How to cultivate a culture of innovation in your development team?

Oleg

Hi everybody! Welcome to the Devico Breakfast Bar! Here we speak with different people involved in the business landscape, share their expertise, delve into the latest tech trends, and explore the ins and outs of IT outsourcing. I'm Oleg Sadikov, and today I'm excited to have Eric Björkman from Stella Sleep. Don't forget to subscribe and hit the notification bell so you don't miss the new episodes. Hi Eric! Thanks for joining me today. Could you please start by telling us a bit about yourself and your professional background?

Erik

Sure. Hi, Oleg, and hi everyone! It's great to be on this call. So, I am from Sweden. I'm a Swedish guy. I have lived five years in Ukraine, though, in my life. I have, basically, worked at two, three companies. First, I worked five years with a broadcasting company called Viasat, and they had some television stations – nothing in Ukraine – but we launched something called Viasat, which is also a satellite TV platform that someone might have used. I did five years with that company. Then, I did 10 years with Oriflame, which I'm sure everyone listening in here know what it is. And I was running sales and marketing in Ukraine, Kazakhstan, Russia, and then in Ukraine again. And then I was heading the operations in Belarus, which is still quite a big business. I'm sure main of the listeners of this podcasting is a bit odd, but, you know, this is before the war. It was different times. I thought, to be honest, that other part of the world outside Ukraine would become more peaceful. But now we know differently. This is life. I've started Stella four years ago. Came back to Sweden. Stella is an app company. We do apps for the meditation and sleep content. We are very active in producing this content, and we also have a lot of interactive features in our app that we will talk a bit about a bit later.

Oleg

Thank you. Yeah, Oriflame and then apps development – pretty different, different experience. What sparked your interest in utilizing AI technology to address challenges faced by parents, particularly in promoting better sleep and fostering stronger connection with their children?

Erik

Sure. So, our product is audio-only-based. So, for us, it's interesting to work with generative AI in a sense that in our world, you can create a lot of bedtime stories, like I'm sure many have tried on ChatGPT already. But we've integrated it very nicely in our app. We just hooked up with OpenAI's own API, which is not complicated to integrate but makes it look very nice. Well, it looks like a ChatGPT prompt inside our app, but the point is that the parents can only make bedtime stories with it, and they can also read this to their children, which usually is important to create these strong bonds and also, by the way, to develop the vocabulary of these children. Then, they can also record this story. So, a father or mother who makes the stories can then record it with their own voice and store it in the app. That way, it becomes available for generations, and hopefully, you can build a stronger bond not only with your kids but with your grandkids also.

Looking forward, we believe that synthesizing voice is the most relevant part for us. It's not that great developed yet, even though it's been 30 years now development of this functionality. It still does not sound great when you put on a sample voice on text, text-to-speech is still not there. We follow up the companies. I think there's a company in Ukraine, actually, called Respeecher, which is the most interesting one. There are many, many American ones. Apple has its own personalized voice, which is kind of more like a tool for if you have some handicap like you're losing your voice. They might develop there, but they have not yet. I think Respeecher is the closest solution I've seen so far. I've evaluated maybe 30-40 platforms in the world. So, that's where we go. And I know synthesizing voice to be concrete, but it means that the parent is then recording the sleep stories. You got that voice sample there. You can use that voice sample to push a button. The voice is synthesized by our server. And then, it's possible for that person to apply that new voice on any of our sleep stories, of which we have more than 130 or something.

Oleg

Sounds impressive. Can you share any specific challenges you encountered while implementing AI algorithms with Stella, and how you overcame them?

Erik

You know, working with OpenAI's API, it was very non-difficult. It took maybe two, three months to develop a normal recorder that we have a simple feature. Whereas it took three weeks to integrate OpenAI's API, and it works very, very well. And then, you know, five hours maximum added to localize this because we have this in both English and Swedish, for example, because there were some hiccups there. But it's very simple. It's very interesting. We have not developed this on our own. It's really just finding a good use case of this technology, implementing it quite well in the app, like few others have. I don't know why. And it's a great compliment to our product, and it increases the value, specifically during the trial. So, in the app world and subscription apps that we run, it's so important with this first, in our case 7 days or 14 days of trial, this user must get hooked during that time. And we can see that many of them are using this funny and simple functionality, creating a bedtime story, but it makes more than converting to paying users. And that's kind of the business sense, to be honest with you.

