You just can’t beat Algirdas Stonys, CEO at the maverick Lithuanian consulting and software development service company TeleSoftas, when it comes to optimism and passion! Having built his company and its entire business model on the economy of happiness, high-tech entrepreneur now yearns to do something ‘earthly’, namely to connect the gap between available cutting-edge technologies and change-wary grassroots consumers. “We call on businesses to embrace technological advancements and lead the way in innovation in order to push the boundaries of their industries,” Stonys told The Baltic Times 2018 Summer magazine.
How do the three Baltic states stack up against each other in terms of high-tech innovations? What are the advantages and disadvantages of each?
Since the 1989 we have a common understanding that the three Baltic States are together and they are like a a mini European Union. However, technology wise all three countries have very distinct approaches.
Estonia, to start with, is backed by a lot of investment and aims to diverge the capital in different areas. They have the unicorn success story – Skype, as well as very strong media and communications products like BNS, Delfi. So Estonians mainly focus on product development and attracting investment.
Latvians, on the other hand, have established a strong position in consultancy and outsourcing services, with foreign companies like Accenture and many others opening branches in Riga, which is the centralised location of the country’s IT sector.
While in Lithuania, we have our own talent pool. We are the biggest country and we have the most resources to attract foreign companies to establish offices. Let’s take Barclays, for instance. Instead of outsourcing they decided to actually establish an office here due to our extensive talent pool. Having such resources here, we also have some big local IT service companies operating worldwide, such as NFQ, DevBridge or TeleSoftas.
To sum up, due to a larger talent pool Lithuania specialises in providing IT services, Latvia is the destination for international consulting companies’ branches and Estonia is the destination for product companies. So I would say the countries stack up against each other in very unique ways.
Yet Estonia claims the leadership in innovations. Do you see that changing any time soon?
From product innovation perspective, with growing numbers of product and venture capital companies, Estonia is definitely the leader in this area. But in my opinion, it’s a very bold statement to claim that only products can be innovated. We can innovate in services, in research and development, processes as well as products for our clients - we can innovate in many other areas.
Do I see that changing? Not really. They will continue to lead because growth accumulates and accelerates even more growth. We have a good example in Lithuania with a company called Vinted, which grew considerably and its founders ended up opening many more businesses. This shows that people grow professionally along the process and that eventually results in the snowball effect of accumulated growth that will touch the whole region. Will that lead to accumulated innovation? I would like to believe so but there’s no guarantee, of course.
According to several credible rankings, Lithuania is on the EU bottom in terms of high-tech production and the contribution of IT sector to the country's GDP. It purports the IT and high-tech picture is not so rosy. What would be your response to this?
Well, I would then just have to celebrate the success of our agricultural sector (he smiles). But jokes aside, the truth is that the majority of IT products that we create, we create for somebody else. Lithuania is a service destination, our IT service sector is really big and includes outsourcing processes, hosting, engineering and many other services that contribute the most to our GDP. Now, basically all the services we provide as a country include IT in one way or another. So if you consider IT service, not IT product, then we have much better numbers.
Can you substantiate the claim that Lithuania has recently created one of the fastest growing startup ecosystems in the region?
Absolutely! For example, Estonia has a really strong startup culture, however it’s because it has a pretty long history of it. While in Lithuania, the startup ecosystem is less than 10 years old. It basically started in 2008-2009, with Startup Weekend association joining Lithuania. Fast forward to present day, now even our own minister of economy Virginijus Sinkevičius claims that we will have a thousand startups by 2020. According to statistics of Startup Lithuania, in 2012 they registered 85 startups and now they have 360 members. That’s more than 300% growth, which can definitely substantiate the claim that our growth rate is one of the fastest percentage wise in the past few years.
What needs to be done to make Lithuania Europe's Singapore in terms of innovation development
In my opinion, we should stop trying to be someone else and focus on being the best possible versions of ourselves. I don’t think we should be Europe’s Singapore. If we are good in doing services and we love it, we should focus on that. We do logistics, transportation, R&D services and are considered as a destination fro engineering and there’s no need to change it, we should embrace it and work on that.
