp. 

“In 2018, we continued to come to our clients — esports companies, developers, publishers. Sometimes it may seem that after the praise, progress should be instant, but in real life, of course, everything is not so bright. The start of negotiations — correspondence, calls, meetings — takes from one to three months, the GameDev industry never had a reputation of being fast in terms of business processes,” Maksim shares.

In WP Merchandise, there are two pillars on which the whole structure is based: a trading house and production (with “production in production” — R&D department). In the R&D department, designers invent or select existing models and then try to recreate them as accurately as possible in a plush form. And if it is possible to produce them by using templates rather quickly, the development of a prototype from scratch lasts for months. The main task of the R&D department for 2018 was to develop as many prototypes of the existing models as possible to try to get a license for them later.  

The uniqueness of the WP Merchandise production is that they make a serial handmade. To recreate a character that contains more than 100 applique details and 120,000 stitches of embroidery in more than 1,000 copies seems impossible.

“We examined our European production, lived in China for a month, talked to both plush and equipment manufacturers, and usually heard: “Do you sew T-shirts? No? Plush toys? Then you have to simplify, remove half of the details, and it will be real”. But this answer did not suit us because it meant producing mediocre products, and the market is already full of them”, says Maksim Bobranitskiy.

Usually, plush merchandise is produced simply and fast and sold cheaply. In WP Merchandise, they began to make complex products of the highest quality, which are sold at an appropriately high price. That is why the average retail price of their toy of 35 cm and more will start from $100. The company classified five categories of the complexity of the toys: from a small cushion to a detailed character in full uniform of 160 pieces with 120,000 stitches. 

The second pillar of WP Merchandise is a trading house, which was fully assembled in 2018. Its task is to sell and promote products created by R&D and production. The trading house consists of several teams: business developers — separately for Ukraine and local markets, and separately in Europe and the USA; marketing, design, PR, plus all the operational part, which allows the company to function. WP Merchandise coordinates with TECHIIA holding to define PR and development strategies.

When the trading house opened in 2018, WP Merchandise had 3 contracts signed: with Wargaming, Epic Games, and FS Holding. At the end of 2019, they also got contracts with Bandai Namco (for the games Dark Souls, Soulcalibur, and Tekken 7), Ubisoft (Assassin’s Creed), Warner Bros. (Mortal Kombat), and Valve (a limited-edition collection for the Dota 2 Minor in Bukovel). At the same time, negotiations with several esports organizations are in progress, and some potential contracts have to be kept on hold while finalizing the production details with current customers.

In 2019, WP Merchandise managed to visit the licensing expo in Las Vegas, Spielwarenmesse (Nuremberg Toy Exhibition), as well as Gamescom in Cologne and E3 in Los Angeles. 

The growth of the cyber-center industry is facilitated by global trends:

• the capitalization of the gaming industry in 2018 exceeded the performance of the movie industry – 138 against 136 billion dollars;
• the in-game shopping market is bigger than the boxing office in the whole world – 50 against $ 41 billion;
• over the next 10 years, the video game market will double, making it dominant in the entertainment industry and completely unattainable;
• The new Esportainment industry (eSports + entertainment) has appeared.

Modern arenas are being created with stages for several hundred people and large screens for tournaments. And if you also add here the hardware in the form of computers and monitors for players, it becomes clear that all this business must be properly managed.

The Ukrainian software company called ENESTECH developed the SENET cloud solution for managing its own gaming center and then monetized this SaaS service.

Today, SENET serves more than a million computers in almost a thousand cyber clubs from 40 countries. On what was the starting point, what contributed to the development and how the company is doing now, more and this is in our blog.

If you want to do something properly, do it yourself

Initially, the software was created as a solution to meet the needs of their own network of cyber centers called IT Land. The number of computers there was getting to 500, and badly needed a system that would simplify the administration and maintenance of such a large number of PCs. Its operating system turned out so successful that it became obvious – it has the potential of a full-fledged commercial product.

The first thought was to use outsource development, but the price-quality ratio was the thing that discarded this idea.

“We created the ENESTECH Software company in 2014 and our own team has already developed a solution. At that time, we had an excellent “training camp” in the form of the IT Land network, so the solution could be tested at any time,” said Oleg Krot, managing partner at TECHIIA holding, of which the ENESTECH company is also a part.