Oleg

Okay. What do you see as the most exciting potential applications of AI technology in the realm of industry you operate, and what opportunities and challenges do you envision for the future?

Erik

Did you ask about concrete examples?

Oleg

The most exciting potential applications in your particular industry from perspective of AI.

Erik

For me, it is definitely a development of synthesizing voice, and I can go a bit more detailed if we have time.

Oleg

We have.

Erik

You know, Respeecher is a very good company. They're working with Disney in the U.S. They are the ones behind Darth Vader's voice because the actor is, I'm not sure he's dead or very old – Floyd Patterson – or something. And in the new movies in Star Wars, they have synthesized that voice. And also, I believe Luke Skywalker also sounds young, although he's very old now – Mark Hamill. Those guys, they work kind of manually on a B2B basis. They develop, for example, Darth Vader voice takes like two weeks to develop. You take voice samples of these actors that are old; they're synthesizing it; they train the machine; they have to manually adjust the errors there to make it sound good. And then, after two weeks or one week, and then, 10,000 bucks or something, they have that voice, and you can use it. But that's obviously not applicable in a consumer world. So, they have another kind of marketplace where they say like this, 'Okay, you have a good audio file recorded one time.

I have a professional voiceover.' So, it's already annotated the sound, and it sounds perfect. It goes up and down, breaks, and everything. It's absolutely possible to replace that voice with another voice. And then, it could be, for example, say that I recorded with a man, you can apply a female voice. And it follows these breaks, these pauses, or yawning very well. But you can only choose between 30 of pretrained voices in their model. So, I want, of course, 1 million people to be able to do this, and eventually it will be possible. All text-to-speech solutions are, of course, getting better. You can go online and resemble AI, it's a player in this field. You can record in like 10 minutes your own voice, and then that voice can be applied on any text, but it still will not sound well. You can choose, for example, that this voice should sound sweet, like a kid, excited, or calm, but it still doesn't sound well, you know, just like 20 years ago. So, I think that space is the most interesting for us. And that's where we try to look at new solutions. And I just believe in these Ukrainian guys – Respeecher – I love them.

Oleg

Yeah. Amazing. Proud for them that they're from Ukraine, actually. I'm glad to hear that. Beyond your professional endeavors, what are some potential interests or hobbies that you find fulfilling?

Erik

Good question. You know, I have two kids, so that takes some time. One of the kids, she's in the scout. You know, scout is like this, you know, girl scouts. I think you called it pioneering during Soviet times. But it's a very nice little young activity. They're outdoor a lot. They learn to make fire, and row a boat, and things like this. I do that with her once a week. And then, I do play some golf. In Sweden, golf is a common sport. It's not like it is in Eastern Europe, where it's like a sport for very rich people or something. This is a simple sport in Sweden, where hundreds of thousands of people play the sport, just like it's a very soft exercise. And then I work extra. I would say that takes a lot of my time. So, I work with an American university, and it's like a paid hobby, I like to describe it.

Oleg

In Stanford University, right?

Erik

Yeah. So, it's in Stanford University, and I can go on forever about that. But let's hear your questions.

Oleg

Yeah. Okay, let's talk about how to balance the demands of being CEO and founder with the role of a course facilitator at Stanford University Graduate School of Business. And do these roles inform each other in any way?

Erik

Yeah, sure. I mean, it's never easy to juggle this, but as many people have this call running or founding companies, you never have enough money. So, you have to do something else very often. So, this is my extra job that pays well. And I do it in the evenings because the Americans, California, they often do that stuff in the mornings with the students. So, I can work in the evenings. I think it's a fantastic activity. I worked as a course facilitator. It means that you're helping out Stanford professors with leading courses. In my case, they're called strategic leadership. It's like marketing, I would say, and critical analytical thinking, which is a very fundamental way how you look at truth. You know, how are we biased when we look at something? How do we logically build a solid argument for the sake of a strategy that will work in the marketplace or will not work? And how do you critically separate data from truth and false? How do you do good tests, like good A/B tests? Because it's not a given that you do them right and learn about sample sizes, and sample selections, and stuff. I think it's fantastic if you can combine some academic hobby with the everyday job. Because even if in the startup world, you're very iterative, you're trying new things all the time anyhow, and it's very innovative. It's still a job.

