Oleg Krot: "Merger into a holding is a stage of growth, and only then of optimization"

Oleg Krot, the Managing Partner at TECHIIA holding got the second place in the "Top-leader of Transformation" ratings by BUSINESS magazine among the best transformation managers

The merger of the different companies into TECHIIA technology holding has been a landmark event for business partners Oleg Krot and Yura Lazebnikov, who have been working together for 14 years. Due to the fact that these companies cover a dozen different directions and projects, the partners managed to achieve synergy, optimize costs, and make the business more stable and flexible.

— Tell us, what goals did you pursue when creating the holding? Is this a way to optimize costs?

— The holding is not only about optimizing costs, it is rather about creating a Center of Expertise and finding synergy to strengthen each other's assets. To this can be added the opportunity to increase management efficiency through a strong team of regional directors.

At the same time, some cost optimization also took place. We have a single internal accounting system, a single Center of Expertise, which consists of departments of Financial Management, Legal Affairs, Compliance, HR, Design, Communications. It is the Center that sets the tone of the work of the holding in general and each company in particular. However, the businesses that are part of the holding are independent, with their own CEO and management team. This is our stability and flexibility at the same time.

Therefore, for us, consolidation is, first of all, a stage of growth, and then of cost optimization. After all, holding is also expensive. We had to hire a team of “bureaucrats” for auditing, legal, and financial management, which became an additional significant financial burden.

— Is there a difference between the impact of the current crisis on the development of the technology industry in Ukraine and other parts of the world where the holding has offices?

— There is a difference in the reaction of countries and businesses in different countries. In some, the state supports the business by paying salaries to employees of private companies, and in others, it does not interfere in business. The common thing for the whole world is the need to revise business models, approaches to remote work, the formation of the institution of regional directors. Ukraine remains a manufacturing center due to strong basic education, competitive wages of specialists in technological industries, and optimal taxation. At the same time, the United States and Europe form the demand for production and give preference to Ukrainians due to the high quality of work at the best price.

— Tell us about the impact of the crisis on TECHIIA. What anti-crisis decisions did you have to make?

— The experience of many years of making business has taught us the most important thing: to be as invulnerable to crises as possible, we must distance business from the political and economic situation in a particular country. So we took a path of diversification.

We transformed the business where necessary, switched to remote work, and will continue to work in this mode until the number of new diseases in Kyiv decreases significantly. We managed to keep all the jobs and we continue to hire staff. However, the activities of some businesses have changed somewhat. For example, Enestech, which is developing Senet subscription-based computer club management software and hardware, has quarantined any stoped all withdraw from customers to help keep their business afloat. And WePlay! Esports had to adjust exceptionally to online tournaments. Despite the fact that offline esports venues are our visiting card, fans’ and players’ safety is the main thing.

— What are your strategic plans?

—We have high expectations for esports, which have no limits, restrictions, and borders and are not afraid of pandemics. We want the word WePlay! To be associated with a bright esports show on the market. To do this, we are building esports arenas in Kyiv and Los Angeles and are preparing to build three more - in Brazil, China, and Australia. This will allow us to have no restrictions on our own shows and tournaments.

In addition, on September 1, 2020, we will launch a WP Merchandise new factory, the capacity of which will be almost 10 times bigger than the existing one. In the next two years, we plan to increase the production of WP Merchandise tenfold! This will be a new level for Ukraine's light industry.

Another interesting project under development is EcoTechnoPark by TECHIIA. This will be the first high-tech eco-technopark in Ukraine to solve the global problem of high-speed data processing.

— The IT industry around the world is developing rapidly, it seems that there are no obstacles and boundaries for it. Tell us, what are the current challenges for IT professionals?

— The situation in Ukraine and the world is different. The United States is a country of investors, while Ukraine is a base of production. And no matter how much we strive to become a country of startups, such as Israel, we must recognize that we still have a lot to do, in particular in cooperation with the state, for such a dream to come true. The IT industry in Ukraine will develop as long as we can provide high-quality development at an attractive price for the Western market. High quality depends on the level of education, while the cost is not only on the level of wages but also on the level of taxation. Both the first and the second will depend on the interaction of the IT industry and the state.

— What was the most difficult transformation decision you had to make lately?

— This is a joint decision with Yura Lazebnikov to establish a holding. There was a transition to a format where "holding" is not just a nice word in the name, but completely different elements of management, and significant changes in the legal structure. And this transition has become the most difficult decision in recent times.

In the Ukrainian reality, it is easier to register a dozen more LLCs and work with them. But if our goal is an investment-attractive business, then these companies must be part of the assets of an international holding company that are protected by the relevant jurisdictions. And this results in much higher financial costs, tax burden, more complex legal and financial services, audit, a larger team, and a more complex management process.

It is a pity that big business cannot be managed as inexpensive and easy as a small one. Gaining opportunities for big business in terms of investment, scaling, international activities, we also get an inept structure. And it is very important to keep the former flexibility, and this is possible only through the culture of the company and the right team.

How often do you have to leave the comfort zone?

— We are never in it

The original interview is on the BUSINESS magazine website.
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