Serhii But

At the beginning of 2023, Serhii But was appointed CEO of Prozorro.Sale SE, so we decided to talk to him and introduce him to you. We learned about Serhii's career path, the values that he and the entire team adhere to in their work, and plans for the development of the system's directions shortly. From this interview, you will also learn how the company was created and how its financial and management functions were built starting in 2016 because Serhii worked at Prozorro.Sale almost from the beginning of its existence.

Why did you decide to choose Prozorro.Sale SE for work?

I joined the project in 2016. At that time, it has existed for almost a year and had a team of about 8 employees. I knew some of them personally, including Oleksii Sobolev, and realized that these people would not participate in something bad. It was a significant argument to be interested in this project, even though it was only a startup.

It was at that time that the post of donor coordinator ( the one who is responsible for all the finances in the project) was vacant. Recruitment was transparent, according to Transparency International procedures, so before I was taken to work, I passed several interviews and performed a test task.

How did the idea of creating Prozorro.Sale come about?

The idea of the project was the experience of the successful launch of the Prozorro public procurement system. Against this background, a specific need arose from the Deposit of Individuals Guarantee Fund – to create a mechanism that would allow for the fastest, most efficient, and transparent realization of the property of bankrupt banks that were liquidated during the "great bank collapse" of 2015-2016. Therefore, the idea of Prozorro online purchases was taken as the basis for creating Prozorro.Sale auctions, with the difference, that here the seller is the state, and the bidding takes place to increase the price. The National Bank and the Ministry of Economy of Ukraine supported the idea.

Transparency International Ukraine, whose activities are aimed at reducing the level of corruption in the country, acted as an important partner in the creation of the Prozorro.Sale project. In the beginning, it was they who helped Prozorro.Sale to attract the support of international partners for the construction and development of the system.

Please tell us about your career in the company and what you did before you became CEO of Prozorro Sale SE

At the beginning of my career in the company, I coordinated work with international donors and organizations that provided funds for the launch of the "Prozorro.Sale" project. This was important because at that time the future state-owned enterprise was in the initial stage of its development and did not yet receive income but already had to pay salaries to the team and cover other costs related to its operation.

Of course, I understood the risks of relying on donor funding, which can be irregular. Therefore, we all tried to minimize the risks: we constantly communicated with potential new donors and worked on creating a stable work regime, first for the project office, and then for the state enterprise "Prozorro.Sale" (hereinafter referred to as the SE).

After the formation of the SE, we had the opportunity to receive income to support the work of the team and other areas of the system's work. We set ourselves the goal of turning the SE into an independent and self-sufficient enterprise capable of earning its existence and development through its efforts. This, in turn, required the launch of a full-fledged financial function, which became one of my new tasks.

Serhii But

Plus, we launched the billing function – receiving payment in favor of the state-owned enterprise for the conducted auctions. I was also responsible for ensuring the resource part of the enterprise – to put it simply, the formation of the procurement department. Thus, from the beginning of the launch of SE from scratch, I was responsible for building these functions.

Then the SE continued its development, we grew both quantitatively in terms of people and in-depth – in terms of the distribution of functions and responsibilities. At a certain stage, we also had a Supervisory Board, which builds a strategic vision of the company's development. From the summer of 2022, my functionality expanded further into the operational sphere. In particular, I began to participate in the activities of our administrative department – everything related to personnel, and the provision of a full range of resources for SE. I did this until January 2023, when I was appointed acting director.

Please tell us in more detail what the Supervisory Board does at Prozorro.Sale?

We are one of the few small state-owned enterprises in Ukraine that have Supervisory Boards. The Supervisory Board of Prozorro.Sale is headed by Ilya Mykhaylov, who has been in the project since the very beginning. It also includes Natalia Boyko as a state representative and Nadiya Vasylieva and Dmytro Krepak as independent members.

Serhii But

Therefore, we understood from the very beginning that it is important for the development of the SE to have a Supervisory Board with experienced professionals in its composition.

There are thousands of state-owned enterprises under the Ministry of Economy of Ukraine, so it is quite difficult to keep each of them under close control. For this, there is a Supervisory Board, which can quickly and qualitatively analyze the activity, and which is responsible for the long-term success of the company. As a result, we can respond more flexibly and purposefully to certain risks and challenges.

One of our first international partners, the European Bank for Reconstruction and Development, played a leading role in the emergence of the Supervisory Board. According to its terms, the state-owned enterprise had to have a full vertical of corporate management – this was a guarantee for the bank that its investments in the enterprise were under close control.