And a lot of manual stuff and a lot of simple stuff you have to do as well, you know. Whereas the academic world, it's a bit theoretical because they talk a lot about kind of optimal scenarios. I cannot do 10% of everything I learned there of how a great company should be run, but it's just interesting to talk with other students. In my case, these students are of my age, like 40. And they are very skilled. They're doing different things. They can work at Google, or Microsoft, or Adobe, or they can work in a gas company in Nigeria, they can work at war gaming on Cyprus – all kinds of stuff really. So, they have different perspectives, and this brings you a good break from your everyday's startup work. And I really recommend that because you can use your brain a bit more, and get into different industries or different academic theoretical frameworks, and can challenge your mind. When it comes to my business, it has helped me to do better A/B tests, like I talked about. Because as an app, you do a lot of A/B tests with onboarding, with the paywall, with the pricing, pricing in different countries, et cetera, et cetera. So, I think it's fantastic. Try it if you can.

Oleg

Sounds great. So, in the morning, you're a father. In the afternoon, in the daytime, you are a CEO, and in the evening, you're a course facilitator.

Erik

Sure.

Oleg

Nice combination. In your opinion, what role does mentorship play in fostering professional growth and development? And have you had any mentors who significantly influenced your journey? Probably except the professor from the course.

Erik

Well, they're not always that great. I would say like this, that I think it's very important with mentors. I don't know exactly who listened to this, but if you are between 20 and 30 years old, I think it's really important, especially if you dug down in a startup, you're spending all the time in that, you get very little other input or reflection, to get someone who's usually older, with more life experience, that can give you a lot of perspective of what you think, and what you're doing, and what you think is right. It's invaluable. We talk a lot about advisory board usually to younger companies. That's kind of the same. They don't have to be called mentors, but they are people with more life experience, more perspectives, and they give you input. And I think most of us, if we look back five years in our own life, we might think that we were an idiot back then, or we did something that we would never do again. And this is what mentors help us to avoid going forward. So, I think it's really good. I think it's good. The mentor can be the same age, too. It could be a coach that helps you think a lot. A good coach is not trying to tell you anything because usually that coach has not achieved very much success, perhaps in business, but it can help you think about yourself, reflect on your thoughts, and may help you come to a new conclusion yourself. That is a great coach. I had a coach in Ukraine, by the way, very good, at Green Light Consulting. She was not in Kyiv, I think. I don't remember. She was like 25. She's not on a business, but she was very good and asked me a lot of good questions, and that helped me a lot.

Otherwise, one of my biggest investors right now is an angel investor, a Swedish guy. He has done two things that I think are very interesting. One, he has really stuck to what he loves his whole life. He's 43 now. I can go into some examples. Like, he would make his own wine in the attic without his parents knowing, you know. It requires a lot of equipment to do this. When we were younger than 18, so we did that. And then he continued to becoming a sommelier. And then, he did a business education and then took one year in France in wine and trade spirits and an MBA. And then he worked at restaurants. Then, he worked at Systembolaget, which is kind of a Swedish monopoly in selling alcohol because we have a monopoly, just like Soviet times. And then he joined the company. And I would say he disrupted the wine industry, like very mature, old type of industry. But he started selling it with celebrities, like local Swedish celebrities in this case, like Swedish rappers or Swedish people heroes, and on TV. So, it made him very wealthy. And it's very inspiring with people to stick to what they love and to do disrupt their industry one way or the other. I think that's the big takeaway there from that mentorship. He gives a lot of advice. Like, people are usually very snobbish in their industries. We look for that. And if you can, break it and introduce a much more commercial sense. So, that's what he did.

Oleg

Great. Are there any professionals or leaders in your network who inspire you in your professional journey, except the one we discussed?

