SECURITY REFLEX: Alexander Kardakov from Oktava Capital on cybersecurity, apple jam and dog manipulations
Alexander Kardakov, the founder of “Oktava Capital” company
Alexander Kardakov is a famous lover of extreme travel. However, not only his vacation life is full of risk, but also his business. Kardakov is one of the pioneers of the IT industry in Ukraine. His business has experienced the whole range of situations in modern Ukraine: a rapid growth, leadership, crisis, and a rebirth.
He had to return to the operational management of the company to replace the top management and pay off the debts. Now our hero has launched a new big business dedicated to cybersecurity – “Oktava Cyberzahist” company.
Leadership Journey asked Alexander how to feel the market trend, pay off multimillion-dollar debts and plant a tree.
Leadership Journey (LJ): Cybersecurity is a growing trend in the market. I know that you are now involved in its development. For you, this is actually like a new start of your business story. What was the start of the new market?
Alexander Kardakov (A.K.): Everyone rushed to do it when the Petya virus emerged (in 2016, the Petya computer virus struck up to 80% of companies and organizations in Ukraine. – Ed.). As a result, only 15–20% of companies did at least anything. In half of the cases, the top executives did nothing not taking the issue seriously. The second half asked the IT specialists, executives and lawyers to solve the problem. That is all those people who were not responsible for these tasks and were not interested in doing this.
In order to ensure cybersecurity, you should have professionals in the organization. These people report to the first person in the hierarchy and can calculate the risks to the business from possible cyber threats, CISO.
Therefore, I figured that during the next mass virus attack the loss would be three to four times smaller. And this is only because only 15–20% of all enterprises actually had done something to secure, and the remaining 80–85% of lazy companies were worried about backups, system updates …
Kardakov: “Everything is not going as fast as we would like, but I am sure that this will become a business and there will be a place in the market for two or three serious companies”
LJ: Is the cybersecurity industry approaching the stage of an established business?
A.K.: It is not going as fast as we would like, but I am sure that this will become a business and there will be a place in the market for two or three serious companies. The error of other players, who for some reasons leave the market, is that they do not see the whole picture. Their activity resembles our traditional patching, rather than building normal roads.
You need to see the whole picture. After all, Petya had appeared not on the spot. The attack began three months before its launch – with preparation and intelligence work.
YOU NEED TO SEE THE WHOLE PICTURE
This was evident even when there was some strange activity on the infected computer, then on the firewall, at the entrance to the perimeter. That is, professional security guards could link many factors into a single picture. That if there were such security people.
LJ: The trend for cybersecurity, is it as strong as the Datagroup trend of the 1990s was? That is, it was clear that this is the future and you just have to catch it.
А.К.: Yes, a system trend is really emerging. When I created Datagroup, it was clear that the universally implemented IT systems would require an extensive high-speed communication system. In the case of the cybersecurity market, similarly, IT systems, on which business depends more and more, need complex security.
In order to secure the information system globally, it is necessary to understand how and why it functions. To be able to secure, you need to understand the object of security, and not send the dog for traces of someone who has long disappeared.
LJ: I know that your company went through a number of different transformations — you were very successful, then you said that you had problems. What is the current situation, before entering a new business?
A.K.: A new cybersecurity company has now been created, in which this issue is approached from two sides. The first side is the IT team that designs the IT system itself. The second side is the security people proper. When specialists from these two teams agree, then everything ends up, as it should. Because for IT specialists, the task is for the system to work, and for the security personnel the task is to ensure the protection of this system. “Oktava Cyberzahist” company unites these poles.
LJ: How do you manage to switch between different business areas? I know that there are people who can work effectively only if they motivate themselves. How do you do it?
A.K.: I cannot engage with a new topic unless I like it. It is like in an old joke: you have to do what you like, not mechanical work.
You should first talk to people, then create a team, and then step aside and look if it took off or not. Rather, if it can fly without you. If necessary, you go and fix it.
LJ: By the way, about fixing it. You had a crisis when you had to return to the operational management of the company yourself because the top management could not cope. What were the consequences?
А.К.: Because of the situation, 80% of top managers were replaced. Some people were tired; others were very heavy to lift. Each person has his own story. This is normal. I am on very good terms with most of them. Conditions have changed, and people are not galleys slaves.
