What Most Founders Get Wrong About Scaling—Railsware’s Founders Get Right | Ep. 205 with Yaroslav Lazor and Sergiy Korolov

0:00Hey, everyone. Welcome back to Founder's Story. We have another amazing episode of two guests. I have to say, my favorite opportunities to discuss and interview people is when it's more than one person, because it's so great having two different perspectives. Today, we have Yaroslav Lazar, the CEO of Railsware, and Sergei Korlov, the co-CEO of Railsware, engineers turned entrepreneurs, active promoters of engineering and a product mindset. that we're going to get, since you're engineers, we're going to get like real detailed in the weeds of things. And I can't wait for that. But first, what was the spark that made you even say, I want to start Railsware and this is the industry I want to be in?

0:49Hi, everyone. So the spark really is the love for software, ability to see and feel that software is something that can change the world drastically. passion for building software it's it's an amazing ride always uh you learn like crazy you grow and it's just you know it's like there are those people who are who are certain sports junkies right they really enjoy doing a particular sport whether it's snowboarding or rowing or anything like that right this is this is a sport for me personally i'm pretty much sure for sergey it is the thing and this is a sport where you can get like infinitely better because there's so many dimensions so you can like expand into this multi-dimensional world um the multiverse uh and learn and understand and you see those you know miraculous stories and it's sport itself is a um uh it's something that lifts your spirit and gives you ability to see wow i made those incredible results and software businesses are even more multi-dimensional from that perspective right because you can you can change people lives you can you know pure cancer or whatever it is you can change anything in the world with the proper amount of software we see what those big tech companies are doing with the world um and you can do some amazing things and the it's the at the beginning it was more a sport of writing code and being in code and now it's it's more of the sport of like this multidimensional change and and influence um helping people grow uh helping amazing individuals grow into professionals growing to influential people into influential leaders for changing changing things this is it's just great it's it's a great right like mentioned the metaphor of sport and i think we started as swimmers or runners but then we went to triathlon and i don't know xathlon whatever it is so at some point you understand that you love to swim but then you want to do something else as well and with software companies like in in our case i believe it it works the same way you start with writing code but then you want to influence decision what exactly you want to deliver then you want to influence the design and then you want to influence the business model and so on and so on.

3:17And in the end, you start to build company which handles all those aspects. But then, of course, you do something that maybe you don't want to do, something like finances or legal or something like that, operations. But when you change the perspective and you treat those disciplines as a product as well, then it helps a lot. It's, by the way, a very good concept we've coined in the company. It's like doing everything as a product, as a software product, kind of whatever you take. Like if it's legal, if it's finances, if it's recruitment, whatever you treat it as a product, because there are users on both sides and they have some needs and you want to cover those needs with the software or processes or any other things.

4:09So do you think it takes a different skill set or mindset for an entrepreneur that builds, let's say, a single product or a single service versus somebody like yourselves where you're building services for other people? and which I love doing companies like this because I get very bored of doing just one thing and being able to help many different people do different things, I feel like it's like a refresh every time. But do you think it's different when you are a service provider helping other people be successful and building stuff for them versus you're an entrepreneur who's just hyper-focused on building one thing?

4:51Right, so in our case, we're both, right? So we run three of our own products and we run now joint venture products. So we run a lot of products. We run about six to seven products, depending on how you look at it, of our own products. And then we also help other companies and do still help other companies build their own products. And it's definitely more growing and engaging, right? Because when you do your thing and you have five people in the team, you're like, well, maybe there's this in the world or that in the world. Maybe if I would raise money, you would get this. Maybe if I would hire in San Francisco, you would get that.

5:36And from our side, we burn candle, not from both sides. We burn candle from all sides. We have clients in San Francisco. We have clients who have hundreds of millions of revenue. We have clients who have hundreds of thousands or zero revenue. So we have all those experiences. We're living them in the same time. It's kind of a multiverse. And we know everything that's happening in those companies because we help them. And we know the founders. We know their stories. And a story for one founder is a lot because we basically talk to them and they tell you their whole life and how they made decisions and how they didn't make decisions.