Erik

I have another guy. He's running a company that is a supplier to me right now. They work with helping paid users share their content that is behind a paywall to other friends, so the friends do not hit a paywall, but they can enjoy the content. For example, in my case, my paying users can share a bedtime story, and the recipient, my paid user, the friend, he doesn't have to download the app, or he doesn't have to register emails or anything. He can just enjoy this product – the bedtime story – in his web browser, in the phone right away. So, it does that and many other things, but I think why he inspires me – he's extremely structured person. Even if you're running a crazy startup where you have to iterate 55, 000 times and change track, change developers, he's anyhow been very structured about what he's doing, and what they're supposed to offer, and how they're supposed to operate their company. Like, I feel often I'm much more relaxed, and he's like super organized. You know, he has a to-do list in Excel every day to get a feeling of how disciplined he is. So yeah.

Oleg

Amazing!

Erik

You never heard of the guy. He's Swedish. He lives in London.

Oleg

Okay. Yeah, I think I was always surprising with the guys who are so well-structured and have a to-do list for everyday activities. That's weird to me, but for someone it works. With your experience leading teams across various industries, how do you foster culture of innovation within Stella development and marketing teams?

Erik

Yeah, very good question. I would say that there are two polars here. Like one, you're running a big company with lots of people, and there's a lot of interaction, and you have to build culture one way. Stella, my company, is a very small company, Five people. There's not so much kind of barriers to innovations in such a place. But I think it's very important to allow for a lot of crazy ideas to be discussed. For example, I love the Stanford. They call it non-consensus ideas, meaning ideas that very few people agree with. Like you have, for example, in my case, five people, and you have an idea from one person, and four people think it's an idiot idea. But he loves it, or she loves it. You should not kill that idea right away. You should let it be there and to be honest. You should try to bring in other opinions. Maybe it's advisory board, or users, customers, their opinions. I mean, new ideas, not to test an existing feature. And then you see, with these different perspectives and different viewpoints, if you can come up with maybe a refinement of that idea. And I think that's extremely important for having a good innovation to allowing for that.

So, I think it's also very important not to punish idiot ideas too fast. I should not say as a CEO, like, 'That's a dumb, dumbest idea I've ever heard.' Should never do it. And if I feel like I want to, or if anyone feels like saying that, they should have a warning bell ringing in their head, telling them, 'Wait up a little bit. Let this idea be there for some time, and we'll see.' And if it doesn't work out, we can have a thorough discussion. And if that person cannot provide a logical argument why that idea couldn't make sense, then we will scrap it. But it's very important to have a very big variance of ideas, like many different ideas. And then, you know, you should work with retention of those ideas. The best ideas, you should make sure they don't slip away in some tech sprint, somewhere. We didn't have time with that. Let's keep it. No, it's very important to keep that idea, and think about what is working in your company, and keep that going. So, I think that's my few cents on innovation and culture.

Oleg

Okay. Thank you. As AI continues to evolve, how do you envision still adapting its talent acquisition and development of strategies to keep pace with emerging technologies and industry trends?

Erik

So, I mean, we're a very small company. It's not like we need to hire a lot of people, everything. But, to keep track of what's happening, I stay in touch with some of the companies like Respeacher, but also other ones in that space. And that is the closest I would be to try to follow them and see what's happening. And if I can raise more money or if my business started to take off, which would be great, then I can afford to hire them. And in my case, it's very clear. I'm very focused on synthesizing voices. And there are a couple of people in the world who seem more or less better on this. And I try to keep tab on them on Twitter, on LinkedIn, and see what they're writing, what they're thinking, their recent, you know, they do some kind of reports, or they add some new features to whatever software they might have. And that's how I stay in touch because I also get a lot of inbound. You know, if you continue a bit more inbound outsourcing for companies who want to maybe provide this to me. They pitch me, and they say, 'We are great in developing mental health space' without being more specific than that. But when those pitches are more concrete, it gets more possible to see that, okay, maybe this firm, or that guy, or that girl, they could be interesting for me to continue with. But I have to balance that with like hundreds of outsourcing companies contacting me all the time.

