Karl Robb, Independent Board Member at EPAM and Ajax Systems — about Ukrainian tech market from a foreigner's perspective and preparing companies for IPOs

AuthorSvitlana Tuchynska

Ajax Systems is serious about doing an IPO. The company recently announced that Karl Robb, a former executive board member at EPAM Systems, joined Ajax’s Board as an Independent Board Member. An industry veteran of 39 years, Karl Robb started his career in ICL Fujitsu in his native England when he was 19. Since then he has worked across three continents, co-founding his first software company in San Francisco in 1993, and serving as a Vice President of one of Latin America’s largest IT Services providers.

In 2001 he co-founded a company in Budapest, Hungary. After it merged with EPAM in 2004, Mr. Robb became Executive Vice President of EPAM Systems Inc.

He spoke to DOU from his home in Marbella, Spain, sharing how he won big clients like Google and Microsoft, and what he believes the future of the industry in Ukraine is.

Speaking to students UCU, Lviv

“I think we always tried to do better, not cheaper and most often we succeeded in this goal”

— How and why did you join the EPAM?

In 2001 I co-founded Fathom Technology in Budapest. We were growing rapidly, and as Hungary is a small country, despite having great quality engineering talent, it’s not so scalable. I was looking into Russia and Ukraine as options for Fathom to expand, during this process in St Petersburg in 2003 I met Arkadiy the CEO of EPAM. So, in the transaction, I came as the CEO of Fathom Technology and became the Global Executive VP and President of European Operations of EPAM.

Had Fathom not joined the EPAM family in 2004, we would for sure have opened our own office in 2004-05 in Kyiv. But as EPAM already had significant offices in Minsk and Moscow, Ukraine was delayed in need for a year.  In 2004 the combined companies collectively had 600 staff in Belarus, Hungary, and Russia. The merge was a good fit. They were an American company that wanted to expand, and we were a European company that wanted to expand. It just made more sense to do it together. Obviously, it worked out very well because the growth rate afterward is unprecedented from $30 million in 2004 – nearly $3 billion in 2021. I retired with some health issues in 2015 but have served as a non-executive board member since.

— 15 years ago, you convinced Arkadiy Dobkin, the founder of EPAM to open an office in Ukraine. What attracted you here?

As I said I had always felt Ukraine would have been our expansion as Fathom, EPAM already having capacity in Belarus and Russia only delayed this decision not changed it. Ukraine is a place that clients enjoy visiting. It’s a short direct flight and had simpler easier visa processes as well as a bigger selection of foreigner-friendly services and facilities, with a strong pro-European culture and importantly a large population with one of the world’s largest per-capita outputs of Computer Science graduates, Mathematicians and engineers. So simple access, good soft skills, high-quality education, and simple transparent rules for business visitors made Ukraine my favorite choice. This gives a large supply of moderately priced high-skill workers.

— You have built international sales teams in EPAM. At that time, EPAM's clients included Google, Microsoft, Oracle, as well as the financial holding UBS, which made EPAM a leader in the field. How did you manage to attract all these clients? What's the key to selling at this level?

Well, there is no single factor. We were invested early on in not taking bad work. While our competitors would take any work from anyone, and they were doing what we called pure outstaffing. You come to me, you need a hundred programmers, I show you four hundred resumes, you pick which ones you want, and the price is whatever you agree to pay them plus I want 1500 dollars for doing it. We always tried to avoid this, we stuck with clients and projects that expect and require us to take leadership and take responsibility not just provide warm bodies. We focused on managing the careers and development of the individuals as best possible. We have had a bench of thousands of staff for many years. We invest in those we rotate them, and we encourage their growth and exchange between different projects and different competencies.

Another big thing that EPAM did differently was sponsoring Universities. We spend more than 20 million dollars a year training more than 2700 students. We were doing that (obviously now on a larger scale) for 13+ years while many companies “invested” in universities simply by paying senior professors and holding graduating parties and recruitment talks. We rent, furnish supply all Hardware and Software licenses as well as bringing our own trainers and paying for additional training for the professors. We also have material input, to modify and extend the curricula, and students work in our EPAM Labs during the last 2 years of their degree. Only two companies really do this.