6:12It's a huge amount of knowledge fact in this simple medium of just working with a person. And you learn just much better than those what-if scenarios. You just see them from all perspectives. So that definitely helps us to grow and to understand everything, you know, all the aspects. And I just want to say here quickly why many products appeared or popped up in Rails for all the products that we have. They start, they originally started from not products but just a piece of software that resolves our own problem so mail truck tighten ups and coupler we've built it for ourselves first then we kind of start to use it we find out that it's interesting and it solves actually the problem then we shared it to the community community loved it and started to use it so we started to get more users and then of course it kind of pushes you to think maybe it makes sense to invest into that product firstly it's time and then it's money and then kind of you know it has own pace so all three products have started this way well joint venture yarislam mentioned that's already a conscious decision because if we talk about own products then we cover both sides it's a biz dev and marketing right but also engineering and product development ourselves.

7:42And with joint venture, we find experts in their domains and we join our efforts. So the best of the knowledge subject matter expert and the best of our qualities in building software. So do you find a correlation between if I have a problem, I solve it for myself and then it's successful, so then I open it up to others? versus somebody that comes to you and says, here's a problem I think we need to solve. Let's build it for other people before it's being tested internally. So it's definitely never not... You know, you open up this Pandora box to a very big, like very huge world, right? Because...

8:28So I have a friend, he's been doing festivals and he was hosting hundreds of thousands of people on those festivals. So if he talks to me about tickets, ticketing system, ticketing problems, and how to work with ticketing information and information of demographics, who buy those tickets to be able to market better, rather than when someone out of college just thinks, you know what? I just bought a ticket on Ticketmaster and it was a bad experience. I want to make it great. Very different worlds. Both of them come up with an idea. and at the same time the funny thing is that it's very hard to say who will be more successful than not we had those cases we had a client who was like a San Francisco blueprint series A series B very serious tens of millions of money raised and someone else who has like$170 ,000 budget, you know, and then wants to build an app.

9:34And then you would, you could guess that, you know, the San Francisco guy will be, we will build a billion dollar company, right? But it was the opposite. So it's, it is a, it is a, it's a big area, which has, it has some logic, and it has this organized chaos around it. How and who and why will be more successful? We don't have a crazy great playbook for that. Our own products are not billion dollar companies yet. We definitely work in that direction and then when we'll crack it, we'll crack it on a scientific level with knowledge and understanding rather than on a random level where you have ideas.

10:23But there's some principles that do work. If you have domain knowledge about the product and it's good domain knowledge and you understand the customer base and you understand the how big is your target addressable market what's your go-to-market strategies to them how do you how do you approach this target addressable market what can you tell them something that they're going to go to you rather than somewhere else how are you going to test that you won't over build the software for what you're trying to to test maybe maybe do some painted doors and then people will you know go there and be like oh great the interest is there you'll find some people from the industry.

10:57You'll talk to them about it. Those things help, but there's no particular use case. And the problem is that those people who are successful, when they tell their stories, they change it in their head because it was not like they're telling it was. And then some of them are more modest and some of them say, I'm a genius. I'm a straight-up genius. I came up with this idea and I had it in my head and I built it. Some of those people are crazy because they were building products for three four years and and they made two hundred dollars and then eventually somehow they build it into a billion dollar business which doesn't like it you know there are you know people like hockey sticks but it's not a hockey stick it's a it's a perpendicular uh it's just some of some of that you know some of that needs this founder mode craziness uh in it like i would say founder mode craziness is very important uh spices that you put on top of everything understanding and going deep.

11:54But at the same time, I saw people who are very successful. They work out of their intuition. Their organization methods are not great. Their organization within their company are not great. The way they hired people and they created the structure, they don't even know how it works. It just works. And I don't even tell them anything because I don't want to break it. It's a very huge area that you can cover. But there are some principles for sure. So I'm curious then, because you've been able to work with And thank you for sharing that, by the way. I really like the ticketing example because those are two very extremes.

