А сold shower for Lviv IT industry: why is Lviv not an IT capital and does it have a chance to become it?
Brief Summary of Discussion with Yevgen Sysoev, Co-Founder and Managing Partner of AVentures Capital, on "IT Entrepreneur: The Jedi Path".
What matters most to you when making an investment decision: leadership, a thorough understanding of business, or a good idea?
It’s not really about a good idea. I would say that we are looking for teams that are ready to learn, think globally, and build a global business. When people come to me with their ideas and ask me what I think, first of all, I try to understand if they have the potential to become world-class CEOs.
IT industry in today’s Ukraine – what does the pie chart look like?
Ukraine ranks #1 among CEE countries by the number of developers, which is very important for our business where human capital is the main determinant of success and matters more than the amount of money you have. Therefore, Ukraine has a very solid foundation to build on. What’s next? For historical reasons, we have a good tradition of service business and outsourcing that are about 15 years old, while the first product companies started emerging in Ukraine only 7-8 years ago. Product businesses can also grow, generate profit for their founders, and create added value for the country. However, currently only a small percentage of Ukrainian engineers are involved in product creation. Of course, it's easier to sell yourself as a service rather than try and create a product. We are still an IT-commodity country – we sell ‘raw’ code and people who write it. Then our clients make something really classy out of it, while we are paid pennies. Ukraine has realized only 0.01% of its potential. If the government doesn’t interfere (or interferes very little), we stand a chance of developing as a technological country. In this regard, your skills as business leaders and as people capable of creating world-class products are essential. You can make Ukraine’s history together!
Lviv as an IT capital
Lviv has abundant human capital. It boasts a vast army of developers, but it hasn’t fully realized its potential as a city of innovation and startups yet. The number of startuppers is extremely small in relation to the number of developers, and those few that try their luck with startups produce minuscule results even on a domestic scale. I think it’s because there’s no hero or success story in Lviv. In many other countries and cities someone becomes a role model and others just follow. Lviv desperately needs such a hero. I believe in the city’s potential. In 5 years you can be ahead of Dnipropetrovsk or Odessa, but that will require knowledge, appropriate environment, and networking platforms. For example, Kyiv can boast of a well-developed culture of trust and support. It’s important to have a critical mass of people that will foster this culture. You won’t be able to survive as an entrepreneur if you are the only one who works based on trustworthy relationships and the principle of win-win.
Developing big business in a city requires the launch of hundreds of startups annually, which means that hundreds and hundreds of developers must try their luck, develop their own projects, take chances, and not fear failure instead of working for a company that pays a handsome salary. What’s the worst-case scenario if you don’t succeed as a startupper? You will just go back to working for a company.
The last decade has seen the development of outsourcing in Ukraine, but during the next decade it will undergo transformations as business. Therefore, you should already reflect on some questions: What value do you sell? How do you sell it? How much does it cost? How can you maintain a long-term competitive advantage? The entire outsourcing industry in Ukraine should give good thought to how they are going to develop in the next 10 years and compete globally. Ukrainian engineers are already more expensive than engineers in Warsaw or Prague. Why should clients hire the former and pay more?
There are several emerging industries that will change our lives in the coming decade. First of all, it’s everything related to the Internet of Things (hardware embedded with software), robotics, Augmented/ Virtual Reality, transportation industry (e.g. self-driving cars), as well as drones and 3D printers. Just imagine an Amazon warehouse where a 3D printer prints out a chair to your order and then a drone delivers it to you. All these innovative industries will transform the world in the next 10-20 years and have a big impact on production, product creation, and user experience.
My experience of networking shows that in this process you should be driven by a positive intention to help others not expecting anything in return. If you want to get value out of a network, just help. If you help, people remember it. Networking is based on fundamental values. It requires hard work on a daily basis and time you invest in meeting partners, distributors, journalists, and entrepreneurs.
Pay it forward
For Ukraine to succeed as a technological country, we should trust and help each other more without a hidden agenda. This concept is called ‘pay it forward’. For example, if a team comes to our fund with a great project that is not within our area of focus, I’m still ready to put them in contact with the right people that will help them. We often give useful feedback to teams and refer them to the right people even if we are not going to invest in their projects. This culture is part of our business portfolio. In light of the current situation in Ukraine, we should volunteer as much as we can, take initiative into our own hands, and do things ‘bottom up’. Let’s build a culture of trust and support for each other!
During the discussion we raised 14,000 UAH for the UCU Volunteer Corps “Volunteer Hundred”. All the funds will be used to support our soldiers defending Ukraine’s territorial integrity.