Chaos Arranged – Feature Article about Peter Mitev, Co-founder of Chaos, Forbes Bulgaria Magazine

We are glad to share with you the feature article about Chaos‘ co-founder Peter Mitev published in Forbes Bulgaria Magazine in June 2021.

Chaos was awarded the Company of the Year 2021 award by Forbes Business Awards.

Chaos arranged

Over the past 20 years PETER MITEV and his team built one of the most important IT companies in our country. Rebranded and with new products in its portfolio, today Chaos strives to create an entire ecosystem to feed into the three dimensional visualization software market.

If you have watched Avengers: Infinity War you were probably impressed by the detail of the computer generated image of Thanos, the character played by Josh Brolin. You are not the only one.

Thanos’ visualization, whose face is shown close up with remarkable detail during the film, took about a year to create. The designers went to such depths that they scanned the faces of people over 60 and traced every shadow of every pore falling on Thanos’ nose.

One of the reasons for the impressive realism of Thanos’ image is developed by an army of programmers in the office of Chaos in Tsarigradsko Shosse. The software company is developer of V-Ray: a three dimensional rendering add-in which allows the designers to transform CGIs into photographs and animation that are hard to tell apart from reality.

Chaos is the big winner at Forbes Business Awards 2021. The company won the first place in the Information Technology category and due to the high marks awarded by the jury it also grabbed the 2021 Company award.

V-Ray is the flagship product of Chaos: you can hardly find a designer working in the area of three-dimensional visualisation who has not heard of this software. During the years V-Ray helped Chaos turn into a business with sales all over the world and annual revenue of tens of millions of US dollars. In 2019 Chaos Software reported revenue of BGN 46.7 million and net profit of more than BGN 12 million. Due to the pandemic the 2020 revenue has not changed significantly. However, Peter Mitev, who spoke to Forbes, dressed in a company-branded t-shirt, does not seem particularly concerned about it.

“One of the big challenges we are facing is that we have grown too much, which slows our development”, said Mitev, who co-founded Chaos together with his partner Vladimir Koylazov more than 20 years ago. “But with our new strategy we will change this”.

An important element in this strategy is to transform Chaos into a multi product company, instead of relying only on several blockbusters. “Until now we were known for having several very strong brands”, said the 46-years-old Mitev. “We are currently transforming into a company of many brands, which will be part of one ecosystem. We are building a visualization ecosystem as part of which we will expand a lot more of what we are offering”.

One of the latest steps in this direction was taken by Chaos at the beginning of 2021, with the launching of the official version of Chaos Vantage: real time 3D rendering software. Vantage allows the designers to speed up the time of making changes to their visualizations, for example, if they want to add a new tree or element to the animation.

The ultimate effect of Vantage is that designers are able to see faster the end result of their work. “If until now the designer could easily wait one hour, now it only takes seconds”, said Peter Mitev. “This gives them the opportunity to work faster on their designs. Our focus is to provide the designers with a high quality toolset that would allow them to work much faster”.

To achieve this Chaos was granted early access to RTX – NVIDIA’s powerful graphic chip series, which caused a small revolution in the design and gaming world. Getting to know the technology behind RTX, Peter Mitev and his team realized that they can develop an entirely new product taking advantage of the enhanced capabilities of NVIDIA chips. That’s how Vantage came about.
Although the product is still relatively new at the market, Mitev claims that users are “shocked”.

“This new tool will change the way they work”, he said. “No studio wants to wait for computers to “compute” pictures. Until now studios have organized their work in a way that allows designers do something else while waiting for this to happen. They don’t have to wait anymore.”

The global 3D visualization software market developed explosively over the past few years. In 2017 Allied Market Research estimated its worth at USD 1 billion. The market is expected to triple up to USD 2.9 billion by 2022.

It is no surprise that companies such as Chaos are racing to develop more and more new products. While in 2009 the company only sold three products, today its portfolio is exceeding 20 offerings. They are sold to clients in more than 160 countries worldwide: twice as much as 2008.

In order to communicate its market leadership the company rebranded and changed its name from Chaos Group to the simple Chaos. Around half of the almost 400 people employed by the company globally are handling sales, marketing and business development.

The message to the market seems to be: “Be careful, we grew up”. Or as Peter Mitev explains: “We became too big to operate in the start-up mode we were in until now. We have a new goal and new ambition and a much bigger horizon to fight for”.

Vantage is just one of the examples of this new vision. The company launched the cloud platform Chaos Cloud. It can be used by designers to process images in the cloud rather than buy expensive hardware (meaning powerful computers which generate and process computer images).

“From a company generating pictures we are turning into a company handling data”.

Chaos’ interest in cloud services is understandable. The SaaS (software as a service) model is taking over the IT industry. Companies that so far relied mainly on sales of licenses are increasingly uploading their products in the cloud and their clients are only paying for what they use. This saves unnecessary expenses on computers that remain idle during times of less workload.
According to Mitev, who is mainly responsible for the business development of Chaos (the other co-founder and Chief Technical Officer, Vladimir Koylazov, is dealing with the products and the technologies behind them), the move toward the SaaS model is unavoidable. “It was our goal from the very beginning to let them use the huge computing power of the cloud without having to understand anything about it”, said Mitev. “They use it when they need it. This allows for more flexibility in their projects”.

