Cik­lum’s Tor­ben Ma­j­gaard on se­crets of IT suc­cess

Kyiv Post - - National - BY DENYS KRASNIKOV [email protected]­POST.COM

Tor­ben Ma­j­gaard came to Ukraine 19 years ago to set up a busi­ness. Af­ter dodg­ing con­stant bribe de­mands and crim­i­nal rack­ets, he man­aged to build one of the big­gest in­for­ma­tion tech­nol­ogy com­pa­nies in the coun­try.

Cik­lum has now six of­fices and 2,500 em­ploy­ees in Ukraine alone and 13 of­fices abroad, in­clud­ing in the United States and the United King­dom.

Ma­j­gaard’s com­pany head­quar­ters in Ukraine and con­tin­ues to grow, de­spite the coun­try’s eco­nomic tur­bu­lence, po­lit­i­cal in­sta­bil­ity and cor­rup­tion. The rea­son, says the Den­mark na­tive, is that the IT in­dus­try is able to op­er­ate sep­a­rately from the state.

“No mat­ter what hap­pens around, IT is free,” Ma­j­gaard said in an in­ter­view with the Kyiv Post. “All you need is an of­fice, con­nec­tion to the in­ter­net, abil­ity to code and here we go — you’ve got an IT com­pany that can do busi­ness in­ter­na­tion­ally.”

This way of think­ing guided Ma­j­gaard into cre­at­ing one of the most suc­cess­ful in­ter­na­tional tech firms from Ukraine.

As­ton­ish­ing re­sults

When Ma­j­gaard moved to Ukraine, he no­ticed the dam­age that the Soviet men­tal­ity had done to lo­cal busi­ness.

While run­ning his re­tail chain of sec­ond-hand com­puter shops, he was con­stantly fac­ing cor­rup­tion and bribery. He dodged it, but af­ter four years Ma­j­gaard de­cided that he should find a way to es­cape Ukraine's busi­ness cli­mate with­out es­cap­ing the na­tion.

“I was get­ting tired of the peo­ple who de­manded bribes to al­low my chain to con­tinue op­er­at­ing as usual. I didn’t like it.”

Still he liked Ukraine and saw pos­si­bil­i­ties, es­pe­cially in IT, so he hired pro­gram­mers, put them in an of­fice, gave them in­ter­net con­nec­tion and locked the door from the in­side.

"It seemed like a good busi­ness con­cept in that Ukraine.”

Ma­j­gaard switched from hard­ware to soft­ware sales, mak­ing it eas­ier to avoid the au­thor­i­ties.

His Cik­lum de­vel­ops soft­ware for com­pa­nies that work in a wide range of spheres from cryp­tocur­ren­cies and in­ter­net of things to big data. It finds clients and matches them with its own pro­gram­mers.

The com­pany posted rev­enue of $100 mil­lion back in 2012. Since then, how­ever, it’s been keep­ing the fi­nan­cial re­sults se­cret. Cur­rently Cik­lum has two stake­hold­ers, Ma­j­gaard and bil­lion­aire phi­lan­thropist Ge­orge Soros, who bought a stake in late 2015.

In 2017, for the sec­ond year in a row, the com­pany won a place on the In­ter­na­tional As­so­ci­a­tion of Out­sourc­ing Pro­fes­sion­als an­nual list of top tech firms.

Ma­j­gaard told the Kyiv Post that Cik­lum is get­ting ready for an ini­tial public of­fer­ing. With this in mind, he de­cided to step down as the CEO and hire a man­ager with an ex­per- tise in tak­ing a com­pany public — Michael Boustridge took Ma­j­gaard’s place. He’s worked for a num­ber of blue chip tech com­pa­nies in­clud­ing IBM, Bri­tish Tele­com, and Ciber.

Now Ma­j­gaard nav­i­gates the com­pany as a chair­man. And though his sched­ule is more flex­i­ble, he still has a heavy work­load, meet­ing other in­dus­try play­ers and ad­just­ing the com­pany’s strat­egy.

In­ter­na­tional path

The state of the busi­ness cli­mate hasn’t changed much over the years, ac­cord­ing to Ma­j­gaard. Ukrainian politi­cians are fight­ing with each other and hold­ing back Ukraine’s de­vel­op­ment.

The politi­cians, and their oli­garch back­ers, are why many of Ukraine’s in­dus­tries are in­fused with cor­rup­tion and un­com­pet­i­tive.

But not IT. To­day this sec­tor ac­counts for 3 per­cent of Ukraine’s gross do­mes­tic prod­uct. It earned the coun­try more than $2 bil­lion from ex­ported goods and ser­vices in 2016, ac­cord­ing to the Na­tional Bank of Ukraine.

