Laziness, ambition and hellish English: 6 bad habits of Ukrainian startups

30.07.2020

The CEO of the acceleration hub Sector X Andriy Komarovskiy in his column for AIN.UA talks about the negative sides and habits of Ukrainian startups.

Support startups and their founders, give them grants-benefits-subsidies-discounts, write about them on the front pages of publications, admire the fact that some startup has attracted investments that will only be enough to buy a used car (albeit with capitalization start-up in the cost of a small plant) – this is really necessary and at times useful for raising the spirit of the participants and forming the right guidelines in society.

But sometimes it is more useful to stop, take a breath of fresh air, look around and ask the question: is it really so festive on our street, and is it not in vain that the lights are on and fireworks are banging out?

Since I, one might say, a serial founder of various startups (sounds disgusting, but I haven’t come up with a better term), and I have been working with startups for quite a few years from different positions (mentoring, distributing free and paid advice, managing accelerators, investing), then I decided to take this very life-giving breath and assess the status of the Ukrainian startup street.

Moreover, I wanted to highlight and formulate precisely the negative in order to understand what can be improved and what needs to be worked on. And I will leave the positive points (which certainly are) for another article.

In total, we got six not the sweetest points about Ukrainian startups. Enjoy.

The constant and unrelenting pill of the product. He’s working on a product. This is when, instead of finding the first customers, signing contracts, negotiating agreements and collecting queues of users, Ukrainian startups are sawing. They saw powerfully, day and night, not sparing themselves and their saw. Because what? Right. Because they can. But not because it is necessary, and this is a real plague that mows startups with schools. Because after many months or even years of mindless product development, we have completely demotivated and impoverished guys with no revenue and no customers, instead of a successful business that brings money to the founders and benefits the economy. I think that soon it will not even make sense to even start talking to a startup, which has not forgotten to cut the product, but has forgotten to call clients to the table. Yes, there are startups where technology (product) is everything. For example, as in projects that work on the technology of charging batteries in 1 minute. The need for a solution is not disputed here, and clients themselves will line up as soon as there is such a solution. But we have such startups, frankly, you can count faster than a quick one. The bulk of our ecosystem: about doing something a little more convenient, better, faster … About the business model, in general.
Extremely low level of material proficiency. As if there had not been all the previous years of the startup movement, as if Stephen Blanks and Roberta Fitzpatrick did not write their books, which have already become practically startup bibles. And the Internet seems to be missing either. What prevents you from reading several books, a dozen or two articles, and only after that do something? I don’t know, but the fact remains – they don’t read it, but they do it. In general, it is possible to launch a startup without at least a superficial study of the hardware. Also, how can you achieve success in life without a university and build a relationship with a partner, not knowing the meaning of the word “psychology”. But the probability of doing all this well, knowing the materiel, is dramatically higher.
Hellish English. In a world where English is de facto the number one language for communication between countries and companies, where startups have to become global in order to justify even the name of the word “startup”, not knowing English at all or mastering it very badly is not permissible and in general. the world in countries with a small volume of the domestic market (and Ukraine is one of them), where start-ups launch or at least want to launch on the global market, their founders speak English almost perfectly. Examples? Finland, Israel, Sweden, Estonia, you name it. But not with us, no.
Ambition and laziness. Because how could it be otherwise? For startups in the country, in fact, a lot of body and money movements are done: battles, contests, different programs, accelerator-incubators, and more recently grants. Plus, this is superimposed on some cultural peculiarities, and as a result, we get start-up founders who have a curious hallucination about their own greatness and importance. And if someone raised a couple of loaves of bread in the form of investment – well, all the candles. The reality is a little different. All work with startups everywhere, in any country is an ADVANCE FOR THE FUTURE. Because in the present, any start-up loses in importance to the economy of any sawmill. And that’s exactly why startups need to plow a little more, listen and hear a little more, learn a little more, and endure a little more than a classic entrepreneur. Simply because the environment gives the startup something already NOW, and the startup promises to use it for good and return it to society with a multiplier THEN. And any imaginary greatness against the background of receiving advances is at least inappropriate, and at the maximum – greatly reduces the chances of a startup to succeed, because it obscures the eyes and distorts reality with all the consequences.
Lack of investment and locality (like two sides of one very bad coin). Investors invest in startups because they hope to sell this startup (technically, their stake in it) in 5-7 years to some large corporation. This is plus or minus ninety-five percent of the time an investor exits a successful startup. The remaining interest falls on the IPO. And now the sad reality: most likely, in Ukraine, a startup is practically impossible to sell to a large corporation. Because they don’t buy it. Scientifically it is called “no exit market”. Our investor is sad and does not invest in local startups (not only because of this, of course, but also). There is an exit market in the US, and investors are investing in startups. And here, investing in a startup, the investor can only hope for its globality and, as a result, the opportunity to sell this startup later to an international (most likely American) corporation. And if a Ukrainian startup does not initially claim to compete on the scale of at least Europe, then by doing so it actually declares itself not suitable for investors in the venture capital market. And in terms of attracting investment, they can only count on FFF (family, friends, fools). What is sad for a startup, venture capitalists, and the country.
There are not enough quality startups. Startups have to come from somewhere, especially good startups. It is not enough to allocate money and announce “Startup, come out!” It doesn’t work. Startups are always a DERIVATIVE of other fundamental things, not an independent entity. And there are not so many fundamental things, read, sources of startups: a large business, competitive in the world market, research centers and laboratories, and, perhaps, universities engaged in research. If in some country everything is fine with these sources, then there is a high probability that with good startups there either everything is already OK, or it will be OK. We are not OK with all three sources yet. So not OK that such words cannot be printed in the press. But! I cannot but say that, despite the importance of the above sources, they mainly affect the quality of startups. But something else affects the number of startups. It is always a mix of the structure of society and its values, the availability of drivers for entrepreneurs/startup founders, and the right ecosystem and infrastructure. And with this, we are actually very good. For example, in almost all European countries, startups are not very good, despite the presence of all three sources of startups. Why? And they already feel good, there is no motivation. Or Japan is the third-largest economy in the world with the strongest corporations, R&D centers and universities. And with startups, it’s a problem. Again, why? Until recently, social values and structure did not allow: respect for elders and honor, a corporation is my family, and that’s all. But in Latin America and the United States, startups appear like mushrooms after rain, and the explanation is already obvious. Culture.

In conclusion. Startups are needed because they are about the near future and about the competitive advantages of entire countries. But, as I wrote at the beginning of the article, there is a feeling that the course is a little lost.