HansaMatrix CEO: “Trust Your Senses - My Unwritten Rule I Follow In Making Strategic Decisions”

The TechChill startup event, being held in Riga February 9-10, will bring a dozen Baltic startup leaders and trailblazers, among them Ilmars Osmanis, the CEO of HansaMatrix, an edge-cutting electronics manufacturer. During the last 15 years, he has founded and developed several startup companies, but the cherry on the cake has been HansaMatrix, which was listed on Nasdaq Baltic last year. The Baltic Times sat down with Mr. Osmanis for an interview.

As you look forward to welcoming TechChill conference participants and guests in your company’s base town Riga, what will be your key observations about the developments and trends in the startup ecosystem---globally and regionally?
First of all, I’d welcome everyone who has decided to become a startup entrepreneur or works for a startup company. Secondly, I’d welcome everyone who has come to Riga and is taking part in the TechChill event. I think events like TechChill in Riga and SLUSH in Helsinki are playing an important role in encouraging young (somehow everyone thinks that startups are a young person’s world, right?) people to realize their dreams.
Looking globally, one of the completely new roles for startups is innovation leadership. While established corporations fight more for margins and results, sometimes sacrificing business and technological innovation – business and technological startups replace them. Startups generally are much less worried about R&D, innovations costs, and business margins, and are much more flexible in developing new technologies and new approaches. At the same time, venture investment funds have to be able to show the same level of flexibility and bridge the gaps between traditional investor roles: Software – Hardware; Medtech – VR/AR; Tech – Cleantech.   

What is specific to the Baltic startup scene? What can the region be proud of and where does it, perhaps, lag behind in the developments?
I cannot say I am an expert on the startup scene. What I am not seeing in the Baltics is deeper involvement in technological startup support in universities. As an example, Stanford University in California is much more proactive in spinning off new companies.     

Prior to attending TechChill, you travelled to California as far as I know. The trip was not about leisure, I assume. Did you pay a visit to Silicon Valley? What is trending there now? What messages is the hub sending to the rest of the world?
Yes, before TechChill, I spent two weeks at the world’s innovation kitchen. With the LightSpace Technologies team, we participated in SPIE Photonics West 2017 Expo in San Francisco, and visited the Stanford Medicine 3D and Quantitative Imaging Laboratory with a presentation. Both events allowed us to present what we believe is a groundbreaking 3D image display technology for use in medicine and other applications. We are coming back with valuable new business contacts and feedback.  

LightSpace Technologies is a new hi-tech company that develops volumetric 3D image technology, and it was started up by HansaMatrix jointly with two financial investors. Such a company would not be possible to launch without HansaMatrix’s deep technical expertise of electronics.
Trending in investment activities of the innovation kitchen has not really changed. Most of the investors and new technology developers are still following “meerkat” instincts and collectively investing in a few technologies they all consider valuable, so, that way, no one individually would fail.
Historically, there have been several collective failures. As an example, development of stereoscopic 3D TV’s. All manufacturers of TV’s developed own 3D technologies and delivered them to market and finally some of them last year decided to stop manufacturing of those because no one really wanted to use them. Huge investments in VR headsets happening now is probably another collective overspending of resources.

Last year, your company HansaMatrix celebrated its 15th year anniversary. Can you talk about it? You perhaps did not shun ups and downs throughout the years, if you can talk about it? What has helped you to get through and stay on the competitive edge?
The very beginning of our operation was in June of 2001. We could not get any famous garage available, so we started our manufacturing operation in a refurbished building which was originally used as a gym. In the beginning, our team consisted of seven people. First product that we manufactured was 4 electronic circuit samples (printed circuit boards) for now a very well-known company, SAF Tehnika. As a fact - all of them failed in tests, but, for an unknown reason, we did receive a new order.  

Providing high-efficiency integrated manufacturing services of electronic systems and ensuring smooth manufacturing processes combined with high yield and exceptional quality in the competitive environment like electronics must require nitty-gritty knowledge of the business and up-to-date technological capacities for sustainable solutions. How do you ensure the continuity of cohesive and smooth operation? Are there any unwritten rules you go by in making strategic decisions?
All that can be achieved with determination, continuous learning and no compromises attitude to competence and quality. An unwritten rule that I follow in strategic decision making is this - trust your senses.

