WINNING ACCOUNT: Alexey Avramenko from EasyPay about «The Devil’s Advocate», the Z generation and how to teach the country to replenish an account by bank transfer

A marker drawing of a Forbes magazine’s cover is hanging on the wall in Alexei Avramenko’s office. “Deal of the Year. Amazon bought EasyPay for $ 2 billion,» is written in the center. “It should be corrected. Not bought but valued,” commented the host of the office.

Alexey’s unwillingness to sell his «offspring» is easy to understand. In the mid-2000s, the company has become a pioneer in the market, which was created by this very company. The company has undergone a change of top management and a large-scale restructuring. But even after that, the company did not cease to find new niches.

Currently, the company has two business lines — the traditional one, which is based on payment services, and innovative, tailored to personalize advertising. The first vector provides the company’s earnings at present; the second one will provide a breakthrough for the company in the future. “This will make us Forbes’s cover subject,” Avramenko assures.

Alexey told Leadership Journey how he, a graduate lawye, created the first non-bank payment system.

Leadership Journey (LJ): Alexey, tell us about the main thing. Why have you chosen this type of business?  What are the reasons for your interest? You had started the company when it was a brand new business type, to put it mildly.

Alexey Avramenko (A.A.): When I was studying in the institute, I wanted to take a path different from that of my father, who was successful in business at that time. My friends and I had many ideas about how we would continue to develop in business; we considered different projects. A trip to Moscow, where I saw a payment terminal was a decisive event. Then, we bought several such terminals; we brought them to Kyiv; and we connected them to a Russian processing center.

Why were we sure that terminals were needed in Ukraine? It’s simple. Do you remember the way we used to replenish a phone with a card? You buy a card, and then you erase a protective layer with a coin and enter the code. It cost 50 hryvnias or $10. But $10 was too much for a consumer. Consumers were ready to pay $1 or $2.

My friends and I had many ideas about how we would continue to develop in business; we considered different projects

And then, Kyivstar had introduced a function of transferring any amount — two, five, ten hryvnias from one account to another. We had bought a modem, inserted SIM cards, replenished them for 3000 hryvnias and routed payments in such a way that anyone could replenish their phone from our SIM cards. As a result, people were receiving SMS “This number had replenished your account” and only then, they came to understand they were using our miracle machine.

However, we have faced a problem. Often, money was sent to a wrong number and, as a result, they did not reach the client. A client was losing money. We had to contact people, to return the money; that is, there were huge overhead costs and reputational losses. We decided not to use foreign processing, but to write our own. We did it quickly — there were three mobile operators in the country at that time and therefore there were three buttons. As a first investor, I attracted my father, Vladimir Avramenko.

Then we made a “serious” purchase – 500 terminals. We had launched services for Kyivstar and MTS. We had launched the first mobile commerce in Ukraine when a person could use the money on the balance of Kyivstar for payments in any network. But it did not go beyond the EasyPay ecosystem, and we made the decision to introduce our own payment instrument based on “Prostir” electronic money of the National Bank of Ukraine (NBU).

LJ: What difficulties did you have to overcome?

A.A.: The lack of a legal model of working in Ukraine was the greatest difficulty of that time. That is, this type of activity simply did not exist. As a lawyer by education, I participated in the development of a legal model for the market. I would say, we have registered the first non-banking payment system in Ukraine, which was called the Ukrainian Payment System “Financial Banking”. This allowed the market, which is now large, to develop in the legal field. After us, everyone else began to register payment and financial companies and obtain licenses from the NBU and the Financial Services Commission. But we were pioneers in this area. That is, the company was started in 2007; it took a year to implement the idea.

If you are standing at a crossroads, thinking about what you would do in your life, then jurisprudence is a perfect choice.

LJ: A lawyer and a pioneer of a new payment system all over a sudden. How did that happen?

A.A.: I really like legal science. Do you remember the movie «The Devil’s Advocate»? It says jurisprudence helps to penetrate into absolutely all spheres of human activity. Therefore, if you are standing at a crossroads, thinking about what you would do in life then jurisprudence is a perfect choice. You dive into any sphere of business; people need you everywhere; you understand any business. Without a lawyer, no business model can be created. Not a single one. A lawyer is a person who can see the entire model.

LJ: In my view, first, to understand this business, secondly, as you say, to describe some processes, you needed a good team of knowledgeable people. Did you have such people around? Were you purposefully looking for them? Were they your classmates or friends? How was it?

A.A.: They actually were classmates. We had a team of like-minded people who were thinking about how to realize themselves, what to do. In addition, we also invited to the team a person who then was the main developer of OTP Bank – Zhenya Dukhota. He left his job to join our company, in which there were two people.

At that time, we had no idea about HR management. We were looking for employees ourselves. Now the group of companies employs about 200 people.

In the team, we have many people under 30. Recently many young talented undergraduates join us. They are still studying, but they are already so brilliant that we are happy to work with them. Both in analytics and processing, these guys are just geeks.

