When did you realize that airships were your life’s passion?
Let’s start at the beginning. I first caught the bug when I was just 14. It’s that age when the world seems simple and easy to understand.
Some kids wanted to be firemen, some wanted to be lawyers. But aviation had an especially adventurous vibe. Interestingly, at the time I thought that there was nothing left to invent or discover in this area. Everything had already been done, it seemed. But, as any teenager, I wanted to change the world. And airships were the only piece missing from the puzzle. I had faith that I could create something new in a space that was conspicuously empty. Airships had this century-old image, like something from a bygone era.
What was the first airship like?
My first attempt was more of an air balloon. We created it with the help of the Lviv weather station [in Western Ukraine]that provided us with the outer shell and the helium.
I think this was during the Labor Day march on May 1st. We tied a red flag to the balloon and tried carrying it through the city. We failed, foiled by tree branches along the way.
Your first business, a co-op aerostat manufacturing company, was founded during the Perestroika period in the USSR. What did that specific entrepreneurial experience teach you?
The most amazing thing in this life is that we tend to succeed when we have absolutely no idea what we’re doing. The ideal scenario is when you’re working on something for the first time ever and nobody is mentoring you on “how it’s done.”
So, Perestroika [a period of commercial and cultural liberalization in the USSR, towards the end of its existence] was great for me.
The word “business” was completely absent from the Soviet dictionary or was used as an expletive. Same deal with “advertising”. In the communist ideology, these were foreign elements from the “evil bourgeoisie”.
When we created the co-op company, it was easy. If anybody tells you otherwise – it’s just not true. It was easy because there was nothing to compare ourselves to. It was fun.
Think about it: you have your own company, you’re young and you’re in the reality of the Soviet Union (where every single person works for the state). But you… you’re working for yourself. You have no frame of reference except for your parents’ stories and movies. You’re the one deciding what will happen tomorrow.
The ‘new rules’ in society hadn’t been written yet, but everyone had already agreed to throw out the old ones. So, we were the ones establishing the laws of business in our cooperative [co-op company, the Soviet alternative for commercial corporations]. This was capitalism at its purest.
Today, business has its own codes of conduct, ethical guidelines, etc. None of that existed back then. We had to create it all from scratch: our entrepreneurial principles, our rules of communication.
What were the technical issues like? You mentioned stories where you had to trade TVs for spare parts. Any other occurrences like that?
Looking back today, I understand that we had difficulties. But we didn’t see them as such at the time.
The USSR was falling apart, along with its financial system. The concept of money (in its modern form) was only just being born in that region. There was a temporary barter system that sprung up out of necessity. Goods were actually being exchanged for other goods, it was par for the course.
So, imagine: we’re in Lviv, where the ‘Electron’ factory was located, and we’re using our connections to provide advertising services for the factory in exchange for TVs. Then, we’re taking them god knows where by train (I think it was to Ufa, Russia), where we’re trading them for other stuff.
When did you understand it was time to leave the country?
It was back in 1992. I was in Boryspil airport in Kyiv and was bound for Moscow, to meet a client. The flight was cancelled and the coup was announced [the August Coup, an armed attempt to seize power in Moscow during the dissolution of the USSR].
I returned to Lviv and our company staff got together in a basement to watch the government news program, Vremya. It was a report on co-op companies, how the people running them were supposedly plain evil. And I said to myself: “This is the end of the line. If we’re going to accomplish something, it can’t be under these circumstances.”
What was the company like at the time? What was its stage of development?
It was a wonderful time in my life. I earned more money than I could spend. I would learn to spend it only much later.
My parents left the country before me, in 1992. I followed later, in 1994. My business allowed me to easily support my family in the U.S. The company had numerous branches: not only in Ukraine, but in the CIS region, in Poland and Bulgaria. My physical move to America was a bittersweet moment. I called a friend in New-York and said: “Buy me a ticket!”
The ticket turned out to be from Kaliningrad, in Russia. We had an office in that city as well, but there was no convenient way to get there. So, I flew to Minsk. I went to the train station to buy my next ticket. Purchasing it was near-impossible, there was a mile-long queue, it was total chaos.
I sat there ruminating on several things.
Firstly, I had enough money to buy that entire train. Second, nobody needed my airships here. Third, I had started getting too comfortable in my environment. That makes you lazy.