First of all, the developers changed the architecture and moved to the cloud in advance. We started from the CIS market, which we knew and understood better than others. When the number of customers who used SENET to manage their gaming centers for a long time exceeded ten, it was clear, now is the time for the product to go to the masses.

Just a couple of years ago, many of today’s ENESTECH customers used standard free of charge systems, which were essentially alarm-based applications. In addition, they are not completely safe, such software can collect user’s personal data for the purpose of further resale. For example, social networks access, game accounts and even bank details of the gamers. In the first few years, the development team had to spend on fighting the habit of using free or cracked software in centers.

“Constant modification is one of the critical success factors in the computer center business. It is crucial to update the hardware every couple of years so that the most demanding games were running smoothly, and gamers didn’t lose interest. The same story with a number of major software,” says Elchin Aliyev, CEO of ENESTECH. “Adding bigger monitors and comfortable seats, but not thinking about a reliable and functional managing system, is obviously a failed strategy. In fact, this is the heart of the club, which runs the blood through the veins of this gaming center, allows you to receive a fixed payment, see all statistics, update content on a hundred of PCs at the touch of a button from the admin panel, increase customer’s loyalty, give gamers the opportunity to book and pay for seats before going into the club and even organize their own tournaments. When a club is stuffed with cool gadgets and gaming chairs for $300, but it uses free software, it’s like if the Ferrari’s car has electronics from the old Daewoo Lanos.”

Recommendations in the market, user’s trust, availability of the trial period, optimal tariffs for using SENET, effective marketing, all these things gave an impetus to the growth in the number of customers.

It’s not enough to be just good software nowadays

The company does not consider itself to be b2b or b2c, ENESTECH creates a unique ecosystem for the club, in which it should be easy for the owner to manage the business, for the administrator to work comfortably and for the gamer to play comfortably.

SENET price rates vary by market and region. The features of the economic situation in the country, the number of connected computers, the cost per hour for a player are taken into account. Approximately the cost of the package varies from $55- $200 per club per month. Even with a very rough calculation, it turns out that the monthly cost of using SENET pays off in 2-3 hours of club operation.

Cloud technology allows owners to manage their cyber center without being physically there. You can be on the beach in another hemisphere and watch the club’s load or cash flow in real-time from your smartphone, while there is no possibility to pay “off the register”. You can collect more ambitious statistics, conduct promotions, create your own loyalty program. SENET offers its customers quite a wide range of possibilities of customization and monetization, increase profits by using additional features.

Club employees, like system administrators, cashiers, technicians – derive their value from SENET. Remote control and centralization of the system allow them to update software and games on all computers in one click, solve problems by connecting a 24-hour SENET support specialist to their monitor, which ultimately increases their efficiency and reduces costs.

The company also cares about gamers and improves their user experience. By creating your own account, a gamer, on the one hand, gets access to a loyalty program, which can reduce the cost per hour depending on the total amount of time spent playing a game (similar to airline miles), and on the other, can participate in tournaments.

The tournament module integrated into SENET allows gaming centers to connect to WePlay! Esports tournaments or even create their own tournaments for gamers.

Online booking of a PC allows a customer to reserve it in advance, pay for their favorite place, come and start the game on their own without the help form administrator.

Shops, which have become an invariable attribute of the modern computer club, also work in both directions. The owner and cashiers control the sale of goods and their stock, and a gamer through the ShopShell module can buy a Coke, sandwich or merchandise not interrupting the game. 

The ENESTECH team has more than 70 specialists from 12 countries: Ukrainians, Americans, Azerbaijanis, Pakistanis, Ecuadorians, Turks, Colombians, Russians. This benefits 24/7 customer support to provide help on the customer’s language. SENET already has localization in seven languages.

In addition to the development of cloud software, the company has a hardware direction – a patented device for game consoles has no analogs in the world. The main advantage is that PlayStation or Xbox can be connected and managed along with your PC’s in a single club admin panel. All thanks to the SENET controller.

What future holds

A computer club is no longer a business for renting a PC. It is rather a format of recreation and entertainment, competing with home comfort and coziness. 

