Lithuanian Unicorn-breeders Tell All: Success Principles, Demand for Talent, and Conditions for Having More Startups in the Country
Having met in one of the most popular online chat rooms at the time, Tomas Okmanas and Eimantas Sabaliauskas tackled one project after another, until eventually deciding to leave their promising and well-paid jobs to dedicate themselves completely to building startups.
Tesonet, a name created by putting together the first letters of the founders’ first and last names, was registered in the apartment of Tomas Okmanas’ parents in Fabijoniškės 15 years ago. This year, the company was officially moved to the recently built Cyber City – a 35,000 m2 office building with space enough to accommodate 3,000 people. Nowadays, Tesonet introduces itself as a global accelerator that brought up the cyber-security companies Nord Security and Surfshark to unicorn status, and that is currently working with over 30 products, including IT companies and such brands as BC Žalgiris and Šiaulių Bankas.
Tomas Okmanas and Eimantas Sabaliauskas admit that getting where they are now took lots of work, but also claim to have discovered a formula for managing businesses and investments of this scale, as well as the key principles for success – which is exactly what they agreed to share with us in the following interview.
– A little more than a year has now passed since the day you announced Nord Security and Surfshark to have become the second unicorn. What was that year like for you?
Eimantas: It was fun – we finally reunited with our people after the pandemic, got back into the swing of things, and grew sustainably. At the same time, it was a year of change, uncertainty, and shifting global conditions. We faced plenty of challenges that shattered many of our old, preconceived notions and, just like every year, forced us to adapt, to keep learning new things, and to get ready for the next step in business development.
Tomas: I’d say it was a dynamic year. Attaining to unicorn-dom increased the company’s visibility and helped us to attract some excellent new talent, but also detracted somewhat from direct work – there was a ton of ambassadorship to be done and plenty of hands to shake. As regards the current market conditions, I think many people have finally woken up and realised what’s real and what’s not, which made them reconsider their spending habits. Our aim from the get-go was to move at 200 km/h, but not 300 km/h – faster than others, but just slow enough to make a sharp turn without having to disassemble half the vehicle to reduce its weight. And we’re still making that pivot – we haven’t closed down any of our businesses, we’re hiring new talent, and our investments are stable.
– Tesonet has undergone some huge changes – from humble beginnings in an apartment in Fabijoniškės to a new office complex that you’ve opened just recently. Tell us more about this journey. Which stages were the most significant?
Tomas: When you’re building a technology business, it’s sometimes difficult to grasp its full scope. After completing a building or, in our case, a tech campus, you can immediately see that, “Okay, this really was a lot”, even though some other tech companies make as much in a month as this project had cost in its entirety.
Eimantas: This moment was, no doubt, important – but so were the ones leading up to it. And this holds true even for the very first step you take as a hired professional, assuming personal responsibility for the future of other people – and that of your own. My daughter was about six at the time, so I felt responsible for ensuring at least a decent standard of living for my family. The second step I’d single out is responsibility towards your employees, who, after all, showed trust in your ideas and joined the team. Sometimes there’s also a mismatch between theory and practice. When that happens, you try again. And then again. Before long, you realise that you’ve already completed 30 projects and have learned things that might come in handy later. Our success arrived with the explosion of Nord Security – that’s the third step. Nobody taught us how to build a global business or, say, how to gauge the significance of TV ads in Germany or of British influencers on sales. We just went ahead, learned a lot, hired the best specialists, and eventually formed a team that brooks no limits.
Tomas: The company is growing and the stages it moves through follow each other quite rapidly. The more time goes by, the more appreciative of flexibility I become. What used to work for the business initially will no longer work as it expands and enters the stage of rapid growth. For instance, instead of micro-managing everything, you should just form a management team capable of making decisions independently. To be frank, today I feel like an employee of Nord Security myself – just doing my job, not making too many decisions on my own. There are people here who grew up with the company, so our decision-making is collective. It’s hard to let it go, though, when you’re feeling like you know it all. I’d like to believe I still have a deep understanding of technology, but after all this time, I’m sure I don’t know as much as 80% of our team does, as they’re out in the field, so to speak, day after day. The same could be said about fields, as well: finance, law, hiring, or business development.
Eimantas: We’ve often heard outside partners say things like: “We’ve never seen anything like this anywhere in the world” or, “We’ve had thousands of clients by now, yet this had never happened before”, while for us – it’s just a regular day. Since founding the company, we struggled to get answers to certain relevant questions, but that’s because no one in Lithuania had them to begin with. Today, for instance, we have over 550 people working on marketing for different products, and more than 50 lawyers – all this accumulated knowledge, experiences, and answers reach Lithuanian startups through them, which, in the end, benefits all of us due to sharing.
