How would you like a fireplace in your apartment, one with real fire, but that doesn’t produce smoke, or soot, and that doesn’t even need a chimney? One that doesn’t burn coal or wood – that’s completely environmentally friendly – that you can even control from a smartphone app? It sounds impossible, but that’s what you get with a Neverdark automated bio-fireplaces! This amazing fireplace, created by Ukrainian entrepreneur Yaroslav Lysak, is now on sale in Europe, North America and Japan. We talked to Lysak about how he came up with the idea, how he built his business without outside investment, and how the pandemic affected his company’s plans.
The magic of electronics
My father worked in construction as an electrician, and was an amateur radio enthusiast. He was constantly soldering circuit boards or making tube amplifiers. As a child, I was fascinated by everything he did. We would connect a transmitter to an amplifier, and then connect a microphone, which we’d speak into, broadcasting to the nearest radio receivers. We’d play tricks on our neighbours this way. Doing this, by the way, was a crime in the Soviet Union – they could come for you.
My father gave me radio electronics sets that you could make things with, for example, an electromagnet. I didn’t buy my first cassette player in a store – I made it, using an electronic constructor kit. I enjoyed creating things by myself, applying scientific knowledge. It’s a kind of magic.
From employee to business owner
When I was studying at the Kyiv University of Technology and Design to become an electrical appliance engineer, I didn't think about what I’d do next. At that time, most people didn’t even know what they were studying for. The labour market was boring. When I started to work after university, I realised something about myself – I really don't like working for other people. I wasn’t impressed by my employers’ conditions, their goals, how they achieved them, and why. So I worked as an employee for only two years, and in 2004 I set up my own company, called First Line.
The company developed innovative design solutions. We started with marine aquariums, then we made waterfalls on glass, bubble panels – complicated things that not many other people made. We were constantly looking for “blue oceans” (market segments in which there is no competition, since rules and standards have not been established - ed.).
We began making bio-fireplaces in 2011 – but we failed, as there was no market for them. People were suspicious of them because of the smell and worries about safety. So we couldn’t promote them very much until automatic fireplace technology was developed. Then we could see its potential. Once we’d already manufactured the product and began selling it, we created a separate brand, Neverdark, for the product, and then we created a company with the same name. I also brought in an engineering partner to the team. We shut down all of the other business directions. This was at the beginning of 2019.
Technology makes a problem product promising
The first bio-fireplaces were just containers made of stainless steel with tanks for the fuel, which you had to ignite with a lighter. There was no control at all: you could just open and close the damper (to ignite the fire and to extinguish it). You couldn’t do anything else because of the limited technology.
However, it wasn’t not expensive, so people would buy them. But then they’d become like an exercise bike – unused, with stuff piled on top of them. It’s an emotional purchase – people think it's cool to have a fire in an apartment, but then they see the downsides – there’s the smell, and smoke. In the end, it would be lit only a few times a year.
Automatic bio-fireplaces are analogous to a car: There’s a separate fuel tank (for odourless-burning, bio-ethanol-based fuel), an evaporator, and a burner that is controlled by a control board with a microcontroller. It’s been programmed, and everything is connected to sensors. This kind of framework gives you opportunities for scaling – if you connect it to Wi-Fi, then you can control it from a mobile application, or connect it to a smart home or to a server, and through that connect to Google Home and control it by voice, and so on.
Bio-fireplaces became a smart device that fit well into the IoT (Internet of Things) trend, which had begun to develop rapidly at that time.
In this case, my education as a programmer, which I obtained in parallel with my main speciality, came in handy. After all, I had to manage the electronics engineer who programmed the controller for the bio-fireplaces, as well as the team of outsourced programmers who developed the application. It would have been difficult to do this effectively without understanding what they were doing.
Better to be second than first
I don't know who invented automatic bio-fireplaces. We looked at their idea and became interested in this line of business. But we didn’t copy their development – we didn’t even look what was inside. We just liked the concept itself. Automation solved all the problems of mechanical bio-fireplaces.
Having a big competitor who effectively created the market helps us a lot. It’s really very valuable. If we’d had to do it all ourselves, we’d have had to attract investment, like most start-ups. (Instead) we just reinvest the profit, and we’re able to move forward on our own.
It’s much easier to take advantage of already existing demand and just offer something more interesting and better. In addition, there’s a large number of people who don’t even know bio-fireplaces exist at all. They’ll get to know about them because this market is going to grow, knowledge about the product will be shared. That’s the main potential for our growth. Looking at it this way, we’re in ideal conditions.
Pandemic: challenges and obstacles
The pandemic slowed down our rapid growth. If it hadn’t been for it, we’d have entered the European market in 2021, and the U.S. market in 2022. It’s delayed our plans for a year.
Before the worldwide lockdowns, our annual turnover was EUR 250,000. In 2020, we planned to double this number, but this didn’t happen. We’ve only started to see growth in the last two months – sales have begun to increase.
We’re planning to integrate new features into the mobile application. For safety reasons, it’s impossible to allow fireplaces to be turned on when there’s nobody close by. There might be a cat there, or a curtain might (catch fire). So we developed the application in such a way that you can only control the fireplace when you’re on the same Wi-Fi network. But that means the owner can’t see what’s happening with the fireplace if they’re not on their home network. We’ve already taken a step towards solving this problem – we’ve now got our own safety server that monitors all of our fireplaces. It’s located in Germany. So even if you’re on another network, you can connect to your fireplace through this server and see what’s happening with it – but you can’t light it.
Bio-fireplaces for the middle class
Our clients are owners of apartments over 50 square meters in area, living in big cities, with an average monthly income per family of from EUR 3,000. In Ukraine, this is the upper layer of the middle class and above. In Europe, this could be any person with an average income.
Currently, our sales model is B2B2C (business to business to consumer). Built-in Neverdark fireplaces are purchased and installed when apartments are being renovated, so we sell them through dealers and interior designers. But now we’re planning to use the B2C model. For this, we are developing a line of ready-to-use free standing models. You’ll be able to buy one in a store, bring it home, place it in any corner, plug it into an outlet, fill it with fuel, and use it – just like you’d use a TV. There’s no designer, dealer or complicated installation required, and that means there’s the potential for mass sales.
Business development is a path with successes and failures – some significant, some less so. But the only indicator that would allow me to say that success really has come would be if a large multinational company came to me and offered to buy my business for several hundred million dollars.
One of my intermediate ambitions is to enter the foreign market. But we still need to build a lot of business processes and gain some new skills. We got a call from the “Business Community Club Ukraine” and were invited to participate in a competition for entrepreneurs launched by the “EU4Business: Competitiveness and Internationalisation of SMEs” project, which is jointly financed by the European Union under the EU4Business initiative and the German government, and implemented by the German federal company Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, where you could win a voucher for consulting services.
For us it was like a godsend. After all, we’d recently received a European certificate for our fireplaces. Thanks to the voucher, we started working with an expert on researching the European market for automatic fireplaces, and the strategies for entering the EU market using the dealership model. This research will allow us to choose dealers not intuitively, but according to an objective list of criteria. The chance of making an error in the “matchmaking” process (searching for contacts) in this case is minimized. We’re also working on implementing our business strategy, namely, developing a dealer portrait, partnership proposals, partnership agreements, searching for and attracting dealers, and building a proper business process within the company.
Best business advice
Having a good team is a priority. Even the best strategy will fall apart with a bad team, and with a good team you can even implement a bad strategy – or make it better.