The main role of the Supervisory Board of Prozorro.Sale is strategic management, planning, risk management, defining certain frameworks, and the direction in which the SE will move in the long term. All members of the Supervisory Board are experienced specialists in their field, so they also add a significant intellectual resource regarding individual decisions within the SE. These are people with vast experience in corporate business (for example, Microsoft, and Visa), and in the management of state enterprises and bodies.

What values do you adhere to in your work?

We have clearly defined values that we all share and which are an important part of our organizational and corporate culture. For example, involvement, mutual assistance, and openness. With us, each employee is responsible for the entire process. Therefore, there is no such thing as someone having completed their part of the work and going home, while colleagues are still in the active work process.

We established such values even when the project was small in terms of the number of people, and everyone had to be responsible for many different tasks. Over time, as the staff expanded, we gradually distributed responsibilities, but our approach remained the same: each of us contributes to the overall success and is involved in what the whole team is doing. This is what helps us to develop quickly and move forward.

How do you keep employees engaged?

We are constantly looking for a certain balance so that employees can focus on their tasks and at the same time see where the company is going as a whole. This is a daily process that begins at the recruiting stage.

Serhii But

Thanks to this, we have proactive employees who are focused on achieving the set goals and energizing each other. They are motivated by seeing their successes and the results of the entire team's work. We also have the possibility of "internal migration" – a transfer from one department to another (for example, from the financial department to the marketing department) if an employee decides to change their field of activity and believes that they will be more useful in another position. This helps our employees discover new talents, and develop and maintain the desire to do even more than what is written in their job descriptions.

Do you have any plans to implement new management methods?

I have no plans to significantly change the management model in the SE because I have also participated in its creation since 2017. During the time that the team grew from 8 to 60 people, we developed a certain corporate culture and management methods both at the highest level (the Supervisory Board) and at all other levels: the director, deputies, heads of departments, and sectors.

The main points were formed at the beginning of the project when we started as an IT startup, which also imposed a certain specificity of activity. And I believe that we managed to preserve a kind of "IT-ish-innovative" approach, first of all in management. Therefore, when we communicate with counterparties or donors, we sometimes mention the fact that "we are the most innovative state-owned enterprise in the country." In other words, we try to maintain a balance between innovativeness and the status of a state enterprise, which also imposes certain obligations and has a certain bureaucratic color.

To briefly describe our management style, I would draw an analogy with a sports team, where each player has a role and value, and this role may be limited to the time when a particular specialist with their skills is needed for a specific task.

Even in February 2022, when a full-scale war began, we fundamentally did not revise our management model and did not resort to reducing the number of people, even though the activity of our work decreased in the first months. The main thing that we changed then were separate internal processes regarding the format of communication within the team and responding to challenges in war conditions.

What helped you in the first months of full-scale war?

The period of the beginning of the war was a significant stress for each of us, even though we had prepared action plans in advance at the SE level depending on how events would develop. But when all this happened, people were still confused, it was necessary to reassemble both myself and the team. Four of our employees went to the Armed Forces, some went abroad, and some were in the occupied territories. So we had to quickly redistribute responsibilities among those who remained in touch.

Serhii But

People were scared at first, but then they realized that they still need to do something, move somehow. Colleagues picked up the tasks of those who were unable to work for a while due to a lack of communication. We understood that much in the country depends on our work, especially when 30% of the country's economy has stopped. After all, Prozorro.Sale online auctions and effective management of public property with their help make it possible to fill budgets of various levels with funds that further, go to support the Ukrainian army, restore damaged infrastructure facilities, and other important processes (for 2022 from the sale and lease property, the state received UAH 10.31 billion – ed. SmartTender). Therefore, we restructured the processes a little, and the Supervisory Board began to cooperate more closely with us at the level of daily processes.

I remembered that on February 24 we had a final interview scheduled with a new employee: horror and fury outside the window and the candidate wrote to ask if there will be a meeting. Partners and counterparties who were under occupation or in the territory of active hostilities apologized that they could not send the necessary documents due to a lack of communication. It gave rise to strange feelings that even rockets overhead were no excuse for not getting the job done.

What motivates you?

I try to find motivation in everyday things. But the most motivating thing is to be focused on a certain goal, a certain result. It happens that at the beginning it is not even easy to describe. But while you are moving towards it, something concrete begins to form, so when you achieve what you set out to do, it is very inspiring.