Maybe they have a good, great AI idea, but I need more information, and I don't have time to spend with two people every day asking more questions about this. So, I would need, ideally, you know, in your business, I would need maybe it's not the marketplace, but it's a platform where all of the companies like yours are reviewed, their previous clients, quick comments, ratings with stars. They have to try to not be manipulated by you because you're probably professionals in this. And I want to be able to speak with someone else who used the services of that outsourcing company. Now I can't. I don't have a great network in Ukraine. It's not like I have friends who used every single agency there. So, you know, your industry, I think, is just so fragmented. There's so many companies there. So many developers break out from whatever they were working. They create a new kind of collective community. Sometimes it's a company, sometimes it's not even like a company, like an individual entrepreneur, like very small form of corporation. That's not always that a company that I can trust, you know, because I'm a Swedish kind of LLC or a company I cannot just work with anyone. It needs to be stability.

Oleg

Yeah, definitely. Based on Sweden, do you notice any unique challenges or opportunities in the tech industry in your region compared to the other parts of the world?

Erik

Yeah, I think that the one problem is the taxes are high here. It's very difficult.

Oleg

Not only in Sweden.

Erik

No, no. But it's expensive to hire people here and pay salaries here. It's almost impossible. That's the problem because company profit tax, it's not high, but you're not usually in profit the first year. Maybe if you're in consulting business, you could, but not if you build a consumer goods type of company like an app, in my case. I think that it is on the plus side, it is fairly easy access to capital. Of course, it's more difficult now than two years ago, no doubt. But it's still, I've raised money from 24 angel investors. And if I would be in Ukraine working there, for example, I cannot imagine that I would have been able to do with that fairly easily. Like, I've not even used a lawyer. I have an accountant person who works five percent, one evening per week maximum. And that's enough to raise that type of money, and put the money in the bank, and start to spend it on stupid ads on Facebook and Instagram, stuff like that. So, I think, that's good in Sweden. Good people talk about ecosystem. Yeah, I mean, they're good trainings for free, a lot of material for free. Good easy to get started. But that also means that there are a lot of idiots that get started that shouldn't start a company. And the filtration, I think, in Ukraine, for example, maybe Cyprus, it's harder because it's hard to get started. It's only the great people who start something. They partner up, for example, with the right IT outsourcing company, and then it becomes something big. So, other thing with Sweden, I think it's a healthy place anyhow, even though Sweden is a very socialistic place in general. Like, I talked about high taxes. But you still have companies like Spotify, or Klarna, or Voi, like electronic bikes. Yeah, actually, Skype was made by a Swedish guy together with an Estonian guy. So, there's a lot of good stuff coming out of this tiny place. And it doesn't seem to kind of squash innovation. You know, with the socialistic system, everyone can get a good education. It kind of helps people to get started.

Oleg

Thanks for the detailed answer. Could you comment on the challenges associated with the shortage of qualified specialists in the IT sector, particularly in relation to your business?

Erik

Yeah. So, yeah, that's very good question. And it touches upon what I was talking about before. I don't think there is a big shortage. It's expense. I mean, especially now because a lot of great people have been laid off the past 12 months, to be honest. But the difficulties is to find good one – good developers or IT outsourcing platform. It's like a huge risk for a Swedish company to engage Ukrainian, or Kazakh, or Cypriotic, whatever, outsourcing platform where you can barely meet that people. There is usually maybe only video conference. It's difficult to assess the previous capacity. Will they do stuff on time? Do they require 10% more time than another firm? Is their pricing fair? Is that company stable, or will it kind of cease to exist? You know, things like that. So, I think it's for a Swedish company, sure they will look elsewhere. They will look, for example, Romania, Ukraine for sure, Kazakhstan, maybe, Serbia, maybe. That's where they have these tech hubs. We try to hire people because long-term is too expensive to always have only Swedish developers.

Oleg

How is your development team structured, and have you ever used IT outsourcing services?

