Lions Arc - From Experience-driven Idea to Building Up a Holding Company | Interview With Irakli Sarava

Lions Arc - From Experience-driven Idea to Building Up a Holding Company | Interview With Irakli Sarava

“Theoretical knowledge is essential, but today, practical experience is the most significant thing in proper management of the business you do, I think. To overcome challenges that occur in day to day business and, more importantly, to learn from your mistakes is that very power that takes you to new heights,” – says Irakli Sarava, – a young man from Tbilisi and one of the most successful Georgians who has gained experience working in the financial sector, including leading companies of insurance and banking sector in Europe, the Middle East and the United States. Later, together with his partners, he established his own company – Capstone, in the consulting sector, and today he is a founder of the International Holding – Lions Arc.

What areas does Lions Arc cover, and why did you think that a Holdings-based management model would be the best solution for developing your business areas at this stage?

“Holding” may sound exaggerated in terms of its scale. Still, organizational structure/arrangement truly represents holding structure as the Lions Arc already encompasses three different directions today. These are Consulting, Hospitality and Real Estate Development, and the third one – the Investment Management entity, is now paving the way for its final formation (startup, venture capital direction).

Within each of these areas, Lions Arc will offer services to its customers together with its subsidiaries, partner organizations and a network of private global experts.

The necessity for establishing a Holding company emerged from our experience when we realized that it would not be correct and proper for all ideas to be under the roof of one company.

Everything started in the same way when I, with two of my partners – Giga Pertenava and Beka Akhvlediani (currently BeKa works in different directions separately from us), established a company CAPSTONE Group in 2018. The company mainly provided consulting services and worked on small projects in real estate. The growing demand for consulting services became especially apparent during the pandemic. As it turned out, large businesses had to adapt quickly to new realities. Therefore they focused more on organizational transformation while startups explored even more new opportunities and markets, let alone the development of a business plan based on appropriate standards and acquiring essential business and managerial skills. Here our accumulated experience and developed skills and sharing practice over many years appeared (without doubt) quite valuable and significant.

You’ve mentioned the experience… What experience have you gained that contributes to the proper management consulting field of Lions Arc?

I have accumulated my working experience in the financial sector over the last 15 years to speak about myself. Having worked in the Georgian market for its top 3 financial institutions (TBC Bank, Bank of Georgia and Liberty Bank), I moved to Tanfeeth (BPO), a subsidiary of Emirates NBD, Dubai’s largest financial institution. Later I was employed by MetLife (Metropolitan Life Insurance Company), one of the leading insurance companies in the USA, holding a position of a Regional Director for Europe, the Middle East and Africa and led the company’s effective development projects in these markets, in particular, transformation projects in more than 20 countries.

And this period, when I had to travel for business to more than 75 countries in the last eight years, opened up plenty of excellent opportunities and perspectives for me, and the idea of founding Capstone also came at this time.

“We, Georgians, can export not only wine but our knowledge as well. “

Our first steps were taken just right in the field of consultancy as we founded Capstone in Georgia and almost at the same time in another country, in the USA, New York. Capstone, by the way, was one of the first Georgian consulting companies which had the ambition to operate in international markets besides Georgia. It became apparent that our activities would be export-oriented, and we would be represented in global markets. Yes, right now, this may seem paradoxical to many, but I believe that Georgians can export not only wine but also knowledge, and I should say that we are pretty competitive in this.

Later on, we got pretty fascinated by one of the small real estate projects related to developing the old Tbilisi yards. Our first step, kind of a tentative one, was in the real estate business, which eventually grew considerably.

Going back to our idea – why Holding? If you think well, it’s clear – there were four well-defined directions in Capstone: Consulting services regarding organizational transformation and general management; training; Investment packages and Human Resource management. When Hospitality and Real Estate sectors were added, it became clear that they all required management in a different format, and we decided to switch to holdings-type management. Consequently, all these directions are unified in Lions Arc.

The second direction of Lions Arc is the development of the Hospitality and Real Estate sector. What inspired that?

As I have mentioned above, we took the first steps within the framework of a small project – the development of old yards. I grew up in the city’s centre, in the oldest district Vera, in the so-called “Italian yard”, and its charm is entirely native to me. I realized that this natural and special-for-me charm might be interesting, or fascinating even, for an international traveller, a tourist or a person who came to Georgia on a business visit for a few days. So it was necessary to create appropriate conditions and infrastructure in such yard (s). So, we started to enhance the development of this direction. I should say that if not for the pandemic, this line would have been even more successful, but as we can see, the pandemic is coming to an end, and I am sure the success of the idea of the “Old Georgian Yard” (OGY) will be more evident in the future.