“People go to restaurants and cinema while having well-equipped kitchens and large TVs at home. The same idea underlies the modern cuber center. People come here not only to play, but also to spend time with friends, eat, sometimes even smoke a hookah, and relax after school or a workday,” underlines Elchin Aliyev.

Clubs are increasingly merging with the HoReCa sphere. The bar in the club can bring 30-40% of revenue.

The sales of eSports souvenirs and accessories is quite a big part of the revenue as well. Computer mice, rugs, backpacks, T-shirts with symbolics, stuffed toys in the form of heroes from your favorite computer game.

The universe of computer clubs today is very diverse and has its own specifics in each country. 

There are three most popular types of sites: 

1. Huge ones. Cyberarens, a large network of clubs, franchises with eSports shows and tournaments.
2. Medium. With very high-quality hardware, but a limited number of PCs and several clubs in the network
3. Small ones. Internet cafes with several PCs and copy centers.

The first type is growing fast and in demand more than others. For example, in Europe, cocktails and disco bars are popular, which have a dance hall and a gaming PC room. One of the most famous franchises is Meltdown, it already has 22 clubs in Europe and is constantly updated with new discoveries.

Large networks and franchises for 50-100 clubs attract large sponsors like Nvidia and Logitech and rely on competitions and cooperation with eSports organizations.

A new and rather peculiar market is eSports faculties, which are massively being opened in many Western universities and which need to administer their PC’s. And today, some of them are testing SENET for effective management of computer classes.

The most interesting market for ENESTECH is Southeast Asia, where the cyber-clubbing culture is unique and has been developing most intensively and for the longest. Elchin Aliyev believes that no standard functionality can cover both the legendary Korean PC bangs and Japanese “cafes for the homeless” at the same time, so they are going to modify the product for success in this market.

Cyber center as an investment

Pretty much soon computer clubs will compete with movie theaters. Can’t believe it? Then imagine that someone telling you 5-7 years ago that you would go to the gas station to grab a cup of coffee. Cinemas around the world broadcast tournaments in various disciplines. Multiplex has sold out numerous times for Dota2 finals.

Experts estimate the number of spectators of eSports events at 394.6 million people. Multiplex even created its own computer club as a pilot project, which will eventually grow into a network. This is logical if a teenager has UAH 50 for small expenses, then he will not have enough for a movie ticket, though it will be enough for a couple of hours in the game center.

Starting with a computer club management solution, ENESTECH went further. 10 years of experience in managing their own centers and accumulated expertise guarantee customers high-quality business consulting. Upon request, the company’s specialists can develop a business plan, a strategy for opening, managing and promoting the club, offer PCs and components at reasonable prices through partnerships with manufacturers and distributors.

ENESTECH offers a full construction option. The first customer was Force Arena in Lutsk – the largest establishment in Western Ukraine. And the cloud solution of the service allows anyone to expand the business of cyber clubs into hundreds of computers in Mexico or Australia in a matter of days, and sometimes even hours.

Opening a club with 30 gaming places will cost an average of $50,000. Calculating the average club possibilities, you will learn that such a project can pay off in up to 2 years.

In fact, there are not so many computer centers in Ukraine, this niche is not competitive and starting a business here is much easier and cheaper than opening a coffee shop or barbershop. At the same time, Ukraine is consistently included in the world’s top 10 countries for the achievements of eSportsmen. The development and creation of new arenas is inevitable, and progress in this direction should occur within a few years, which can already be seen in countries with similar situations and market conditions in this area.

In Europe, there has not been a single company in the past decades that could compete with the world-famous giants such as Tencent, Huawei, Apple, Microsoft, or Facebook. European banks do not boast of the availability of a broad range of services via mobile applications or web-based interfaces, while in India, it is possible to open a bank account and run it via the Internet in any remote village. In Europe, no country or city is innovative or attractive for startup development.

Yes, the government of the Swiss city of Zug, where corporate tax is only 14%, announced the launch of Crypto Valley, an ecosystem designed to manage the cryptocurrency and which is a blockchain analog of Silicon Valley. It is a kind of cluster of companies and foundations engaged in the development of cryptocurrency and blockchain technologies. But so far, the world is only watching the development of this platform. Instead, Israel is already known in the world as a “startup country” which attracts millions of dollars and provides jobs for technical specialists.

