Serguei Beloussov is Turning Acronis Back Into a Startup

Beloussov said the company needed to "fix a dysfunctional business processes" and return to rapid growth. In November, the company invested $10 million into the Acronis Labs development center and now has both a new strategy and a new product line.

Slon spoke with Beloussov about how he plans to return Acronis to the state of a startup, whether its business is threatened by the popularity of Dropbox, what hope there is for the state of Russian scientific education and how he juggles his responsibilities between all the different companies he is involved with.

In a recent column where you discussed you why had to return to lead the company, you said Acronis now needs a businessman as a leader. Since then, what have you managed to change?

I’m still acclimatizing. With software companies a year is like a day, so you could say that I just arrived at Acronis. My vision of what needs to be done has not yet been finalized. Currently, I have five-stage plan in mind. The first stage concerns the stabilization of growth, profits and other financial indicators that befit our standing. The second is the elimination of the outside influences that interfere with the life of Acronis. For example, we are going to court with Symantec. There are unfilled positions within the company and there are business processes that need to be normalized: HR, for example, internal communications and business development. All this is difficult for a professional manager, who usually just runs the machine, to implement. It is about bringing the company to a qualitatively new state.

After the first two stages are complete, we will have, to use a sports term, a skilled, healthy athlete. Not yet a champion, but one who can win a medal.

The third stage is our biggest news — new branding for Acronis and a new product range — which is a new vision for the market in data protection. Now we are, in a sense, reissuing all of our products because the line that Acronis offered until recently was invented and developed 10 years ago. Today, large- and medium-sized businesses have changed the way they work with data that they cannot risk losing; it is valuable and needs protection.

A company can now not only buy the best protection for any kind of data from us, but they can also combine them into one product, on one platform. We call it AnyData technology. That, however, is only part of the equation; the other relates to technology at a deeper level. Just like you can deposit any type of currency in a good bank, the same is true for AnyData, which accepts data from any environment and in any place.

We are becoming a completely different company that is unlike anything that currently exists on the data protection market. All existing models assume that you either overpay and get more than you need or you underpay and get less than you need. Paying for as much as you need and getting exactly what you want is currently unavailable on the market. It’s like discount airlines; you stop people eating on the plane so you can save money. We offer a different degree of flexibility. And this is what we are doing now.

So you want to make a sort-of construction kit?

We have actually already done it. (He opens a slide presentation comparing Acronis’ with its competitors and starts reading.) Commvault is a very cool product with a single platform, but it is very complicated and expensive. Symantec is old and spread across a lot of individual platforms. Veeam is only for virtualized infrastructure; and even then only for VMware and Hyper-V. Acronis, however, offers everything and it can all be bought separately.

We have tried to complete the first three stages of our current transformation at speed and in tandem. One of the problems with big companies is that they are bureaucratic and have to act consistently. In a normal business, this project would last a year-and-a-half or two; we did it in six months.

I believe that sometimes you need to be able to turn back into a startup. At the startup stage everything happens randomly, there is this Brownian motion.

Google creates a number of different innovations at once and one of the reasons for this is that within Google there is still a place for disorganization, with one hand not necessarily knowing what the other hand is doing at any given moment. People don’t necessarily know to whom they are accountable; their products are released in no particular order and so on.

Now we have such an atmosphere at Acronis. We needed to create an artificial crisis because the links between the different units had begun to petrify, preventing movement and flexibility. The faster they fade, the easier it is to rebuild in the best possible way.

After completing the first three stages of our restructuring, we became a market favorite. There are, perhaps, five teams capable of becoming leaders, and we can be considered one of the top five.

And the following two stages?

First is the restructuring. Then new products will be released based on the principals of good engineering and innovation, about which we still prefer not to speak. The restructuring has now ended, engineering will take place at the end of the year and innovation will come next year.

How do you transmit your new values?

Acronis’ past positioning — compute with confidence — was a bit fuzzy. Our new promise sounds more like next generation data protection. We want to be involved in everything related to data protection: backup, security, data archiving, search and storage. It is not only about backup anymore. In fact, there have been a lot of big changes that just haven’t been noticed. Small changes are easily seen but larger changes are like a tsunami which you barely register in open seas. They can be hard to explain not only to partners and clients, but even to our own employees.

For quite a while, all these things — backup, data protection — were perceived as some kind of unshakable story.
And this is what we want to change.

But things like Dropbox and other similar products already exist, and are absolutely massive. How does this affect your business?

In fact, it has no effect one way or another. There is a widespread misunderstanding, which I will fight as long as I am at Acronis. Dropbox and backups are two separate things. Dropbox is needed in order to make data accessible to different people and so that you, in turn, can access your files from any device. This is not related to data protection. Dropbox can be hacked and you can quite easily destroy or damage the information deposited there. In principle, it is possible to have Dropbox find older versions of files and save them, but initially it was not designed for this. Such technology is created for live data.

Acronis keeps copies of everything, which can be used to recover lost data at any time. And this includes not only documents but also everything about your computing environment: we protect the entire system configuration. We also focus on historical data. One of our units actually produces an anti-Dropbox — a data exchange service for large companies that want to maintain control of their data. So Dropbox is not a competitor for our main products.