It is normal when every person pursues his own interests. If a person’s interests coincide with mine for a certain period, we work. The main mistake of any leader is not to see when the interests no longer coincide.
IT IS NORMAL WHEN EVERY PERSON PURSUES HIS OWN INTERESTS
LJ: If you embrace the whole history of the company, how many such epoch transformations were there, for subjective or objective reasons?
A.K.: The first turning point in my business, I think, happened from 1995 to 1998. It was then that I started to spin-off new directions from one business. I had to learn a lot.
The second crucial stage was from 2002 to 2003, almost immediately after the crisis of 1998. It turned out that we became number 1 on the market! This, too, was a very serious challenge: the incentive to constantly grow and develop was lost.
LJ: What did you do in that situation?
A.K.: I had started setting new goals, looking for new niches. We had to regroup somehow. A year and a half we were in such an internal depression. We were the first, and we had no goal.
Then there was a period of 2006–2007, a period of growth, I would say even, catastrophic growth. A lot of money flowed into the economy; cheap loans were available all over the world. There was a clear excess of money. People invest in IT when there are available resources.
High technology is developing mostly on investment money. A new enterprise is being built; the IT infrastructure is being expanded and updated. At that time, we used no credits.
My mistake in the period of rapid growth was that I was involved in businesses that I was not competent in. For example, in construction. The construction business at that time turned out to be extremely corrupt. And you could remain successful in the construction business only if you accept the rules of the game.
Then we were selling batteries. This business also began as a very successful one. We created a brand, invested money, but then smuggling expanded, and we began sharply to go into minus.
As a result, I now avoid business directions that depend on smuggling or corruption. Unfortunately, some business types do depend on these.
LJ: And how did the company survive the 2008 crisis?
A.K.: The speed of reaction was the main advantage at that time. I had made some changes timely in some areas; I was not speedy enough to change other areas. Still, I had managed to keep operational control over the business and preserve the business until the present day. However, many companies disappeared from the market at that time.
My key mistake at that moment was that I did not take operational management on time, and the company had been moving by inertia for several years. The business was managed by growth managers, while it needed crisis managers.
When I realized this and got involved in the work, everything went on the mend, the loans were repaid, and all other problems, which predicted the end, disappeared. That is, unsolvable problems suddenly turned out to be easy tasks.
LJ: After all this, what is left of your level of delegation? Fell to zero?
A.K.: It is very high.
LJ: Did not change at all?
A.K.: A high level of delegation remained, but the degree of response to deviations increased. You need to delegate so that the top manager was responsible for the situation, and not to be an executor of the owner’s will.
The team should have all the rights, but I put significantly more control points for the managing company than before. It is necessary to be able to see the deviations in time, earlier than the previous time. Deviations from the plan or harbingers of future changes. I have developed an ability to react more sensitively to things I had previously reacted to with a delay.
LJ: I remember from the previous interview that you are an avid traveler, and you practice extreme tourism. You have a safari, trips to Kamchatka on your list and so on. Tell me, please, in a difficult time for you, did these “unloading” days become more frequent? Did they become more dangerous?
A.K.: I traveled fragmentary and only last year I allowed myself to travel a lot. This time we went to Australia. Four friends on two rented SUVs crossed the continent from south to north through three deserts, 6,400 km. I also went on a diving trip to the Truk Islands (a group of islands in the Federated States of Micronesia. – Ed.). The program consisted of 12 dives on wrecks that previously moored at the former Japanese base. These were extreme journeys. Then in Mexico, there were dives in the cenotes (karst caves. – Ed.). I managed to take three such good travels in a year.
LJ: Recently, doctors have proven that there is so-called decision-making fatigue. The syndrome pursues tops and owners. Did you feel anything like this? What do you do about it?
A.K.: Let me remind you of an old joke. A man comes to the doctor and says, “I cannot work, I burn out.” Doctor, “What do you do?” Man: “I sort out oranges, there is a conveyor, I put large ones in a box with large ones, medium ones with medium ones, small ones with small ones”. Doctor: “Why are you tired?” Patient: “I have to make a decision every second.”
This is a matter of the level of decision-making. If a top manager is engaged in micromanagement and he needs to take micro-decisions every second, then, of course, he will get tired. He needs to either automate this or find someone to delegate his tasks to.