I think we always tried to do better, not cheaper and most often we succeeded in this goal. These factors attract large clients, large clients bring complex projects and grow the skills of staff quicker and we and our team get stronger. It’s a cycle. For example, if you take any of the big-name clients that you mentioned or most others, — after a period working together the client gets a feeling and understanding of whether your company is doing a good job or not. The reality comes to light well after all the sales presentations and beautiful stories are done and forgotten. Most IT services companies never win a large contract for a thousand people. They win a more modest contract for 15-30 people. If you do a very good job, you match or beat the clients’ expectations, THEN the engagement gets bigger and more projects and workstreams open up. Then, if you do a good job again, you get an even bigger one and so on. You really cannot sell your way into a big contract. You sell your way into a small contract, and then if you do a good job — into the next one and the next one. A number of small decisions.

EPAM has a very strong engineering culture. At some point, I was the only person at the top of the company, except for the CFO, who was not a Software engineer. Almost all of the other execs were former programmers, architects, delivery managers, designers or testers, who then went into HR, marketing, or whatever. EPAM’s DNA was and still is predominantly engineering-centric. That helps when you want to sell. Building a successful sales machine is about the sum of a lot of small decisions, not some clever single concept or ring-fence sales strategy. There is nothing clever about it. Focus on the long term. You don't create the company in one year. EPAM was created over 20+ years. Pure consistency, focus, and always do the best thing, even if it screws up, which, I can think of a lot of times we screw up. But we fixed them, learned from them, and moved on. But never try to do the easiest thing, the fastest things, or the cheapest thing.

— You were involved in a large-scale recruitment process in the EPAM, hiring tens of thousands of people across several countries. What difficulties did you face in the process and how did you solve them?

A little over 2 years ago, I opened a new EPAM office in Malaga, Spain. They don't even have a big University here. Now, despite COVID, we have 300 people working here, of 41 different nationalities. Ukrainians, Spanish, Russians, Belarussians, Argentinians, Canadian, Norwegian, Indian, and we have a lot of people who want to work here. All because we decided to open in the place where everyone wants to be!

15 years ago, when I opened an office in Kyiv everyone was excited when we gave them an official IBM computer (rather than a locally hacked clone), with legal SW licensees, and paid them their full salary openly and officially, and offered health insurance. In 2006 in Ukraine, that was — wow! Now everybody’s got that, and more! Ukrainian programmers receive as much money in their hands as programmers in Newcastle, Glasgow, and Leeds, especially because of the low taxation. They are the upper-middle class of the country and they are spoiled.

EPAM invests in recruitment more than anything. I think we have around 800 people in talent acquisition and HR functions, while only about 50-60 salespeople are looking for new customers. Given that we hire over 1500 students every year, in a few years they become middle-level professionals and it's also a big reason why we are able to grow. We stay in control of this process — first, the students learn, then they work for 1 year and they go from theoretical knowledge to practice. And that amount of people take a load off us. We built this recruitment machine with the University programs and company training programs, and now this machine scales across new cities and brings on people.

— What did you do to prepare EPAM for the IPO?

Before joining EPAM I was an executive in companies that were public, but I never did it myself, I was just an employee. So, the IPO was a very interesting learning experience. We did it in 2011-2012 and we planned to do it a year or so earlier but postponed it because of the 2009 global financial disaster. Now we had to learn on the job, but we had a very good banking syndicate. We had UBS, Citibank, Barclays advising us, and they knew what to do. First of all, it's a physical challenge. I remember afterward I took two and a half days off because I was close to collapsing. I was having meetings from 7 in the morning until 9 in the evening for ten days across 13 cities in America and 5 cities in Europe. We were one of the first tech companies to go public after the markets reopened and saw some IPO activities following the 2009-10 crisis when it was dead. When we did our IPO we were a little disappointed in the initial valuation of 500 million dollars.