By the time my journey to Kaliningrad had ended, the decision to leave had solidified.
How many years did it take you to attain citizenship?
My story is a bit unusual in that regard. I arrived in one city, submitted my papers in a second one and lived in a third. The overall process took approximately six years. By the start of the 2000s, I was a U.S. citizen.
How quickly did you master English? Were there any issues with communication?
There were no issues because I didn’t speak any English at all. Initially, I hired a local interpreter. She accompanied me everywhere and helped me communicate. That was all well and good… until the money ran out.
It all came to a head when I had to go to Atlanta, Georgia for a client meeting. But there were only enough funds for one ticket. So, I was forced to go alone and start speaking English.
I started thinking in English much faster than speaking the language itself.
To this day, my knowledge of the language isn’t perfect, but it’s genuinely mine. The beauty of America is that the quality of your pronunciation doesn’t define whether you’re American or not. Americans are defined by their values and way of thinking.
What values specifically?
There are no foreigners as a clearly recognizable phenomenon in the U.S. You can’t identify a foreigner in a restaurant or on the street. Even if you see someone that doesn’t know English or is dressed somewhat differently, that’s not conclusive of anything. There is no concept of national belonging, but there’s a very strong sense of belonging to the country. The central concept is “I’m an American citizen”.
Everyone initially came from somewhere else. Why? To live a better life. People came here, leaving behind their native country, where they were born and raised. And every single person is trying to make America a better place than the one they’re from.
The American constitution has an amazing phrase in it: “We the People of the United States, in Order to form a more perfect Union…”. This is a country that is never going to be perfect but will always improve. It’s a country of perfectionists.
Your company received its first million-dollar contract 3-4 years after your immigration. How can you describe the initial years before that?
They were wonderful. Everything seemed great at the time. It’s a similar pattern to what I talked about before: only now am I starting to see the difficulties in retrospective.
Everyone has their own definition of success. I believe that success is when you’ve burned all the bridges and the only way left is forward and up. Success is when you either sink or swim. From the outside, people called that success. From the inside it feels like a totally unnatural process.
That’s what the first two-three years were like. We managed to get a loan at the bank and build our first airship. Then we sold it cheaper than its manufacturing costs. Money periodically ran out.
I remember our agreement with the bank where we got a $500 000 loan. We placed an ad for the bank on an airship above one of its offices. One night, a horrifically strong wind picked up and we rushed to rescue the balloon. Literally 40 minutes later, there was a crowd of policemen below us. Not a huge surprise, considering what it looked like: some folks climbing on the roof of a bank and yelling in a foreign language during a storm. We managed to save the aerostat.
But I wouldn’t even call that ‘difficulties’. When you have no way back, life is fascinating.
Was there a point where things started to settle down and improve?
Things always improve. There’s an excellent saying that defines success as when you «Wake up every morning looking for trouble».
The longer you maintain this mindset, the better. Things don’t settle down but the challenge keeps growing. The initial problems that you encountered two-three years ago become insignificant. They are replaced by something new.
In your New Yorker video profile, you said that you have no competition. Is that an artful exaggeration or is it reality?
Nobody has the capabilities to knock me off the pedestal based on two reasons:
– First, I’m the best at what I do. But that’s not the main factor.
– Second, I wake up every morning looking for trouble.
We spend 70-80% of our profits on research and development aimed at staying “one step ahead”. We reinvest heavily. That’s the corporate spirit that propels us forward. We have no competition because nobody can catch up.
Your first aerostat that was highlighted at an international event was launched at the 1996 Paralympics in Atlanta. How did you pull off that deal?
Simple. When I came to America, at first, I lived in New-York, trying to understand who the buyers for my airships in this country could be. But one time, I went on a trip to Washington. I went to the NASA headquarters with my interpreter (I didn’t know English yet).
The government representative that I spoke to had one single question for me: “Do you have an established American company?” I confirmed the fact and he said: “OK, we can do business then.”
In time, we became good friends and he introduced me to a company in Atlanta that had just received an order related to the Paralympics.
I was always lucky in life. Still am to this day. I always encounter people that push me forward along my path, people that are ready to take my hand.
We sold the airship for less money than it cost to make. But that didn’t matter to us. What mattered was that we created it in America, on a military base.