When someone says to me: you have millennials, I answer that we have not so many millennials. We have Z more than millennials.

WE HAVE Z MORE THAN MILLENNIALS

LJ: How to work with generation Z? There are often some misunderstandings, not conflicts, but different value paradigms between «Xs» and «Ys.»

A.A.: You should use different generations in different ways. If we have a conservative project and it is built on the technologies of the 2000s, which we began to use in 2006, then we are using people who are definitely not from generation Z.

We used to have 10 developers from the Z generation, but they worked for the company for six months. We realized that this was a mistake. For that work, we were to look not for Z, but for the millennials. People who have a family and are well settled in life. They work great.

However, if you have a new product for which a person wants to work more than from 9 am to 6 pm, then a representative of generation Z who dreams of self-realization is suited best. This is the problem of generation Z — they take up a new idea with great enthusiasm, but they don’t really like to develop the existing products further.

LJ: So you are developing and working on the principle of reasonable sufficiency. You are not trying to implement any megaprojects and run after trends. 

A.A.: We try to. But we have two directions — a conservative and the so-called «future», that is, the new. We do not plan to develop the conservative direction beyond Ukraine, with rare exceptions, because it has national peculiarities. This is a linking to the geography and location of the client. It does not scale well outside of Ukraine. This includes the payments in payment terminals that banks, retail, and merchants need.

Currently, there are two large networks of payment terminals. The first is PrivatBank terminals, which replace the bank’s cash office. And the second network is EasyPay, which has even wider geography than PrivatBank. Our terminals can be found in the remotest places — not only in regional centers but also in villages or urban-type settlements. We have 13,000 terminals.

Our terminals can be found in the remotest places – not only in regional centers but also in villages or urban-type settlements.

The second direction is called proximity marketing. There are very few such projects in the world so far; its roots are in Silicon Valley and China. There is «near field marketing» when marketing occurs in the zone nearest to you.

You go into the zone of action, the Bluethooth technology recognizes you first, and then connects with you. And the most important is the third – the technology provides the information you need. It takes into account, which days, how often you visit a shopping center. Your trajectory is monitored. Depending on what you visit, what you buy, how much time you spend near the goods, you are offered a particular set of products. Even if it is a civil services center, on approaching it, you will receive a push-notification with a list of services – from registration to receiving a particular certificate.

This is already our mission. We make it easier for a person to communicate with the city. We are planning to scale this project and bring it outside Ukraine. Now we are implementing the project in Lviv. Why there? Because it is one of the most innovative cities, people are open to innovation, and the city administration has its own development strategy — tourism. And the availability of this strategy, which facilitates the communication of business and City Hall, is very rare.

We make it easier for a person to communicate with the city

At present, in Lviv, we have equipped electric transport — trolleybuses and trams. When you enter a tram, you no longer need to look for a card validator or a ticket composter. You just sit down and you get a ticket directly to any application that is integrated with our technology. It may not even be a financial institute’s application, but a coffeehouse’s application. So in the application, you can confirm the payment with a touch and buy a ticket from your card. Now we implement such projects already in the Dnipro city and Ivano-Frankivsk.

We provide our technology free of charge, it is free for the consumer, and we make money on large business. Today, we can easily introduce this technology in any city in Ukraine. And even outside of Ukraine. This is a project of the future.

LJ: To what extent are these technologies applicable and effective for traditional retail?

А.А.: Such technologies open a new world for advertising and promotion of goods in offline retail where we make 90% of purchases. This technology allows retail, and manufacturers of all products, to receive a fundamentally new means for advertising and promoting their products. It is very different from TV ads or big boards, which are like shooting a gun on sparrows and no conversion planned.

Such technologies open a new world for advertising and promotion of goods in offline retail

For example, what is the difference between “Rozetka” and “Silpo”? “Rozetka” knows a lot more about the consumer than “Silpo”. “Rozetka” knows how often you visit their website, what you look for, how many seconds you view a product and which product in particular.

“Silpo” has no such data, but they can get this information through proximity marketing. Thus, we take marketing in offline trading networks to a completely new level.

Besides, we use this technology working with “Fishka”, with “Celentano” pizzeria network, “ECO Market”, Nescafé and others.

LJ: I see you have several layers of notes on the board. Are these new ideas? How do you work them out, by the way? Do you switch often? How do these ideas come – at night, on trips, during a parachute jump?

A.A.: It is very important to be able to say “no” to ideas. This is such a terrible thing, which absorbs you. It’s like polygamy, for example. If you try to pay your attention to different women, then, in the end, you will have a mess.

People who kick to one spot achieve perfection. As Bruce Lee said, “I fear not the man who has practiced 10,000 kicks once, but I fear the man who has practiced one kick 10,000 times”. This is true for business. It is very important to say «no» and to focus.

People who kick to one spot achieve perfection

For example, two years ago I was offered to create a platform similar to Uber Eats or Glovo. This is a good project, but we said «no». Another idea is obvious — the creation of an analog of Monobank, that is, a bank with no branches. But this is a completely different business, to which we also said «no». These are big ideas, apart from them; there are many smaller ones within the framework of already working products.

