One of the owners of the L’viv-based, multi-million dollar video game company, Nravo, was murdered by a knife-attack in the entrance to his home. The perpetrator didn’t take any money.
Dear Ukrainians, it is neither democracy nor law-abidingness which creates a wealthy society. Hell, most of what the Bolsheviks did was in accordance with the laws they themselves passed. A wealthy society arises when there are property rights.
There are four or five grocery stores on my street, within a single block of my apartment. I’m not sure why there’s such a concentration. Nevertheless, I walk about a quarter mile to a more modern one.
The modern one follows the American model. I look at products, hold them, study them, and them either put them in my basket or back on the shelf. I grew up with this model an never imagined another one could exist.
Perhaps that’s why it took me so long to realize that most Ukrainian groceries are following a different model, and even longer to realize that I hate it.
In most grocery stores, all produce lies behind the counter under the protection of the clerk. You have to communicate for every item. Studying an item and then rejecting it is taboo and will only be tolerated once or twice per visit. If you hesitate while studying products at a distance, the clerk might switch her attention to another customer. This is bad because in true Soviet fashion, NOTHING happens without the clerk.
Sometimes when there are no other customers, the clerk speaks on her cell phone. She’ll usually try to help me while carrying on her conversation, and poorly disguise her irritation when I interrupt with naive questions.
The moderately free market has brought choices to Ukraine’s grocery shoppers. I hope it comes to stationary stores too.
“What type of notebook do you want?” the clerk asked me. I was stunned and annoyed by the question. There seemed to be great variety on the shelves behind the lady and I wanted to browse leisurely.
How does this model of shopping allow for new products? for innovation? Does new merchansise gather dust on their shelves because no one every knew to ask for it?
I asked for a notebook that isn’t for children. Something without pictures. She scanned her shelves (something I would have gladly, preferrably even, done myself) and handed me a flimsy notebook (all Ukrainian notebooks are flimy) with only a small picture of a unicorn on it.
Somebody please open a Staples in Ukraine. I’ll be your best customer.
I love new businesses and the energy of entrepreneurs. It’s exhilarating, and I’ve only been able to appreciate it since fairly recently — since deprogramming myself from all the socialist garbage I picked up in school.
Before I ever met this young manager, I was already a great appreciator of her restaurant. It was clean, simple, fun, tasty, innovative, inexpensive and had great customer service. I’m not going to name it because I want everything to remain anonymous.
It was fun listening to the back story over beers:
The owners are two guys both of whose fathers are politicians. (This part of the story is depressing to me. I want at least some sectors of the economy to be opened to the aristocratic competition of the free market: may the best restauranteur win.) So they probably have some cover from L’viv’s famously predatory bureaucrats and tax collectors. Typical of the political class, they do little work beyond making harsh demands on their underlings.
I think the reason I heard so much of the story was because this young lady suffered from months of pent-up frustration.
She unleashed a flood of evidence, making the case for her deserving better.
I agree with her, of course, but mostly I felt impressed and delighted to see her competence and the run-away success of a fairly new restaurant.
She told me about waking up at 6am and scouring supermarkets because she realized they were out of lettuce, about teaching employees to smile and greet customers, about choosing the design for the restaurant, about the amazingly small initial investment (less than $30k!), about their stunning profitability, about preparing documents, about late night phone calls from the owners, about begging for vacation time, about her salary (about $500 a month), about doing what I had assumed was lawyer-work — preparing franchising documents, about miraculously locating Ukrainian suppliers for things previously shipped from America, about receiving no appreciation, about her desire to switch to a government job (I hope she fails).
Of course there was some frustration, but this isn’t a sad story. It’s a glorious one. For her talents, dedication, and knowledge, I think she’ll eventually earn the money she deserves.
It’s also the story of entrepreneurial success. Yes, from her perspective, the owners have flaws, we may feel they don’t deserve their success, but L’viv’s restaurant business is at least a partially free market. I know an American who doesn’t even speak English whose year-old restaurant is fast becoming a L’viv icon (TexMexBBQ). He succeeded presumably without a relative in politics.
