How a Ukrainian sold his business in the USA for $ 10 million - ForumDaily
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As a Ukrainian, he sold his business in the USA for $ 10 million.

“I don’t like programming, but I love computers,” says 28-year-old Oleg Roginsky, a native of Dnepropetrovsk who has lived in the USA and Canada for the last 12 years. He managed to create a multi-million dollar IT business and sell it to an American company. The Forum Daily story is about how one father’s question, entrepreneurial spirit and perseverance turned a Ukrainian into a millionaire.

First startup

The working day of Oleg Roginsky begins in 7 in the morning. He remotely manages the Canadian division of the American company Lexalytics, which is engaged in text analysis. The company's headquarters is located in Boston, and Oleg, located in Silicon Valley, has to adjust his working day to the east coast.

Lexalytics has a long history of business relationships with Roginsky. At first, he worked at the company as a demand-creation director, then launched his own startup Semantria, successfully sold it to Lexalytics for 10 million dollars and now returned to the company as a member of the board responsible for sales.

It all started over 10 years ago with a paternal question: “Is it hard to study at a university abroad?”.

Oleg at this time graduated from a prestigious English school in Dnepropetrovsk and wondered where to go to study further. The university was chosen almost with a finger to the sky, Oleg recalls. In Ukraine, the beginning of the 2000-s had almost no information about studying abroad. As a result, the choice fell on political science and international relations at Boston University.

The father paid more than 150 thousand dollars for his son’s education, but reduced his monthly allowance to a minimum of $300. It’s hard to live on this money in the States. Roginsky, who had been interested in computers since childhood, began working part-time from the second semester of his studies - first he repaired equipment for students himself, and then he assembled a team of guys who provided repair services. Money became easier.

In 2004, Oleg, together with two other students - Dan Stone and Clay Camardo - opened a joint business. At that time, Facebook was just launching and Boston University was the second university after Harvard where students began using the social network. The trio of guys created the prototype of today’s tags - an application that allowed you to tag people in photos on Facebook, and then follow a link to go to the person’s page.

For the development of business attracted thousands of dollars 150.

“I was a poor student, there was no personal investment. My two partners invested money in the business - they were from fairly wealthy families - plus two more external investors joined,” Roginsky explains the origin of the funds.

With this money, the guys hired photographers who shot parties, posted photos on Facebook and, using their own technology, pointed out tags to people. Then the project has grown into a print version called No Comments.

But then Facebook added the ability to tag your friends' photos.

“Overnight our entire business disappeared. We lost all the money, quarreled, then didn’t communicate for six months,” says Oleg.

Novice businessmen were able to earn only a thousand dollars on advertising alcohol brand.

Good bye, America!

Oleg’s studies in Boston soon ended, and his American visa was expiring. “I was depressed, I was already sitting on my suitcases, I thought: the year will end, and I will have to return to Ukraine,” Oleg shares his memories. But at that moment, his father made permanent residence in Canada for the whole family - his sister had just entered the local university.

Roginsky moved to Montreal and joined the startup Nstein Technologies. The technology created by them “read through” the material in online media and automatically placed tags and links. Customers included the New York Times, The Economist, The Hearst Corporation. By the summer of 2008, the startup was estimated at 100 million dollars, but after the financial crisis it fell almost three times and was sold.

After that, Oleg moved to the Canadian office of the Boston company Lexalytics, which was engaged in text analytics. Their software analyzed the content of news, blogs, comments and showed how users responded to a particular brand or product. For example, in the new Microsoft Office it is possible to leave “feedback” about the program’s performance. Microsoft receives millions of such reviews every month. All of them are run through the Lexalytics “software” and the output is beautiful graphs that describe customers’ attitudes towards the new Microsoft product.

The caveat was that the $100 Lexalytics software had to be installed on powerful servers. Their cost together with installation work and maintenance could reach 400 thousand dollars. “To start using this technology, we had to spend half a million dollars,” admits Roginsky, who served as sales director at the company. Among the clients who could afford such an expensive pleasure were Microsoft, Oracle, and HP. Lexalytics' profits grew fivefold between 2010 and 2011, to $5 million.

“I love to build. My thing is that I can come where there is no process, build it, get the right technical products, put the right people in key positions and ensure that the process will optimize itself ”.

- Roginsky says without false modesty. And he admits: when everything worked like clockwork at Lexalytics, and profits increased significantly, he became bored.

Wind in the clouds

The idea of ​​what to do was born directly at the workplace. “People came to us and said: you have great technology, but half a million to start using it is too much,” recalls Roginsky. And then he came up with the idea of ​​placing the software not on servers, but in cloud data storages, which would significantly reduce the cost of analysis. The so-calledcloud" - is an online storage, a kind of virtual server, consisting, in fact, of the many servers scattered in the network, which are provided for use by a third party.

With this idea, Roginsky came to Jeff Kathleen, CEO of Lexalytics.

He did not believe in the promise of a venture, but allowed Roginsky to use the company's software to develop cloud technology. Lexalytics received 21% in the new company Roginsky Semantria.

“Initially, Semantria was supposed to be called Lexicloud, but the company very much doubted the success of the new project and did not want the name of the startup to somehow overlap with their brand. And I came up with Semantria, a derivative of the word “semantics,” says Roginsky.

