The full transcript

Oleg

Good morning, Patric! Welcome to our Devico Breakfast Bar! Happy to have you here! Please introduce yourself and tell us about your professional journey.

Patric

Hi everyone! I'm Patric Palm, based out of Sweden, in Uppsala, which is just north of Stockholm, very close to the main airport in Sweden, which is very convenient for me since both the business I'm running right now and also my previous businesses have been very international. So, having that convenience with the airport has been very good. Now, what I currently do is two things. One - I'm Founderand CEO of Favro, or Favro, you can pronounce it whatever way you want. Favro is a platform. It's an enterprise-grade platform for collaborative planning and collaboration used a lot within the game industry. So, game studios and game publishers, many of them are venture-backed. It's typically people that have worked in a bigger place before, for example, Riot Games, and they spun out and started new studio, you know, raise some venture capital.

And they are not only wanting to build a really cool new game, they're also thinking about building a studio, a culture, and a company that feels modern and where the smartest people want to work. So, that's one big customer group. Then we have the second one there, which is big publishers or game companies that have been around for a little bit longer, like for example, Sumo Group. And in their case, they have probably used every tool under the sun and they're enthusiastic about using something with a little bit more modern take on how planning, product management, and collaboration can look like. And then we have also customers that are tech companies, SaaS companies. So for example, Wolt, they have more than a thousand users of Favro, so very large organization wanting to master hybrid work. And then we have enterprises, you know.

Volvo, in our case, it's the newer part of Volvo, they're basically like, you know, driving a car as a service. You know, those kinds of teams are using Favro. We have telecom companies. So, we do also have, let's say, a little bit more traditional enterprises as clients.So, that's what I spend most of my time on. And then on the side, I have an investment company, where I invest in game companies, AI, functional foods through venture capital companies. So, currently, I'm an investor in 17 companies directly, and I also have 7 venture capital funds that I'm a limited partner in. So, I also try to invest in, let's say, give back to the very new ones coming up.

Oleg

It sounds very interesting. Can you tell us a little bit more about Favro, what problems it solves?

Patric

Yeah. So, if you look at enterprise tools for planning collaboration, most of them are really, I would call, glorified ticket trackers. They're really bug databases that you have built more and more functionality on. I mean, the most classic example and competitor is JIRA, but there's also many others where you will have a very long list of issues or tickets. And, you basically end up with a situation where you kind of throwing tickets at each other. And it's very easy also that the organization becomes very siloed. And also this kind of tools are typically used by the engineering and IT organizations versus the rest of the organization are using something else. And, we've thought, we basically have three ideas with Favro. One is to create something which is in the cloud and enterprise-grade, but also something that's not only working for IT and engineering but actually working for the whole organization.

Because if you're thinking about software as a service, you know, kind of organization, you need to have a lot of collaboration between product, marketing, operations, and management. It needs to be more integrated if you're going to have these teams to be highly autonomous. So, we had an idea about how could this design look like. So, that's what we created. And then the third idea is really that when we look at what we've learned over more than 15 years of how you actually scale, you know, agile software development, we also learned that you need highly autonomous teams empowered to align with the company goals themselves, instead of being micromanaged and having a centralization of process management. And we thought that there was actually no really good tool in the market for that. So, we set out to create that.

Oleg

Okay. Interesting. My next question is what you're really passionate about, but I found the answer to this question on your LinkedIn page. So the question is what drives you the most in business agility?

Patric

Well, my very, let's say, personal perspective on this is that I think it's very interesting how different the productivity can be between a poorly functioning team and a well-functioning team. The fact that a very small team can create something that really disrupts big competitors – I think that's super interesting. So, this part of me, which is kind of like an organizational geek. And then I always like technology: everything I've done in my career has been around technology one way or the other. And when you're making a tool, it's technology, you know, that supports this to happen. And then, of course, I think I like doing business. I like meeting people. I mean, business is kind of the way the world goes around. So, here we have this combination of organizational strategy with technology, with business, which is basically Favro, and that's super exciting for me.

Oleg

Okay. Okay. Thanks. Sounds amazing. Looking ahead, are there any emerging trends or technologies in your field that you believe will have a significant impact to your business in the near future?

Patric

Yeah, actually there're several trends happening at the same time. Everything moving to cloud. It is obviously one. That might seem like yesterday's news, but something, which is still happening. And then you have the trend that I kind of talked a little bit about before with a higher level of team autonomy. So, this is interesting because we had this trend already before COVID and the reason was business agility. You know, more autonomous teams are simply more agile. But what happened with COVID is that now you have hybrid organizations. So, companies are working in a much more distributed way. No one wants to be micromanaged over Zoom.

