Avocode serves thousands of teams from various business environments. It’s crucial that we understand how a modern business is built, how it works, and how it develops over time. That’s why we keep interviewing talented and committed co­‑founders from all around the world.

Another guest in the Lesson Learned series was Nikita Ushakov who just visited us in our Prague office. We asked him about his entrepreneurial journey and the beginning of TraceAir a company he co­‑founded. Traceair is a mission control software to help construction executives avoid reworks, overcharges and data gap on site work. It is powered by drone data and smart analytics.

Fun fact: Nikita was born in Siberia and had a bear as a pet.

TraceAir app UI shows how the construction site changes in time and comes with extra features like comparisons or volume calculations.

How did you become an entrepreneur?

I started very early. When I was eleven, my friend and I were trading mobile phones, we would look them up on Russian Craig’s list, find the underpriced phones, buy them and then sell them back on the same page list for a different price. That was my first venture. When I was 17, I had my own little clothing shop. Everything changed when I went to college.

While I was studying mechanical engineering and robotics at the University of Bristol (UK), I was trading physical commodities — over the phone I was connecting the right seller with the right buyer and make sure that the transaction goes through and that the stuff gets from point A to point B. I think that gave me a good understanding of the supply chain and how things work. Then I went to Columbia University to study management science and industrial engineering. The school was quite demanding so I didn’t have time for anything else.

Once I graduated I went back to Moscow for a while and I met Dmitry Korolev, my co­‑founder. Soon after I was traveling around California and we met again. He asked me if I want to join him for a trip and together we were just going around and did market research for his previous project, a drone delivery company. Soon we realized that drone delivery is not going to be big in the near future.

How did you find market fit?

We knew how to use robotics — it’s an exciting tech, we knew how drones work.

“How do you find a big problem to solve? You have to look at big industries.”

We looked at multiple industries where drones could be useful: construction, oil and gas, transportation and agriculture. We didn’t know anything about agriculture, we already tried transportation, so we ruled those out. We actually considered oil and gas as a potential fit. There are a lot things to be done, such as pipelines monitoring. However construction seemed even more appealing, a huge market, completely untouched by cool software. That’s how we came up with TraceAir.

Then we split up — in a good way. Dmitry went to Moscow and I went back to New York and started working at a brand consulting company called Millward Brown Vermeer, a subsidiary of Millward Brown. While I was working in consulting during the day, I spent my evenings and weekends on polishing the idea of TraceAir.

We realized that we can save a lot of money for construction by making a visual copy of the actual site and finding errors. Construction is a very straightforward process in terms of following the plan, yet not an automated process because of the lack of sensors and real time data. Also it is full of unknowns that come up every time requiring adjustments to the initial plan.

Dmitry and his friend coded the first working prototype, we got our first pilot and the idea worked — we actually managed to save the client money. That was the first good sign, knowing that you have a product that people are actually willing to pay for.

In December 2015, after six exhausting months of working two jobs I quit consulting and dedicated 100% of my time to TraceAir.

How did you move from a prototype to a full-fledged product?

We both had to wear multiple hats. While Dmitry was handling hardware, software, and customer research, I was coming up with strategy, preparing presentations, getting leads. We funded the venture from our own savings and Dmitry’s previous company, a software production studio (which was building scientific software for universities like Stanford). During the summer of 2015, we already had one pilot project set up in Moscow with a Russian construction company. They liked the idea and our product worked.

Though our clients mostly cared only about finding errors and then the user experience, once we had a robust backend, we turned our focus to front­‑end. We realized that we can uncover more value from our product if it wouldn’t be us who finds the errors, but the client himself by using our product.

Then we got a super experienced backend developer Alexander Solovyev, who was helping us for free simply because he found our product interesting. Soon after we made him a co­‑founder and our CTO, who is currently running our office in Moscow. In 2016 we brought in our 4th co-founder Maria Khokhlova — first to do operations and data processings, but once we hired a COO, she became the Head of Product (often we call her the CXO, Chief Experience Officer, because she connects client feedback, backend and front­‑end, and makes sure that the right priorities are solved).

We also hired a UX/UI designer who turned the whole product upside down. It took us only 3 months to make the product compelling and easy to use.

What is the next stage of building your product, since you already have the front­‑end?

First of all, investors like our long­‑term vision but at the same time they ask: “What’s now?”

“You cannot just have this sky you want to shoot for, but at the same time admit that you don’t have anything to show for the next couple of years.”

So they want to see the thing now. That’s why we need to combine the technology that’s currently available with market interest and our vision.

These three components bring us to the next step where we choose a niche within the construction industry, which is earth/soil works. So now we want our customers to go through the initial stage of construction — the earth works — without a single mistake. Our product compares the actual site to the plan model — basically how the earth should look like vs. how it actually looks. We can compare these two things on a daily basis and provide the construction managers visually insightful feedback about what went wrong and what they should do next.

Well, and that’s a matter of visualization. One of the things that consider trying is augmented reality. — we provide them view of what they should do next through the lens of augmented reality.

How do you do that?