We expected and hoped for more, but the markets were not fully recovered, and they were nervous. It wasn't financially beneficial for the founders and at the last minute, we tried to decide whether to do it or not. And we chose to do it for a very simple reason — because we promised several hundred employees over years that we were going public. As I am sure you remember, many employees in Ukraine, Belarus, Russia, and Hungary 10-15 years ago believed that stock Options and IPOs are what Americans give you to make your work more instead of paying you more money and it's almost surely total bullshit. We had to fulfill our promise. Also, we decided that as long as we keep delivering the evaluations will go up. And it showed to be the right decision valued today over $20 billion.

But to be honest I think I learned much more from being on the board after the IPO than from the IPO itself. Because the board of a private company with one shareholder of 50 percent is very different from a public company. There are so many regulations I could keep you on a conference call for a week without going deeper into any of them. You have to follow the rules around compliance governance and fiscal accounting as well as physical and logical security, balancing the regulations in 20+ countries (some of which appear to be contradictory but nevertheless you're obliged under all). You only learn this from multiple specialists and lawyers who come all the time with updates and for board members several training events every year as regulations and expectations change and expand continuously just as programming skills do.

The conditions to do an IPO now are massively stricter than in 2012. There are many new laws, and tighter rules, adding new restrictions to stop businesses from cheating investors, bending the rules, and making it more transparent. You cannot learn it; it changes all the time. And the New York stock exchange has the toughest regulations. To be honest I think we could not have done it without the two board members who had already been on the boards of the public companies and the bankers that we got from Citibank and UBS, who helped us with it.


— What lessons will you use from the EPAM growth?

The attitude should not be — Karl did this for EPAM, so let's also do this. AJAX is in a different time, the market is different, the labor market is different, the customer market is different. You don't learn about how to get from point A to point B, you learn how to use maps so that when you are in a different time and place you know how to read the map. Ajax is a very different business than EPAM. But the biggest challenge Ajax faces is the same — it's attracting high skilled professionals, in a globally short supply and competitive employment market. You do that by focusing on building a good brand for both employees and customers. Most people want to work for a company that they see in a positive light. Additionally, attention needs to be focused on a large number of complex compliance, governance, sustainability, and diversity issues.

Investors don't want to invest in companies that make a profit, but nobody knows how. They have to see a sustainable, repeatable, extendable, profitable model.

I think maybe the biggest lesson I learned is that you never assume that what you did successfully before will work again. I truly believe that the most important trait that the entrepreneur should have is the ability to solve problems that you have not yet faced.

“The struggle for Ajax is to keep a strong steady supply of the best Ukrainian and foreign talent so that their astronomical growth is not retarded by lack of key people”

— What is your Ajax IPO strategy? How does it differ from the EPAM strategy?

I have known Alex Konotopskyi for a number of years, though our relationship was very informal, I was never paid or anything like this. But I have offered advice or help to a few other entrepreneurs in Ukraine Belarus and Russia. I have many friends in the region and I had a great personal financial outcome from my years in the region, so I am happy to help. You know, my children were born in Ukraine, my son hopes to play rugby for Ukraine. My experience will contribute to making sure that Ajax does not make any mistakes, just as we had two directors who had prior experience in EPAM, as well as the banks.

My job is not to run AJAX or to perform operational functions. It’s to guide and mentor senior execs and make sure that compliance governance and international financial norms are fully adhered to. And when they face difficult choices that are new to them hopefully my experience can help them. My job is to make sure the best interests of all shareholders, all staff, and clients are represented. That’s why independent board directors exist and why publicly traded companies need to have a strong or dominant representation of independent directors. Additionally, banks will advise the company, they know what to do, but at the end of the day banks’ primary interest is to make money for their shareholders, not to make money for yours and board directors have to balance all. There is a happy win-win situation, of course, but you have to know what you are doing.

— Besides preparing the company for the IPO, what other functions will you have at Ajax?

I will be helping Alex to coach and mentor the executive team, help to prepare for the IPO, and all of the increased governance and compliance that comes with the western stock exchange. Clearly, we have different laws for each country. In the EPAM we have to comply with the laws of the USA, UK, Hungary, Ukraine, Poland, etc each individual country.