Erik

So, we have one full-time lead developer who is fairly good, fairly full-stack, like he's handling both front end and back end also. But he's an iOS developer. So, we have two apps in our company. The first one is programmed in Flutter. He's not so good with Flutter, and I cannot take his time to learn Flutter from beginning, et cetera. So, I've engaged an agency, exactly like your company. It's a small one. They're called DevsX. I'm not even sure, it seems to be a company, but it's small. It's working well. So yeah, that's the setup. They work maybe 5%. You know, if I say 100% is what they work full-time, they work about 5% with different features, specific sprints. It is quite clearly assessed in time. They usually keep the word. Of course, in this world, it's very challenging because sometimes it might be difficult to predict if something will take longer time, shorter time. And the guy who orders it, me in this case, can never really know how fast should they be. Of course, a CTO who worked 20 years in the industry has another opinion, but CEO person might not know.

Oleg

I totally understand you. What were the factors you decided to proceed with an IT outsourcing company?

Erik

One, we need special knowledge. In this case, people are good in Flutter and have done a lot of other projects with Flutter before. So, I know it should not take so much time for them to fix whatever I wanted. That agency had been into my industry. They had been into mental health with some other projects. And sleep app is kind of close to mental health. So, that also helped me choose them. It was not a tender. It was not like a big tender brief where they had to assess what hours it would take to do this and that. I didn't do any tests with them. I just took a chance that they would be good enough. And the first task was simple. Second task is less simple. And now soon going to do the third task. So, I like it because, with them, I can control the cost. If something takes too much time, I just kill that feature and live without having it. Whereas a full-time employee, you never know is that person working hard and not working hard. You can never know.

Oleg

Got it. What are the benefits and drawbacks of IT outsourcing as per your opinion?

Erik

So, benefits, you can control costs. They usually have 10 other products. So, it's good for them to have more or less sometimes if you're not so super hard with your deadlines. You can get hold of specific knowledge, very interesting, of course, if you have a special programming language or a special industry. You want to try to go into such as easy to do with outsourcing platform that's been there for a couple times before, has an idea what works and what doesn't work. You can control the cost of that. Yeah. Drawdowns, it’s sometimes they don't have, obviously, any loyalty or super interesting. Of course, they have normal relation to this company, but they will not work on a Sunday evening if you need to because the app goes down, because the server has a timeout, or because it's been too many requests on something, or whatever. But a full-time employee would usually have much more loyalty and help out with that. So yeah, that's the drawdown. So, the thing is it's nice to have a full-time resource in-house and then use outsource agencies on top of that.

Oleg

As per your opinion, how do you measure the success of your collaboration with your existing IT outsourcing vendor or in general?

Erik

Yeah, I mean, I will say if they deliver reasonably within time that they have assessed, because they assess every sprint very well. If they do that within that timeframe or reasonably, you know, 10% more, 10% less hours, that's a determination of success for me.

When it comes to the quality, you know, it's kind of black and white – either that feature is done or it's not done. And it's not like I put a certain value on that, that it was nicely done than the other ones, et cetera. Of course, if that agency wants to have a lot of opinions also, like not just program whatever I want or whatever I draw in Figma, but if they come with very good business advices or opinions that maybe we'll not put the number on it, but I would like it and I know that means more for me. And that's probably how I think I will think they're more successful if they were proactive with business advice.

Oleg

And my last question – what advice would you give to other companies considering IT outsourcing?

Erik

Yeah. Well, I think you should try it. I just think we need to find a better, you know, trust pilot is not enough to assess if an agency is good or bad, especially like in my case, Nordic European companies finding an outsourcing platform – Ukraine – high risk. Very few people who want to try. Some of course do it, but far from a lot. And we need some kind of overview of all those agencies in Ukraine. So, I understand I can see customer reviews from them, from their customers, and grades, so I can assess it. I think that's my final advice. Can please someone make a site like that for Ukraine? I'll be happy to engage to the website.

Oleg

Thank you, Eric. Thanks everyone for listening. If you enjoy our discussion and want to stay updated on future episodes, don't forget to subscribe and hit the notification bell. That way, you'll not miss out on the latest insights and conversations from the Devico Breakfast Bar. See you next week. And Eric, thanks again for your time. I'm sure that was very useful.

Erik

Great. Oleg, thank you very much. I can say, 'Dyakuyu!'

Oleg

Dyakuyu!