As part of my series about the “Five Things You Need To Be A Highly Effective Leader During Turbulent Times,” I had the pleasure of interviewing Borys Pikalov.
Borys is Co-Founder at Stobox, an award-winning startup that developes a disruptive financial technology that provides alternative business financing for enterprises. He is also a researcher with over 2,500 hours of research in the industry of securities tokenization and author of the book “How to attract investments with STO. A practical guide”, supported by the Maltese government. Borys shares his knowledge as a speaker and contributor to professional industry media, Securities.io, TheTokenist, Finovate. He also assits government of Ukraine with the education of business community and design of legislation for virtual assets. What is the most impressive, Borys ahchieved all this at the age of 22.
Thank you so much for your time! I know that you are a very busy person. Our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?
I’ll go into detail here because all the lessons I applied in business have been learned before I started. In the hindsight, it seems like all things that happened to me in the early years were a preparation to handle challenges to come.
In childhood, I was a “prodigy” child, learning was naturally easy for me. However, as many of such children, I struggled with emotional intelligence and social skills. This is a dangerous combination as it makes you someone classmates envy and someone who is barely able to protect himself from emotional abuse.
Those years left deep scars but also provided a key revelation that changed my life and made it possible to become who I am now. It is was that these skills may be learned through continuous practice of overcoming yourself. If you are ready to struggle, to do what feels uncomfortable and embarrassing repeatedly, eventually you learn the skills and become comfortable. Learning to struggle is critical. But there is also another key element.
In the university years, I’ve studied theoretical physics (quite uncommon for entrepreneurs). In the community of physicists, there is a unique culture that is very lacking in business: complex challenges are fun. We would often gather with friends to solve the hardest problems that we could find. This attitude makes it possible to handle long-term continuous pressure for years!
Another element that thought me resilience was my sports career. For 3 years, I was professionally engaged in competitive debating in British Parliamentary Style. The uniqueness of this style is that you have only 15 minutes to prepare a speech after hearing the motion. Limited time and high stakes create a different kind of pressure, which couldn’t handle for a long time. In my most active year, I lost 10 final rounds in a row (!) because of it.
The key to winning I have found is surrendering the result. It is another extremely uncommon business advice. Mostly, it is advised to focus on revenue, growth, KPIs. The problem is, those are not things you fully control — they are determined by hundreds of factors, such as the wider economy, your competitors, etc. To achieve efficiency and mental resilience, you should focus on what’s under your control — doing your best work and realizing your higher purpose. Since I surrendered winning, I won 6 competitions in a row.
All of these lessons later have shown themselves crucial. The industry of securities tokenization is very complex, and I don’t think we could have survived without having these lessons learned. It is highly competitive (literally hundreds of other tokenization providers) but at the same time only emerging, with only a few dozens of clients in 2020.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘take aways’ you learned from that?
It is funny to look at my communication at the beggining. I was trying to be very formal in all messages, letters, documents. This made some of them barely readable. At that time, I thought it was impressive. Only with time you learn that however cool is the CEO you are speaking with, he or she is only a person, as well as you. If you want to other people to trust you and work with you, you have to connect with them on a human level. When I realized that, our sales conversion rate increased two-fold.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?
There were many great people in my life, it’s hard to pinpoint anyone particular. It refers not only to those who I know personally, but to people who share their insights in books and articles. I’ve been deeply impacted by the book 80,000 hours, by the works of Eliezer Yudkowskiy, Mark Manson. These were definitely lifechaning for me.
Extensive research suggests that “purpose driven businesses” are more successful in many areas. When your company started, what was its vision, what was its purpose?
We started with the mere purpose of making money in a promising niche. I don’t think that many businesses start with the goal of changing the world. Most often you simply want to do something cool, solve the problem for yourself or your friends or simply to make some money. The purpose is discovered later when you realize what you are capable of, how you impact people’s lives, how your business fits into the bigger picture.
This happened to us as well. The more we were doing research, speaking to potential clients, the more we realized how disruptive we can be to financial markets. Now we have found that our purpose is to democratize financial markets, giving businesses more access to capital and people access to better investment opportunities, the vision in which each company from day 1 can make it open to investment from any people in any part of the world.
Thank you for all that. Let’s now turn to the main focus of our discussion. Can you share with our readers a story from your own experience about how you lead your team during uncertain or difficult times?