I am the first independent board member, but obviously, there will be others. At the end of the day, investors are investing in the executives and they see the board as a question of their guarantee that honesty, integrity, security, diversity and compliance, and governance will be paid attention to in the proper manner. Rather than see the company as a small privately-owned company in what is still viewed as an emerging market. Clearly, Ukraine is much further down that path than many of the former Soviet-influenced countries. Now, you cannot learn how to do an IPO, you have to actually do one. When we were running EPAM we benefited from having directors who were part of other boards and had that experience. So, the Ajax guys will do it, I am there to offer experience and some guidance from someone older who has done it before. My job is to try to do it better, faster, and not to run into any legal land mines.

— How did your relationship with Ajax Systems begin?

I wanted an alarm for my house in Kyiv and I asked our security expert who takes care of our security in EPAM. And he said — you should get this one. I showed it to my wife, she liked it. And I said — okay, where do they make it? And he said — in Ukraine. My first reaction was — No! I am not buying a security device made in Ukraine! I want German or Japanese. Our expert said – ‘listen, it is very secure, and very high quality. So, they started explaining it and showing me and they persuaded me to try it. After using it I fell in love with its reliability, performance, and ease of use. Far better than other alarms I had in the USA and Europe!

So, I got one for my house in Spain too, it's an amazing product. It's all Ukrainian, it's designed in Ukraine, manufactured in Ukraine, the founders are Ukrainians. You know what people say about Amazon Ring, that it is a Ukrainian company. It is not! It’s an American company, designed in America, marketed in America, the idea was American. They had a development team in Kyiv in the same manner EPAM develops software for Google, SAP, or hundreds of other companies and manufacturers. This does not make Google or any of those EPAM clients a Ukrainian company! While Ajax has Ukrainian founders, Ukrainian R&D heads, designed in Ukraine, built-in Ukraine, tested in Ukrainian.

I am financially fortunate, so I can, and do, invest in small companies. So, I called Alex and I said — listen, I want to invest in your company, and he said — we are profitable, we are growing, and we have no need for money. That’s a shame! I was 2 years too late, sadly. But we became friends and occasionally he asked me for advice in sales, and business development and it was just purely informal communication. But I do the same with other companies in Lviv, Minsk, and other places. Also leading Professional Investor Lenna Koszarny (CEO of Horizon Capital – DOU) knows me well from many panels and investor conferences, so they asked me to be on the board.

And by the way, a lot of my friends who have nice villas here in Spain also bought Ajax on my recommendation. And I never once heard one complain! They love it. I truly believe it is not only the most impressive truly Ukrainian company but one of the sexiest, coolest and advanced brands in the world today.

— Ajax plans to double the team this year. Why is it necessary to recruit a large number of people in a short period?

Remember that they do a lot of specialist hand manufacturing, it’s not all robots. They also do their own R&D, not just OEM or rebadge someone else’s IPR, they create it. As the company grows substantially, they open in new countries, so they need more sales, more marketing, and they are going to start developing new products. So, you have to invest in R&D. Alex is just trying to keep up with the growth of the company. The product, once it gets into a decent distribution channel, nearly sells itself. The struggle for AJAX is to keep a strong steady supply of the best Ukrainian and foreign talent so that their astronomical growth is not retarded by lack of key people.

“You want Google and Facebook in Ukraine? Get real!”

— Is hiring on the Ukrainian market different from that in the West? What problems do you see?

When I first came to Ukraine it was the Orange revolution during President Kuchma. And Ukraine was on the sanctions list, you could not take a certain software to Ukraine. Minsk was all fine until George Bush called Lukashenko the last dictator in Europe. Then Belarus became unpopular, it was hard to sell. And Putin was then seen as a great partner. So, Russia was popular, and Belarus was not, then Ukraine was popular. So, it depends on what point in time you talk about.

For sure now Ukraine is hotter and more competitive and has more talent for resources than the other two countries. So, the recruitment landscape is more competitive.

But at the end of the day, it does not matter for us. Because we have to be everywhere, and we have to do the best job we can, and we have to focus on retention. We are very successful at retaining the middle level of people. The biggest problem for us is that the number of venture capital startups in Belarus and Ukraine take the talent from us because we are the biggest most prominent company. So as Ajax becomes bigger and smaller companies want to do Internet of things or devices, they will start targeting the Ajax staff. Everybody wants to steal the guy from the big guy, right? So, we cannot stop that from happening. We have people who leave EPAM for startups and come back after three years when their startup fails.

