In contrast to some parts of the Ukrainian economy, the country’s information technology sector keeps pumping out good news and numbers.
For instance, Amazon only in February paid $1 billion for tech startup Ring, which has its largest development center in Ukraine.
In May 2017 Ukrainian startup Grammarly raised $110 million.
Google wrote a cheque for $45 million to swallow up Ukrainian startup Viewdle in October 2012. And in September 2015 Snap Inc. paid $150 million for Odesa-born startup Looksery.
But it’s not because Ukraine has suddenly become a wonderfully easy place to do business. In fact, Ukrainian tech businesses are thriving not because of the business climate, but in spite of it.
And even Ukrainians are surprised by how many successful startups are born here, according to Oleksandr Kosovan, the founder and CEO of one thriving Ukrainian tech firm, MacPaw. Highly acclaimed abroad, Kosovan’s company develops applications aimed to improve the productivity of Apple’s MacOS-based computers, or Macs.
Kosovan’s business in Ukraine was born out of a deep love for the U.S. company’s products. He was an early adopter of Apple Mac computers, which wasn’t that easy in Ukraine, where all the curricula in universities were based on Windows-based programs.
“It was risky, I never knew if the software I needed would work,” he says. In need to adapt most apps to his Mac, Kosovan reprogrammed them, which eventually led him to creating apps he would later sell abroad, a skill that became his business.
And it is one that has done well over the last 10 years: only last year MacPaw received a Red Dot Award for outstanding product design of one of its apps, and also got a Golden Kitty Award, dubbed by industry players “the Oscar of the tech world.”
MacPaw marketing manager Julia Petryk holds a Golden Kitty Award statuette in Kyiv on March 19. A service from this Ukrainian company, Setapp – a subscription to a collection of apps for Apple’s MacBooks – was named the Consumer Product of 2017. (Volodymyr Petrov)
Along with that, MacPaw demonstrated brilliant financial results in 2017 – 552 percent growth with 2.6 million euros in revenues — placing it on Inc. magazine’s prestigious list of the 5,000 fastest-growing companies in Europe in 2018.
Good quality
Today MacPaw has users in 185 countries, and boasts 15 million downloads since the start of its operations. And while it headquarters and develops its apps in Ukraine, there was a time when Kosovan wanted to move his company to another country and finally disconnect himself from Ukraine.
“It was utterly risky to do business in Ukraine four years ago. We avoided telling our partners and clients where MacPaw was from,” Kosovan says.
Tech firms in Ukraine have for years borne the brunt of illegal and intrusive searches by law enforcement agencies. Police have often confiscated their computers, servers, office equipment and even personal laptops, sometimes paralyzing their operations.
The grounds for the searches are often shaky: Ukraine’s law enforcement claims the most recent searches of IT firms were required because they suspected some companies had been involved in either misappropriation of government data, cooperating with Russia, or embezzlement.
But none of these searches led to any known criminal charges.
MacPaw hasn’t been searched, but the fear of being groundlessly accused of something made Kosovan want to move MacPaw abroad four years ago. But then came the EuroMaidan Revolution of 2013–2014, which ousted the corrupt President Viktor Yanukovych. It gave the entrepreneur hope.
“Inspired by the revolution, we wanted to show the world that it is possible to run a really successful business in this country, to develop successful products, to prove that ‘made in Ukraine’ can mean quality,” he said.
Kosovan hoped “the brigandish methods of treating business” in the country would disappear with Yanukovych.
“But we were wrong, of course, as were most Ukrainians,” he says.
Kosovan says that the current government should open their eyes to the fact that true professionals are leaving Ukraine.
MacPaw, however, is staying — for now.
Bright minds
Foreign clients and journalists are still “surprised that a good tech startup can come from Ukraine,” Kosovan said. MacPaw, in particular, is frequently mistaken for a U.S. company.
But Kosovan says it makes no difference where people come from, if they’ve got talent.
“It does require talent to run a successful business from Ukraine, but only as much as it does anywhere else,” he says.
All the same, Ukraine has a good many “bright minds” who can compete with the world’s tech leaders. Kosovan said he has worked with many Westerners, but that he prefers to work with Ukrainians, as they can develop the same quality products much more cheaply.
Not all people here, however, have values in sync with the modern world, the entrepreneur said.
“Many local businesses still have a Soviet approach to business — they don’t think about clients and about the legacy they’ll leave,” he says. “They care about money here and now. That has to change.”
Fighting pirates
MacPaw’s competitors are a range of small developers that also develop programs for optimizing Macs, and the success of MacPaw has encouraged many to steal the Ukrainian company’s ideas, copying app designs and texts, Kosovan said.
“There was a time when almost every week we could find on the internet a clone of our product,” he said. However, the pirates didn’t have the resources to focus on making a really good copy of MacPaw’s products.
“Over time, we’ve put together a lot of small details that now make us stand out. Dishonest competitors can try to copy us, but when you look closer at the product, use it, you can see there’s a big difference,” Kosovan said.
He says in some cases he threatened to start legal actions, but it didn’t go further.
“We’ve never paid much attention (to piracy), but just continued to do our job,” he added.
Hope for change
Kosovan said his hopes are fading that Ukraine will become a hub for international tech companies like his, or like Grammarly, Viewdle, Ring, and Looksery. Such companies will remain as exceptions rather than the rule, he said, putting the blame on the government.
Kosovan said he does all he can to stop his employees thinking about leaving Ukraine. The good salaries the company offers help, and so does the modern office in central Kyiv — said by many to be the best in Ukraine. People still leave, however.
One consolation for Kosovan is that when employees do leave, it’s usually for global giants like Facebook, which he takes as a compliment.
“I only hope Ukraine will change, and the best tech people will one day come from Facebook to MacPaw,” he said.
The Kyiv Post’s technology coverage is sponsored by Ciklum and NIX Solutions. The content is independent of the donors.