So this for sure has been an important, well, it still is a very important trend. The way that affects us is that you need tools for that. So, I think a lot of companies have realized what this means in terms of leadership, culture, organizational structure. But tools are an important part of what shapes your culture. To be a little bit more concrete, if you're really trying to have a culture of decentralization and high team autonomy, then maybe it's not a great idea to have tools that are built upon centralization because then you're going to have kind of like a power that moves in the opposite direction. So I think this is an interesting trend.

Oleg

Okay. Thanks for your answer. My next question is about software development in Favro. What problems have you encountered recently in hiring technical teams and how do you solve these problems?

Patric

Well, one thing, which we pride ourselves - having a small team with super highly skilled developers. One thing I learned a very long time ago in software development is that you can't replace one brilliant coder with 10 or even a hundred mediocre ones. And Favro is a very large platform, you know, it's a lot of code. And we are competing with very large companies, like I mentioned Jira, for example. So, we need to have developers that are extremely smart. And, one of the things I learned is that it's definitely easier to be able to recruit the people that have that kind of level if you're looking more globally. Because if you're looking locally, that's going to be an issue. Because it's simply... You can think about it like a bell curve and it's like how many are going to be on that very edge of the bell curve. That's smart. And that's going to be a very few people if you look locally. But the number becomes a little bit bigger if you look more globally. So, for us, that's been extremely important to be remote-first. So we can recruit very smart engineers, independent of where they are. And it's not only engineers, any engineers, QA, everyone.

Oleg

Yeah. Especially after COVID. COVID has changed a lot in mentality of people. And there are many of our clients, people I'm talking with, they're more flexible with remote hiring and they find it much more useful. Since you have experience in collaboration with the remote teams, what could you suggest to people who haven't cooperated or doubt whether it's worth it? Because there are still some people or businesses who have never tried this before.

Patric

Yeah, I would say three things. The first is when you have people that are remote, it's important to treat them as an extension of the team, so they don't feel like they're satellites. That's like the first step. So, let's say that you are like an office-first organization, you really need to make conscious efforts to make sure that the ones that are remote do feel like they are an extension of your team. And you can do that by using the right tools –Favro, Slack – but also making sure that they are very included in all-hands meetings, et cetera. The second thing is if you want to truly become a hybrid organization, you also need to redesign for that, so that you truly are remote-first.

Every meeting, for example, needs to be an online meeting. And basically like every process you have in the company – it's designed for being remote-first because otherwise, the people that are remote will feel like the satellite. And the third thing I would recommend is to actually have onsites. Let's say a traditional company would have offsites. But in this company, you need to have onsites where you all come together, and you should have them on a regular basis. So you do actually get to know each other and actually see each other face to face. And when you do those onsites, make sure that you're not focusing on making a load of decisions and stuff, make sure that you focus on really getting to know each other. Because then your remote work will be much easier.

Oleg

Can you provide your thoughts on the challenges associated with the shortage of qualified experts in the IT industry? We can talk about Favro, other 17 companies you're in.

Patric

You know, venture capitalists, they have a thing that they very often say that it's very important when you scale your company, you hire A players. Because the problem, if you start to hire B players, is that the B players will then hire C players, and you're going to go down a slippery slope. One thing I learned when I was an entrepreneur and now third time CEO is that you always have a tendency to hire too fast and fire too slow. And you really need to take your time finding people that are truly living up to the expectations and probably also to be prepared for that even when you think you got the right one, it might be that it wasn't.

So, you need to have that as part of your calculation. When working with a recruitment partner, you need to also have calculated and budgeted for that not everyone's going to work out. You know, you need to overhire a little bit, but still be very slow, much slower than it would like. And this is very challenging, especially if you have raised venture capital because your VC is going to tell you like, 'Oh, faster, faster, faster!'And you need to hold back and say, 'Well, we need to take it a little bit slower here because otherwise, you're buying yourself problems.'

Oleg

Okay. Okay. Good. What role do you think IT outsourcing play in solving these challenges? I mean, I think the world has become a much smaller place in a way.

Patric

I can give you a very concrete example. I was very worried when the war in Ukraine started. And I thought, 'Okay, shit, the productivity of my team in Ukraine is going to go like this and I need to handle that.’ But it's almost like the opposite. It's been fantastic. The people we have in Ukraine have actually proved to be equal or even more productive than people we have in other countries which is quite impressive. So this is resilience. And I think this wouldn't be possible if it wasn't kind of like a remote-first world now.