— How competitive is the Ukrainian IT market in the world, in your opinion? What are its advantages and disadvantages?

It is very competitive. The disadvantage is the cost. It’s the most expensive place outside of the EU. More expensive than Russia and Belarus, because you have a lot of people and the quality is good. Ukrainian salaries are higher than Russian and Belarussian. But it’s only a big disadvantage if you are trying to sell a cheap product. It's not a disadvantage if you are the market leader who invests a lot and tries to do the best job possible and charge a premium price commensurate with the premium output of service. At the end of the day, it’s not about the price per hour. Only the stupid buyers focus on the price. I remember having a conversation with one very big company in Europe — yes, your guys did a great job, we really liked it, but the other guys are 4 dollars cheaper per hour, so you have to adjust your prices. And I was — okay, bye. What can you say? Porsche is a fantastic car, and you cannot say that you will get another one because it's cheaper. Because the other one does not do what this one does, it's an entirely different benefit.

So, Ukraine is the most expensive outside of the EU. But it has good people, a good soft culture, a good level of English, Western mentality, open society, easy access physically, and geopolitically popular. Americans and Europeans have a lot of empathy with Ukraine. So, good people in a good place, it's close. It's perceived as being trying to be more Western, but of course, we have a lot of doubts about how good and how genuine, and how fast the reforms are. But people outside of Ukraine genuinely believe it's more Western. So, it's not all about price. And it's a big country with a lot of good engineers. It is however getting dangerously close to pricing itself to lower growth as you can get a smaller number but equally talented staff (in much smaller numbers) in Canada, Scotland, America, England, etc.

— More Ukrainian IT companies are trying to move from outsourcing to providing solutions. How competitive can they be, in your opinion?

I have been in the business for 39 years. I started when I dropped out of the University at the beginning of my Maths studies, I got a job as a Manufacturing Systems Specialist (similar to a business analyst) in a computer company when I was 19. I have seen many service companies trying to become product companies, and vice versa. 80 percent plus of them failed. It's a totally different business model. Requiring totally different thinking, totally different principles, and most of the people who try, always think the grass is greener on the other side.

One in 10 product companies succeeds, maximum. How many outsourcing companies do you think to fail? Close to zero. Even the ones who are badly run, badly managed, who hire not the best people — they still are in the business and they grow 10 percent a year. There is a market for everyone. What people forget is just because you developed one piece of code for one company does not make you able to sell that code to everyone else. Most services companies and people who want to get into the product arena just think it’s so easy. They hear 20-30 stories a year about the little unicorns, about the tiny startups that make it. But for every successful company like Ajax, there are hundreds or maybe thousands of failures.

Do you know how much it costs to develop a small IT product? Between 2-3 million dollars. Do you know how much it costs to roll it out on the market? In legal and marketing costs? Minimum 4-7 million dollars. . .  And then if you want to test it on all the different environments, all the different browsers, on all different currencies and languages, and fund the entire company for 1-3 years while you have no material revenues, it costs about 15-100 million. Then you’re in the game to play and the vast majority fail.

— What does Ukraine need to do to attract IT giants and other top companies to open their offices here? Or should we focus on developing our own product companies instead?

It’s just a nice excuse to talk about in the press. Let me tell you some of the most stupid arguments I have heard, they are all related to this topic. And I won't mention the names of the people, but they are all sort of famous people. “The reason that we don't have any product companies, and the reason why we don't have Facebook and Google in Ukraine is that all the outsourcing companies suck up all the talent and there are no engineers left for the product companies”. That is nonsense! 

First of all, let's examine Holland, England, Austria, Switzerland, France, Denmark — where is their Google and Facebook? Oh? Really? They don't have one. Why? Because America dominates the freaking technology world! Sales, marketing, the biggest market — until the last US administration — completely free of intervention, free market. Why doesn't England have their own Facebook or Google? Having your own Facebook or Google in your country is not a measure of success in economic life.