What we do lack, is advertising skills. Lithuanians are terrible sales people (Algirdas laughs). We are too shy to let everybody else know how great we are. So we need to invest into our soft skills, become more open in our communication. That is the main quality of successful areas like Singapore and San Francisco. They are really open, brave enough to take advantage of various opportunities and jump from one project to another. They are not afraid to fail, because this is exactly what helps you find your way.
How the tax environment should be changed to attract more high-tech investments to Lithuania?
Reduce taxes! No doubt! I even have an idea to petition European Union to allow Lithuania more tax free zones. We have two very successful ones, but we need more. It would be very difficult to attract investment to places that are not highly inhabited and far from the main roads. We need to go with the path of least resistance and exploit what we have. We already have infrastructure in place along the motorway between Kaunas and Vilnius, which we could turn into a whole new tax free zone. This way we could help develop smaller areas that, ultimately, would trigger expansion further to other towns. We are a very small country and for European Union anti-competition establishments it would not matter if we had two or ten tax free zones but for Lithuania it would mean a lot. It's just a thought, but it might be worthwhile exploring such possibilities.
Can you talk about TeleSoftas please? What is so unique about it?
I think what is most unique about TeleSoftas is the people. We are truly like one big family, one big community. Like in a family, you truly care for each other, trust and enable each other. And not only within the company but to our partners, customers and the whole human network around us. I could go on here for hours!.
Would it be an exaggeration to claim that TeleSoftas today is one of the leading companies in the region for pioneering engineering solutions in mobile. Are the solutions applicable in the daily use of mobile gadgets? How?
Certainly not. We’ve been listed on Deloitte Fast 500 EMEA. Our solutions are used by people all around the world. 700,000,000 people are relying on our solutions and support on a daily basis merely in the US. To name a few, people are using transport ticketing system in Odense Denmark, people in Germany are purchasing Westwing Home & Living products all over Germany and deliveries in England is optimized by a code created by our engineers. In 14 years of existence Telesoftas has delivered over 350 projects all around the world.
Can you speak about the Step Forward attitude? Why do you favor it?
The main issue is that the IT sector is far ahead in the sense of available cutting-edge technology, and constantly innovating. However the gap between the advancements in tech and its applications is still very large. For us, in the engineering sphere, faster, more efficient processes, improvements and solutions to existing problems are obvious. But we need the business to invite innovation. So StepForward is our invitation to businesses to embrace technological advancements and innovate, to push the boundaries of their industries. We facilitate that process, and we want to do it, as it matters in the grand scheme of things and its exciting! Because progress anywhere is progress for the whole humankind, so ourselves too!
Is the Lithuanian education system enough flexible and nurturing future IT talents?
Every talent must be nurtured on a personal level first such as the way they see themselves in the world and that has to start within the family. And only then come the mentors, inspiration and the right advice at the right time.
I don’t think Lithuanian education system today is flexible enough but based on statistics, just in KTU alone we have 700 students in technology field and the numbers are increasing. So, the education system does its function. Could it be better? Always!
What changes do you believe are necessary in the regard?
We do not have MIT, but we could take example from them and create in-house R&D centres in universities that allow students to participate in real life projects. Students should be allowed to explore, fail and try again. They would break things, but it’s ok! Pay people for making mistakes. That is what science is about. Because this is the only way to learn and we need to invest in it. But we could certainly do this.
A good plan would be for universities to start hiring at least 10 first-year students for a decent wage to come and work for them. Giving them an actual task, like building a robot, in a few years it would result in 10 more PhDs with hands-on experience. This is how we at TeleSoftas grow our own talent.
Are Lithuanian laws flexible in terms of allowing to attract talented foreign IT workforce?
Lithuanian laws are not flexible and our labor law is outdated. It is created based on the examples of 1989 USA and improved very little. Also we have social insurance system that is still a derivative from Soviet Union.
Our government really needs to put its foot down and completely rewrite the laws rather than patch up the old ones. We should make a business case approach for this and look into what we already have, what the current market needs are and what results we want to see. But It requires guts to step forward and change the entire system.