Ma­j­gaard thinks that the tech in­dus­try thrives be­cause it op­er­ates to sat­isfy in­ter­na­tional de­mand. Tech com­pa­nies can be based in Ukraine, while work­ing some­times ex­clu­sively with for­eign clients.

“In fact,” Ma­j­gaard said, “we don’t have Ukraini­ans as clients at all. The rea­son? Some­times lo­cal busi­ness is achieved by bribes, and we don’t want to go there. So we only have Western­ers as cus­tomers.”

Lack of lo­cal cus­tomers

Be­sides, few peo­ple in Ukraine can af­ford tech ser­vices like the ones that Cik­lum and other such com­pa­nies pro­vide.

“Any busi­ness is about cus­tomers,” he said. “The econ­omy is weak in Ukraine, and peo­ple’s pur­chas­ing power is lim­ited.”

The ab­sence of lo­cal cus­tomers is why many Ukrainian tech star­tups are mov­ing abroad. They're sim­ply fol­low­ing the money, Ma­j­gaard said.

He doubts, how­ever, that firms from other in­dus­tries can eas­ily adopt the same busi­ness model or sim­ply move to some other coun­try.

Work for Ukraine

Ac­cord­ing to Trans­parency In­ter­na­tional cor­rup­tion per­cep­tion in­dex, Ukraine ranks 131 out of 176 coun­tries and shares this re­sult with a rate of 29 points to­gether with Kaza­khstan, Rus­sia, Nepal, and Iran.

Ma­j­gaard’s moth­er­land Den­mark ranks as the least cor­rupt coun­try in the world.

The tech busi­ness­man thinks that the only way to re­duce cor­rup­tion is to make ev­ery­thing dig­i­tal, for “brib­ing is not pos­si­ble if the gov­ern­ment in­sti­tu­tions and their ser­vices be­come elec­tronic.”

Ma­j­gaard said that Cik­lum might even part­ner with the Euro­pean Union and Dan­ish and Ukrainian au­thor­i­ties on the ini­tia­tive to help re­duce cor­rup­tion in Ukraine.

Apart from it, Cik­lum could also de­velop cy­ber­se­cu­rity sys­tems to pro­tect the gov­ern­ment in­sti­tu­tions from at­tacks from Rus­sia.

When it was made public in 2015 Soros bought a share in Cik­lum, and Ma­j­gaard’s com­pany be­came the tar­get of mas­sive cy­ber­at­tacks from Rus­sia, but with­stood them.

“We’ve proven that we can with­stand a mas­sive cy­ber­at­tack from Rus­sia, and now I guess we could help Ukraine in this re­gard as well.”

Ukrainian politi­cians are talk­ing to him with in­ter­est, he said.

“They know we work clean and hon­estly. I tend to ac­cept an of­fer if one even­tu­ally fol­lows. And if they should try to give us a bribe at some point, we won’t take the job. Den­mark is the least cor­rupt coun­try in the world. This is where I’ve grown up and where my men­tal­ity comes from.”

Vi­sion for Ukraine

As an ex­pa­tri­ate who has spent al­most 20 years in Ukraine, Ma­j­gaard does not be­lieve that this coun­try will de­velop quickly — it will take decades to build bet­ter hos­pi­tals, schools and roads.

“Ukraine’s a large coun­try with a long his­tory. You don’t turn around a coun­try like that in a year or two. Re­forms do hap­pen, but I un­der­stand peo­ple who say they’re hap­pen­ing too slow.” That's why he's stick­ing to IT. “IT has a life of its own,” he said. “There’s noth­ing to hold this in­dus­try back — no bar­ri­ers, ex­cept peo­ple’s own brains. Let peo­ple know how to work, how to found and run com­pa­nies. Once they know how to do that, they can make a com­pany. Once a startup that needs in­vestors ap­pears, in­vestors usu­ally come.”

When Ukraine ed­u­cates enough tech peo­ple, there will be more re­search and de­vel­op­ment cen­ters in the coun­try, Ma­j­gaard said. This is the road to na­tional wealth.

“This is how IT busi­ness can drive Ukraine for­ward,” he said. “There are other spheres in Ukraine also, but I look at the IT in­dus­try as at the in­dus­try that can’t be stopped. There’s in­ter­na­tional de­mand and Ukraini­ans can learn to sat­isfy it. With that, IT can be the big­gest in­dus­try here in a few years.”

The Kyiv Post’s IT cov­er­age is spon­sored by Cik­lum. The con­tent is in­de­pen­dent of the donor.

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