One more thing – I found out that in the few dozen countries where I have travelled, I practically don’t remember a single hotel where I had to stay overnight. But… beyond the shadow of the doubt, I clearly remember even the colours of all the houses on “Airbnb” I rented. And here, it dawned on me that “Old Georgian Yard” may well be the direction which will be imprinted in a person’s mind once visiting this place, and of course, they will share this emotion with others and will be willing to come back once again.

Looking at the bright side of the pandemic, if I can say so, something good was apparent. Due to introduced restrictions on travel, my personal and business trips practically ceased. Consequently, I was not able to go skiing in international resorts. Moreover, you will remember the famous winter resorts of Georgia, and it was closed for the whole season. But you know, skiing is something different, like an all-consuming passion, and as I have found out, you can satisfy your passion for that here in Georgia, and with the highest standards. In Bakhmaro, I met a Czech guy who has lived here for years and willingly helps foreign extremals enjoy the happiness of powder skiing. Of course, I shared this pure happiness. This friendship between my Czech friend, Milan and me, brought a brand-new business idea and direction – to create infrastructure zones suitable for extreme powder skiing & Heli skiing in mountainous Guria and Racha. We are developing ambitious plans in this regard as well.

The first steps of Irakli Sarava and Capstone abroad. What was it like – cautious and considered or somewhat risky?

Full of responsibility and lucky at the same time, I would say. And I think, later on, we got accustomed to that through the approach full of responsibility for the work we did. The fact is that almost immediately after the establishment of the company and the expansion of consulting direction, we received an order from a large international client. It was a Greek insurance company EuroLife FFH (a subsidiary of Fair Fax Financial Holding, a Canadian global financial group), the second-largest company in the Greek market. The most impressive achievement was that we signed a 2-year contract with this Greek company for an international consultation (on organizational transformation/efficiency). Because of this, at that point, we had to shift our focus from America to Europe as our operations were minimal, and the proper focus was critically necessary for us.

I moved to Greece, where we opened a Capstone branch to be allowed to work and operate there for those two years. That was a valuable and successful experience that allowed us to develop the company rapidly following our return to Georgia due to the pandemic. Our Greek experience was already well known in the fields interested in the consulting business, and it turned out to be a kind of “Green Card” for our further activities. Since then, we got accepted as international partner consultants for the leading financial institution European Bank of Reconstruction and Development (EBRD).

Apart from the “Green Card”, what else did the Greek experience give you, being far away from Georgia?

Being physically far away from home is always a source of new movements, ideas, and energy. You get to know new culture and get used to unique peculiarities, which is even a doubly enjoyable process. Here everybody knows you, you feel free to use your networking, traditional or built up lately, but there, it’s different, nobody knows you and you have to start everything from scratch… And that is a huge challenge you take on and overcome, which can probably be compared to the feeling of winning a serious sporting competition. This is how I would evaluate that.

Our Greek experience was proof that as a consulting firm, we have a full capacity to export our knowledge which allows us to have our feet on the ground and strengthens our self-confidence. If you used to be an employee of well-known large corporations, for now, you have been able to do it with your own business.

In addition, it was also a valuable experience when we managed to facilitate the innovation within a company with many years of history, which is one of the market leaders. This developed a new vision for us and the Greek organization itself, how it can achieve great results with modern methodology and innovation. And, of course, the Greek experience has given us unique contacts and credibility in the market, which is the most crucial thing in our business.

Is there anything you would like to mention from your Georgian experience?

I can talk endlessly, but for now, I’ll talk about just one case – this is a successful partnership between Capstone and Liberty Bank. After my return from Greece, Liberty Bank became our client quite soon. This project was recently accomplished at the end of 2021, and by joint evaluation, it was very successful.

We built up a strong team and implemented the first pilot project quite successfully. This team will continue to accomplish the bank’s transformation for the next three years. In the case of Liberty Bank, we also worked on organizational efficiency issues. However, the primary focus defined by Liberty Bank was to focus on improving the customer experience because, as you know that it’s a quite specific bank that serves 1.5 million pensioners and socially vulnerable people. It was also noteworthy that it encompasses many complex processes that require a lot of effort to bring it all to modern standards.

What I liked most about “Liberty Bank” was its new management and its approach to issues. I believe that this bank will soon be transformed into a modern universal financial institution and, as they have written in their strategy, will firmly establish its place in the TOP three Georgian banks.

Let’s talk about the investment fund (Startup, venture capital direction). But before that, I’d like to ask you about the name – Lions Arc, what it means, and is there any specific content it carries?