Ukraine is at a stage where we can still choose our vector of development. The geographical location (near-shore) gives us the advantages of a country located both in the center of Europe and close to the markets of Asia.

Building an ecosystem around startups, IT products, and outsourcing will give Ukraine the benefits it urgently needs today. Namely: advantages in attracting export money, investments in the economy, and jobs.  How Asian countries have managed to beat Europe in the technological field, and how we can use this experience in Ukraine — let’s look at the points:

Staff shortage

Europe claims a massive shortage of IT specialists. By 2020, a deficit of 526,000 IT specialists is expected, according to the Eurostat Labour Force Survey report. Europe actively promotes the relocation of Ukrainian specialists. Still, the latter hold back on going: the level of salaries of developers in Europe and Ukraine is approximately the same, and taxes and prices in our country are much lower. European countries would also attract specialists from Asia, but they do not want to go either. The reason for this is that Europeans are not ready to pay.

In 2018, the Asia-Pacific region outpaced Europe in terms of IT salaries. Experts in Asia earn an average of $75,000 to $100,000 a year, while in Europe — from $50,000 to $75,000, according to a survey of three thousand IT employees by American company Puppet (CNBC published the study). Europeans can only hope on Ukrainians and people from Eastern Europe, or the EU will have to raise the salaries. In turn, Asia is building up its IT army since school.

Education system

Europe (and the United States) are the world’s leaders in the number of Nobel Prize winners, and they are the “discoverers” of the most important theories. 

The higher education system in China includes universities, colleges, and professional higher schools. Their specialty is their explicit specialization. There are no common and obligatory programs here, and technical and applied subjects dominate in university programs. “Soft scientists” in China are a relatively small part of the student population.

In 2000, half a million students earned a bachelor’s degree in China, and in 2010, it was already one and a half million, and in 2015 — two and a half. The situation is almost the same in Europe, but it is worth considering that it is one country against a whole group of countries. A large number of highly qualified technical specialists can meet the demand of technology companies and startups for staff. 

The situation is similar in India, with more than one and a half million young Indians earning their engineering degrees each year. The same number of programmers in India call themselves self-taught. Knowledge of several programming languages is almost guaranteed to provide jobs — the domestic market is growing like a weed. By 2020, there will be 730 million Internet users in India. 

According to the Science and Engineering Indicators Report (2016), India and China provide 46.4% of the world’s bachelors of hard sciences. By 2030, two-thirds of the world’s technicians will be from these two countries. In comparison, the USA produces 9.2% of bachelors of hard science and the European Union — 11.5%.  

In comparison — in the top 1000 universities of the world, 42 universities are from India and 5 — from Ukraine. Many Indian students choose to study abroad — only in the USA, about 150,000 students from India study engineering, and only 27,000 Ukrainian students study abroad. 

Yes, we can argue about the quality of “Indian code,” but India is making more and more efforts to make the code meet the customers’ expectations. And they do it very successfully: repeated contracts prove it.

The good news for Ukraine is that 402 universities annually educate technical specialists here, compared to 621 in India. The quality of basic technical education in Ukraine is very high. For comparison, only 7% of Indian university graduates are ready to start working immediately after graduation. In Ukraine, about 15,000 technical specialists graduate, and about the same number of students also graduate from educational courses. 

Ukrainian employing companies in the IT field are interested in attracting high-level specialists with three years of experience. 30,000 graduates will be able to fill the market in the future only in a few years when their level of knowledge and practice will meet the expectations of the employer.

“The shortage of technical specialists in the world will only grow. Ukraine is already in demand for talents, exporting IT services. To get higher added value, we can export ready-to-use solutions that cost more,” says Yuriy Lazebnikov, Managing Partner of TECHIIA holding.

“The statistics speaks about the competitiveness of Ukrainian IT specialists: export of computer services for six months of the current year has grown by one third up to the level of $1,64 billion among the main customers — the USA and EU countries. This is facilitated by both the high potential of human capital and the competitive price of Ukrainian developments in the global market. The pool of Ukrainian IT specialists is 172,000 developers, most of whom have higher education and know English at the Intermediate level and above. At the same time, a favorable tax system makes it possible to set a competitive price for Ukrainian IT developments in the global market,” says Konstantin Vasyuk, Executive Director at IT Ukraine.

