As part of our interview series called “5 Things I Wish Someone Told Me Before I Became A Founder,” I had the pleasure of interviewing Mihails Scepanskis.
Originally from Latvia, Mihails Scepanskis holds a Ph.D. in Physics with a focus on numerical simulation and modeling. He has led several research projects, working with industrial companies and national research laboratories. CENOS was founded after recognizing the market demand for purpose-built applications of modeling software. Since its founding in 2017, Scepanskis had led the company through acceleration programs at 500 Startups in B26 in San Francisco and Startup Wise Guys based in Tallinn and raised pre-seed and seed rounds. The company has more than doubled its revenue in two consequent years: 2020 and 2021.
Thank you so much for joining us in this interview series! Can you tell us a story about what brought you to this specific career path?
My background is in science. I have a PhD in Physics and ten years of an academic career before we started CENOS. I’m originally from Latvia but I also studied at Moscow University. I also traveled to Germany a lot, leading academic projects, and working on my studies.
Something about academia had me feeling these inefficiencies in a real way. What was the impact of my work globally? Was it just academic? I love science and I still consider myself a scientist in many ways. But the system of science that is done in universities and other research-oriented laboratories is a world unto itself, which is to say that it is not the real world.
When I defended my PhD thesis, I got involved with a challenging project with a large German manufacturing company, which I ended up leading. This got me networked with some Americans, and from these connections I got hooked up with other projects, including the chance to work at Argonne National Laboratory outside of Chicago.
A lot of this work brought me to the same conclusion that this was still just kind of academic, meaning that science was just in the business of reproducing itself. But American culture had an impact on me. Something about the people there and the spirit of self-organization lit a fire in me.
CENOS was born from these experiences and from a wish to connect my scientific training with a real impact on the world. I know now that I always had entrepreneurship in my blood. It took me a long time to find it but I guess it was always there. But between entrepreneurship and science, there are a number of commonalities. Both are based on finding successful experiments, how to define experiments, how to move on to the next one, and how to learn from failure. This is kind of a rare mindset actually.
Business has been the bridge for me to allow the scientific tools to speak through an expanded vision of what the future might look like. Our customers are buying a belief that we can build that future together.
Can you tell us a story about the hard times that you faced when you first started your journey?
We’ve made a lot of the typical mistakes that young entrepreneurs make. We ran out of money. This is very common, but it’s not fun when it happens. You build a product, you get some traction, you’re burning money, and you need to be raising money simultaneously. We definitely had a few times in the company where we were running a negative balance sheet.
We made a couple of stupid decisions actually, looking back. For example, we chose induction heating as one of our core competencies. There are a number of companies in this sector but almost no competition for companies supplying this industry. We already had a little experience here. But now we are in this field and we know now why there’s no competition — this field is very difficult!! Getting success in induction heating requires a great deal of investment in product. We survived it and it turned out to our advantage because now we have this depth that we can transfer to other areas. But the beginning was rough. It’s as if you’re a farmer, looking for land, and you see all this empty land in the desert and think, ‘well nobody has taken that land yet!’
Where did you get the drive to continue even though things were so hard?
Risk tolerance is a decisive factor. I don’t think everyone has it. Self-belief is another. You’ve got to know for yourself that success is probable and possible.
You’ll hear all kinds of ‘outside’ voices telling you what to do, telling you what you’re doing wrong. Invest more in sales, for example, is a common refrain. But you have to know yourself, based on your own product or service what the best course of action is going to be. It’s not about ignoring everyone else, because there are times when you’ll need some guidance from people that have been there before. But nobody else besides the founders can truly be the compass of the company.
So, how are things going today? How did grit and resilience lead to your eventual success?
Well, I would have to say things are going quite well at the moment! We just raised €1 million, which is really a lot of money and that’s amazing. But as we grow the company, it has also become clear that this won’t be enough. So we have this great success but we also have these ambitious visions. We really want to disrupt these markets. The challenges don’t change but we are maturing as a company. We are sticking with our vision, investing in product, and trying to be the best in our industry. We appreciate the successes we’ve had, but there’s certainly not a feeling of having “made it” yet. We are still hustling every day.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson you learned from that?
I find it a bit crazy how much the world has changed since we started CENOS. Some of the things we did back in the “early days” seem pretty foolish in today’s world of zoom calls and slack. I once traveled pretty far to do some fundraising, to pitch a GM. I booked a flight with all these connections, eventually landing in Poland, all in one day. It’s just one of these “jet set” days you find yourself having when you’re constantly doing fundraising. It seemed like this was the window we had and this is the way that we could make it possible. So it was going to be a crazy day of travel and pitching. And of course one of the flights gets delayed and then the entire itinerary is ruined. All of the connecting flights were going to fall like dominoes after that first one got screwed up.
Luckily, the guy we were pitching to turned out to be on the same flight, which I discovered after sending some frantic texts telling him of the situation! It turned out to be fine, the planes all got connected. This was a different era, even though it wasn’t that long ago. I look back and I think wow how could that not be a zoom call. And I didn’t get the money there either.
What do you think makes your company stand out? Can you share a story?
Our differentiation is pretty clear. A lot of competitors will build a “general software” solution, whereas we target very specific verticals with our modeling software applications. Each application is specifically targeted to a certain industry, and we are aiming for, above all else, ease of use within that very specific market segment.