Tell us about Aeroscaft. What makes it unique?
We’re changing the world for the better. Let me elaborate in more straightforward terms: I can move cargo the way I move information on the internet. From point A to point B, without hubs, sea ports or airports.
When humanity invented the wheel, roads appeared. We’ve never carried cargo without the corresponding infrastructure. Aeroscaft allows us to depart from that formula.
Why has the industry ignored this idea for so long?
Airships were always seen as a very lucrative area for cargo transportation. But there was a problem.
If I bring 100 kilos of cargo, I’ll get 100 kilos of lifting power by loading it off. That’s why the cargo transportation idea bounced around for a long while but it needed an “on-switch” that would compensate for the extra lifting power.
You have to realize that the first helicopter was designed on paper by da Vinci but was physically created only centuries later by Sikorsky. The Internet existed for a long time but people started seeing it as a mass-communication method only due to American Online.
It’s the same situation with what we’ve accomplished. As soon as we came up with a “lifehack” to deal with the lifting power, everything became simple.
When was the idea of cargo transport services born? After all, your initial business model was based on advertising via airships.
The understanding that it’s a possibility existed from the very start. I’ve always had this vision. Using aerostats for advertising was a by-product, a necessity. Our current capabilities, skills and organizational expertise were drawn from managing an advertising business.
In 2013 one of the Aeroscaft prototypes was damaged when the roof of a military hangar collapsed. Your company sued the U.S. government. The lawsuit asked for a $65 million compensation but you received only $7 million. Were the court proceedings difficult?
The U.S. has a clearly defined legal process: it doesn’t matter who the plaintiff and defendant are. There’s faith in finding truth and justice.
That was exactly the case in our situation. Yes, we filed a lawsuit against the government, but the judge viewed us just as two equal parties in court. The only considerable difference was the lack of a jury. There are certain restrictions in such scenarios.
In terms of all the other factors, it was a standard proceeding. The U.S. government can’t pressure the judge. And we won in the end. The out-of-court imbalance was still present of course. We’re still a relatively small business that sued the largest corporation (so to speak) in the country. The resource disparity is immense.
How many airships does Aeros manufacture per year? And how pertinent is the question of raw numbers anyway?
Raw numbers aren’t really representative of the “big picture”. For example, we have several vehicle models: apart from the really crazy, monumental projects, we also make more “conveyor belt” type products. Previously, our average was approximately one airship per year. The last two years we’ve been concentrating our efforts on a new airship.
Everything is relative in this area: some things can be produced in three months. Simultaneously, the first Aeroscaft prototype took us three years to create. It’s a question of scale: “What size is the house we’re building going to be?”
With this measured tempo, how high are the risks? If you’re manufacturing a thousand vehicles per year and one breaks, that’s not a huge deal. In your scenario, the proposition seems riskier.
Aviation is still aviation. People always regard it with a more critical attitude. It’s obvious that less people die in plane crashes than in train wrecks or car accidents. But the public still approaches air travel more cautiously.
The understanding that human lives depend on you is a vitally important quality. I always tell my engineers that if they are personally comfortable with being aboard their creations, then the product is worthy of existing.
That’s the exact reason why I sit in the vehicle’s cabin during our airship tests. Beyond the technical specifications, the human factor is important. If you’re ready to put your child on board the aircraft, you’re good. And I’m willing to do that.
The Bloomberg commentary relayed the following: by 2024 you want to deploy a fleet of 24 Aeroscaft aerostats. Are these plans still in effect?
That collapsed hangar roof delayed our development. But I still think that date is relevant. We still have enough time. Maybe there will be less than 24 aerostats.
How much does a fleet of that scale cost?
A couple of billion. Or tens of billions. But money in such projects is always a secondary matter. Procuring funds is never as hard as completing the project itself.
There are reports that your contracts with the U.S. Department of Defense amount to approximately $100 million. What’s the secret to a successful business relationship in this case?
The total amount is probably somewhat smaller, I wouldn’t want to overstate the sum.
Every little detail matters in this business. The main thing is that we’re developing in a competitive environment. While we considerably outperform our competition, it’s important to adhere to one rule: «Deliver what you have promised».
Promises must be kept. Everything else is simple.
You’ve also worked with the Ukrainian Ministry of Defense. What are the differences between the two experiences?