New ideas look kind of attractive and tempting. They have many advantages. However, these advantages go hand in hand with disadvantages. It is important to choose your favorite idea and put aside all that contradict it.

LJ: Tell us about the period when you went to work at AVK. What experience did you bring from AVK when you returned to your company and what did you have to correct?

A.A.: It was a difficult moment in the company. I founded it in 2007, and in 2013, we sold part of the company – a network of more than 500 terminals. I myself joined AVK (A confectionery corporation – Ed.) to open new markets. In the company of my father, I worked as the head of the new markets department. And during this time I had opened 36 new markets.

The period was difficult but useful. Firstly, I left the company where we were all friends. Together we went to «shashliks» outings. We were doing everything together. Nobody could have fired or penalized others. I probably subconsciously left in search of something different. Because I understood, the order of things would remain the way it was. From 2013 to the end of 2016, hired managers were in charge of EasyPay.

After working in the markets of Kuwait, the United Arab Emirates, Brazil, America, and China, you have a completely different view of everything that happens

In AVK, I got tremendous experience in a top system company, a world-style organization. At the end of 2016, I returned to EasyPay a different person. Completely different.

Working in AVK, I have learned classical skills, without which you can’t create a large systemic business — planning, analysis, systematization, and job responsibilities. I became cold-minded. And a twist toward global thinking is probably the most important thing. After working in the markets of Kuwait, the United Arab Emirates, Brazil, America, and China, you have a completely different view on everything that happens.

When I returned to the company, there were already about a dozen business directions for employees to have to spend their time and attention. Only one direction was making money — payment terminals.

To put it roughly, they were selling pies in the morning. They were selling oil in the afternoon. They were doing three dozen other businesses in the evening. A lack of focus had led to poor results in all the directions.

A lack of focus had led to poor results in all the directions

We began by clearly identifying the teams and distribution of types of activities. Thus, we created a new structure with three autonomous functions: sales, production, and development (In Russian: prodazhi, proizvodstvo, proektirovanie – Ed.). Three “P” – our own invention.

We had systematized the business based on narrow specialization, and this had borne fruit. We clearly figured out the efficiency of employees, the results across activities, and deficient processes. A year later, we had introduced a different structure. It was not based on narrow specialization. It was a holistic structure with single management.

Now we can afford the classic business structure because we know what we are doing and what we have in the portfolio of each business area. If it is a payment business, then it has everything related to payments — cash and non-cash.

The task of the second line of business, advertisement, is to bring us to big water and to ensure Forbes magazine would write about us. Like on that cover there.

The final word is mine

At the same time, decisions in the company are made collectively and the final word is mine.

LJ: There is a conflict between the entrepreneurial spirit and systemic management. The systemic approach can hamper the freedom of an entrepreneur and vice versa. Do you feel this conflict? What is closer to you?

A.А.: I would say, we are moving in two directions. The first is conservative; it is a payment system where operational perfection is needed, not innovations. And any company has a business line that should be scaled by means of operational excellence and not used as a cash cow.

We are moving in two directions

In the case of the advertisement line, we create an atmosphere of entrepreneurship, because decisions can change several times a week. Because no one knows the right result. This market simply does not exist yet.

Now in the world, six companies are engaged in this market. They invest a lot of money. All of them are located in the United States. We are one of the companies involved in this type of business but nobody knows about us yet. But we plan to be the first in this niche in the world.

We are one of the companies involved in this type of business but nobody knows about us yet. But we plan to be the first in this niche in the world

LJ: Regarding icons in management. Do you have a collective image? Or is there a specific person? Elon Musk?

A.A.: I think I rely more on my diligence. There are very talented people who grasp everything immediately, who manage to do ten things at once. I am not capable of these.

Speaking about people I like and read, of course, I do read Musk. You cannot help reading him. I do not know what is true, what is wrong. I think that not all is true. I like Howard Schultz (former chairman of the board of directors and CEO of Starbucks. – Ed.); you cannot help reading Jeff Bezos (head and founder of the Internet company Amazon.com. – Ed.).

I rely more on my diligence

LJ: Do you have any personal development plan? Where do you go as a human, as a personality, as a leader?

A.A.: This question torments me all the time. I wonder what the role of the company’s leader is. What should I do? Keep checking tasks’ performed? I used to be doing this — checking departments, companies. “What are you doing? And what about you? How is this going? How is that going?” But I realized that it was not what I was to do. I have defined the following algorithm for myself. I select a business segment, a direction for some time to take care of it. For example, currently, I have taken control over the advertisement direction and focus only on it. I am not engaged in all operations connected with other businesses.

LJ: This concerns your job. What about your interests? Would you like to learn Chinese or to do anything else?

A.A.: It will probably come with time. I think I will return to this issue when I am older. Meanwhile, I am still obsessed with the boyish desire – to catch up and overtake.

Meanwhile, I am still obsessed with the boyish desire – to catch up and overtake.

Photo by the author

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