Why Ukraine has so LESS Startups? Part 2. Market
Even though Ukraine has the most talented developers in the world we have the same amount of startups as South Korea. How did that even happen?
War is of course the reason but this is not something new. This problem was not introduced just recently it existed for the lifetime of independent Ukraine. So the reason for war is out of the question and let’s figure out real reasons.
The IT market of Ukraine is evaluated at $10Bil and there are about IT 200k specialists working there. Let’s start with the fact the vast majority of Ukrainian IT specialists are working in IT companies that do outsourcing / out staffing. There are a few product companies in Ukraine and there are almost no international offices.
So by examining how IT companies in Ukraine are operating we will be able to find market drivers that lead to the low rate of startups in Ukraine.
The company is a second family
Cameron and Quinn define 4 types of corporate culture
Most of the corporate cultures in Ukraine are “Clan”. You may notice how well IT companies are playing the role of your second family. Corporate events, personalized presents, birthday parties, Friday parties, weekend outdoors, free snacks, careful managers with stable one on ones. All of that costs the company almost nothing but it makes you feel noticed and socially accepted which increases your lifespan with a company almost ever? Cause who wants to leave a family?
I have nothing against the culture of the clan and in fact, I admire it a lot. It is the best culture for work-life balance
However, there is a much darker side of clan culture. Culture is a powerful tool, especially in the Clan. It can be easily used to promote one set of values over another and transform a person from a goal-oriented hustler to a “family member”.
Some corporate cultures are not allowing employees to have social media like LinkedIn. It is not something you can control legally but you may get a social punishment and questions like “Do you feel not comfortable in the company?”, which are obvious signs of management being not happy with what is going on. Such signs of unhappiness may go far beyond LinkedIn. Any kind of outside-of-work activities that are professional may be negatively perceived because they do not follow work-life balance rules. “If you work on something else it will drain your energy and impact productivity on your main job”. That is the belief most Clan cultures in Ukraine have. Clan culture is opposite to a culture of hustling and it doesn’t support having side hustle
Having a side hustle is the #1 catalyst of great startups, and it goes in a different direction from how most IT companies operate in Ukraine.
领英推荐
Law is not a joke
Every IT institution which deals with outsourcing has a strict NDA which does not allow specialists to work directly with company clients. It is very reasonable for an agency to keep talents inside but sometimes it goes too far and even referrals from the clients are considered to be under NDA. Which is again hard to control legally if the deal comes to a lawsuit, but still makes people scared.
Oh yeah, non-competes do apply to co-workers. The IT industry in Ukraine is dominated by 5-10 big companies and through the career of a senior developer you can work in half of them. So it means that now you can’t start a startup with half of Ukraine. The rest half you just don’t know.
Most contracts have a period of validity during which you can’t leave the company under any circumstances. The industry standard is a year. If during a year you got an opportunity to become co-founder, well probably you need to reconsider that because you have a contract. In the end, an IT specialist gets only a small window of 1-2 months per year when he is available to start working on some new project and be able to leave his job without any legal issues, the rest of the time he is committed to something. The world is moving fast and you can’t say your co-founder to wait 6 months till your contract expire so the only way is to make the company fire you or decline the proposal. Making company fire is actually a not bad legally valid solution, but that drastically ruins the reputation of your “second family”, so a few are ready to do it. The only solution here is to don’t sign a contract again, leave the job and spend months searching for opportunities that are hell risky assuming the consumer habits of a work-life balance lifestyle.
You can’t passively search for opportunities, you can’t get referrals from your clients and you can’t partner with your co-workers, there is a legal block from all sides to make people not start startups. Add to this a culture that promotes work-life balance and denies a need to have a side hustle. Here is the perfect formula for a low rate of startups.
Solution
Of course, everything described above doesn't apply to 100% of the IT industry, but definitely to the majority of it.
I don’t think I can impact laws which I would happily do by introducing additional employee protection policies
Startups are the main driver of the economy and if we wanna live in an innovative country with a high level of life we have to build this country. Nor oligarchs nor government will do it for us. If we need change we have to make it.
The first step to start is to realize the trap of IT companies and try to avoid it at any cost by becoming a freelancer
Make yourself free of 1-year contracts, NDAs, and cultural boundaries. Don’t be afraid to take shares as compensation for your work and the bright time for the economy will come.
Share this article with that senior developer who for 5 years moving from 1 big IT company to another in search of a bigger salary. The salary won’t make you a millionaire and will not help to restore the economy, but starting a company will, my next article gonna be about that.