The systems are completely different. The Ukrainian one is still in the process of being created. The rules that people and businesses live by in the West are still being fine-tuned in Ukraine. In a way, it’s a return to the times of that Lviv co-op company, when we had to create our own environment.
In Ukraine you’re known for more than just building airships. Your company also implemented the identification system in the Azov sea and produced the modified version of the M4 rifle for the army. How did you arrive at this broadening of your specialization?
Every morning I wake up and I’m looking for trouble.
In reality, the situation in the Azov sea was a straightforward one. The system that we installed there is already used on board our airships. In Mariupol city it just sits on top of towers. It was a logical adaptation to new circumstances.
The case of the M4 is a different story. Weapons are fascinating to any engineer. One of our structural teams works specifically in this area. It was a really interesting challenge to take up in Ukraine. The country is moving towards NATO and it’s understandable that the soldiers should be equipped with the corresponding weaponry. But the ammunition reserves in Ukraine are the ones still left over from the Soviet Union. It was a unique task for us: how do we combine these two elements?
But it got even more interesting as we went along. The ammo was manufactured using older technologies and had a different kind of gunpowder. The resulting rifle was a real engineering victory. It’s something nobody has ever accomplished before.
You said in an interview that you want to establish a systematic business in Ukraine. Opening a factory to manufacture the modified M4 was listed among the goals. Are you still planning to do that?
That’s the reason I’m in Kyiv today. It’s what we’re currently working on and moving towards. The entire story has transformed into a concrete business. And it’s presenting its own challenges.
Your return to Ukraine in 2014 was the first time you came back since immigrating. Why have you never visited before?
I had no desire to do so. These past 20 years my life has been in America: friends, information, specific events. Ukraine was my history that I no longer had any ties to… before the events of the Maidan. But it’s a different Ukraine now.
How often do you visit Ukraine nowadays?
It’s a bit embarrassing to even confess this: too often. In 2015 I came here nearly once every month. Why is it embarrassing? I have so many mental associations now that my perception is different. I don’t just visit Ukraine, I’m part of it now. The events that take place here have become part of my life.
What scares Americans away from investing into Ukraine?
The lack of real investment opportunities in the country. There just aren’t any tangible ones. And it’s not only about the absence of a regulated market, stability or appropriate legislation (especially if we’re talking about the defense industry).
There’s just no clear mechanism. It starts with very basic things, at least in my specific area: the presence of Ukroboronprom, which is not a corporation. It’s just some kind of hard-to-understand auxiliary structure with the Cabinet of Ministers. Nobody really has any clarity as to what it is.
Then, we get to the aspects of elementary operational routine, such as the accounting system. American and Ukrainian auditing are drastically different, I wouldn’t be able to make sense of the local documents even if I tried.
Do you think this will change in the coming years?
It won’t change tomorrow. And everything that has a timeline of beyond tomorrow is too long.
In reality, there’s no alternative. Either Ukraine will remain an agricultural country or it will restore its industrial potential. I’m confident that the second scenario will come to pass. But progress is slow.
If you had to give advice to modern Ukrainian business owners, would you recommend staying here or immigrating?
I would recommend staying. Because there’s potential here. The rules are being written in real-time. But it’s also clear that all business has become global, nobody works within the confines of a single country anymore.
Every industry has its “dream projects”. Some people want to go to Mars, some want to launch a colossal satellite with solar sails. What’s the dream project in airship construction?
A cargo airship.
But haven’t you already achieved that?
There’s no limit to this dream. We’re always aiming for “bigger, faster, higher”. It’s also important to understand that there’s no cargo airship industry in the modern world. There’s a possibility of establishing it. That’s the dream: to create this industry.
Let’s talk a bit more about dreamers. Sergey Brin invested $100 million of his personal funds into the creation of a cargo airship. What do you think of his idea?
Sergey is one of the few unique people in this world that has vision. When he started getting involved in cargo airships, it became one of the launching points for me as well. The first negotiations on the subject took place in 2013, I think.
My perspective is: the more people get involved in this area, the easier it is for me. An industry can’t be built by one individual. Some people will ultimately leave, some people will stay, it’s a natural process.
And though I haven’t talked to Brin in a while, he was quite serious about the idea at the time.
