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UKRAINE – STARTUP AND
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Andy Baynes, a former Apple employee talks about doing business in Ukraine: “People are driven by innovations here”

Andy Baynes had been working at Apple for 12 years with Steve Jobs and Tim Cook. Then he left together with Tony Fadell, a former Senior Director of iPod development and started to build a smart thermostat for Nest – the company, which was bought by Google for $3.2 billion in 2014. Now Andy lectures at Stanford and Berkeley, he is engaged in new projects, one of which is a Ukrainian IT-recruiting company. AIN.UA Editor talked with Andy about what it was like to work with Jobs, why he decided to leave his career in Apple for a startup and why he chose Ukraine for doing business.

You’ve been at Apple, Nest, Google, in general what was your area of expertise at those companies?

At Apple I was around 13 years in product design division in California. I worked on both the iOS and Mac product range, heavily focusing on materials and material development, also on sustainability, removing toxic chemicals, finding substitutes, making more energy efficient, more recyclable versions. At the time we were the first company to deliver green environmental performance through product design. This is something Steve Jobs and I worked closely on, when the rest of the industry was focusing mainly on environmental housekeeping.

We did lots of life cycle analysis and what we found was that improving the performance of your buildings accounts for about 1% of all environmental footprint of a company. And about 75% of it has to do with the products that you and your customers use. So we decided to focus our best engineering efforts on making products greener.

You personally were acquainted with Steve Jobs, Tim Cook and other famous CEOs of the Valley. How did it feel to work with them?

It was intense. Steve ran a very tight ship. And he was the most remarkable person I’ve ever worked with, and certainly the most demanding. He expected you to be the world’s expert in what you do. And if you weren’t – let’s say there was not a lot of wiggle room. He would call me Saturday mornings at 10 am and to this day I don’t know why he would choose that particular time. We would talk about all sorts of things, product design issues on the environmental side, recycling programs. And it was always a good idea to have a strong cup of coffee before 10 am on Saturday 🙂

How did you join Nest?

During my time at Apple I worked  with Tony Fadell.. He left Apple before me and in 2010 he came across an idea to build a smart thermostat for a new house that he was building. At that time thermostats that were available on the market were all very poorly designed. Most of them hadn’t have any design engineering at all, and those that had looked very old-dated, like they were released in 1980-90-ties.

He saw the gap in the market, and a  team of around ten engineers from Apple and started developing the first generation of Nest, that was in fact the world’s first smart learning thermostat. First generation was launched in 2011.  In the early days at Nest I built business development and international partnerships which was a very big career change for me but in the end it became something I really enjoyed doing.

You were able to get more than 100 partnerships for the startup, and eventually to help build a company that was sold for $3.2 bln to Google, how did you do that? Can you offer a piece of advice on success in sales for young startups?

We had a couple of big advantages. We invested a huge amount of effort and engineering detail on the design of the hardware and software. And at the time we were the only company that had both engineering corners under our control. Most other manufacturers did the hardware part in China and outsourced the software. We didn’t take that approach because that device really had to produce beautifully choreographed user experience and because it had a lot of algorithmic complexity to it. We knew that the only way to do this was to have  complete control over software and hardware.

So we could go to our partners and quickly show them the difference in performance and features between our product and our competitors”. It also meant we didn’t have to follow the same retail channels that our competitors  relied on. Many of them were more or less stuck selling their products through DIY retail chains and we went into mass and high end electronic market, gadget stores, we opened an entirely new channel with energy companies. One major difference was our relationship to energy companies throughout North America.  We figured out a way to aggregate the control of air conditioning units across hundreds of thousands of Nest thermostats. Suddenly Nest was were no longer a smart home gadget, instead it was now a virtual peaker plant that energy companies could call on to help manage grid stability during hot summer afternoons, .

During first year we more or less had to educate retail about what our product can do, but during the second year people were reaching out to have partnership with us.

What was your role in preparing deal with Google? Was it hard to negotiate with Google?

Google has a division called Google Ventures. They were following our journey from the start, because they were one of our six very early investors. They knew Tony for a long time and knew his track record as a God father of an iPod and iPhone.