Secondly, Ukraine has only been a sort of democracy and approaching the first world country for a decade and a half and it has lots left to learn legally, politically, and economically. In 2003 I got beaten by the police one night because I did not have my passport with me and I refused to give them a cash penalty. Corruption was horrific. That was just a little over a decade ago. Now you want to beat Britain? Get realistic.

Now the next point is the following. America produces very few programmers, most of them are immigrants, and the USA is also the world’s largest consumer of IT outsourcing from OTHER countries. However, America is successful and owns by far the dominant share of technology unicorns and big players. How can this be? Because of America’s sales, marketing, and business skills, and its capital markets and entrepreneurial sport, not because of their availability of programmers. Successful products depend on understanding the market, and what customers want as well as how to deliver it to them and establish a brand and marketing presence. It's not solely because of the clever R&D guys.

Why is Ajax successful? The product looks good. They have got a great site; they have a good sales message. Alex hires great salespeople.  It's what's lacking in Russia and in Ukraine and Belarus. In Ukraine, not many people consider being a salesman. It is not a noble, desirable, socially acceptable profession, it's looked down on. But you know what, me selling contracts at EPAM is just as important as Arkadiy and others developing resources and engineering capabilities, you cannot have one without the other one.



My last point. EPAM loses between 10-15 percent of our workers in Ukraine every year. Out of the 10 000 employees, 1000 to 1500 left for other companies. Our biggest competitor SoftServe also loses about 10-15% a year. Engineers leave us and the other service companies for a promotion or for more money. So why cannot product companies and venture capitalists simply hire some EPAM staff! Slavery does not exist for a long time.

I actually believe EPAM, SoftServe, and others are part of an ecosystem — we produce the seed level and leadership levels for startups to hire. They get years of experience working in the world’s top companies, according to the most advanced and exacting technical and commercial standards. After some years they have invaluable skills. The vast majority of startups and VC-backed companies take a lot of their people from us, we are the ‘free” University for private equity in reality! You cannot have Chelsea without clubs for 13-15 years old to play football, right? They live off these guys. So, we actually believe that our companies feed these companies.

Last year when I met with President Zelensky, his team and other IT VC and PE leaders in Canada these issues were debated in panels. I said the same thing then and it resonated well with Canadian and Ukrainian business leaders.

Another argument, often given by the politicians in Ukraine — we have so many talented young people, but they have no access to capital. I was an employee till my late 30s. Then I took my savings, and I started the company, why? Because I had some knowledge, and I had some skills. The 23 years olds with demands for capital and others to take risks but with little experience are with few exceptions useless for some years. A VC could have given me a million dollars when I was 23 and I would have blown it.

— The Ukrainian government proposes to introduce a new legal regime — Diya City in order to create more transparent conditions for doing business in Ukraine and attract foreign investors. And now it looks like they want to abolish the massive FOP (Private entrepreneurship) taxation scheme for developers. Do you think that the employment of developers through individual entrepreneurship is an obstacle to the development of Ukrainian companies? How do foreign clients feel about this?

I don't think any country can viably have a taxation rate of 5 or 6 percent. It's not possible to provide education, health care, public safety, and functional roads. I spent three months in a hospital after I crashed my bike because somebody left a massive hole in a road between Zhytomyr and Kyiv. There was no light, and I was driving alone. Boom! Literally, I am in the hole. I broke eleven bones and lost a kidney. That was the day I tried to move to Ukraine in August 2005. As a result of this delay, EPAM Ukraine was started three months later than we planned, in December 2005, as I was in the hospital for 3 months.

The day I departed Budapest to start EPAM Ukraine, 2005

This issue is not only about IT. Many businesses use the private entrepreneur’s scheme. I don't believe it's fair to cancel it for one industry and not for everybody else. If you change the taxation just like that many highly paid professionals will leave the country and Ukraine will get a much faster and larger brain drain. Customers and employers will go and not come back. You need to move it one a percent a year, or one and a half percent over a number of years, gradually, until the private entrepreneur’s income tax moves closer to the traditional standard employee’s income tax.