It is possible that a quantum transition will occur, after which most people will start to keep their information with services like Dropbox. If this happens, we will need to change the characteristics of our products. But this is not going to happen in the next five or ten years.

And if it does happen, what will you do then?

I can’t really say because by then we would be a different company. And even then, not everyone will store their data on such services. It seems ridiculous to say but even in developed countries, not everyone keeps their money in the bank. In Germany, for example, many people keep their money at home. Why? Because otherwise the German tax office will have control over it.

I’ll ask about another exhausted term, Big Data. In addition to the fact that the amount of data is on the rise, and that this fact is good for you, does this trend affect your business in other ways?

This phenomenon is significant for three reasons. First, there is now more and more data, which is good. The more data, the more desirable the security and speed features of our products become. The second is that data has become as fundamentally important to business as money. Assume an oil company has profits of $40 billion per year. If it is able to constantly analyze the sensors at its oil wells, then it will be able to increase profits by $15 billion. Their entire IT budget may only be worth a few billion in total but they are glad to spend $5 billion a year to have access to this data. Therefore, business is beginning to treat data like money by controlling access to it, conducting audits and establishing security protocols.

Thirdly, the amount of data has become so vast that the cost of operations is comparable to the cost of running the entire business. If the same oil company has 300,000 wells and each well produces 10 terabytes of data per day at an annual cost of storing one terabyte of $1,000 per year, a trillion dollars worth of data will be generated. This is much more than the cost of the company’s main product. It is impossible to keep backups of large data sets and the cost of copying is even higher than that of storage. So in reality, things will take a different course.

For us, this is good news because in our reconditioned state, we are ready to invent something new. It will be much harder for our competitors with their well-established business algorithms. We also had an algorithm, but we consciously tossed it out in order to rebuild the business.

You said that you want to achieve a tenfold increase in Russian sales over the next several years, but isn’t the business atmosphere here generally pretty lackluster?

Technologies have little relevance to the business environment. We are a company with Russian roots and it is much more natural for large- and medium-sized firms in Russia to use our products over the products of Commvault, Symantec, EMC and IBM. Our programs are not only better, but they are created by local engineers who understand all the requirements of the local consumer.

Unfortunately, Russia is not very patriotic when it comes to buying product. If we were in France, I would shout that of all our products are French-made, and so worth buying for that reason alone. In Russia, this sort of thing just doesn’t work.

But the Russian state says that it wants to buy Russian products.

They do not want to buy Russian products. In fact, the state is unpatriotic: it does not really care and is limited to making mere declarations. There are no specific incentives for the Russian state to buy Russian goods. And if you remember that the Russian state is to some extent corrupt, it becomes clear that buying more efficient products makes no sense.

Once, a manager at IBM told me the reason IBM sold so many mainframes in Russia is because they are very expensive.

Because it makes it easier to hide huge amounts of money.

Yes. Nevertheless, we begin to actively promote our products under the slogan that they are not only the best in the world, but also made in Russia for Russia. In addition — and this is most important — we have paid the Russian market far too little attention because we had managers who saw the issue in exactly the same terms as you pointed out earlier.

Let’s talk about Acronis Labs. Why did you create it?

The first achievement of Acronis Labs is the release of products based on AnyData technology. Now we are trying to refine this technology. When a company is overly commercialized, it stops thinking about innovation and only about pumping out product. We built Acronis Labs to create a constant flow of new ideas from a dedicated team. This is not based on the immediate needs of clients, but rather on continuously improving our technology. This is a specialized job that is more difficult in terms of engineering, while also being more creative. Creative people need to work with other creative types. Within Acronis Labs we have many such people.

It has often been said that the legacy of Soviet engineering education has been tapped out, but there are still new people to work with. Where do these people come from?

You have to understand that there was never a single school of thought where software is concerned. The first professional software companies were formed in significant numbers thirty years ago. By then the Soviet Union was already dying, so it is funny to talk about Soviet engineering traditions in terms of software. Our industry has been based principally on Soviet and Russian academic education. Most people who are engaged in key development — especially at Acronis Labs — are people with scientific educations. What really happened is that Russian scientific education system deteriorated significantly and its effective capacity decreased at least ten-fold. As a result, it was hard for us to find good people, although now the situation is getting better.

So you are optimistic?

Yes, academic strength has been restored, and it is clearly visible. There are a lot of statistics about what is happening in science and education, and there are a lot of positive changes. The state is again investing in universities and new science.

Now it is almost possible to work as a scientist in Russia, although there is still much to be done.

So now you can begin to hope for an inflow of personnel.

Yes, but we need people who have, for example, a doctorate. This means that they have studied for ten — or at least seven or eight — years. And if it was only three or five years ago that scientific education began to recover, then in five years time there will be many more people available. However, the hope for a return to the level of the Soviet scientific standing — which was at its peak in the seventies and was second only to the U.S. — is probably not worth it. I do not see when this could ever happen.

In addition to Acronis you help out at the Moscow Institute of Physics and Technology, Kazan Innopolis, two venture capital funds and Parallels. How do you manage to combine so many different occupations at once?

In fact, I really only work on Acronis right now. The rest takes up maybe ten or twenty percent of my time. And mostly it’s to the detriment of both my health and my family. This is my reality — I even dream about Acronis at night.