"Code, sweat, and tears: How Ukrainian MacPaw went from a student startup to millions of users worldwide" by Andrii Degeler
When Apple famously announced the move from IBM processors to Intel in its computers in 2005, Kyiv-based student Oleksandr Kosovan knew he had to act quickly. The price of his most valuable possession, a PowerBook G4 laptop, would start going down as more people learned about Apple's decision. Within a couple of weeks, Kosovan sold the device for a good price — but the Intel-based Apple computers wouldn't be on sale for another year.
“I was an evangelist of Apple, I loved this company so much that I insisted all my friends switched to Apple as well,” he recalls. “I couldn't go back to Windows.”
A computer science student, Kosovan ended up getting a PC and installing a customized version of Mac OS on it — the so-called Hackintosh. Back in the day, however, Hackintosh was full of bugs and issues that the project's small community couldn't solve fast enough.
“There were no working drivers for networking and graphics, so I had to code them myself,” Kosovan said. “I got a lot of experience from that and learned a lot about how the operating system worked. This became the foundation of CleanMyMac.”
Fifteen years later, CleanMyMac — a software application that essentially does what it says on the tin — is used by millions of people worldwide. Its development is still overseen by Kosovan, whose software company MacPaw has 250 employees at its Kyiv headquarters.
NO VENTURE CAPITAL, NO PROBLEM
Kosovan founded MacPaw in 2008, three years before The Lean Startup was first published — and yet, the company is a perfect example of this paradigm. Fully bootstrapped, it has never raised external funding, relying only on its profits.
“In 2008, there was no startup culture in Ukraine,” Kosovan said. “At least I had never heard of it. So, how would you fundraise? You could either go to a bank or turn to your relatives for money — that's all we knew. So, because I didn't know how VC worked, my main purpose was for the company to be profitable from day one.”
CleanMyMac, the firm's first product, quickly grew popular, attracting attention from Mac OS users all over the world. However, as Kosovan quickly discovered, there was one downside to the popularity — that is, the growing levels of piracy. Hacked versions of the application had surfaced on popular pirate Bittorrent trackers for everyone to download and use for free, and there was little that could be done about it.
To tackle the problem head-on, Kosovan did something no one expected: he registered on some of the tracker websites and offered the “pirates” free CleanMyMac licenses.
“Sometimes when the pirates crack your software, they can break some things, which may lead to negative user experience,” Kosovan said. “So, I decided that the best way to go would be to provide free licenses to the people who would use our product anyway, and it turned out to be a great experience.
“I asked everyone to write to me directly to get a free license code for CleanMyMac. Thousands of people did. I sent license codes to all of them and eventually they became some of our most loyal beta testers. What's even more interesting, one of the people who requested a license remembered this experience and later they came to work at MacPaw.”
NETFLIX FOR APPS
CleanMyMac still remains the chief source of MacPaw's revenues. With more than 20 million downloads, it's evolved together with Apple's computers and is now an all-in-one digital junk cleaner with a built-in anti-malware module. The application is sold both on the website of MacPaw and through the Mac App Store, which is usually a no-go zone for software that goes deep under the OS's hood.
Over the years, MacPaw has branched out to other software projects. Not all of them proved successful, but the surviving ones look promising. Those include the duplicate file remover Gemini and the firm's most recent addition to the line-up, subscription-based app marketplace SetApp.
The idea of SetApp, which was first launched in beta in 2016, is simple but powerful. Its users can pay a subscription fee of around $10 per month in exchange for unlimited usage of a wide range of OS X applications, not unlike the way you'd pay for Netflix or Spotify. There are currently more than 180 apps on SetApp, including MacPaw's own CleanMyMac and Gemini, as well as popular third-party pieces of software, from Ulysses to BetterTouchTool.
“We share the revenues with the developers of the apps that are actively used. If you, as a SetApp customer, use an email client or a system tool, its developers will get a share of your monthly fee,” Kosovan explained. “We have around 50,000 paying customers with a very good churn rate. Once they've discovered SetApp and understood the value, they don't want to leave the platform.”
In addition to the apps created in-house, MacPaw has also acquired a few along the way. The most well-known example is The Unarchiver, which is probably one of the most popular free OS X apps ever. Back in 2017, MacPaw acquired the app from its initial developer, Circlesoft, and has been maintaining it ever since. Kosovan has repeatedly promised that the app will stay free forever.
MILLIONS FOR UKRAINIAN STARTUPS
Although Kosovan has never raised external funding for MacPaw, he's been active in supporting and investing in aspiring Ukrainian startups. In 2013, Kosovan co-founded the VC fund SMRK, which has since invested in companies like Ajax Systems, Allset, Competera, Preply and more.
“So far, we've made 14 investments and had three exits, which is a pretty good score,” Kosovan said. “In fact, two of the startups we invested in were founded by former MacPaw employees.”
The VC firm has already invested a total of $12 million and is currently raising a bigger fund of up to $50 million with external limited partners. Kosovan expects that the average ticket size of the new fund will be higher than that of the first one, which invested anywhere between $150,000 and $1 million per deal.
“The new fund will also focus on Ukrainian startups,” Kosovan added. “I believe that there is a lot of potential here in Ukraine. There are many great tech companies starting from Ukraine, and we have to help to grow this ecosystem further.”