Belarus has approximately two-thirds of the revenue of Ukraine in exports of IT. But it's only 9 million people. Why? Lukashenko was the first one to have the technology park and he came up with a different system — a nine percent tax and a cap on the amount of social security. Ukraine is nearly five times more population, so that would give Ukraine a 12 billion industry.

An important and often ignored point in government discussions and press speculation is that if the government wants to do something to help people and to help the national economy, they should help the exporters first. Those who bring foreign hard currency, revenues, taxes, and investment into Ukraine. The IT industry is producing billions of export revenues. And this is where the possibility of politics, favoritism, and corruption could come in. Many companies who import products, be that hardware or software licenses like Dell, Microsoft, Hewlett-Packard, and others who resell and distribute to retail customers and companies, inside Ukraine, want some special treatment too. Why? What's the economic benefit to Ukraine if IBM sells a thousand computers in Ukraine? Or Microsoft sells a billion-dollar worth of licenses in Ukraine? How many people do they employ? A hundred? Two hundred? Three? What economic activity effect do they give to the Ukrainian economy? They take money OUT and worsen, not improve, the balance of payments.

America gives Boeing, IBM, Pharmaceuticals, and Big Defense Companies, among others, massive tax breaks. Why? Because of the export of billions of dollars of weapons, planes, drugs, and technologies all over the world. In Europe, Airbus gets special privileges on taxes and operational costs. Why? Because they want to export Airbuses. If people in Ukraine want to buy foreign products let them, without restriction, but there is no reason why you would subsidize it or provide tax breaks to make it easier or more beneficial.

“This is the biggest mistake with engineering-centric entrepreneurs — they tend to create solutions and then they spend years trying to find out what problems to solve with it”

— You have been in the IT industry for over 39 years. What has radically changed over the years, and what has remained the same?

Today all the biggest companies on the stock exchange are technology companies. Technology is the dominant industry in the entire world. Even when I was a CEO of a technology company in Sweden in the late 1980-s, if you said to me — at some point the biggest companies in the world will all be software and technology companies, I would have said “no way”. Anybody who says they predicted this is probably not being totally honest.

I ended up in this industry by chance. I was planning to be a math teacher. A guy I knew from a gym told me about his company hiring, and I decided to take a year off University to make some money. I was 19 when I took the written aptitude test and was hired by the ICL which was Britain’s IBM in those days. On my first day at work, I saw a computer for the first time in my life. I had no idea what it did. I was like — that’s it? It looked like an orange refrigerator without a door. I was expecting flashing lights, tapes beeping sonar displays, etc., like in the movies. Nowadays my 5-year-old plays roadblocks and builds houses on his computer! Our job was to help clients computerize their manufacturing processes. I got a nice free car, free patrol and a good salary, higher than a teacher of 10 years experience, so the idea of going back to University was not very appealing.

— You have been the co-founder/founder of several companies. What do you think is key in creating a successful IT business and in managing an IT company?

The window of opportunity to create another EPAM, Luxoft, or GlobalLogic is gone. The rich are getting richer, and the poor are getting poorer. The big ones will just acquire the small ones either by employing one at a time or by M&A. I would say that the big opportunity is in native digital software that makes people and businesses ’ lives easier and more effective. What I mean by native — is that it is built around interaction, not technology. Of course, there is a market for great devices. There is a fantastic Ukrainian little exercise watch for people with heart problems, called Mawi band. My lawyer invested in it. And I know that some Ukrainian guys are working on a health monitor for animals. Some people laugh at it. Well, you know what a good horse costs? A couple of hundred thousand dollars. My car costs that much and I have an engine monitor.

I do due diligence for private inquiries and venture companies and I see maybe a hundred ideas each year of startups or companies in the early stages. And about 75 of them have discovered a technology, a product, or an idea and are trying to figure out what to do with it. This is the biggest mistake with engineering-centric entrepreneurs — they tend to create solutions and then they spend years trying to find out what problems to solve with it. Often, they do not even really plan how to monetize it and think that is someone else’s problem to do so. The best entrepreneurs are identifying the problems that people would really love to solve, preferably MUST solve, and then working on technology to do it. People will always pay for a product that solves a problem. Especially if the cost of not solving this problem is high. That's my advice.