The shift towards the SaaS model happened just in time for Chaos. In 2020, when the pandemic brought the economy to a stop, the designer studios, the primary clients of Chaos, had to slow down. Cinemas remained empty, blockbuster premiers were postponed by more than a year. Big construction projects requiring 3D visualizations were put on hold.

This forced the studios to cut their costs and seek more flexible options to pay for the software they use. And they found it in the new subscription business model of Chaos. Peter Mitev claims that in 2020 the company managed to double the number of its users due to subscriptions. Currently more than 50% of the revenue of Chaos is generated by subscriptions. Mitev expects that within several years this type of revenue will reach 85% of the total turnover of the company.

“This allows us to be much more stable as a company, because we are more flexible”, said Mitev.

Another niche that Chaos is trying to penetrate is the 3D model market. The company launched Cosmos: a 3D model library which the users can utilize in their projects. You may think of the platform as an image bank where designers can find pre-generated models of sofas, trees, cars or whatever they need for their visualization.

Such a product proves valuable when designers have to pour content into their visualizations. For example, if you are producing visualization of a stadium, you have to draw trees, streets, people, cars and everything else apart from the stadium itself in order to make the picture feel real.

Initially Cosmos, the beta-version of which was launched in 2020, offered free of charge models. Mitev’s new vision is that Cosmos will expand in the future through the addition of more free and paid content from a wider range of selected authors.
With the launch of new products Mitev is trying to solve a problem bugging many designers, architects and 3D artists. The market is suffering from the “all-in-one” type of solutions. For example, an architectural design studio uses one software for the initial load-bearing calculations to be sustained by a building and a completely different software to visualize the building itself. But the two softwares are incompatible, which means that any subsequent changes have to pass through each one of them again.

By providing a big range of 3D visualization software products Chaos hopes to make the life of users somewhat easier. “We are trying to build a simple ecosystem and each and every product will be able to communicate with the others”, said Mitev. “”From a company generating pictures we are turning into a company handling data”.

“Our new strategy sets much bigger ambitions as an organization”.

In the late 90ies Peter Mitev and Vladimir Koylazov, fellow students at the Faculty of Mathematics and Informatics, had completely different ideas about Chaos Group. The company was established as an advertising agency, but in 1999 both of them started experimenting with developing their own software. Mitev remembers that their main source of information back then was programming books, sold at Slaveykov Square.

At the end of that year they reported the first sale of Phoenix – 3ds Max software add-in allowing users to create simulations of fire and smoke.

The cornerstone in the history of Chaos Group came into being in 2002 when the company launched V-Ray in the market. The add-in allowed the designers to rebrand their computer images so well that only trained eye can tell that these are not real pictures.

V-Ray turned into a favourite add-in for studios working on animation, special effects in films, architecture, automotive industry and many more. Some of the most impressive scenes in expensive Hollywood productions were made using V-Ray. The Swedish giant IKEA uses V-Ray to create CGIs for its famous catalogue.

Over the years Chaos managed to do what Intel did at the microprocessor market, and Apple – at the smart phone market: it turned into a leader with its own army of followers. Today V-Ray is one of the most widely used 3D image rendering products in the world.

Peter Mitev and Vladimir Koylazov prefer to listen to what users are telling them – and both co-founders claim this is what helped them turn it into a hit. Both of them use the 90 forums on the company’s website as user feedback tool. For example, Koylazov often responds personally to suggestions and criticism related to Chaos’ products. “We are in close contact with the users”, said Peter Mitev. “They ask questions and this is how we built this community of 3D artists. We communicate constantly with them and this is how we built this community”.

Thus more than a 140,000 registered users in the Chaos’ forums turn into some sort of a quality control department and generator of product improvement ideas. Chaos feedback received from the community is also used as an indicator of what the next products of the company should be.

When in 2018 Chaos organised its event Total Chaos hundreds of visitors from all over the world gathered in Sofia to attend it. In 2020 the event was replaced by an online version due to the pandemic. Today Peter Mitev calls it an event that “helped us build this community”.

With tens of thousands of followers Chaos turned into a global and profitable business. In 2019 the net profit of Chaos Software exceeded BGN 12 million. The fact that the company managed to get here without any reliance on investors and big bank loans is perhaps even more impressive than the sales all over the world. The two co-founders prefer to expand Chaos mainly through reliance on the company’s inner strength, through organic growth.

But now that the goals are set and the stakes are on the table, Peter Mitev seems more inclined to consider the possibility of external financing to inject into the ambitious plans of Chaos. “Our new strategy sets much bigger ambitions as an organisation”, said Mitev. “This may lead to prospecting for external capital. We may look into it, if we consider it appropriate”.

Whether independently or using third-party financial support Chaos continues to be an experiment lab, as Peter Mitev calls it. He claims the company still does not have very well defined processes for many of the things it does. This is both a disadvantage and an advantage, as processes are important in corporate settings. However, Mitev and Koylazov have chosen to look mainly at the outcome, rather than as to whether steps one to ten have been followed.

If you ask Mitev he will tell you that this strategy works and over the years it has helped Chaos turn into what it is today.

“What most of the world does is when someone invents something, everybody else tries to make it better”, said Mitev. “We encourage people to think that we are capable of inventing what to do ourselves”.