One more memory from Kiev where I was for TMT.Ventures’08 Kiev conference. The next day we had a house party at Denis Dovgopoliy’s place. We were talking about VC business and what’s driving it. To make the long story short it’s the survival of the strongest. Meaning - who delivers the biggest growth - stays. Who fails to deliver - is out. The rule applies to both VC managers and entreprenuers. Up or out! That simple.

Because of the very unformal Ukrainian atmosphere we got creative and discussed a number of interesting, high-growth but rather controversial investment opportunities. Ideas that might work but not every VC would officially support it and some businesspeople would refuse to develop.

One of the ideas was taking advantage of our natural weaknesses - like envy or dislike for other people. Envy and dislike which we like to indulge in. There is a hater in every one of us. And that’s why anti-communities and anti-blogs have became so popular.

So we imagined an e-commerce service for people who want to send an unpleasant gift for other people whom they don’t like too much. For a fee. Anonymously. The recepient may of course return the package. For a double fee. For a premium fee the company would deliver a classic horse’s head to recepients bedroom - like in Godfather. It seemed to be a brilliant idea. And a great business.

Then I saw this a few days ago:

You can actually buy a horse’s head - a stuffed or unstuffed version. I don’t know what they stuff it with but it can’t be good. ;-)

Ok guys, who started this business without me? We were all at the party so I should get some equity, right? I could be up, but instead I’m out. ;-)

Very mobile, well educated and trained, often workaholics, somewhat greedy and therefore effective in whealth creation and trade. They already invested quite a lot of their time in Western Europe, conquered America and then they came to Kiev. Very keen on beautiful local women. Who am I talking about? No, I’m not talking about VCs coming for TMT.Ventures’08 Kiev conference. I’m talking about Wikings known also as Normans or Varangians who established Kievan Rus’ in the 9th century and started the Rurik dynasty which ruled Russia until 1598.

Medieval Scandinavians had many of today’s VCs qualities. They were undertaking very risky projects using their reputation which often preceded them. Their investment vehicles (boats) used for value creation were very mobile and used for doing business around the world. Depending on the situation they either made business deals or resolved business differences in a more brutal manner using mercenaries (lawyers) and swords (pens). They very much appreciated charismatic managers able to lead small teams throughout expansion into large organizations capturing large markets. They were all about business.

Their managerial skills were developed in the 9th century under competition and pressure from older Western business cultures like Celts and Picts. They got some nice ROI results and quickly dominated in the region. Danish VCs established kingdom of York in England, Norwegian VCs started kingdom of Dublin in Ireland. Norman VC known as William the Conqueror conquered the English market in 1066. About the same time Leif Eriksson discovered America.

Kiev from the hilltop

When I was walking in the streets of ancient Kiev with blogger Alex Riabtsev I wasn’t quite aware of all this but he told me that the city was built on hills overlooking the Dnieper river. It kind of reminded me of San Francisco which is also built on hills and has some famous brigdes. And we all know that VCs like everything which looks like the Bay Area.

San Francisco from the hilltop

Present day VCs are re-discovering Ukraine which has been under Russian influence but now attempts to enter EU and utilize its intelectual potential using venture capital funds. There are some great startups over there and some of them are surfacing on the global market but the situation kind of reminds me of the 9th century. Back then local managers (Finnic and Slavic tribes) invited VCs (Varangians) to accelerate their companies’ growth and increase ROI. It proved to be the right decision and created (business) culture which lasts until now.

Are Western VCs going to make it big in Ukraine? Again? Sure unless…
Medieval VCs were so fond of the local ladies that the the Rurik dynasty after around 70 years turned completely Slavic. Since then there was nothing Norman about it. So VCs, watch out for those beauties. It is very easy to defocus. And I know what I’m talking about - I went out with Yegor to a club and didn’t want to leave. ;-)

So the future looks bright for the Ukrainian tech industry. I just hope that present day VCs don’t make a mistake of underestimating its potential. After all the Viking VCs made a quite spectacular error. Leif Eriksson discovered America around 1003 but he soon left. He had a Google or Skype of his times and decided to go back home. The rest is history.