So their flaws aside, these two young men took a risk and are delivering fantastic food and service to thousands of Ukrainians and tourists.
God bless capitalism. May it not perish from the Earth.
Half-joking, I asked whether she’d be able to turn $20,000 into $40,000 in a year. She didn’t understand the question. I repeated: “If I give you $20,000, can you turn it into $40,000 in a year.” She was full of doubts and questions and qualifications. It’s clear that a personality capable of stunning coordination and discipline and management isn’t always a personality capable of taking a large sum of money, choosing a direction and saying to other people “follow me.” She needed the two owners (at least initially) just as much as they need her.
The inspirational story of a game developer from Lviv who made it big:
http://www.polygon.com/features/2013/6/5/4391952/contre-jour-mokus-games
http://real-economy.com.ua/news/40135.html
Translation:
“Law firm Yuskutum plans to make virtual currency Bitcoin as payment of legal services.
This was reported in the company, reports the “League”.
“Emission and turn Bitcoin is fully decentralized and does not depend on any regulatory authority, the course currency known to all participants in advance” – said Artem Afyan, managing partner of the Bar Association Yuskutum.
“Ukraine is not allowed as a revenue gain any benefit. A person can get a car grain services. That is Bitcoin, which is objectively valuable. Requirements of the global market can not be ignored, as well as the fact that Bitcoin used worldwide as a means of payment “- the Afyan.”
I posted about the physical attack against the business last week. Now this:
“Ukraine plans to almost triple the excise tax on beer in a bid to boost annual budget revenue by as much as 1.7 billion hryvnia ($209 million).
The tax will rise to 2.43 hryvnia per liter from 0.87 hryvnia, according to a draft law published on the Revenue and Fees Ministry’s website today.
The government is in talks with producers about increasing the tax and plans to submit the proposal to parliament this autumn, Revenue and Fees Minister Oleksandr Klymenko said June 7.
“As of today, in Ukraine, beer is not an alcoholic drink and that’s why its production and distribution are not subject to licensing,” the ministry said.
“Lack of control of beer production and sales, which is accompanied by low taxes, led to low beer prices, while the price of water, milk or juice is much higher.”
Ukraine, which is in talks with the International Monetary Fund over a third bailout in four years, had a budget deficit of 5.1 percent of gross domestic product in the year through April, Dragon Capital (VIETENI) said June 3.”
http://news.kievukraine.info/2013/06/ukraine-plans-to-triple-tax-on-beer-to.html
This tax is being advertised as necessary to help children dying of cancer — a transparent gimmick instantly ridiculed on facebook: https://www.facebook.com/groups/561519530555123/?fref=ts
The last two sentences of this article are the most interesting. They are in Russian:
В октябре 2012 года парламент принял закон, ужесточающий контроль за функционированием систем «электронных денег». Эмитировать их отныне могут только банки.
Translation:
In October 2012, parliament passed a law that would tighten control over the functioning of the system of “electronic money”. Their issue can now only banks.
This is a story about division of labor.
My friend sold one apartment and bought a smaller one in Kyiv. During a recent visit, she complained to me about the contractors. They would argue with her about details like the color of the walls, insisting they were right. They’d be late, or drunk. One guy smoked pot and talked to her all day long, then apologized for not working. (He brought his own pot.)
So what’s the deal?
Ukrainians are famous all over the world for their building skills. A cousin of mine travels as far as Portugal and Moscow to work. I know of a small businessman of Ukrainian descent in the US whose making a killing and building a great reputation for quality. It seems like every other Ukrainian I meet is building or renovating his own home.
Why the hell haven’t Ukrainians figured out how to sell their labor to each other?
Here are some possibilities:
1. This is a low trust society.
2. There is a severe lack of entrepreneurial talent. It all fled, or was killed or deported. A massive bureaucratic burden prevents its re-emergence.
3. Ukrainians are suspicious. This is a golden opportunity for people who know how to build brands. The success of brands in Ukraine is obvious.
