We recently had the opportunity to attend the fifth annual Technology Summit hosted by global intelligent capture leader ABBYY. While there, we had a chance to meet the new CEO, Ulf Persson, and get some insight into the latest changes ABBYY has been making to its structure and strategic direction. We had no idea the conversation would take us through the last 20 years of geopolitical and global market maneuvers — although, given Ulf’s professional and personal history, we probably should have suspected it. Join me in the SpeakEasy.
You have a very broad and diverse background and have lived and worked in many different countries. Tell us a little about yourself.
I’m Swedish. I’ve spent a substantial part of my adult life in Russia. When I was 18, all young men in Sweden had to do military service. I applied for something called the Swedish Defense Language Institute, not really knowing what it was, but thinking it might be a meaningful application of the next 15 months. I got accepted, and I knew it was about learning Russian, but I wasn’t really prepared. At that time, I had no particular interest in Russia or in the Soviet Union, as it was at the time. I did, however, enjoy languages and other cultures, so I thought, “This could be a good thing.” It turned out to be a very intense kind of education. We learned a foreign language in nine months. We also studied all kinds of culture, history, religion — all of it. If I wasn’t interested to begin with, I certainly became interested in the end.
At the end of the program, you could apply for a one-year job at the Swedish Embassy in Moscow. For a 19-year-old, that was very cool. The reason this was even possible was that there was no functioning local job market and there were also security implications, so even for rather mundane jobs such as visa processing, Western embassies tended to hire Russian-speaking staff from their home countries.
It was a very interesting year to have experienced the Soviet Union from the inside. I then left and went to business school at the Stockholm School of Economics in 1985. In the late 1980s when I was about to finish, the Soviet Union sort of opened up. Perestroika, Gorbachev, Glasnost — quite a lot of companies started to look at Russia and the Soviet Union as a potential market.
That’s when I started to work with a large, privately owned Swedish company called the Axel Johnson Group, which is one of the largest family-owned companies in Sweden with origins in shipping, mining and heavy industry. They had a long-term and very large presence in Russia, so I went to work for them there for three years until the part of the group that I was working for was acquired by an American trading company. I transferred to London with the acquiring company and then shifted back and forth between Moscow and London for a few years until I resigned in 1996. This was the point when I got involved with some Swedish entrepreneurs who set up an investment bank in Russia called Brunswick. I didn’t work on the banking side; I worked with the companies they invested in. At this time, private equity investments were only just emerging in Russia.
Brunswick set up a $300 million private equity fund together with AIG. Then the economic crisis of 1998 came and everything crashed, management changed and I was appointed along with an executive from AIG to co-run the fund.
You took it over at that point?
Yes, me and the AIG executive. Very hands-on. It was really about working with the companies, digging them out of their holes. Some we lost, of course, and some we had to sell, but what you could see then, in early 2000, were green shoots of recovery. They were different from what we’d seen in the 1990s, when it was more about privatized Soviet companies and, to some extent, the emergence of large trading companies. Trading, including IT hardware and software, and privatized companies – that was the story of the 1990s. In the early 2000s, you could see another story emerging, and that was all about small, entrepreneurial-driven companies that either started after the crisis or made it through the crisis. In fact, ABBYY is one of them.
How did you first get involved with ABBYY?
A friend and colleague of mine from both business school and the army days used to work for a cosmetics company called Oriflame, which is a direct sales, multi-layer marketing company similar to Avon. He set up that business in Russia, which was a huge success for Oriflame. The owners, two brothers from Sweden, were happy with the results he showed, and they became our core investors when we set up our VC fund.
The core thesis of our fund – Mint Capital – was to invest primarily in software technology companies that had a market outside of Russia. ABBYY was one of those companies. We also had a telco software company, a 3D software company, some media companies and a few others. All did relatively well.
I met David Yang, the founder of ABBYY, back in 1998 or 1999, but we never did anything together. I liked David a lot though, and when we met over lunch a few years later, I asked if he needed any money. The company was pretty small, sort of a mom-and-pop style company at the time, and of course he said he didn’t need any money and was very profitable. But I felt it was such a right situation that I pushed it. I agreed that ABBYY could grow without our money because our money was pretty small at the time, but I thought he could probably make good use of some external business consulting. That was really what sold it to him, because it is a lot easier to question what’s being done and give some ordinary business advice when it is coming from the outside.
So that was more valuable than money.
That was more valuable than money. Prior to that, ABBYY didn’t really have a board of directors. It was all run by David and his co-founders. Our investment coincided with ABBYY’s international expansion, which allowed the company to start competing successfully in global markets. Growth rates picked up — 25 or 30 percent every year.
Your involvement with ABBYY is fascinating. You started off as an early investor and formed the board in 2002 and progressively became more and more involved. You became the Chairman of the Board in 2015 and then in January 2017 you were appointed CEO. Are you now a full-time CEO?
Yes. Absolutely. [Chuckle] There’s no time to do anything else.