How does your ordinary day at HansaMatrix look like?
I cannot remember ever having an ordinary day. Every day is new, unique and different. There is one important rule I try to follow – work on important problems first! In this way, you are reducing future urgent problems to appear. Urgent issues are in most cases a result of non-solved important problems.
 
Last year, HansaMatrix received a R&D project grant funding for RF testing technology development. How were able to benefit from it?
HansaMatrix is continuously developing R&D competence and expanding to new competence areas. Product development and industrialization of radio frequency (RF) products required also testing system competence development. That was mainly aim of grant funded project. R&D grants are excellent risk sharing instrument to encourage companies to explore new competence areas and we use them.

Also in 2016, HansaMatrix rang the bells marking its admission to Nasdaq Baltic Exchange. What is the additional value of the membership?
Our decision to get listed was triggered by overall skepticism. After having a few discussions with investment advisers when most of them told me that listing for medium size company at Nasdaq Riga is not possible, I sensed the taste of challenge and decided that finally I am having decent project to accomplish. The big advantage for me is new status of company when we are not having anymore short investment and exit cycles, how that is with private equity investors. This allows to plan for larger targets.

Can you speak about the people you employ? Is Latvia able to provide all the necessary workforce you need? Do you outsource some of the services? How do you feel about the outflow of Latvian workforce?
I have always counted only on available resources. I believe we have the best in world production workers, technicians and engineers. The same time they constantly have to learn new skills and competences. We use also outsourced labor and what is more interesting we are regularly recruiting Latvian graduates of European universities that are willing to come back and get an interesting engineering job.  

Can you speak a little of your cooperation with high-tech institutions as well as educational facilities? Are you still offering a competence development programme for your employees? Is it a carbon-copy of what top Silicon Valley start-ups offer?
No, it is not. In order to ensure consistent development of business, we have invested efforts in creating dual education program with local technical vocational schools in Ventspils and Ogre. In this cooperation we are providing hands-on training and learning program and we are getting large number of graduates to join us. Regarding universities, we are developing internship program for engineering students and cooperation in R&D.
Stanford University was valuated as world leader in number of graduates that started “unicorns”. It speaks for itself. Silicon Valley start-ups recruit from world talent cream and do not care very much about employee development. When they establish then some of them establish they own corporate universities.

What global big names do you work with? Which of the clients are you especially proud of?
I would like to mention one very special our client. It is Latvian company Mikrotikls which accordingly to reported results in year 2015 has exceeded 200 million euro turnover. Back in year 2002 John Tully (one of Mikrotikls founders) came to our “used to be gym” manufacturing facility and asked – would You be able to manufacture internet router boards for us if we manage to design own hardware ? Since then we have been growing step by step and I am very proud about their success. I wish them soon to become first Latvian “unicorn”.

As your company operates in Riga, known for its diversity and the large ethnic minority of Russians, how the economic sanctions against Russia have affected your company? Has the company severed all links it had with Russia before their enforcement?
Two largest HansaMatrix manufacturing units are actually located outside Riga – they are located in Pārogre and Ventspils. In fact, this year, we are celebrating 10 years of manufacturing in Ventspils.
To be frank, it was some challenge to establish modern manufacturing operation in electronics back in 2001. We followed two “iron” rules - we did not recruit anyone with “Soviet” manufacturing background and we created completely new cultural and quality responsibility model. As a consequence we do not have any such links and do know about existence of such sanctions only from newspapers. Even contrary, we are starting to have good contacts with Russian companies that are looking for market in EU.

Are you uneasy in a sense of US President Donald Trump’s determination to “put America first” industrially? Where does the bulk of your export go to?
Not really. You have to realize that in 21st century capital follows the knowledge. Knowledge is the only single important ingredient that brings income to the worker. These days you do not need a tower to see a World - you can see much of the world from single internetworked computer screen. I cannot imagine US putting import barriers to all hi-tech import it uses to become competitive – Taiwanese microchips, Japanese display technologies, German optics and manufacturing technologies, etc.
I think Donald Trump’s “put America first” is supposed to help to create jobs for basic skill workers. That is the problem of last two decades – to create jobs for workers with basic education and skill level. Migration is not a cause for that. Such jobs are disappearing. That also was main reason why “Brexit” vote did take place. Just one example - wide use of robotic welding has improved process quality, reduced need for welder jobs, but created new jobs in robotic welding engineering. This is a problem of lifelong learning.