This article was originally published at Expertorama. Below is a translated version.
Ruslan Synytsky is a Ukrainian businessman and founder of one of the few global Ukrainian startups Jelastic, that provides services on five continents. Meeting at iForum , we talked about the problems with the Ukrainian business environment, the specifics of investors in Jelastic, the experience of engaging with the CEO and experienced foreign consultants.
You have worked in the public sector for a long time, followed by freelancing. What was the impetus for the creation of your own product?
I always thought about my own product. Though at first I had just the idea of creating the outsourcing company. At that time such an opportunity was rather popular.
Starting work in startups as a freelancer, I have realized the benefits of creating your own product: the adoption of direct involvement in the creation of the architecture of the product and its development, as opposed to when you just get all the tasks from the top. I got pleasure from it and decided that I wanted to work in a product company. With regard to outsourcing – it’s not my preference. I have nothing against this kind of activity, but to me it did not fit. As a result, having experience as a freelancer, outsourcing and work experience in another startup, I started to create my own product – Jelastic.
In one of your interviews you said that very few IT-specialists in Ukraine want to build their products. What’s the problem here?
I think the problem is the entrepreneurial culture. Or rather, its absence. I got the entrepreneur “bug” not in Ukraine, but while working in an international company. Anyway now we can note the positive movements towards the entrepreneurial culture development in the Ukrainian IT community. For example, recently high-quality conferences and industry events aimed at the development of product companies are conducted rather often. However, all of this is in its infancy.
Do aspiring entrepreneurs often turn to you for advice?
Yes, occasionally asking me to look through their presentation or for my opinion about their project. I am always open with these things. Constructive criticism is good for business, as long as they perceive it as it’s intended.
And who criticized you?
Who has not criticized me? Partners, and family and investors. I tried to listen to them all, but often I did things my own way, taking into account the comments made. We cannot do everything the way others recommend. You need to enable your own power as well as to completely abandon the perception of criticism. The truth is always somewhere in the middle.
How about working with investors? You have attracted investments from many of the most active Russian venture funds: Runa Capital, Almaz Capital, Foresight Ventures, Maxfield Capital. How do you deal with such investors, and what have each of them given you, in addition to the money itself?
The current set of investors have different benefits. Runa were very helpful in the initial stage (the first venture investor in Jelastic, $500,000 seed investment), when it was necessary to polish the idea, to form a strategy for the development and release the first version of the product to the market. Sergey Belousov made a significant contribution to the development of the technology itself, helped to look at our own product in a new way. From a business perspective, investors often have the experience and knowledge; what is saleable,at which points there can be problems, and how to prevent them. If we talk about Almaz and Maxfield – they showed a great understanding of relationships in the enterprise-direction. In general, our investors are mutually complementary.
How is your financial performance now? Are you showing profit or do you plan to attract more investment?
Yes, we plan to attract additional investments, as development and marketing of the brand in the global market will require substantial resources. Additionally, the development of such complex code of Jelastic requires the recruitment of highly qualified personnel, who are not cheap.
You now have three offices: in Ukraine, Russia and the Silicon Valley. How was the opening of a location across the ocean?
We understand that having employees only in Ukraine and Russia does not make sense, as we are an international company. So we hired one person who was always in America, then after a while another one. Then he found the office and began to expand the team and opened a location in America. This was not difficult. We have already established procedures, and we have a sufficient number of lawyers who frequently deal with issues of this kind.
Opening of the offices, hiring new employees, the rapid growth of the company. How did you cope with it, and how quickly did you integrate new employees in the project?
First of all, it’s thanks to the connections with people who have the necessary experience to address various issues. And of course, thanks to the tenacity and desire to deal with these problems. At some point, when the company begins to grow rapidly, there are problems with the operating activities and prioritization of tasks, duties. All this should be built correctly during the process of company development.
In fact, to turn a startup where everyone does a little of everything into a structured company.
Yes. For example, we have an R & D department. We have an adviser, who for 25 years has worked with large companies, including Microsoft. He came to us, listened to us all and issued his recommendations. Some of them we have implemented, and some – not. He visited again, helped to complete the process of optimization and instilled a desire to constantly improve. Now we can see the problem and solve it. If you do not have enough internal expertise to do this – then engage it from the outside. We have a lot of consultants who help to analyze the current situation in the company. Absorption of information and experiences from the environment and from the experts have already taken place and this is very important. As a result we have additional knowledge and we are willing to share this with budding entrepreneurs.
Every story is unique. Usually you have a mutual acquaintance and then you yourself begin to develop this contact. If the initial conversation goes well, we then focus on the desired channel topic. The problem is that people of this level are very busy. They receive a lot of requests, and most of them are ignored. Your task is to interest the person and make sure that he wants to devote his time to your project. We managed to do this with Zbikowski, and Lerdorf, and Monty (Michael Widenius – creator of MySQL ). We couldn’t get Monty for a long time, but finally found a “weak link” and this interested him in our project. Now he continues to communicate with us, to come and help.
At what point did you decide that you need to change the CEO, and how was the process?
We came to this decision when we realized we needed to expand our product strategy in favor of corporate clients. Initially, we focused on the hosting industry, but then realized that there is an immense ocean, which you can try to “dive into”. After this, we understood that the company would be very difficult to get into the corporate sector without the right person, with established contacts and experience. We already had a finished product, and to gain the necessary experience in sales in the corporate sector from scratch would cost us precious time. It was therefore decided to find a suitable person for this task who can quickly achieve our goals in business development in the corporate segment of the market for cloud services. A separate person was directly involved in the search, HR who got the demands from investors and founders. After hearing all sides, we nominated John Derrick.
Was it difficult to leave the position?
No, because I always knew that I would bring the company up to a certain stage and eventually give control to someone else. It was rather difficult to find the right person, because the project has its own specifics. In general, the search was not an easy task, but I believe that we have found the right person.
Now you have an experienced CEO, investors and consultants. How do you plan to move on?
We came to that strategy, which was originally founded in our product. We compete with global companies such as RedHat, VMware, Amazon, Google, Microsoft and others. In some places, we are ahead of them, some are lagging behind. Our main advantage is now in technology. We are far ahead of similar products in a number of functional capabilities. While the weak link remains – the question of finance allocated for international marketing. Despite this, Jelastic is actively growing because of the quality of the product, that sells itself.