Serhii But

Do you manage to maintain a work-life balance?

I usually try to stick to it, no matter how difficult it is. On the other hand, I understand that at certain moments in life and career, this balance can shift towards work, especially when you move to another position or start a new important project. That is, working overtime is not something terrible for me. But now, when I have been in a new position for a few weeks, I force myself not to sit down for work longer than 8:00 p.m. This is important to have the resources to continue working the next day.

What are your goals for the development of Prozorro.Sale?

The Enterprise faces many challenges, both specific and typical for the economy and business in Ukraine. For example, in the summer of 2022, for security reasons, we decided to "move" from the local data center to the Amazon Web Services (AWS) cloud storage, which is inaccessible to Russian missiles. It was an important and quick decision that the Ministry of Digital Transformation helped us with.

Serhii But

Prozorro.Sale – like a living organism – is constantly complicated and developing. Even during a full-scale war, some of our procedures were modified and new ones appeared. Since we depend on Ukrainian legislation and economic conditions, which are constantly changing, we cannot freeze in a certain "ideal" state and stop development, so we constantly adapt.

Another challenge facing us right now is changing the organizational and legal forms.

Serhii But

Only the way the company will be organized internally is changing, but it will give us more operational flexibility and we will be able to implement more tasks both for ourselves and for the entire ecosystem.

And, of course, the launch of new auction lines – we've announced quite a few of them in recent months, and we're not stopping there.

What directions have recently appeared on Prozorro.Sale, and what new directions do you plan in the future?

First of all, this is the direction of NPL – non-performing bank loans. We have come a long way to cooperating with state-owned banks, which are the largest owners of such assets. We see this direction as very important and promising from the point of view of helping the country because the presence of bad loans is always a burden for the economy, which does not allow it to use a certain share of resources.

Also recently the direction of implementation of the rights of the special use of aquatic biological resources started, aimed at making transparent the conditions of cooperation between business and the state in this field. The State Fisheries Agency has already published about a hundred lots in the system.

And, of course, we continue to develop our usual lines of renting and selling state and communal property. Plus, bills were recently passed that make it possible to sell the property of joint-stock companies with a controlling share of the state in ownership. We already had a successful experience of cooperation with Ukrzaliznytsia and Ukrposhta, and in the summer of 2022, Ukrainian Danube Shipping was actively working with the system, so we hope to strengthen in this direction as well.

Serhii But

Also, active work is currently underway in the direction of the sale of seized property, assets subject to sanctions, and property confiscated from residents of the Russian Federation. The state is interested in turning such objects into liquid assets as soon as possible, which will help to obtain funds for financing the military and supporting social functions in the country. So we have quite a lot of work and plans for the year.

Can you share cases of how the purchase of state property helps businesses?

From the beginning, our entire project was aimed at ensuring that people are not afraid of dealing with the state and that the state can manage its assets more efficiently. If something is not included in the mandate of state structures, then this property should pass into private hands to create added value for the economy.

We constantly analyze the structure of buyers in our system. We need to see that, for example, there is a growing number of individual entrepreneurs who can come to an auction, bid, win, buy, or rent a property, and then successfully make money and create added value and jobs. We always monitor such cases and periodically share them on information resources. For example, we recently talked about a Khmelnytskyi businessman who, after winning the auction, was able to rent a site to open his driving school even in wartime conditions. Such examples inspire and show indomitability at all levels of our country.

Serhii But

They are the interface for communication between the seller and the buyer and sometimes know even better than us about the categories of assets sold in the system. We have both objects available to anyone (for example, renting premises for opening a coffee shop, office, barbershop, etc.), and more complex lots (such as non-performing loans or mining licenses), the buyer of which must know their specifics. So everyone will find something here that can be useful for starting or developing a business.

Besides providing property sales and rentals, how does your enterprise support the country now?

During the entire period of military operations, we focused on our main activity – helping to ensure that the budgets of various levels receive funds from the sale or lease of property. At the same time, we were looking for ways to be even more useful for the state. We have launched a line of charity auctions, which have demonstrated good dynamics and allowed us to raise funds for the support of the army.

Together with the Ministry of Economy and the Ministry of Infrastructure, we launched a platform for business relocation, which is still working. It is designed to help businesses that cannot continue to function where they are and are forced to move to safer regions of the country.

Plus, all of us, like every conscientious citizen, donate to support both our boys who have joined the ranks of the Armed Forces, as well as for other needs.