From a business perspective, this is very challenging. These applications are very specific but the technology behind them is also development-intensive. Of course it’s easier to build a more general solution and make the customers adapt to a tool that is only nominally useful for their application. But that is not how we operate. We want to make the exact perfect tool for the customers’ applications that we are working with, and we have found tremendous success with this idea so far. It’s just supposed to be incredibly time-intensive to do it this way; we found a way to do it fast: it’s our innovation!
Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?
This is a very important question. Of course, if you’re a founder, you’ve got to hustle. If you want to start a company, there isn’t going to be a “work/life” balance, at least at first. I don’t really have hobbies anymore. At some level, the company has to be the thing that you actually want to do. It’s so time intensive. If you don’t enjoy it or feel the need to do it, then you’re going to come up short with an empty feeling at the end of the day. And you’ll feel that.
On the other hand, if you feel the need to do it, if you feel the love, then it will be a fantastic experience. This is why investors are always talking about passion. Passion can be a terrific indicator that the person and the project are well aligned.
As the company grows, I’m not necessarily looking to regain more free time. Rather, I’m looking to hire people so that I can focus on the things that I do best. I want to be able to focus on the things that I love and that I can do efficiently. It’s a process of concentrating.
I don’t think that burnout is limited to startup founders alone. Anybody can burnout on anything. For me, it’s been about connecting with that love of what I’m doing. And family is very important as well.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?
Cristobal Alonso from Startup Wise Guys has been a tremendous help. He was an investor, then he was a mentor, and now he’s a friend. The thing about Cristobal is that he is a pure investor. He moves from a place of belief; he won’t invest if he doesn’t believe. He doesn’t push any decisions, but he puts the emphasis on the truly important things. What is the development of the founder? How can we help good founders build the companies that they want to see in the world?
We are friends now. Our families are friends. He was an important bridge for me to the world of entrepreneurship and business. He helped me understand the idea of balance in this world. How to be there for the family. I consider him a tremendous resource. There’s a depth of experience and understanding there.
How have you used your success to bring goodness to the world?
Absolutely. This is something that I reflect on all the time. We are not only building this company to make money. We are also making it easier to redesign our world. These are urgent problems right now. There is a chasm between the ideas people have and the solutions that we are currently able to build. Engineering and design will help solve the major problems that we are facing, and it’s critical that we try to make these jobs easier. These are already very difficult jobs.
Also, in Eastern Europe, science used to be a very important part of the economy. But then we have this time after the collapse of the Soviet Union, and the esteem of science and engineering plummeted. We have this palpable lull in talent and scientific ambition here now and we used to be quite proud in these areas. We are building this company that has science and engineering as a base, and we hope that we are creating a new vision for young scientists and young engineers to find a clear path to a meaningful career.
What are your “5 things I wish someone told me before I started leading my company” and why. Please share a story or example for each.
- Sell to customers, not to investors. I spent a lot of hours traveling, visiting different startup events and trying to sell the company vision to investors. Although I succeeded in that, the effort was not worth it in the end. You’re better off focusing on product and getting your product to the stage where you can sell it to real customers, and get there as quickly as possible. Even when investors don’t understand what you do, if they see your customers paying you, they want to be part of your story.
- You need to truly feel committed to your ideas and your potential impact if you’re going to make it in the startup world. You will be tested, almost every day! You will definitely go through ups and downs, face obstacles and everything and everybody around will tell you “give up! It is not worth your time.” But the truth is that there are no successful companies in the world, which were built seamlessly. The only way to continue working is if you indeed love what you do and you do it just because you love it — love with no conditions.
- Running a startup requires a certain tolerance for risk. It is a field that is frequently unstable and filled with uncertainty. The rewards can be huge, but the potential for real failure is almost always present, especially at the beginning. I ran out of cash three times. The last time, I tolerated the debts of a few tens of thousands of Euros. But I continued working and I motivated the team to continue to work. They trusted me that we would get money. And we did. But without that risk tolerance, we would’ve been sunk.
- “Work/Life Balance,” is a nice thing to aspire to, but you need to think more in terms of hustle if you want to run a company. Actually, I am certain: you cannot build a company without hustle. With the growth of the company, the hustle should be gradually replaced with focus. You personally focus on what you can do the best and hire talents to do the rest. At any rate, the need for hustle is ever present and will not be alleviated simply because you love what you do. When I’m asked what my hobby is, I say that I used to have a few, but now the only hobby I have is my work. I truly love what I do and I enjoy doing that even in the evening, on weekends, and sometimes during vacations.
- Startup growth is about people you hire. There cannot be compromises. You grow as fast as your people can do that. Hire the best talents and give them a chance to show the best of their character.
If you could start a movement that would bring the most amount of good to the most amount of people, what would that be?
There is a concept in Judaism called Tikkun Olam. I’m not Jewish and I don’t mean to cheapen these deep traditions in any way, but there is something in Tikkun Olam that speaks to me. Based on how I understand it, this concept asks us to ‘fix the world.’ There has been an unequal distribution of goods on the planet, and we need to work to make things more equitable. We have this drive inside of us. It’s an innate part of our humanity. My hope is that more people will put focus on this idea generally.
How can our readers further follow your work online?