“Ukraine is an undiscovered secret”: an interview with CTO of Shelf, a startup that recently raised 52.5M, about business in Lviv
On August 2021, the US startup Shelf.io announced a $52.5 million Series B investment round. Almost all of its product team works in Lviv, and its CTO, Tobias Jaeckel, even moved to Ukraine five years ago to further develop the company’s office and products. AIN.UA made an interview with Shelf CTO Tobias Jaeckel about why the company chose Lviv as a location for its office, what the funds raised will be used for, and Tobias’s impressions from five years of living and working in Ukraine.
About the company
How did you start a company?
At the time we were discussing the idea of Shelf, I was running a software product and services company. We faced many challenges there because we had to build management knowledge systems and processes from scratch. So we had the idea to productize this experience.
I’ve been friends with two other co-founders long before joining together as business partners. And as the idea of Shelf matured, we decided to team up and build it.
How does your product work?
The average worker spends around 19% of their time looking for answers in corporate guides, documentation, instructions or tracking down colleagues that could help. If you think about it, it’s one whole day of the week. Every week. And we are trying to address this global issue.
Shelf is the central depository of all the corporate knowledge. Our platform helps every employee from management to customer support managers to promptly find answers to any questions. Our primary focus is on customer support (that often means contact centers). But we frequently expand across the enterprise in different departments as well.
Our product is a piece of software that every employee has on their desk, and if they have a question, they just type it in and get the answer immediately, instead of browsing through tons of corporate sites, guides, and so on.
There are a number of important metrics that show the efficiency of knowledge management, specifically in contact centers: customer satisfaction, average handling time (AHT), escalation rate, and so on. Typically with Shelf, we see a 25% reduction in handling time, and escalations are decreased by 40%. And these are massive contributors to the customer satisfaction metric.
On Ukrainian office
Why launch an office in Ukraine and in Lviv specifically?
None of the founders have previously been to Ukraine. And it was a conscious choice for us to come to Ukraine. The company’s headquartered in the US, so it’s important for us to go to the region, where the time zone is manageable (from the East coast to Ukraine it’s 7 hours, so it’s OK).
Also, we wanted to build a team in Europe and we investigated a number of countries for that, including Romania, Czech Republic, Poland, Belarus. We initially decided between Poland and Ukraine, went to a number of cities in Poland, and actually started a recruiting process there to see what kind of candidates we would be able to attract.
And we had a strong recommendation for Lviv. Of course, in Ukraine, the natural choice for launching an office is Kyiv, but we liked Lviv very much. It is a large city, but still small enough to have a kind of community feeling. We wanted to establish an office in a city where it is easier to build a community. And we saw how much potential this city had. Being here for 5 years I can see how much more international Lviv has become since we started.
Ukraine is also clearly known for its exceptional engineering talent. Here, IT is a very important industry, and you can see lots of young people trying to build a career in IT. A large number of successful and well-established outsourcing companies operate here and they have hugely contributed to building a strong IT ecosystem.
Currently, we have team members all around Ukraine, from Kyiv, Ivano-Frankivsk, and other cities.
Was it difficult to launch an office in Ukraine in terms of red tape and compliance?
I wouldn’t want to get into much detail on that, but It’s never easy to establish a new company. We’ve found the right partners to work with and everything worked fine.
How many people do you have in Ukraine, what are they working on?
Right now, we have about 60 people in Ukraine, mainly in Lviv. Our team here is primarily focused on product development, product management, design, engineering, and data science. We also have customer success and marketing support here.
We are now scaling the company across all departments. In Ukraine specifically, we have about 50 open positions right now, for the product and data science teams. Our stack is built around Node.js on the backend and React on the front end. Then there’s AI and machine learning teams, where we use technologies like Python, NLP, and knowledge graphs.
Does your Ukrainian office operate remotely or on site? Did the pandemic change that?
Every team member has an option to work either remotely or at the office. And frankly, most team members use a combination of both, it’s a hybrid working environment. And I think this is great because there is value in meeting your colleagues in person. But at the same time, you sometimes need a convenient, quiet work environment and an opportunity to work from home as well.
How did coronavirus impact your business?
Of course, Covid did have an effect on our work routines but also during these years Shelf has been growing quite significantly. From the business model perspective, we have always been supporting remote teams. The shift to remote work has significantly accelerated during the pandemic and has actually increased the problem that we solve — tracking down answers. Remote workers have much more difficulty accessing information than their office colleagues. The onboarding process for remote workers is more complicated as well.
So the remote work trend has boosted our business and at the same time pushed us towards making it an option for everyone at Shelf to work from home. It was easy for us: our infrastructure is all cloud-based so everyone could easily access the work environment.
You moved to Lviv five years ago, and you’ve been working and living here since. What do you think of it? Have you ever questioned your decision to move here?
Going to a different country and not speaking the language is always a challenge. Though I’ve worked in many countries before: Germany, US, Japan, Philippines, Singapore. I’m used to working and living in different places and cultures.
Ukraine was a new place for me, but I’ve found people here very accommodating, very friendly, and open-minded. They made it easy for me to adapt, and of course, we’ve found a great initial team here.
I think it’s a great place to live. Cities and nature are beautiful, there are lots of things to explore. I feel like Ukraine is a bit of an undiscovered secret.
Could you compare the business environment here in Ukraine and in other countries?
Infrastructure for business is generally good here for IT, there is fast and reliable Internet, also in Lviv you have easy access to the airport which is important for a global company.
What I like about the IT industry here is a lot of young people, that are open-minded and flexible, proud to perform at the highest level. And that’s essential for anyone building a great product. At the same time, the focus in IT is now shifting a bit away from outsourcing towards building products.
On a recent round of investment
What do you plan to do with the money — hire people, launch new locations, new products?
Clearly, we are scaling the organization, so we are massively hiring as I mentioned before.
On the product side, we’ve doubled our efforts to continue being the number one choice for the knowledge management system. We’re working on some new and exciting features that I cannot disclose right now, they will be launched early next year.
We also are planning to open a sales office in Western Europe and are currently assessing markets for that. As our team grows in Ukraine, the next office location would be Kyiv, that’s also planned for the next year. We are now waiting a bit for the Covid situation to resolve, to better understand when there is a right moment to launch the office.
Are the team members getting anything like options or other things that motivate them to work on the product?
All of our team members receive option plans, so they can participate in the success of the company directly and personally by being part-owners of the company.
A stock option plan means that you have an agreement with the company that gives you the right to purchase its shares in the future at a fixed low price. Typically there is a vesting period, which means the longer you stay at the company, the more options you get. And at some point in the future, you can execute options, convert them to shares at the predefined price.
When there is an investment round, there is a valuation of the company. At that point, all the options now have a new -and hopefully much higher- value. At the recent round, all of the team members who had been with Shelf for more than three years were offered to sell part of their holdings. Some have accepted that offer and received cash, others decided to hold on and wait for a higher valuation in the future.
Are you a unicorn?
We are on the path to becoming one.