Look for the unobvious niches! Invaluable pieces of advice from Oleksandr Konotopskyi, CEO of Ajax Systems
Have you heard about Ajax Systems, the world-known Ukrainian company and about their legendary security systems? How did Ajax manage to achieve global success? Stanislav Savchuk, a participant of VI group of MSc in Innovations and Entrepreneurship program of UCU Lviv Business School (LvBS) prepared the valuable pieces of advice from CEO of Ajax Systems company, about running your own business. Innovators visited the Ajax Systems’ office, technological company which works on the production of smart security systems for home and office, which protect from the in-breaks, fire and flooding. We are sharing useful and interesting things with you.
The company was founded 7 years ago and it is located in Ukraine. Its price for today is approximately 100 million dollars. Ajax Systems exports its product to more than 70 countries around the globe. Almost all production of the company is located in the main office of the company in Kyiv, the staff contains more than 400 people. The participants of MSc in Innovations and Entrepreneurship program of LvBS met with Oleksandr Konotopskyi, CEO of Ajax Systems, to find out how the company works and to get valuable pieces of advice in the sphere of running your own business:
About the intercultural aspects
✔Why don’t we locate our production in China? Chinese people often take shortcuts. We tried to locate the part of the production in Kyiv and received 10 times higher percentage of defects. In our business it’s very painful, because it is very expensive to withdraw a product.
✔West Europe keeps its word. But it’s not recommended to work with the East without previous contact.
About an international market
✔Ukraine is a perfect place to build global business. In the USA, a professional engineer costs $250 000/year. In Ukraine, for $100 000/year you can find such a star, who is greatly fought for in the USA. We have the very good engineers.
✔When you are in Ukraine, you don’t imagine how much money there is in the world. Go abroad, but come back.
✔If I set up this business once more, I would start the export earlier.
✔You can sell everything. Even if you want to sell faeces (Ukrainian faeces with the help of which you can fertilize the soil), you will sell it. There are very many people, the world is very big.
About the markets and search for a niche
✔Usually, money lies there where it is unpopular. If the niche is obvious then there is a «bloody mess» there. It is obvious for everyone that you need to open a restaurant, but it isn’t obvious that you need to create pipes for the nuclear reactors. Look for the unobvious niches!
✔As soon as Techcrunch starts writing or mentioning about something in the conferences then this is a hype already, so consider it as obvious for everyone.
Value your time and time of others
✔When you come to an investor, ask yourself what they will get.
✔Don’t go to the conferences, don’t waste your time. Also, don’t be a spokesperson in the conferences before you have some experience. If you go to the conference, or meet-up, then ask yourself: what will I get from it. Don’t waste your energy on unnecessary things, as very often it is all theatrics.
✔In my business any B2B contact is better than publicity. Don’t invest in publicity, as an article about you in a newspaper won’t bring you money. Use your time and energy reasonably.
About smoothie culture and a result
✔If you speak well in the meetings but you don’t put into practice what you’ve said, you’ll get fired. We had an engineer who was explaining in a very long and quality manner from month to month why it was hard to do something. And then, another engineer came and did the same task within three days.
✔Smoothie and all this is from evil. We try to restrain smoothie moods in every way. I become sad when I go to the DOU and see that programmers discuss cheese and not engineering questions. This is not a culture which we build inside the company. Our main goal is a quality result of our work.
✔There is a rule of two Ps («to talk a lot» and «to work constantly»). We build our company, the DNA of which has exactly the second P as a key element.
✔Nowadays, It’s hard to find people who are ready to work towards a result. In Ukraine, it’s somehow good to not to work at capacity and get a lot, but to work a lot and get a lot is considered bad. We are a company where people work a lot and earn very much money.
✔From the observations: if a person is a Candidate Master of Sports then, more than likely, they will perform well.
✔You need to have people with a skillset. It’s very hard to build a company with juniors only.
About sale, markup and ambitions
✔Make something that you have already sold. I have a technical background which allows me to evaluate how complex it is (or even possible) to create this or that solution, while selling it.
✔If you consider new opportunities, but a markup in the Excel table is small, then don’t even go there. If we are talking about hardware products, then X5 is minimum, X7 is good.
✔Don’t stop when you get your first $10 000 on your bank account. Our startups rejoice over the small victories. They are happy when they put their company on Kickstarter on $50 000. I am happy when I receive $300 000 on my bank account by one tranche, and I wish you the same.
About operational business
✔The bigger your operational business is, the less romance it has. Somebody says that it becomes romantic again, when it grows to the very big sizes, though ours is somewhere in the middle yet.
✔Look for someone with whom you’ll be able to eat a crap, because you’ll have to eat plenty of it.
✔When you have a hospital, a person will die there sooner or later. You need to cope with negativity.
✔Intelligence and money not always correlate with each other, since only the brave people win!
Ajax Systems company started their development with several engineers and storefront with devices for security systems. A trip to China had a great influence on Oleksandr. He saw how people «in slippers with soldering hammer in their hands» create super technologies there. This inspired him to think that he can make something no worse than that in Kyiv.