12:29And it is very fascinating to see in the end who does become the most successful. you know but I guess at the same time if you already have a successful business and you can add in a component and make it even better that's success in its own right even if it doesn't make itself a billion dollars I'm curious on on the traits of successful entrepreneurs so when you think of yourselves or if you think in you know you've worked with other people who have also found success and you've been integral in that in that success if you could if you could tell me two or three traits that you feel that either either you all share or people have to have in order to find success so i would say that there are different stages require different skill sets so if it's an early stage you need to be able to wear different hats and be a visionary and a doer at the same time.

13:29So you need to project the perspective somewhere in the future, but also do just small tasks, big tasks all the day long. That's the beginning, right? But then when you grow your company, you need to be able to switch from this mindset into the mindset of the team builder, first of all, because the great entrepreneur in the end must build the team because it's impossible to implement all the plans by yourself. And you can lose the momentum if you will start, not start, when you will proceed to move forward with your principles of building the early stage company. So you need to switch your mind into the scaling mode, right?

14:20And then you need more people and you need more professionals you need to start to play like a coach when you pick the right people and put them into the right positions you start to build schemas which kind of fits the most for the team set that you have kind of you so you do a lot of shuffle and kind of setting up those people structure is very very important component of successful company and successful entrepreneur and without people without team it's just impossible well sometimes you have some luck and you will be able to build company even without being able to manage people properly but kind of we talk about the science part of it then managing people setting up the proper teams being able to make decisions you know to fire people early if you kind of not to stretch this process into the time kind of you need to make sharp decisions and you need to make them fast at the same time there are solopreneurs who who take companies to like six million they are which is a very good financial success for some of the teams that have like 40 people they wouldn't have it's you you kind of have to balance everything right the same thing if you feel that you're suffocating with work but i would say one of the most important elements is understanding and conscious understanding it might be even intuition intuition was a was a decent amount of logic on top of it if you know what you're doing and and you're proceeding and and basing it the right way you can get you know very effective with with very small team sometimes if you over hire people and they can be great people they will be missing something and instead of you doing the right thing for the business right now, what you'll do, you'll be like, hey, I hired these people because the lot, so let me go manage them.

16:22You start managing them. You start coming up with whatever co-products or something like that or some features that nobody needs or expanding the features and you do the wrong thing for the business but the right thing for your employees that you just overhired. You need to, there's no like, there are no rules that you can apply to yourself without conscious understanding what is going to happen next so it's like conscious understanding is important right luck is important i don't know how to how to time that one right how to how to pace it and how to like take it out of like i don't know what maybe there are probably some um techniques and principles shaman techniques and principles that involve a candle and the and stuff uh but there's like you don't that it doesn't mean that you need to hire the team like uh with especially with ai hype there there's stuff that you can do with ai that will actually work and will be consistent um apple seems not to be able to do it with siri but uh but some companies are able to do it with some other tools it's um you need to understand you need to have understanding and understanding comes from also knowledge and your experience right and it comes from luck it's so huge we've seen it throughout all our clients it's somehow in all those successful stories you rarely can hear that there was a luck i mean usually people don't say that but in many successful stories luck was the key key thing that happened in certain moment of time you know proper time proper proposition proper people met each other and uh but when did the right thing yeah but sometimes but people usually prefer not to talk about this this way they they rather say that everything has been planned this way from the very beginning from the childhood kind of envisioned yeah but at the same time uh aderson horowitz has this great article that helped me throughout the years.