The name of the holding was selected as a result of a small international contest. We’d like the name to be one, that would be understandable to the international community, but at the same time to have a Georgian origin as well. After all, the content of our holding is precisely that, to connect Georgia to the global market.

The inspiration for the young foreign girl participating in the competition turned out to be the coat of arms of our country, where two lions look at each other with a crown above them. The idea of the “Lion” came from the strength of the company and its desire for solidity. And the idea of the Arc is a kind of circle connecting the force of unity. Hence, the name of our holding was born – Lions Arc.

As for our new and exciting investment direction – during the pandemic, our clients got particularly interested in alternative markets and businesses where they could invest their money. That was why I have actively engaged in the “Startup world”, which is actively and well followed by the Innovation and Technology Agency (GITA). I met them, and soon afterwards, we agreed on a partnership as well.

“The concept of our holding is to build and strengthen the links between Georgia and global markets. “

When I looked deep down into this field, I realized that an exciting ecosystem was being created in Georgia, where absolutely everyone should participate. I am also actively promoting it. The right vision of the GITA team and the proper planning of support for startups greatly facilitate the process.

For our part, we help startups through our consulting services and share our experience, which we have accumulated from successful projects over the years. We also have local and international partners actively involved in legal and tax matters to help startups with high potential to accelerate and get into markets in other countries and be competitive.

Furthermore, we also try to sparkle up and stimulate the interest of private investors so that they can adequately assess which startup is promising and how the money should be invested. This is essential because this culture has not been developed sufficiently in Georgia yet.

This is how this ecosystem is created, making it possible to discover startups with high potential and an alternative source of investment for investors.

Your occupation as an independent businessman covers more than three years. What was that major discovery this period brought you?

It cannot be called a discovery, but it was terrific to experience the feeling that we already have many diverse projects behind us, ranging from participating in large-scale organizational transformations to helping small startups build businesses properly. In addition, training for professionals in financial direction, assistance to people in the industry in exploring areas of interest for investment, detailed analysis of these areas, and evaluation of specific businesses as well.

However, regarding a discovery, yes, it was really a discovery that we, as a consulting company, proved that we have the full capacity to export our knowledge. I want to do even more in this part, to bring out more and more Georgian talent and expertise. We are now focused on bringing life to the American branch of Capstone Group with the help of our partner and myself.

You say that Georgians are competitive in the knowledge market. What is the competitive advantage, or what is the manifestation of our competitiveness?

We have got a considerable potential to turn it into one of the strategic directions of the country – the export of knowledge. Unique opportunities have been accumulated in this regard which I can explain – we have had to grow quickly in a very small market and on a limited scale.

This means that no matter what progress a 20-30-year-old person makes in Georgia in the course of 10 years, it is unique. Areas of his occupation are not one but several.

If I provide my example, by the age of 24, I had changed three different business directions and departments. I have changed so many of them that there aren’t any structural parts of the organization left where I hadn’t worked.

As soon as you leave the country, you begin to realize that the market where you get into has been developing for many years. A person of your age has been pursuing career advancement, maybe not in one position, but it’s evident in one direction. It is pretty hard to move fast from one business direction to another in large organizations, mainly due to its size. For example, if you pick one company’s operational business direction, there may be 20,000 people, which is 20 times bigger or even more than any Georgia company. Consequently, it is a very slow process and difficult to climb the hierarchical height even in one business direction.

“…And indeed, that was an impressive achievement which we, as a company, proved – to export the knowledge we have is well within our capacity, which generates and strengthens our motivation to make our way to bigger markets. “

Besides, people in developed countries are accustomed to other income levels and social protection. The average income of our society is significantly lower than in any other European country. Consequently, the costs of operating a company in the country are also considerably lower. This gives us an advantage in both – in terms of diversity of knowledge and in terms of price, which makes us quite competitive.

Ultimately, all of this allows us to get a lot of international companies and corporations interested in our country, the costs we have and the knowledge we have. We are one of the best locations in Europe in this respect. Next are Bulgaria, Romania and Poland. Their average annual salary is 36,000 euros, our average annual salary is much lower. This allows our country to grow rapidly and generate much higher income for the people who have already accumulated this knowledge.

The strategy of our holding, Lions Arc and its subsidiaries, is to use this advantage and get into the international markets, diversify and strengthen our business with the help of companies gathered in our holding and our strong international partners. So that we are not oriented only on the Georgian market, which is relatively small. We have to create a part of the wealth outside the country as well. That is why we are now actively focused on re-opening our operations in the American market, which is considered the world’s largest market, and I think it is the right time to do it now.

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