What Most Founders Get Wrong About Scaling—Railsware’s Founders Get Right | Ep. 205 with Yaroslav Lazor and Sergiy Korolov
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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 Korolev, the co-CEO of Railsware, engineers turned entrepreneurs, active promoters of engineering and a product mindset. 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, you know, I want to start Railsware and this is the industry I want to be in. Hi everyone. Um, so the spark, the spark really is the love for software, um, ability to see and feel that software is something that can change the world drastically. And, um,

Passion for building software. It's an amazing ride always. You learn like crazy. You grow. And it's just, you know, it's like there are those people 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 a sport for me personally. I'm pretty much sure for Sergey it is the same.

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 multidimensional world, the multiverse and learn and understand. And you see those, you know, miraculous stories and,

It's sport itself is a, 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 multidimensional from that perspective, right? Because you can, you can change people's 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 a sport of like this multi-dimensional change and influence um helping people grow uh helping amazing individuals grow into professionals growing to influential people into influential leaders changing

It's just great. It's a great ride. So I 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, exathlon, 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 our case, I believe it works the same way. You start with writing code, but then you want to influence decision making

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. And in the end, you start to build a 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 you know as a product as well then it helps a lot it's by the way a very good concept we've delivered kind of we've coined in the company is like doing everything as as a product as a software product kind of whatever you take like if it's a legal if it's a finances if it's a you know 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. So 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? 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, you know,

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. And 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 experience.

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 they basically talk to them and they tell you their whole life and how they made decisions and how they didn't make decisions. It's a huge amount of knowledge packed 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, all the aspects. And I just want to say here quickly why many products appeared or popped up in Rails 4. All the products that we have, they originally started from not products, but just a piece of software that resolves our own problem.

So Mailtrap, Titan Apps 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 it.

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 yaroslav 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

And 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, so I have a friend, he's been doing festivals and he was hosting hundreds of thousands of people on those festivals. Right.

So if he talks to me about tickets, ticketing systems, 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 and then wants to build an app.

And then you could guess that the San Francisco guy will build a billion-dollar company, right? But it was the opposite. So it's a big area, which has some logic, and it has this organized chaos around it.

how and who and why we'll be more successful. We don't have a crazy, you know, 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 know,

you have ideas. But 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 how big is your target addressable market. What's your go-to-market strategies to them? How do you approach this target addressable market? Can you tell them something that they're going to go to you rather than someone else? How are you going to test that? You won't overbuild the software for what you're trying to test. Maybe do some painted doors.

And then people will go there and be like, oh, great. The interest is there. You'll find some people from the industry. You'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 changed it in their head because it was not like they're telling it was, right? And then some of them are more modest and some of them say like, you know, 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 they made $200. And then eventually somehow they build it into a billion dollar business, which doesn't like, you know, people like hockey sticks, but it's not a hockey stick. It's a perpendicular thing.

It's just some of that needs this founder mode craziness in it. I would say founder mode craziness is very important spices that you put on top of everything. Understanding and going deep. But 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...

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 and it is very fascinating to see in the end who does become the most successful. 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 the traits of successful entrepreneurs. So when you think of yourselves, or if you think you've worked with other people who have also found success and you've been integral in that success,

If you could tell me two or three traits that you feel that either you all share or people have to have in order to find success. So I would say that there are different stages that 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. So 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 a 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 and then you need more people and you need more professionals you need 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 view so you do a lot of shuffle and kind of

Setting up those people structure is a very, very important component of a successful company and a successful entrepreneur. Without people, without a team, it's just impossible. Well, sometimes you have some luck and you will be able to build a 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 take companies to 6 million ARR, which is a very good financial success for some of the teams that have like 40 people they wouldn't have. It's...

You kind of have to balance everything, right? The same thing if you feel that you're suffocating with work. I would say one of the most important elements is understanding and conscious understanding. It might be even intuition. Intuition with a decent amount of logic on top of it. If you know what you're doing and you're proceeding and basing it the right way,

You can get very effective with very small teams. Sometimes if you overhire 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 lots of let me go manage them. You 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. 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 time that one, right? How to pace it and how to take it out of like, I don't know what. Maybe there are probably some...

techniques and principles that involve a candle and stuff. But it doesn't mean that you need to hire the team. Especially with AI hype, there's stuff that you can do with AI that will actually work and will be consistent.