Sure. After 9 months of work, we started understanding that despite the initial hype, the market is not ready yet. When we started we thought that mass adoption is right behind the corner. At that moment we understood that it is another 2–3 years if not more until it becomes possible until regulation and technology evolve enough. Until that we could serve only to the limited number of early adopters that were hard to get (as we are in the B2B).
Furthermore, we started encountering financial difficulties. We were mostly funded by one of our partners, Gene Deyev, who is older and had other operating businesses. As they started having difficulties due to COVID, so did we. As the cherry on the top, a few months later we also had to pivot from the tech we were developing for almost a year and start from scratch.
We had to refocus from searching for quick fixes to building long-term value. We had to cut salaries, reduce marketing and tech expenses, and find financing solutions that would support our operations and development throughout the years to come.
We’ve been in this “low-spend mode” for 7 months, although they felt like 7 years. During this time, we have tried 15 ways of client acquisition, learned to obtain them with less budget. Although tech was not ready, we accumulated expertise that could be used to sell services. We tested 5 different services that we could sell before finding what works and brings money. Instead of using external providers, we’ve built an internal tech team and found cheaper infrastructure, which allows us to ship the first version in November.
Did you ever consider giving up? Where did you get the motivation to continue through your challenges? What sustains your drive?
Yes. Giving up is a rational decision when the market is too small, when the timing is not right, or when you are not ready for sacrifices and challenges. Sometimes business goes bad not because you doing anything wrong but because it is impossible to succeed The time you spend on a bad business is the time you don’t spend on good business. Even if the business goes well, you should regularly consider giving up and finding something better to do.
In this case, it was finding the purpose that made me stay. It was the hard time that made me look deep into why am I doing this and discover the purpose of Stobox. Having this purpose creates responsibility — you cannot give up when there is a change in the world that has to be made, whatever it takes. This is when the shift happened — I gave up thinking about the beating competition or increasing revenue and instead focused on making the future possible. The search for funding and clients was part of making this purpose possible, not the end in itself. And this is when we started winning.
What would you say is the most critical role of a leader during challenging times?
Helping the company and each person in it to discover and remember their “why”. For people, it may differ from your own and the “why” of your business. Some are motivated by significance, some by friendship and connection, some by growth, some by challenges in themselves. This is what makes people work hard and achieve results in hard times. Even if you do only this one thing, assuming that you have the right people on board, this is already enough — you people will do everything else.
When the future seems so uncertain, what is the best way to boost morale? What can a leader do to inspire, motivate and engage their team?
There are many ways, which should be tailored depending on the employee. Some of the tips are:
- Create a feeling of safety. Managers often blame employees for what is caused by the general downturn. People are thinking about whether the company will be here tomorrow to pay salaries. Make them feel accepted, feel that you are not going anywhere, they are here together to solve a common problem.
- Make your victory theirs. This is a great time for bonuses and options. They may be very small because what matters most is symbolism, the fact they will share your success if it ever comes.
- Celebrate small victories. Even if the achievement is not significant for the business, it is significant for people who put their effort into it. Let them feel appreciated. Plus, let them feel that both they as people and you as a business are able to win.
- Have a clear picture of the future you are going to build, your shared dream. Remind of it often.
- Treat challenges as fun. The harder it is to win, the bigger the price, the greater you feel after accomplishment. The atmosphere of playfulness encourages experimentation and creativity — they are your key assets that differentiate between winners and losers in a hard time.
What is the best way to communicate difficult news to one’s team and customers?
You have to frame difficult news in such a way that they motivate the team, instead of depressing. This is a two-step process. In the first step, you have to acknowledge their emotions. Let them tell their feedback first. It is completely normal to feel fear, anger, confusion. If you are optimistic, while people are fearful, they will consider your optimism fake. When you have shown that you understand their feelings, they are ready to listen. Now offer them another framing, which you consider appropriate, such as framing it as a growth opportunity, interesting challenge, etc. Our minds generally look to protect our sanity, so they are likely to accept your framing to feel more positively.
How can a leader make plans when the future is so unpredictable?
The future is always unpredictable, no matter the good or the bad times. Any business planning is business guessing. Instead of making 5-year plans, focus on agility and resilience.