Mindset 

No matter how hard the Chinese and Indian universities try to train the best specialists, the thinking style of the Chinese and Indians differs significantly from that of the European and American universities. The Ukrainians, who are close to Europeans in the mindset, are engaged and hardworking. That’s why they win this game, as well as they quickly get on well with both Americans and Asians.

“Ukrainian specialists who work for the global market can easily understand both Europeans and Kazakhs. For example, when adapting Senet, a computer park solution, for different markets, we rarely encounter difficulties in understanding customers’ needs. Ukrainians demonstrate an amazing ability to negotiate and find the right solutions,” says Elchin Aliyev, Managing Director at Enestech Software, about the ability of developers to work.

Offices and coworking spaces

In India, the commercial real estate supply is growing with the business. In Bangalore, as the hub of India’s IT business development, 1,200 of the 7,000 startups operating there were registered in 2018 (NASSCOM’s 2018 report). However, according to JLL’s report, only startups and IT companies occupied 7.3 million square meters of office space in the first nine months of 2018. Judge for yourself — it is necessary to put somewhere at least 228,000 employees of the largest IT outsourcing company Infosys. 

Demand for offices in Ukraine already exceeds supply. The main demand in the office market is formed by IT companies; the share of vacant space decreased from 7.6% to 7.2% in January–March only. The market stands with the lessor. Will there be new business centers? In 2019, developers promise to put into operation about 100 000 sq. m. In office centers, where startups and IT companies are concentrated (at the same UNIT.City), there are practically no vacant premises, and their cost is rather high. 

“In Kyiv, there is a very high demand for office property due to the rapid development of the IT companies in Ukraine. In terms of the number of people, the IT industry is growing by 25-30% annually, which is five times faster than in the whole world,” says Dmitry Ovcharenko, CEO of ALCOR VRO-company. 

Dmitry draws an analogy with the traffic lights. He says that Kyiv is still a yellow light in the real estate market, and Lviv and Kharkiv are already red: “In Lviv and Kharkiv, old factories will be converted into business centers, but they are of low quality. They plan to build IT Park in Lviv: the construction has not yet started, and all the space for offices has already been purchased in advance. In small towns, such as Ivano-Frankivsk or Rivne, there is also a lack of quality office infrastructure. Business centers are oriented to the economy of the whole city, so big cities are more attractive,” says Dmitry Ovcharenko.

Therefore, if we plan to develop the country’s economy as a whole, it is worth paying attention to the commercial real estate market in Ukraine, not only to the high-tech field. 

Government support

In India, there are special conditions for the IT industry. Software exporting companies do not pay corporate and wealth taxes for the first five years and sales tax for the first ten years. The next five years pay only 50% of the corporate tax, and when reinvesting in the core business, the discount is extended for another five years.

ІТ-companies pay for electricity at reduced rates and have preferences in the construction of infrastructure and recruitment of specialists in ІТ parks. In 2014, the government announced a special “Digital India” program aimed to develop the digital industry and create a knowledge economy. The efficiency of the program is high — for example, Electronic City in Bangalore alone generates a turnover of 167 billion dollars a year and makes about 8% of the country’s GDP.

The outsourcing programming industry is not demanding of large-scale imports and infusions of enormous capital, but at the same time, it brings export revenue and creates real jobs. This made it possible for India to create a new industry from scratch and to increase the massive volume of foreign economic turnover. 

In China, not only IT but the entire production process operates within the state program. As of September 2019, China’s GDP per capita is still only one-third of the US GDP per capita, and about 44% of the EU GDP. And India’s GDP per capita is only about 20% of the EU’s GDP. But the gap has narrowed dramatically since 2000. According to the definition of the World Bank, many Asian economies have moved to medium and high levels of profit. 

Support for the development of IT innovations of the European Union is a strategic one, including the Horizon 2020 program, and the promotion of public procurement, and improving the regulatory environment for innovation through measures for startups, and the development of clusters to stimulate innovation in small and medium-sized businesses. The results will be evident this year, but so far, there have been no significant breakthroughs in the IT market in Europe. 

