AZERON is a technology company that deals with the production of globally innovative and unique video game controllers. Such a controller is the dream of many gamers, because it makes playing video games much easier by replacing the traditional keyboard. The company only emerged in 2019 but has already managed to grow into a team of 100 employees and reach a turnover of EUR 2.5 million.
This is largely due to the fact that those who were interested knew about AZERON video game controllers even before the company was officially established. Work on the development of the prototype started in 2012 in a country house in the Ventspils region. The necessary specialists – 3D modeler, programmer, production, and business process managers – joined creator Imants Daigins one by one, transforming the idea into a unique and visually appealing product. To inform the wider public about the product, we turned to several influencers, until one of them – YouTube content creator Beaks, who was popular among video gamers and had half a million followers at the time – responded. We sent our prototype to him. Beaks prepared and published a review of our controller on his YouTube account, which got four million views within a month. From then, we started to receive hundreds of letters a day from people all over the world who were ready to buy our product. So we founded a company and started to develop production in order to satisfy the growing demand.
Even before the founding of AZERON, we submitted documents for pre-incubation to the Ventspils Business Incubator of the Investment and Development Agency of Latvia (LIAA). After the company was founded, we joined the incubator, and we are still members. We are very satisfied with and grateful for the possibility of developing the company in an incubator environment. It is possible that we would have been able to establish the company without an incubator, but the support that we have received to date has allowed us to develop at much less cost and in a more effective manner. Participants in an incubator have training and advice which is very useful in managing and developing a business. It is also possible to receive grants and co-financing for various activities, such as accounting, renting premises, marketing, etc. We take advantage of any possibilities we can. With the support of grants, we have designed and purchased packaging materials for our controllers. Now we are in LIAA’s international competitiveness programmes. The environment in the incubator is very friendly, welcoming and flexible. I have called the manager of the incubator at 7 p.m. asking if she knew anyone who could help us on a certain issue. Almost instantly she found the necessary contacts via LIAA networks. It is hard to speculate which stage of development we would be in now without the incubator, but one thing is clear – we would not have been able to invest such resources in our development ourselves. Each euro we have invested has paid off handsomely.
Participation in exhibitions is not necessary due to the specifics of our business. First, our customer is an end consumer who can be reached via the internet. Second, we can achieve much better results by investing the money we would have spent on exhibitions in digital marketing.
After its inception, the company was first known in America, followed by Europe and then Latvia. Therefore, it is logical that our top export destinations are the USA, Canada, Great Britain, France, Germany, Australia and Japan. Only 0.1% of our production remains in the Latvian market; the rest is exported abroad. Historically, the USA has been the largest market, a position it retains today with 60% of our turnover. Last year we noticed a remarkable rise in the Japanese market. Over the year, it grew from 2-3% to 10% of the company’s turnover. It is hard to identify why – it might be due to several factors. We cooperated with the world’s largest mechanical switch manufacturer OMRON, based in Japan. They wrote and talked about us via their channels. Also, information about AZERON was available during the Latvian Days organised by LIAA in Tokyo and we received positive customer feedback. We also saw a rise in sales when we established our presence on the Japanese Amazon site. People started to talk and write about us and, accordingly, buy controllers more actively. Overall, our customers started to take an interest in us very organically and have never stopped.
We are based in Ventspils – this is where our production and administration is located, while sales take place on the AZERON homepage and Amazon platform. Anyone who is interested in video games anywhere in the world where FedEx or DHL provide delivery can get one of our controllers. We have no local partners, wholesalers, or retailers in export markets, as this is unnecessary. We export almost 100% of our production, but none of our team members has ever been on a business trip outside Latvia. From the very beginning, our Marketing Division has been working to promote the product and attract customers online. On a Latvian scale, we dedicate substantial funds to marketing activities. We are working with both digital marketing and influencers. There is also a Discord server in the video gamer environment where thousands of customers come, chat, and have discussions with each other. It is a very international environment where communication mainly takes place in English.
The markets which were closed due to the war initiated by Russia in Ukraine were not substantial, so the war has not had a direct effect on our sales. However, we feel its impact in terms of deliveries. A large part of our raw materials come from Asia via air transport. Now, a flight from e.g. Hong Kong to Charles De Gaulle airport in France takes 5 hours longer. This means that, first, it takes longer for raw materials to arrive and, second, it costs more – the flight is longer, and we have to pay more for the fuel, which has also become more expensive. When the COVID-19 pandemic started, delivery prices increased in connection with the tightened restrictions and requirements in various countries, but after the start of the war the price grew even more, and this is also felt by the end consumer.
To date, we have only taken advantage of the possibilities offered by LIAA’s business incubator and the SKV programme. I think that an individual approach to each participant and their needs would be a valuable improvement in the operation of the incubator. For example, we, as participants in an incubator, can receive support for IT services, accounting, marketing services, consultancy and other services if these are used as outsourced services. If we choose to carry out any of these activities within our company, we are no longer able to attribute these costs. As a company, we view it as a lack of support for hiring employees to increase the number of basic staff at the company. Until now, within the framework of a grant programme, we have been outsourcing accounting services. We have just started to do accounting ourselves, and, according to our initial estimates, our overhead expenses have decreased by 50%, which is equivalent to LIAA’s grant support. Currently, we are working on automatisation of the accounting system; once it is in place, work efficiency will also improve considerably. Eventually, it turns out that it is more beneficial to do things ourselves without any support.
I would say that an excellent product and more importantly an excellent team have been the key to Azeron’s success. Were either of these elements missing, we would probably not have achieved what we have. Also, it is important not to be discouraged to do and look for what is needed. Everything will happen if you work for it. If you ask, you will get the information you need. I certainly recommend choosing cooperation partners very carefully, especially looking for ones who are willing to grow together with you, not the ones who only issue invoices. For example, the Latvian FedEx team noticed Azeron’s potential already from the beginning and offered such a price for its services as it offers to large customers, as well as provided free advice on various markets, provided valuable contacts, and even helped develop safe packaging, while other transporters didn’t even want to talk to us. It is not easy to find such partners, but it is crucial to try.