4. Ukrainians can’t afford each other’s labor. (This seems unlikely, as there is great desperation to work.)
What I hope more Ukrainians realize is that a division of labor is necessary for wealth creation. If you’re growing your own food and building your own house because it’s gratifying, fine, but you’re not going to be as rich as someone who does one thing very, very well and sells it.
There are different ways of measuring a country’s monetary supply. They’re called, M1, M2, M3, etc. M1 is the most conservative.
M1 = 337,461,000,000 UAH Million as of March of 2013
That equals $41,559,236,453. About $41.5 billion.
30 UAH (about $3.75) at L’viv Radio Rynok!
It’s a technology bazaar. I feel safer, of course, surrounded by the ethic of a shopping mall — symmetry of information, guarantee, warranty — but it’s nevertheless exciting to see so many people making a living in such hyper specialized ways.
It’s open Wednesday, Saturday and Sunday.
My dear friend and co-conspirator who accompanied me also builds tesla coils for fun. Did you know that if you hold one of those new “green” light bulbs next to a tesla coil, it’ll light up?
Forbes Advertisement on L’viv city council building.
Here’s the Powerpoint presentation I gave: Intro to Bitcoin & A Brief History of Money
It went really well. They seemed riveted. There were ten people including a local entrepreneur and the local leader of Plast, a youth organization.
I pretty much gave the whole presentation again in a bar to a couple other people.
After the collapse of the Soviet Union, miners in the east homesteaded abandoned mines. Their efforts grew into a complex operation, but sadly, gangsters eventually took over (with considerable help from local bureaucracies which were — and are — indistinguishable from the gangsters).
The title of this article translates as HOW DONBASS BECAME, INSTEAD OF NEW AMERICA, THE INDUSTRIAL MIDDLE AGES.
http://texty.org.ua/pg/article/editorial/read/42483/Shahtarskyj_adat_Jak_Donbas_zamist_novoji_Ameryky
The article references “anarcho-libertarianism”.
Translation: here
Again and again and again: Half Ukraine’s problems would vanish overnight if everybody owned a gun.
Americans who favor restrictions on guns are the spoiled inheritors of a private law culture that evolved with the frontier where people owned guns and found private solutions to the problems of security and justice.
=============
Bitcoins — the future of money.
http://en.wikipedia.org/wiki/Bitcoin
In 2008, a mysterious Japanese mathematician described what he called “peer to peer electronic cash.” In 2010, a bitcoin network had been established. One early bitcoin transaction was a pizza for 10,000 BTC.
Today, those 10,000 Bitcoins would be worth over a million dollars.
In New York City and Berlin, bars have begun accepting bitcoins. Cars have been sold for bitcoins. A Forbes journalist in San Francisco has lived only on bitcoins for a week.
In the last several days, California venture capitalists invested 5 million dollars in one of many emerging bitcoin businesses.
This is the future of money. It will change everything. Bitcoins will do to banking what email did to the postal service.
The speaker: Roman Skaskiw is an American of Ukrainian descent who recently moved to Ukraine and gained residency. He has a bachelors degree in Computer Science from Stanford University. He accepts bitcoins.
=============
This has been taking much of my energy lately. We just a few days from launching our first two stories.
New technology. Old fashioned story telling. :)
Shopping is an amazingly complex and subtle activity. One of the (many) things which makes Amazon.com fantastic is that they’ve exhaustively imagined the activity and designed their arrays of services accordingly.
Recognizing the complexity of the activity makes me feel better about having such a hard time. I ask for advice.
With the hangers, I had to draw a picture, because my friend thought I wanted some sort of stand with hooks on it. Anyway, the store she directed me to didn’t have them. I made a half dozen stops at different stores before finding one that sold hangars.
The plastic ones were 2 uah each — 25 cents. That’s when things got weird:
“Are they for you or for a girl?” the sales lady asked.
“Hangars?” I replied, surprised.
“You can buy a bunch and give them as a gift.”
I really doubt Ukrainian girls wouldn’t be offended by such a gift. She was talking nonsense.
Amazingly, as I continued home, hangars in hand, a lady stopped me in the street.
“Where did you get those hangars?” she said.
What a weird day…