Then Oleg began to look for people who could take over the entire technical part of the work. Explains:

“I am not a techie, I have never written codes and will never write them. So I needed people who could develop the technology. ”

At first, Yury Baranov from Kherson, the owner of Postindustria, joined the project. He offered his programmers, and also led George Kozlov to the project, who became Semantria’s IT director and fully designed and developed its technology. The startup focused on the model "B2B" ("Business to business". - auth.), that is, the company planned to sell its product to other companies.

“Oleg asked me: can we make such a product? Do you take responsibility for the result? I answered yes,” Georgy Kozlov recalls his first steps in the project.

So, in February 2011, Oleg Roginsky, Yuri Baranov and Georgy Kozlov became co-founders of Semantria. Roginsky owned 44%, Lexalytics - 21%, 35% went to Baranov and Kozlov.

A word worth its weight in gold

A year later, the cloud solution was ready. “The first version was far from ideal, but it worked,” Kozlov describes the results of his work. Roginsky began to attract clients. The first was Dachis Group, which deals with brand benchmarking - a comparative analysis of the performance of companies. They initially planned to buy technology from Lexalytics, but they liked Semantria's cloud solution better. The only frightening thing was that the technology was not yet sufficiently refined. Roginsky promised to return the money if they were unhappy with the service.

“We started up, patching holes at night when everything broke. But we managed to build very good relationships with them. They understood that our technology is not great, but we will not sleep at night and will do everything. As I remember now, they paid us 3,5 thousand dollars a month. With this money we built a team in Kherson,” Roginsky shares his memories.

The guys decided to improve the development and "taught" their technology to recognize the context in which the word is used. For example, in English, “windows” can refer to both an architectural structure and an operating system. Without taking into account the word polysemy, for example, the analysis for Microsoft will contain a lot of garbage, and accordingly will not be adequate. Semantria solved this problem. Of all the words contained in Wikipedia, using their own algorithm, they created a web in which they traced the connections of the words to each other. Further, the system checked with what words in the news or comments the term being analyzed adjoined and determined the meaning in which this term was used and its emotional evaluation.

“That was a bomb. Microsoft said that we solved their main problem. Now they can qualitatively monitor their brands. After all, almost all of their products have absolutely ordinary names: Office, Word, Exchange, Communicator. The only brand for which they had no problems was Power Point,” Roginsky laughs.

Semantria now has major clients - Microsoft, Cisco, Hewlett-Packard. They had practically no competitors in the market. “Besides the fact that they have excellent cloud solutions, they are very focused on the client and always put their needs first,” he said in an interview Forbes One of the regular customers of the company is Eric Huddleston, who was previously the CEO of the Dachis Group, and now is the TrendKite CEO.

Millionaire from Dnepropetrovsk

In February 2013, Semantria made its first million dollars and began to bite Lexalytics' significant share of the text analytics market. “We had the same technology, but it was 10 times cheaper,” explains Roginsky. The growth rate of Semantria’s business began to exceed the rate of Lexalytics three times, adds Georgy Kozlov.

“Lexalytics owned only a fifth of Semantria, despite the fact that they provided the most important thing - a low-level engine that performs text analytics. Our entire infrastructure was built on top of it. They understood that we were making money on their engine. And Oleg concluded the contract so skillfully that they could not take it away from us for the next 3-4 years,” says Kozlov.

Roginsky's former employers became worried. Back in the summer of 2013, Lexalytics wanted to buy the company founded by Roginsky for $2 million, but then the parties did not agree on the price. Oleg, angry at such a low price offer, doubled sales of his product in the fall. They made him a purchase offer again. The negotiations in Boston were very difficult. The price of 3 million was discussed. Oleg was openly pressured. “Lexalytics brought its bankers, and they began to press: why do you need how much money? You're actually a teenager. I got up and left,” says Roginsky.

Oleg Roginsky. Photos from the personal archive

Oleg Roginsky. Photos from the personal archive

Then everything went according to the already tested scheme. Angry - announced a New Year's Eve discount - increased sales. Within a month after the negotiations, the company's revenue grew by 33%. In February, 2014 they earned their first five million.

At the same time, Lexalytics appointed another round of purchase negotiations. This time Roginsky raised the price three times and in the summer of 2014, the deal finally took place. Lexalytics bought Semantria for 10 million dollars, making, in fact, its Canadian representation from a startup. Roginsky joined the board of directors of Lexalytics and is now responsible for the company's sales.

Whether it was worth selling Semantria so quickly and at a time when it had just reached stable growth is still a sore point for the co-founders. “Before this, I did everything with my own money. By February 2014 I had 100K in credit card debt. By the way, parents will be surprised when they read it. I didn’t pay myself a salary at that time, I lived off loans,” admits Roginsky. Therefore, at that moment he simply needed money. His decision to sell the startup was also influenced by the fact that the girl he was dating entered Stanford, and Oleg was going to move to Silicon Valley with her.

“Now we could get two or three times more money. I believe that the company was sold early,” states Georgy Kozlov.

Now he, while in Kherson, is working as a vice president for developing cloud solutions at Lexalytics.

Roginsky is now already thinking about creating a new startup, but has not yet figured out what kind. “Good ideas don’t come to mind every day. There were a lot of ideas, but I test every idea for viability and so far they have not passed my own tests,” admits Oleg.

He planned to select several Ukrainian startups to invest in them, but he did not find anything interesting. Therefore, now with like-minded people I created a project UA50 - a kind of community of successful Ukrainian businessmen who have achieved success in the United States and are ready to help start-ups from Ukraine to enter the world market. It is hoped that with their help many more Ukrainians will become millionaires in the USA.

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