Tomas: It’s important to keep moving forward, taking on challenges, and trying to learn even what, at first glance, seems impossible. We’re having quite the adventure even today, although we can’t say too much about it publicly. It’s absolutely crazy – if we manage to pull it off in the end, we’ll be at a whole nother level, and if we fail – we’ll at least be able to apply what we’re learned to other solutions. Here’s an interesting story. We’ve been told by pretty much everyone – from funds to world-class advisers – to hire our CFO in the U.S. But we went ahead and hired Laurynas Zabulis, who’s been with us for several years now. He’s constantly growing and is, above all, exceptionally talented. It’s irrelevant that the market standard is an American citizenship, we knew that our move was right. It was a challenge for him, to be sure, but he made it, and is pretty much bound to become one of the strongest CFOs in Europe.
– How do you filter prospective talents for your team?
Eimantas: There are many important aspects, but, speaking of the less obvious ones, we value the experience that people have gained abroad by way of studies, travel, or work because this usually implies a wider mental horizon. If it’s a former athlete or someone who’s currently big into exercise, it’s likely that he or she is disciplined and isn’t afraid of temporary discomfort or stress. We don’t hire even the best of professionals if they’re toxic.
Tomas: We also take notice of professionals in any given field who have additional competencies. For instance, a lawyer who’s knowledgeable about IT. I’d say, the key qualities are humility, the capacity to hustle, not being intimidated by authority figures, and being more of a friend than a manager.
– You say that you like challenges, but it seems to me that nowadays there might be too many of them – turbulence in the startup sector resulting in thousands of people being laid off – and even unicorns going bust; there’s also economic stagnation and the oft-criticised breakthroughs of AI. How do you assess the market situation today?
Eimantas: We noticed, and started redying ourselves for, the impending changes in the financial market well before the mass layoffs started rolling in the corporate sector. It’s quite natural that, during the pandemic, both individuals and companies had accumulated a good deal of capital, which then led to a headlong rush in making the most effective use of it. The bubble was inflated to the point where some of the air simply had to be released. Although the war is also having an effect, I think the economic cycle will start rebounding again in a few years’ time.
As for AI, we’ve had a team dedicated to its monitoring for about 3 years now. In our view, AI is just one labour-saving device among many. There’s currently lots of talk going on around this issue, but I’ll just say this – the world is not a unified whole. If we restrict something in Europe, the U.S. will take off, and if the U.S. puts a leash on itself – China will outcompete it. We might eventually get a set of guidelines on how to make AI safe and reliable, but, for us, limiting or otherwise impeding the future breakthroughs in this technology would be suicidal.
Tomas: History shows that whoever tries to halt a technology – goes under. There are many questions regarding the application of AI, but I expect Big Tech to grow exponentially and lead to some major transformations which, in turn, will give a massive boost to productivity, creativity, business efficiency, and solution-testing.
– What are the most promising areas for investment today? What popular tendencies have you noticed?
Tomas: An Israeli acquaintance of mine, who’s an investor, once hit the nail on the head: “If a good founder comes along with a good idea – that’s perfect. If a good founder has a mediocre idea – that’s good, as I’ll be able to fix it, and it’s gonna be perfect, also. And if a good founder comes to us without any idea to begin with – that’s the best, as we’ll just tell him what to do”. We have plenty of ideas for what to do, so there’s no sense in chasing popularity. A business can be built even in a niche market, provided that the latter is growing by 100% per year.
Eimantas: At the beginning, our cybersecurity business was also niche. But we managed to introduce a niche product as something crucial for everyone, not just computer enthusiasts. During the early days, we applied for investment to a certain fund, but they said no, arguing that cybersecurity was the very epitome of a niche. A few years later, though, we both laughed remembering that moment.
Tomas: There’s no one-size-fits-all strategy to achieving success. You must do something you like, understand, and have the capacity for. Regardless of how promising a given niche may be, you won’t get anywhere if you don’t understand it properly. If someone were to ask me for advice, I’d say – build your business in the area you already have a black belt in. For instance, I was impressed by the founders of the tutoring platform Mokosi.lt. As life-long teachers, they identified a problem, and then solved it with technology. It’s a good example to follow.
– You’re the leaders of both Tesonet and Nord Security. How do you deal with both simultaneously?