As in every acquisition you first and foremost want to take care of your colleagues, especially if you had taken them out of high flying roles in other companies including Apple to take risk with you in building a thermostat. In negotiations it is always important to make sure that everyone gets a fair outcome and more importantly – you don’t want to do anything that has a risk of them leaving.

You can compare being independent entrepreneur and a hired worker. What are ups and downs in both modes and why did you choose to run your own projects?

I certainly can’t see myself going back to a big corporation. On the one hand if you asked me the same question 10 years ago I just wouldn’t have been ready to go to be a CEO or investor. But 12 years at Apple and 5 years at Nest and Google – that’s a sort of a training camp that prepares you to just about anything in the business world. With all that experience I feel that my impact on early stage high growth companies can be quite profound. For me it is one of two very important ingredients for feeling happy in my career: Am I having an impact? And am I dealing with something that is on the leading edge of a very new direction, disruption?

When you get into big corporation as an executive, you end up becoming much more detached from high impact product related decisions, instead you get a lot of people related and governance related issues. Some people out of business schools love that kind of thing but for me I feel like I’m wasting time. I’d much rather be with a smaller team that could grow triple digits every year, helping them to make meaningful decisions.

Please tell about your new projects, especially – about Ukrainian startup that you joined.  

There are two companies to speak of. There is company in Ljubljana called Sleepy Bottle, which is the world’s first smart baby bottle. You plug it into USB-port by your bedside table and it heats the water to a perfect 37 degrees Celsius. When the baby is ready to feed, all you have to do is to twist the neck of the bottle and shake it. We are launching in three weeks in London in a big department store.

The second one is in Kyiv and it’s an IT-recruiting company. From my experience in Google it was extremely difficult for us to get high end developer talent. If Google can’t get enough developers with its resources and reputation, what must it be like if you are a bank or oil company or pharmaceutical company? So I was introduced to a company named HireHunt [Ed.note: now called as  Global Talent Advantage ] which is located in UNIT.Сity. At the time they had an ecosystem of 20,000 developers and during six months that turned into 52,000 developers. And I have taken CEO position with them. I’m helping to bring London and Silicon Valley based customers who need developers in Kyiv.

How did you find them and why did you choose to become a part of the team?

They were part of an accelerator in Ljubljana. I was giving a keynote speech there and the representative of that accelerator was in the audience. She invited me to meet some of the startups and that’s how I’ve got to know the team. I never jump into things immediately, I take my time to peel the layers, to understand the culture of the company, skill set of the management team. But in that case the potential was immediately obvious. Seeing how much talent was available across Ukraine and particularly in Kyiv was not news to me, but having met the company that established themselves on almost no budget and became top brand for job search and training – that seemed like a remarkable achievement to me. What they needed was a channel to North Western Europe and North America and I could see how I could build that channel, make an impact.

Did you get an equity in the company, under what conditions did you take a role of CEO?  

For most people in my position who were in large corporations and built startups from scratch it is really about impact and growth. For sure having a package which is based on equity is important for any startup that is looking to attract right business experience. But in most cases it is really about the chemistry, opportunity and timing. If there’s equity linked to that, it just helps with the decision.

What would you say about Ukrainian IT-community and IT-market?

It seems that every time I go here I learn something new about it. First of all I’ve fallen in love with Ukraine. It’s a wonderful place to visit and it has so much potential. And there is no other area on the Globe that I’m aware of, with such a concentration of highly ambitious and highly skilled IT-specialists, both hardware and software. And of course when I say that people often respond like: Yeah but what about Silicon Valley? In numbers these places can compete, but they cannot compete in ambition and drive. Developers in the Valley have lot of expectations from employers, huge salaries, bonuses. Whereas people I meet in Ukraine are driven mostly by the need to move forward, to develop exciting new projects. It is really about innovation for the sake of innovation.

Ukraine for now is in near-war conditions, and economy is not at its best – didn’t it scare you off when you were thinking about doing business here?

Most of the people I know who have that sort of fears, just don’t understand Ukraine. If they visited Ukraine and spoken to local people, as I did, they’d change their mind.

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