FOUNDER INNOVECS – ABOUT $ 8 MILLION ERROR
Alex Lutsky 18 years built a career in various companies in the United States. After he launched his business, he successfully developed it, made a number of mistakes and eventually sold it. But this experience helped him build a successful IT company in Ukraine – Innovecs.
At the Hrabli Battle event at UNIT.City, Alex told the story of his fakap and what he taught him. We recorded the most interesting.
Why did you decide to launch a startup
In 2005, I lived and worked in America. Everything was fine – work, car, vacation twice a year. But something was missing. I wanted to do business and run my startup.
Then, in the USA, a loan was given not at 3% per month, as in Ukraine, but at 3% per year. And anyone could get it. Therefore, my partner and I took a loan, went to Orlando and bought a small amount of condos (apartment buildings), then to rent them out.
After faced with a problem – how will people take them off. Then the idea came up to make a separate site for this. So we became entrepreneurs and started to do business.
Co-founder of SoftServe – about problems at the start of a business.
When they started – in 2005 – the market was not developed. Worked resource for rental housing VRBO, which was opened in 1995. Then we appeared – Villa4vacation.com.
Almost simultaneously with us, HomeAway was launched. They entered more globally because they clearly understood what they wanted to do. Therefore, a year later they began to absorb the market. Since it was small, they just bought VRBO and a couple more companies.
Why combining work and business is a bad idea
We went to the main work and at the same time were engaged in business. They didn’t want to leave their posts because they received good salaries and additional corporate benefits. Including medical insurance, which is very important in the USA.
Things were going well in the business – we had two developers in Minsk, two specialists worked remotely in the client service. In 2008, in our database there were 2 million travelers who rented accommodation, and about 10 thousand homeowners.
The company flourished. We invested $ 20 thousand in it and paid off in three months. This does not happen today.
But we did not devote all our time to the company. And that was the main mistake.
Many people ask me: is it possible to combine a permanent job and at the same time do business? And I answer: it is possible, but not for long.
My partner and I raised the topic of time to quit work and concentrate entirely on entrepreneurship. But the matter did not go beyond the conversation. We decided to continue to combine.
Tip: Determine if your business is a hobby or a business? If business – throw everything and completely immerse yourself in it.
Why the business collapsed
In 2008, Airbnb appeared and began to gradually absorb the market. Our business was losing ground.
In 2010, I decided to leave the company, and we frantically tried to develop it, and then sell it. We came to HomeAway and say: we want to sell ourselves. They knew us and wanted to buy us, but purely for equity. They said: we can’t give the cache – this is our policy.
We didn’t understand very much what equity is. They thought that they were too cool to agree to such a deal, and continued to search for a buyer. This was our second mistake.
This often happens: companies think they are more expensive. But this is not always justified. I think this: when you are not selling, name the price you want. When you sell, your price is what the market offers.
We continued to look for worthy buyers, and Villa4vacation.com was slowly dying. In 2013, we still sold it – but not as a business, but as an asset. A large real estate company came to us and bought everything as a database.
But the rake was not even that.
In 2015, the travel company Expedia absorbed HomeAway for $ 3.9 billion. A partner from America called me at four in the morning, reported this news, and we began to count. If then – in 2010 – we agreed to receive shares from HomeAway, then at the time of the takeover their value would increase to $ 8 million.
Instead of output
When a startup comes to an investor, they ask him – did you have a fakap? Because an entrepreneur who did not make mistakes is likely to make them in the future.
Now I understand: if I had not made a mistake of $ 8 million, today I could not have built what I have. In 2010, I moved to Ukraine, we created Innovecs, and its value is much higher than the one we lost.