Tomas: It’s easier than it looks. Nord Security is Tesonet’s biggest investment. We like to joke that all of the many companies we’ve invested in have their own leaders, so there’s no one left to develop it. If we were to break down how much energy we dedicate to each – 100% would go to Nord Security, and another 30% to Tesonet.
– Whatever maths you may want to use – that’s more than a regular work day. It seems to me that you could now back off regular business management altogether and focus exclusively on investment. Have you ever considered that? How do you manage businesses and investments of this scale?
Eimantas: We’re not interested in investing purely on financial grounds. We like to help people grow, foster team-building, and share experiences or contacts. Besides, all of the companies that we’ve founded and developed have grown faster than investments, which makes it rational for us to spend a good deal of time on this area.
Tomas: It’s not like we know it all, but after many years in the field, you start getting a sense for what works. For instance, I now spend a disproportionate amount of my time on Žalgiris – one of Tesonet’s investments. It seems as though everything we’ve proposed is working, the management team is quick to learn, and the organisation is growing at breakneck speed. The niche is different, and yet the same principles apply – you form a solid management team, motivate and trust the employees, give them freedom to act and make decisions – that’s all. You must hire people who are better than you, and then trust the decisions they make.
Eimantas: Things must also be sufficiently challenging such that you would feel a certain degree of resistance, but not so challenging as to be impossible to solve. Furthermore, people should be rewarded for successfully tackling any given problem. Most importantly, though, you have to be honest – we do what we do because it matters to us.
– And how about you, yourselves? Have you always wanted to become entrepreneurs?
Tomas: The moment you stop, it’s all over. There’s nothing easier than living comfortably. We could think of Nord Security as a major achievement that allows us to hang back and take it easy, but that’s just not the case. There’s a saying to the effect that success can be your biggest source of joy, but also a powerful enemy. It’s harder for us today than it was at the beginning. Much harder. It’s not just that everyone is aware of us now, but also that operating in today’s markets is like wading through molasses – our competitors have way more capital than we do and can therefore exert a lot of pressure, which forces us to work overtime. Introducing a new product in such a context is super difficult – it has to be scalable and of exceptionally high quality. Managing such an organisation is an additional challenge.
Eimantas: For me, building a business is the ultimate art form. You must always keep abreast of the competition by innovating, creating, and inventing. Personally, I love a lot of different things, from music and fishing to video games and learning about longevity – not to even mention that my family is my No. 1 inspiration – but neither of us is motivated by something external like money, a sense of achievement or whatever else. We were motivated by challenges and the desire to do something good for other people. When you have that fire burning inside of you, there’s no need to be asking each other how we feel because people just don’t burn out. I’ve noticed that it’s much better to have your team consists of professionals who forge ahead at roughly 80% capacity, but in a stable way, than those who give 110%, but sporadically. It’s very good to be working with highly motivated people, but very bad when external challenges demotivate them.
– In your view, what is required for Lithuania to have more startups and unicorns?
Eimantas: More success stories. If we want more startups, we should also ensure a high quality education system. For instance, IT should be taught at school from the beginning – and seriously so. I’m also not sure how to teach aspiring startup founders to be patient, which is crucial for building a business. Many give up too early or never realise their ideas to begin with. I’ve noticed that people often have good ideas, but are afraid of sharing them out of fear that they might get stolen. The fact of the matter is, however, that success depends not so much on the idea, but more directly on its realisation – on your drive to make it a reality.
Tomas: A unicorn can arise very quickly – you just have to find an investor who believes in your $1B valuation. Lithuania, though, is unique in that our startups are exceptionally sustainable, which is a wholly different guarantor of success. For instance, Omnisend, Kilo Health, Hostinger, and Baldai1 were built without outside investment that’s normally a must for attaining unicorn status. In Estonia, on the other hand, all startups went the investment route, due to the liquidity that following Skype’s take off, and now have around 10 unicorns. That being said, the climate for startups in Lithuania is almost unbelievably favourable – the ecosystem is growing, investors are jetting in, everyone’s sharing, and it’s easy to find an answer to most any question. You just need to know what motivates you personally, to believe in it, and to keep at it until things fall into place. Under no circumstances should you found a startup just because it’s cool. It’s better to join an existing team, as you’ll create more value for others and earn more for yourself. No successful startup founder is vulnerable to the charge that he or she is not working enough. Patience, work, and perseverance are the keys to success.
This interview was prepared by Vilnius TechFusion partner Unicorns.lt. Find the full story in Lithuanian here: Silicio slėnį Lietuvoje kuriantys vienaragių augintojai – atvirame interviu: kas atvedė į sėkmę ir ko reikia, jei norime turėti daugiau startuolių | Unicorns