I am not tired of making decisions, because I make strategic, tactical decisions or project decisions. It is interesting. For this, you need to collect information, compare and analyze. I do not have a stream of decisions every second, like on sorting oranges. Therefore, a “decision-making fatigue” is a problem for those who suffer from micromanagement.
“A Decision-making fatigue” is a problem for those who suffer from micromanagement
LJ: How do you handle multitasking?
A.K.: Well, first, I have a very interesting criterion that allows me to evaluate how effectively I am loaded with business tasks — these are my «production» night dreams. If I see dreams about work, it means, I did not fulfill a task. If the dreams are more pleasant, then there is no business-related irritant. I did everything correctly.
Multitasking? I never write anything down. I take as many tasks as I capable to remember. If I have an overflow in my mind, I try to either delegate them to someone else or close them. Even if you diligently have recorded 150 tasks, no one will be able to perform them alone, even the best “multi-tasker”.
LJ: A question on business education. There are polar points of view: some people say that business schools are useless for experienced business owners. They argue education hampers the generation of ideas.
А.К.: The best option is when you come to a business class with your own experience and other people share their experience with you. As a result, you can not only compensate for the lack of education but also systematize those skills that you gained from various sources.
Therefore, I believe that you need to go to an MBA with at least a decade of experience, including five years in a managerial position. Of course, when twenty-year-old girls are in the group, it is pleasing to your eye, but there is no “value added” to them or the rest of the group.
When you communicate with your equals – with similar tasks and problems, similar life situations, cases, which can be discussed – is a different case. It is very useful. Similar to an athlete who each time increases the distance and adds load, a manager develops the ability to make management decisions.
LJ: How do you know, a person is with you or not? What are the means you use?
A.K.: The response depends on the question. Today you can cheat even a polygraph. Easily. There are even special methods. Therefore, loyalty is based on the current interests of the person. You need to understand this in advance and discuss this with a person in advance. I talk with top managers about this, top managers talk about this with their subordinates. A person may be is interested in fame today, in education – tomorrow, in money – the day after tomorrow. It is necessary to ask a person the question in due time. What are your current interests?
It is necessary to ask A person THE question in DUE time. What are your current interests?
LJ: This is a great scheme, in my opinion.
A.K.: And depending on the situation, you need to give a person what he wants at this particular moment. Because you cannot have study, fame, and money at the same time.
LJ: Is there any skill that you would like to develop?
A.K.: The experience of recent years has shown that I can perfectly prune trees. Grown-up trees. Well, I, of course, laughed, but it worked. I had a stunted tree, an apple tree, which I planted six or seven years ago. The tree had frozen in winter, and a few twigs remained. I began to form the twigs, although everyone said I was to throw them away. And I look and see a few buds had appeared on the twigs, and I had made a peculiar tree.
Now, this apple tree is bearing small fruits, of which we make jam every year. This is our ritual.
LJ: There is process-focused thinking and result-focused thinking. Which one is closer to you?
A.K.: I have a clear approach — with a properly constructed process, you will always achieve an acceptable result. My task is to come up with a result, and then build processes. That is the difference between McDonald’s and a French restaurant. You can create several «McDonald’s» restaurants with acceptable quality food. Every new French restaurant will be different. My task is to do something in-between. Something not unique, but also …
LJ: A larger trading room?
A.K.: Yes, something like this. I mean, my task would be to create an average option including both delicacies and regular meals.
My task is to come up with a result, and then build processes.
LJ: To what extent, should a manager, an owner or a co-owner be attached emotionally to his business? Did you have an emotional connection to the business? For instance, when you were selling part of the Datagroup, what were your emotions?
A.K.: This was not the first business that I had come in and come out. Speaking about business attachment and manipulation … Well, for example, I have a Maine Coon cat weighing 8.6 kg.
He is cool. Once I felt like I would love to have a dog. But I refused the idea. I knew I did not want to be bound by a dog, I was afraid of affection. Because a dog manipulates a human, binds a human by its attitude.
I am afraid to become attached to a dog just as I am afraid to become strongly attached to a business. Therefore, you must treat a business like a cat – a gentle touch and you move on. The cat is happy. I am happy. But there is no close attachment and scenes. Relations with a dog are different.
You must treat a business like a cat – a gentle touch and you move on.