In Ukraine, the need for support and development of the IT industry by the government has been discussed for a long time, and some steps in this direction have already been taken: the possibility of special taxation conditions and work under the contract with IT entrepreneurs are being considered, and even the “Digital Ukraine” program which is planned to be announced this year, is being talked about. 

Investments

Investments in innovation depend on many factors. For the time being, Ukraine is a country of IT service for the world (about 70% of companies provide software development services on demand) and ideas for startups. “Investments” in the form of salaries for developers also cannot be considered in the long run. Ukraine cannot provide clients with outsourcing services below the price of India and China.

Ukraine can provide quality IT services and our developers are in demand.

“Our developers compete in the world market with Americans; Asians are not even taken into account because of the low quality of their work. But this does not mean that they should be discounted — India also confidently converts the quantity into quality, and in a couple of years nobody will talk in vain about the Indian code,” thinks Oleg Krot, managing partner of TECHIIA holding.

Oleg Krot thinks that instead of relaxing, Ukrainians should think about attracting investments into large innovative projects that will be valuable both for their own country and the world.

Konstantin Vasyuk, Executive Director of IT Ukraine, thinks: “To pull away from competing countries, Ukraine needs to promote innovations at the government level: develop R&D centers and provide a comfortable environment for IT business. Thus, the project “State in a smartphone” can create domestic demand for IT products and services.”

Ideas and startups are more expensive, and for their development, it is necessary to attract external investments. In Ukraine, there are no conditions for startups to remain Ukrainian, and at the same time, attract external money and work in the country. The product companies that came out of Ukraine followed the same path: the idea was invented in Ukraine, the company (and product) was registered in the USA, and investments were attracted in the USA, too.

Product development (R&D), as a rule, remains in Ukraine, which means that we get benefits that are calculated solely by the salary of the involved developers. Many people have heard about the successful attraction of investments by Ukrainian Petcube, Preply, Concepter, Competera, Grammarly, and Kwambio. Unfortunately, all the millions of dollars work for the United States, not Ukraine. 

Investment rounds in Europe are several times less than in the USA and China. Even if European companies have ingenious ideas for startups, they apply for funding abroad. The most successful in this regard are such European candidates as Spotify, Zalando, Delivery Hero, and Just Eat. But their total capitalization will not even get close to any of the major players. 

China invests public funds in the development of innovations and IT education. China already has surplus public money and actively invests them in innovation around the world: the investment of $5 million in Israeli startups, the purchase of a part of the Canadian mining company, the investment of $100 million in a gambling company Grinding Gear Games from New Zealand, etc.

It is worth mentioning the work of the judicial system, the stability of the government in the conditions of war in the East, but the solution to these issues takes a long time. Nevertheless, it would have a positive impact not only on the IT industry but also on the entire business in the country. 

Ukraine

Having a unique geographical location, strong basic education in universities, talented specialists and low taxation for the IT industry, Ukraine has all the prerequisites to take advantage of the low dynamics of the IT industry development in Europe and (so far) not high quality of software development services in Asia and to become a country exporting not only IT services, but also innovations in general. 

Despite the minimal support of the state in the development of the IT industry, Ukrainian companies are showing an example of innovation export. 

“We started with the implementation of our own software in one computer club in 2014, then in its chain. Over the past four years, we have increased our client base in 25 countries around the world,” says Elchin Aliyev, Managing Director of the Ukrainian company Enestech Software. “Our Senet software and hardware complex is used by several million people in computer clubs, esports centers, Internet clubs, and cafes. Such interest in the product is caused by our ability to scale and adapt it to different markets quickly. All developments on a product are conducted in Ukraine by our experts who are about a hundred people.” 

Ukrainian startups attracted more than $290 million in 2018 and $217 million in 2017, which is 231% more than in 2016. Among the most successful Ukrainian startups, Litnet.com, which sells 2.5 million books a year, has recently received $330,000 in investments. And in August 2019, the Ukrainian company PDFfiller raised about $30 million and changed its name to airSlate. One of the investors was General Catalyst which includes investments in Airbnb, HubSpot, Snap, and Stripe. Also this summer, the Ukrainian startup MyCredit which is estimated at $20 million, invested $3 million.

Ukraine can choose its vector of IT industry development, compete in the global market with Europe, USA, and Asia, and create its value.