Because it is a requirement with having team members in Ukraine that they can really work from anywhere because, for example, in the beginning, I had people in Kharkiv. And Kharkiv didn't fall in the end, but it looked for a while that it was going to fall.And then those team members needed to move. But today, you really only need a decent laptop, Internet connection, and some electricity, and that's it. I typically don't even know where people are working from and that's fine. I really only care if the code is of good quality. So yeah, it's kind of like a new world in this way. I think just the fact that you can have people in your team that are hyperproductive that are actually in a war zone – that's quite extraordinary. I think when we look back at this 10 years, 20 years from now that's going to be an interesting story to tell. Yeah.

Oleg

Everyone wants to hear this story 20 years from now. I'm also excited to see how it ends. We already discussed some of outsourcing benefits, can you please add more to this topic? So basically, what are the benefits of outsourcing?

Patric

One benefit is also flexibility. This is a bit of a sensitive topic. But we are headquartered in Sweden. One issue we have in Sweden is that labor laws are extremely strict. That is an issue. And when it comes to talent, it's very expensive. You can talk about salary levels when you talk about if talent is expensive or not. But you also need to think about flexibility when you talk about if talent is expensive or not. You can have a higher level of flexibility, which means, from a CEO point of view, the risk is lower. If I hire QA or coders in Ukraine, I can allow myself to take bigger risks. I can test the person. I can be like, 'Well, am I 100 percent sure this will be the perfect person for this role?’ Well, you're never 100 percent sure. But I'm willing to take the risk. I'm going to try it. And in Sweden, if you're a small growing startup, that might be relatively much more risky. So, there's a flexibility aspect, I think to this.

Oleg

Okay. What are the drawbacks of outsourcing then?

Patric

Well, the drawback, it can be language. But I haven't seen that actually be a problem. I mean, the people that I have hired through this model have excellent English. So, no problem. But of course, it could be. My experience is that English has not been a problem. There are some cultural differences, and that can be a problem. And an interesting thing here is that I think that every person always think that we are the normal ones and the other ones are the strange ones. But if you look at this plenty of books written about cultural differences in business, Sweden is the strange one. If you take Ukraine as an example here, I would say Ukraine is more similar business culture wise to the rest of the world versus Sweden is the odd one out. I need to be reminded about that all the time. It hasn't been a big problem in practice.

In Sweden we have a culture of high level of autonomy and empowerment with team members, you don't have to micromanage them. And my experience is that that has been working really well with Ukraine. And from previous experiences, I learned that, for example, it's been actually harder with, for example, India, where the cultural difference is much, much bigger to Sweden. There's a bigger need for micromanagement there to make things work. You need to take into consideration cultural differences. Language – not a big problem. And then, of course, one drawback is also that, as I said, I do want to have onsites, and right now that is not really possible in Ukraine because of travel restrictions. So, that is of course a drawback, but a very manageable one. But yeah, it is there, of course.

Oleg

Okay. How do you measure the success of collaboration with an IT outsourcing vendor?

Patric

I mean, I wouldn't say that we have a very sophisticated, it's kind of like very binary: if it works, it works. If the person fits in the team and my CTO is happy, my Head of Product is happy, that's really my measure of success. To be honest, we're not really more sophisticated than that.

Oleg

Okay, got it. Thanks. And finally, what advice would you give to the other companies considering IT outsourcing?

Patric

I think your questions today have been very good. I think the answer, in terms of advice kind of is within my answers to those. My only advice would be, as part of the recruitment process, doing some pair programming, which is very easy to do remote. That would be my advice – to really sit down and do some work together.

I also have second advice. At least when we're talking about coders, it's a little bit different with QA, but if we're talking about coders, I would say that the question I would always ask is what do you code it in your free time? And I would actually like to look at that code. Because that's something where this person would have a little bit of passion. So, I would ask, 'What do you code in your spare time?' And I will actually look at, maybe they have put it on GitHub, and I would look at that.

Oleg

Those advices are really valuable. I've never heard from our clients an advice looking to his personal GitHub, but this is really nice one. I'm sure many of our listeners will find this useful. Patric, thanks for taking time to share your opinion. I'm sure the information you shared will be pretty useful for our listeners. Thanks again, and I'm wishing you a great day.

Patric

Thank you so much.