Is there a “number one principle” that can help guide a company through the ups and downs of turbulent times?
Stick with your core purpose, optimize your actions towards achieving it. This will save you from doing rushed decisions, chasing short-term profits, laying out people to improve the bottom line for investors. If your purpose is the bottom line, difficult times are a great time to start finding a new one:)
Can you share 3 or 4 of the most common mistakes you have seen other businesses make during difficult times? What should one keep in mind to avoid that?
- Searching for quick fixes instead of building long-term value and following their purpose.
- Creating a culture of pressure, in which people should burn on the work to achieve performance targets.
- Not changing anything, thinking that situation is temporary and things will come to normal, reacting when it’s too late.
Generating new business, increasing your profits, or at least maintaining your financial stability can be challenging during good times, even more so during turbulent times. Can you share some of the strategies you use to keep forging ahead and not lose growth traction during a difficult economy?
In most cases, difficult times are a sign of a structural shift in an economy, such as the shift to online during COVID, shift to outsourcing in US manufacturing, etc. While some sectors fall, others grow even more. You should focus on leveraging this fundamental shift, becoming the pioneer of change.
For example, if you a bank affected by COVID, don’t simply wait until quarantine end to open physical offices — abandon them at all and become the online-only bank because this is the future.
The best time to do it was yesterday — before the difficult times began at all. Then you are prepared and make the transition smoothly. The sooner you recognize this shift, the better. Most likely, things will not get back to normal. Live with it and seek to be the first one to adapt.
Here is the primary question of our discussion. Based on your experience and success, what are the five most important things a business leader should do to lead effectively during uncertain and turbulent times? Please share a story or an example for each.
These 5 advises come naturally from our previous discussion:
- Stick to the “why” of your company, remind everyone about it. Focus on this core purpose. Find how you can achieve your purpose in changed circumstances, optimize everything towards it. In our practice, we understood that the core purpose is to prepare infrastructure that would allow at some point all businesses to tokenize their securities. There were few instances when we could pivot to more profitable niches in the short-term, such as payments, fundraising services, or other tech services. But this would mean abandoning what we stand for becoming one of the thousands of faceless companies. But we resisted the temptation, and instead focused only on those services that allow us to gather insights or future clients for Stobox Network, while obtaining funds for its development.
- Identify and leverage the fundamental structural shift. Do it as soon as possible. Act bold, sometimes you will need radical actions. Be ready to cannibalize your own profits. Don’t hesitate and don’t postpone what must be done. An example of it is government of Switzerland. While most world governments require securities to be stored in centralized depositories, it is clear that securities on blockchain have many superior features and are the future of finance. Switzerland adopted a law, which recognizes securities that are stored in blockchain as a legitimate type of securities, thus becoming the most progressive jurisdiction in tokenized securities.
- Empower your employees. Help them to discover their personal source of resilience, create atmosphere of safety. A great example of such approach is AirBnB, which had to fire nearly 2,000 employees but help them as much as possible with finding other jobs, including in other AirBnB departments, and provided equity compensation even to those who didn’t work long.
- Experiment. You are venturing into the unknown, alongside rest of the world. You need to find what works in changing circumstances. When resources are scarce, you need creative solutions, which are always born from experimentation. In Stobox, when we shifted to provision of services to sustain are operation, we tested 5 revenue streams in 6 months before discovering what we are comfortable with. We did it with the team of 10 people. If you have a team of 1,000 peolpe, you can do 100 times more testing.
- Manage your energy. Burnout is a big risk for leaders in such time. We’ve on our experience how founders can become irritable, increase pressure on a team and start having conflicts due to lack of sleep and rest. What is even worse, you stop generating creative solutions and seeing the big picture when are are stressed and tired.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
“Slow and steady wins the race”. This is the quote about compounding — how small actions throughout years add up to amazing results. I spend a little time each day learning and reading. Throughout years this added to knowledge being my main competitive advantage. Since I already know a lot, learning new things comes easy and I find connections other people are unable to. This is true about any other activity in which you strive to excellence.
In business it allowed to compete with people who have 20 years of experience in law and finance after having only 1 year. I share my knowledge in professional media publication, on Stobox YouTube channel, and the feedback we get is that clients are unable to find other high-quality sources of education about asset tokenization and their relation to fundraising, this why they come to us. And this is only the beginning.
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