Fill us in on your reorganization efforts since you became CEO.
We wanted to globalize the company. It was already a global company in terms of revenue but it wasn’t being run like one. We wanted to make sure that the right people were running sales, marketing, product management, etc., regardless of where they were located around the globe. The old organization had most key functions located in Moscow with regional sales offices that partially competed with each other. Even when they were not competing, they were not communicating enough to take advantage of opportunities that were global in their nature.
Another issue tightly linked to that is how we perceive ourselves and how we are perceived by the rest of the world. We needed to be open, accessible, and transparent both in terms of how we make decisions and how we are seen to be acting in the marketplace. Today we are a truly international company with 13 offices in 11 countries and global offices in Milpitas, California; Munich, Germany; and Moscow, Russia.
Where are we now? We have undertaken a tremendous amount of change. We have become, in many ways, a different company. Not because of me, but because I think the company was ready for it. It was almost like opening up a lot of windows and all this fresh air came in and you could see that people started to reconnect or started connecting across the regions, across product groups. It was just waiting to happen. It just needed this little spark to kick into place.
You’ve worn many hats in your career. What do you consider yourself to be? What kind of unique skills do you think you’re bringing to the table?
I think I am a fair and good leader. I tend to want to build a team of people who know their areas of expertise better than I do, because in this particular case they inevitably will. I have a very strong belief in creating an atmosphere and a platform, a stage, for people to perform on. We have so many incredibly talented people in this company, not only on the executive management level but throughout company. We need to let them play with their full energy to their fullest abilities. I’m more of a conductor in the orchestra.
At the same time, sometimes you have to make hard decisions. When you make hard decisions, make sure you explain why you make those decisions and do them as quickly as you can. We have had to part ways with a number of people in this change process; we’ve had to divest, stop investing in or close down parts of the business that have been so close to the heart and soul of ABBYY for many years. But I think you just have to do it, and try to do it in the fairest and best possible way. To shy away from the actual decision would be wrong, not only from a business point of view but also from a human point of view I think. It’s perhaps an advantage for me to come from outside the industry because I can look at it with no emotions attached to any part of the business. I can look with clear eyes and gather information, talk to people, listen to people and say, “This is the way I think we should be going,” and come up with a new strategy that way.
Am I a numbers guy? I’m probably a numbers guy in the sense that when we get our monthly reports I open them immediately and I will have spoken in advance to all the business unit heads and head of sales and head of marketing to understand what I can expect. I’m driven by the numbers, but the numbers are a reflection of reality rather than the reality itself. I think I have a decent understanding of where we need to go from a strategic point of view.
Would you describe yourself as flexible?
That’s a good question. It doesn’t really have a simple answer. I’m definitely flexible. If I’m wrong, I admit that. But I also stick to my guns because I’ve experienced that we learn throughout our whole lives. I think the mistakes I’ve made have more often than not been caused by shying away from my own conviction in order to support someone else. If you’re convinced about something, it should require a very hard beating to get you to change your mind. We’re in a changing world, so to be nimble and agile means that you have to be flexible in your thinking.
What do you see as the biggest challenge that you’re facing in the next three to five years?
I think our biggest challenge is to be quick and agile enough to actually grab the opportunities surfacing in the global digital transformation market. It requires a lot of footwork, because we’re not alone out there. We’re well-positioned right now, but what does it look like a year from now? We need to keep the pace up, and we need to make sure that we, if anything, are moving faster than we’ve done this year. That’s a challenge.
How do you communicate that to the team and get them to feel that urgency?
I think that is something that we need to think about. We also have, of course, challenges in terms of new disruptive technologies which may affect part of what we are doing. One of the strengths of ABBYY is the profitable core OCR business. There are other companies offering OCR solutions, even though no one has come up with another one that would work for 200 languages. We have competitors in China, Japan, Korea and other markets. Over time, technologies will become commoditized and we need to find other ways to replace both the revenue and that profit. That’s a challenge but also an opportunity. I don’t see that as a real problem — competition is good.
Having said that, I am convinced OCR has a bright future and ABBYY’s OCR technology is still in high demand but we need to be aware that the technology barrier will not remain defendable forever. And that’s why we are looking into the future with our strong and diverse portfolio of AI solutions for intelligent capture and text analytics that serve the needs of global enterprise clients.
If your customers were to describe ABBYY in three words, what do you think they’d be saying?
Innovative, trustworthy, quality-minded … and I hope that they would say open.
OK – now the best part. What kind of music do you listen to?
I’m stuck in the 70s. My biggest hero in life died a couple of years ago, David Bowie. I absolutely love David Bowie.
Do you have a particular period of David Bowie’s that you like the best?
Yeah, it was a period starting in 1970 and ended two years ago!
I’ve never done an interview like this before.
We know, it’s a little weird. But we love the fascinating tale we’ve heard and we thank you for sharing.
This article originally appeared in the March 2018 issue of Workflow.
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