18:28It's called The Most Difficult CEO Skill, Managing Your Own Psychology. One of his points is don't quit. It's pretty simple. If you quit, even if luck is there to present itself to you and you're not there, if something falls from the tree, you have to be under the tree. So don't quit is a really great idea that a lot of, in our cases, we kind of rely more on trend rather than particular use case right now so we we know we have those games or situations that happen every time and every time it feels like it's the end of the world and then when we went through 10 ends of the world we were like you know maybe we don't call it the end of the world because the world is not ending maybe we call it just you know something hard that we went through like i mean our country went through went through war and survive that as a company and um the don't quit is really important thing another thing is uh what what i was saying it's technique to calm your nerves so at some point emotionally you can burn out but it's a choice and it's a choice in front of you you burn out by burning yourself out uh so you know lower the gas don't burn yourself out uh it's it's actually very egoistic to burn yourself because you're like you're you're taking things the wrong way you're you're being too connected to what's what's really happening and you're like you know it's it feels so rough look well don't feel that roughness it it sometimes that doesn't make sense to do it this particular way so just go you know calm down your nerves uh by like making making some friends and getting things out of from from your hat into the paper in the hat they're always uh you know more painful but focus on the road not on the wall that's uh the words of uh anderson whoever is not mine but they really helped me throughout the time to kind of remember them but one thing is to read them the second thing is to actually rely on your past successes oh i was in a situation like this oh it felt really hard i did solve it i didn't know how i will solve it but i found a way so So maybe, you know, maybe I rely on myself this time.

20:46And because I did handle things like that, that really helps a lot. It helped me a lot in a lot of the cases when, you know, where you feel nervous and you just go through it. So, you know, don't quit. And those techniques are really, really cool. Yeah, I like that. Don't quit. I'd say, you know, many of the people that we've interviewed, if you ask them, luck was a major part of it. And timing might have been the most important. And, you know, if they quit at year one, then they wouldn't have anything. If they quit at year 10, quit at year 15, it just was a matter of time for them. And then they, you know, success or exit or whatever would have came to did come to fruition.

21:25So don't quit might be the best entrepreneurial advice. I appreciate that as simple as it is. I'm curious on diving into the AI. So there's this whole talk around, you know, the unicorn solo entrepreneur. So, you know, how big can you grow and scale a company nowadays? Leveraging AI, I'd say even leveraging partners, but not really having a lot of employees, being more like a solo-ish founder and leveraging these resources in AI. How do you see this going? Being as, you know, you're in the industry that is, I'm sure, impacted tremendously through AI. So how do you see this coming with being not necessarily just a solo founder, just having less employees, but really scaling and growing a larger company?

22:17So it's a big question if you will have really smaller amount of employees. Because like when ChatGPT appeared, people start to think that content writers will disappear from the market right away. But it didn't happen this way. they just started to spend more time on preparing bullet points collecting stories kind of creating the concepts and then with help of chat gpt they started to create those bigger articles so instead of two three four articles per month they were able to deliver like say five eight articles per month so they shifted more towards creating stories kind of to the sense of the article, right?

22:57Of course, and quality, and quality, of course. And there is a lot of hype, let's be clear. But it's a proper hype because like any other technology, when it pops up, there are some expectations, there are high hopes. But then in the end, it will just get to some point kind of of reasonable expectations from AI. uh ceos of the companies uh which uh kind of promise you that you will create software without developers uh they say it and kind of their revenue is growing exponentially like not even like a hockey stick but at a trillion dollar yeah just say something on the on the stage and then and and basically your your company is growing uh you know one trillion dollar and capital value.

23:50Very similar to what the science fiction authors were doing, right? They were also predicting all of that. They didn't add to a$1 trillion capitalization to their net worth, but they were doing it. Yeah, so I just want to say that there is hype, but behind this hype, there is a real thing. So definitely AI can, it not only can, but it influences the way how things are done. kind of right now so we we run youtube channel like more than 50 000 subscribers and before graphical designers were able to create thumbnails for our videos right now kind of the same person can create some nails faster because kind of ai helps it and then you know he just finishes with smaller touches here and there so but still it's not a replacement for graphical designer it's a booster for graphical designer he can do more work than he was able to do before with software engineers it very depends on the type of task that you work kind of if you prototype ai right now gives a lot of possibilities to prototype quickly so you can make some clickable application kind of almost applications to present the idea before you were able to do so with i I don't know, some napkin and, you know, some pencil, but then you were able to do it with some instruments like Figma, kind of create some clickable prototypes right before it was envisioned.

25:25But right now you are able to make like almost, you know, almost ready to use with some corner cases not covered yet, but still you're able to show it, present it, and kind of even get some feedback. When you realize you need to hire, it's usually already too late. I've been there wasting weeks waiting for decent candidates. If I had used Indeed, I could have hired way faster. So when it comes to hiring, Indeed is all you need. Stop struggling to get your job post seen on other job sites. Indeed's sponsored jobs help you stand out and hire fast. With sponsored jobs, your post jumps to the top of the page for your relevant candidates so you can reach the people you want faster.

