“Why did you choose the tourism field in particular as a start-up in the Russian market?”
“I have many years experience in the West in online travel. I have managed to make a success of four start-ups in this field. I am so close to it and understand it so well that I feel it is in my DNA. That’s why I’m interested. I make a point of only dealing in what interests me. In this case, my interest was aroused by the idea of selling complete tourist packages, which is what Travelata.ru offers. There are really good prospects here. When the system of selling airline tickets through the internet appeared, not many believed in that at first either. The convenience of selling tickets through the internet has now been proved. What is unique about the Travelata.ru project is that it offers convenient conditions. The client does not have to seek out tours, this is already done for him. The stress is on quality of service. Furthermore, we offer significant guarantees. Travelata.ru has contacts with important partners. Over the year which has elapsed since the project was launched, it has shown its viability, and I can see further prospects for it.
“What is your role in the project? And how was the team selected?”
I am a co-founder of Travelata.ru and also an investor in it. My activities here are concerned with marketing. It is up to me to drive the website forward and to publicise the brands. In effect, I am simply the marketing director.
As for selecting staff, I could say that they found me. There were two co-founders, and it was they who offered me a part in the project. They had the idea, but it needed high quality management in the marketing field. They made me an offer and I thought it was interesting. After that, I also invested in the project. I think Travelata.ru is a good team. I have complete faith in Aleksey ZARETSKY, who thought up the whole idea. He is a man who thinks positively. And he is not only a theorist, but a practical man too”.
“Speaking of the electronic commerce market in general, is it not dangerous to be involved in this in Russia? Russian hackers are notorious.”
“This problem does not only exist in Russia. But we have not come across it, because our business is transparent, and we do not use illegal schemes. Anyway, there are always ways of detecting swindles. My experience in Russia gives grounds for stating that there are no problems related specifically to electronic commerce. The DDOS attacks we are often warned about do not cause any particular trouble. However, there are quite a few problems offline. One of them is theft from warehouses. But this is the concern of the personnel departments and security services of those companies which suffer from such thefts”.
“What advice can you give to potential investors?”
“I personally always choose a project in which I can do something myself. This concerns passing on ideas and techniques, and opportunities to use my knowledge and experience. I simply make out a check list, tick off points and take note of what I can do myself. I am always thinking of how to use the ideas suggested to me in my projects.
An important element of choosing a start-up is the project team, trust in it. If I see that an idea is not taking off, but I have already checked out the author of the project, I agree to it without hesitation. The key condition is the partner’s reliability, though analysis is undoubtedly important too. I receive five or six ideas for new start-ups every week. And I have people in my team who sniff around these proposals, test them and report their conclusions.
In general, you have to have a nose for good prospects, and here the business model is sometimes not the most important thing. When an idea is brought to me, I start off by asking: lads, do you want this business to feed you in the long term or is your main interest on getting the first tranche? Investment in itself should not be the final aim of a project. I have been brought business plans set out attractively and correctly. But they were made as if to a template. As if the authors had carried out some training assignment and put all their energy into that alone, i.e. they had only based it on the concept. But where are the financial estimate, the long-term view, the marketing ideas?
They don’t like taking risks in the West these days. A potential investor, even if he has a substantial sum to invest, is never in a hurry, he spends a long time weighing the pros and cons. And that, by the way, is a sort of filter: during the time the investor is thinking about it, the author of the project may change his concept, or the team may fall apart. But it can go another way. One investor assured me that the most effective scheme is one in which you have to invest in areas you know nothing about, i.e. you have to take a risk. To prove the point, this investor, who knew nothing about mineral water, invested in Borzhomi in the nineties. And he wasn’t wrong. But that is more the exception than the rule”.
“What sort of Russian start-ups will be called for in the long term?”
“The ideal kind would be internet advertising. Another one would be marketing services on the internet. Thirdly, electronic commerce (for example, internet shops, but only if the logistics are properly sorted out). And lastly, mobile phone apps, for which there is already great demand. The prospects for providing consultancy services are also not bad. But in that field, it is difficult to calculate an investment in advance because much depends on what is paid to the personnel.
As for my own plans, they include partnership with major commercial networks in the field of organising online trading. The client places an order through the internet or a mobile app with a big online store and receives the goods in an agreed place. This projectis still at the development stage, because two kinds of trade, online and offline, have to be coordinated. There are also interesting ideas about a “Chichikov” project. This refers to compiling an inventory of “Dead Souls” – non-operating web banners. We are also starting an internet store for children’s clothing. We plan to put through a start-up in the field of mobile phone apps”.
“What are the main difficulties in implementing projects in Russia?”
“The main problem is seeking out competent people – the sort who understand everything at once. It is very hard to find them, most of the candidates lack experience. But how can anyone have much experience, if online trading is only just beginning to develop in Russia? And yet even these relatively inexperienced specialists demand high salaries from the very beginning!
Another difficulty is that not all investors can be attracted to invest in “small” ideas. The big investment funds are mainly interested in large-scale projects. Something on an average scale is not always given due attention. All the more so if it is something that demands real effort. I have no problem with working 16-18 hours a day, though I realise that the return for it will be a long time coming. But not everyone will accept such conditions.
“What about difficulties in relations with the Russian state and supervisory authorities? How do you manage to get on with the world-famous Russian bureaucracy?”
“When I first came to Russia in 2008, I was simply in a state of shock. The bureaucratic swamp swallowed up all initiatives. Fortunately I managed to create a good team, who took it on themselves to deal with these matters. Yes, keeping such specialists on the payroll costs money. But it at once relieves you of a whole load of problems. In general, questions of relations between the authorities and business are far from settled in many respects. In Western countries, there is a practice of conducting research using focus groups. For example, they measure how much time entrepreneurs spend on filling in tax documents. This is done with the aim of reducing the time spent on dealing with paperwork, so that a businessman can devote more time to business. I hope they will eventually do the same in Russia. However, for the time being, the problem of bureaucracy exists. And it hits start-ups in particular. Not everyone can keep experienced specialists on the payroll.
“Won’t Russian start-up operators end up by letting foreign investors down? Don’t you have any worries about that?”
“To a certain extent, I do. When I began my projects in Russia, I felt like an astronaut. I don’t feel that way today. Many bold and energetic lads have come forward who not only propose ideas, but also carry them out. Quite a few projects develop independently, attracting Russian rather than Western capital. The time when any foreigner was looked on in Russia as some sort of guru is over.
But the problem with the Russian start-up market is that here there are virtually no mentors willing to share their knowledge and experience. Here it’s every man for himself, no-one wants to help anybody. In Silicon Valley, the process of the active exchange of experience and ideas is well established. They have a system of “collective wisdom” there. That’s how they get results. There is nothing like that in Russia. Furthermore, there are not many investment funds willing to put money into start-ups, and not all entrepreneurs are ready to cooperate with them. So the situation is sort of frozen for the time being. Therefore there is still a need in Russia for Western specialists, their funds and their ideas”.