Apple seems not to be able to do it with Siri, but some companies are able to do it with some other tools. 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 thing that happened in certain moment of time, proper time, proper proposition, proper people met each other. But when...

Did the right thing, yeah. But sometimes, but people usually prefer not to talk about this this way. They rather say that everything has been planned this way from the very beginning, from the childhood kind of envisioned. Yeah, yeah. But at the same time, Adamson Horowitz has this great article that helped me throughout the years. It'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, then if something falls from the tree, you have to be under the tree. So don't quit is a really great idea. A lot of, in our cases, we kind of rely more on trend rather than particular use case right now. So 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 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 we survived that as a company and the

Don't quit is a really important thing. Another thing is what Anderson Cordova is 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. So lower the gas. Don't burn yourself out.

It's actually very egoistic to burn yourself off because you're taking things the wrong way. You're being too connected to what's really happening. And you're like, you know, it feels so rough. Well, don't feel that roughness. Sometimes that doesn't make sense to do it this particular way. So just go, you know, calm down your nerves.

by making some friends and getting things out of your hat into the paper. In the hat, they're always more painful. But focus on the road, not on the wall. The words of Anderson Horowitz, 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 maybe, you know, maybe I rely on myself this time. And 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, when 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, whatever would have came to did come to fruition. So don't quit. Might be.

the best entrepreneurial advice i appreciate that as simple as it is uh 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 um leveraging ai i'd say even leveraging partners but

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're in the industry that is, I'm sure, impacted tremendously through AI. So how do you see this coming with being...

a not necessarily just a solo founder, just having less employees, but really scaling and growing a larger company. So 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 ChatGPT 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 of course and quality and quality of course and there is a lot of hype let's be clear but there is a

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 reasonable expectations from AI.

CEOs of the companies which kind of promise you that you will create software without developers, they say it and kind of their revenue is growing exponentially, like a hockey stick. At a trillion dollar, yeah. Just say something on the stage and basically your company is growing $1 trillion per

and capital value. Very 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. Right now, we run YouTube channel, like more than 50,000 subscribers. And before graphical designers were able to create thumbnails for our videos, they

Right now, the same person can create some nails faster because AI helps and then he just finishes with smaller touches here and there. 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. If you prototype, AI right now gives a lot of possibilities to prototype quickly. So you can make some clickable, almost applications to present the idea before you were able to do so with, 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 but right now you are able to make like almost you know

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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 in the water. Yeah, Instagram, the kinder developers, a few people who can do this with the eye in the initial stage. 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 Railsware, all the things that you're working on, how can they do that? They can visit Railsware.com. All the contact information is there. Form, email, everything.

kind of our social media linkedin the instagram so youtube channel and 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 uh every each one of our products coupler uh mail trap and uh tycoon apps they have their own youtube channel which which also do you know 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? Our blog is great. There's a lot of information and content to explore.

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. You 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 episode

50 hour video on 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. But with AI, as you articulate, as you try to figure what your ideas are, you now have this intermediary thing between, except for just people, right? Because people act like they understand you, but in 99% of cases, they do not really understand what is it that you're thinking about.

You have your picture in your hat. I have my picture in my hat. 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 do you all go in one page by actually looking at one page, right? But AI is a good thing. Like, it's a good thing for kids because kids are asking. Like, sometimes, you know, when we tell our kids, well, don't do this. And they're like, why? Well, because of this. They're like, wait a sec, let me check with AI. Maybe you're wrong.

So there's this marriage counseling, like a third person, third entity 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? I'm with you. It's opened up my mind to thinking in a different way, thinking much bigger than what I am. I think I get stuck in 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 excited. That's why I hope people check out rails, where it's been great having you both on. Uh, I think we had a great discussion. I took away many things, uh, 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 rails, where when you want to create, you know, something that you're going to impact the world, um,

These are all the things that I took away from today. But thank you both for joining us today on Founders Story. Thank you, Nuneo. Thank you. Thanks for having us. Six months from now, you could be running a 5K, booking that dream trip, or seeing thicker, fuller hair every time you look in the mirror. Through HERS, you can get dermatologist-trusted, clinically proven prescriptions with ingredients that go beyond what over-the-counter products offer.

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