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26:45Just go to Indeed.com slash Founders Story right now and support our show by saying you heard about Indeed on this podcast. Indeed.com slash Founders Story. Terms and conditions apply. Hiring Indeed is all you need. So prototyping definitely very good. some routines can be covered with AI but it's still this is my perspective okay so I still don't think that it's possible kind of to develop on scale kind of product after product after product by one person or by two person like there were always cases before AI right like I don't know minecraft so it has been created or like quake it was created by just very limited amount of people and big products so there were always cases like indie developer yeah instagram like indie developers a few people who can do this with ai yeah in the initial stage yeah yeah this has been amazing thank you for sharing that by the way the future looks bright i like that the future looks bright it's boosting the abilities of many people to get even more things done which in the end could be great for them great for the company great for employees great so i'm excited about those things but if people want to get in touch with you they want to find out more about rails where all the things that you're working on how can they do that well they can visit rails where.com all the contact information is there form email kind of our social media linkedin the Instagram, so YouTube channel.

28:26And it has links to other things, right? So it has links to all our current products. Assuming it'll have links to the joint venture products. Each one of our products, Coupler, Mailtrap and Tyken apps, they have their own YouTube channel, which also do a great job of educating about the particular subject. So Railsware has a YouTube channel about how do you build products? How do you do roadmaps? How do you figure out what do you focus on? And Coupler has content about how do you connect APIs to BI and how do you analyze the data and what's your approach on doing that? And so there's a web of resources, right?

29:08Our blog is great. There's a lot of information and content to learn from there. And you can ask AI, hey, focus, narrow down on Railsware and its products, tell your story to AI and say, how can Railsware approaches and principles help you? And then it'll actually be able to tell you what our methodologies and principles match to you. We have a great employee handbook or just handbook of how the business works. And this can be a great deal. One thing I wanted to add about AI is that it makes people articulate things more to AI. It makes you think, it makes you go back and forth with it. And I think if also, and then you can do prototypes on it.

29:50You can generate images and you can ideate better. Before, there was like either you doing the job as a solopreneur and then hiring the team and hiring the team with this big cornerstone, which is incredibly hard. And we have probably a billion content about it and we can record a separate 50-hour video how to record, how to hire people, how not to hire people, how to fire people and what to do with them and how to help people grow, right? But with AI, I see you articulate. as you try to figure what your ideas are. You now have this intermediary thing except for just people, right? Because people act like they understand you, but in 99 % of cases, they do not really understand what it is that you're thinking about.

30:35You have your picture in your head, I have my picture in my head, and then we're kind of like living in two separate worlds for sure. And we have a method how to bridge this world called Bridges. It also has a really, really great video. we can give you a link you can send to people about it like how how do you all go in one page by actually looking at one page right but ai is is a good thing like it's a good thing for kids because kids are asking it it's like sometimes you know when we tell our kids well don't do this and they're like why well because of this now like wait a sec let me check with ai maybe you're wrong so there's this you know marriage counseling like a third person third entity in in those dialogues And I think this is a great thing for the world to think, to figure what is it that you're thinking about, what is your consciousness thinking about.

31:19I'm with you. It's opened up my mind to thinking in a different way, thinking much bigger than what I am. You know, I think, you know, I get stuck in this sometimes a smaller mindset. But when I use AI tools, I leverage different things. I'm like, there's the unlimited possibilities of the things that we can create nowadays are very exciting. That's why I hope people check out Railsware. It's been great having you both on. I think we had a great discussion. I took away many things from this conversation. And I love, I really can't, you know, have to go back to the timing thing. Timing, luck, abilities, finding the right partners like Railsware when you want to create, you know, something that you're going to impact the world.

32:02These are all the things that, you know, I took away from today. But thank you both for joining us today on Founder Story. Thank you, Nino. Thank you. Thanks for having us.