Our drones take thousands of pictures of the site and we input them into an algorithm that stitches them together to make a point cloud of the actual job site. So from 2D pictures we can make a 3D model.

When you compare the actual state of things with the model, you know what is missing, what went wrong. Next you have to visualize it. Right now we have a cloud platform that can be accessed from any mobile device. It’s basically a 2D map and on top of it we show where errors are and we show the next steps. The map has been here for a long time (Google maps etc) so people are already comfortable using it. We took the user experience with a virtual map and made it better.

On this image, TraceAir automatically compares the actual surface to the planned one, showing how much excavations is left.

Our core value lies in the software that compares the different objects and also in our UI — in how we visualize the differences so people can effectively use our software.

Why did you apply for 500 Startups?

While the Russian market is big, it’s shrinking and it is not the most advanced one. We felt like we need to move to the US market, because it’s the second biggest construction markets in the world and it also happens to be one of the most technologically advanced markets. We wanted to be on the cutting edge. We expected the 500 Startups to be the perfect stepping stone to go to the US market.

What were your expectations?

It was actually very different from what we’ve got. We were expecting that when we came here, 500 Startups staff would take us by the hand and walk us through the list of potential clients and help us sell. But that didn’t happen.

“It’s like they say: Give a man a fish, he’ll survive a one day. Teach a man to fish he’ll survive for the rest of his life. And that’s what 500 Startups did.”

They taught us how to find and approach clients and how to make sales and how to focus on one key metric.

“Always finding of what’s important, that’s growth hacking.”

How did 500 Startups help your personal growth?

I learned self organization, general hustling and believing in what you do was critical — for me that was the biggest step.

“The main thing I got from the 500 Startups was to be relentless.”

You really have to justify to yourself why you do what you do, why you spent so much time doing it. You have to become relentless in what you do. I think for a startup it’s critical. The startup life is full of ups and downs, and if you let it to get in the way of your focus, you’re not going to get anywhere.

How did 500 Startups help your product growth?

500 Startups really didn’t change our product much. Our roadmap didn’t drastically change, it only became more clear since we learned how to understand our industry better.

How did 500 Startups help your team growth?

I still do a lot of little things that I probably shouldn’t do but I learned how to delegate at least something.

“Knowing what not to do is a very important quality.”

So many things can potentially help your business, but you cannot do everything, again you cannot lose focus. But when it comes to growing our team, we now focus on 3 main things:

1. Hire Rockstars

When the company starts and you don’t have much money, you work with pretty much whoever wants to work with you. But once you have the resources, you should be extremely picky, about who you hire. By “rockstars,” I mean self-motivated people who you don’t have to manage and they can do stuff on their own.

2. Create Structure

Since we had to work both for the US and Russian markets at the same time, we came to the conclusion that structure is necessary, otherwise things start slipping through the cracks. Right now everyone below the C level management has a specific team leader who is the only person they should listen to. Even though everybody is still hanging out with everybody, our people know that their team’s tasks always come first. Only when they have no pending tasks they help other teams.

3. Work on Culture

If people don’t know why they are here, working for us, they start to do some random things and move in random directions. But since we don’t want to micro-manage everyone, we wrote down our mission which gives everyone a specific goal to follow. We want to build a brain for the construction industry that will eliminate all errors, and maybe even build cities on Mars.

How did 500 Startups help your company growth?

Our key metric is revenue, but a very important sub-metric is the number of job sites (i.e. the construction sites that are using TraceAir to monitor and prevent errors) and our sale cycle is 3–4 months, so our revenue moves in jumps. But if you’d flatten this line, our month over month growth is now at steady 26%. Our number one task now is to increase sales in the US market.

Are there any people you’d like to thank for helping you out?

If I go in a hierarchical order, I have to start with Rob Neivert. He gave me great qualitative sales advice. He taught me how to think of sales and a process. Also Nemo Chu was immensely helpful in terms of generating leads. Chris Nolet helped with little things that have the potential to make or break us — such as small details about fundraising. And of course Chelsea, because without her we would have never got to the Batch 17.

What tools help you with your team workflow?

Asana for project management

Google Apps for Work

Telegram (It’s like a super fast super secure messenger, basically like Whatsapp on steroids.)

Avocode for design handoff

Can you introduce us your design­‑to­‑code workflow?

We have 2-week sprints for our software. Usually it starts with gathering requirements that our CTO or our Head of Product formalize into tasks for developers and UX/UI designer. Designer creates mockups and shares them with the team.

First they discuss if the mockup fits the business requirements, then the developers do the revision and then we take those mockups into the development and testing process. When it’s done — both UX/UI designer and our Head of Product do the revision and final tests. Before each 2-weeks release they do regression tests to prevent errors in important parts of the platform.

We usually have detailed planning for 2 months and more “bold pen”-planning for 6 months.

What advice do you give to your teammates and employees?

There’s no limit to what you can do, and this is why you are in a startup. I don’t want to manage you, I want you to tell me what to do when it’s relevant. I don’t want to check everything after you all the time, so you should kick ass on your own.