City Spotlight is a new feature on VentureVillage which aims to cover innovative startup hubs worldwide – this week, we look to Moscow through the eyes of Maelle Gavet, CEO of Ozon Holdings…
International investors are finally catching wind of the opportunities in Russia. Slowly but surely, Moscow is becoming a growing startup hub, but Ozon Holdings CEO Maelle Gavet still maintains it’s tough. The French bigwig of Ozon.ru – often been described as Russia’s Amazon, as well as Ozon.travel (the Expedia of Russia), O’Courier (the Fed-EX of Russia) and Sapato, (the Zappos of Russia) lets us in on her thoughts of Moscow’s internet scene, and the “small island” – home to a reworked chocolate factory and some of the best cocktails in the city…
From US consultancy to Russian startup – the natural progression
It was just a natural occurrence of life events that brought me here. I studied Russian in school and created my own company in Russia. When I sold it, I moved out of Russia to join an American company – the Boston Consulting Group (BCG) as a consult in the Paris office. I travelled the world, and after five years – in 2008, BCG asked me to move back to Moscow to grow the practice. So that’s what I did for another year, until I moved onto Ozon. It’s really great to be in Russia now, because you have a lot of investors looking this way.
Russia’s no Berlin… but the number of entrepreneurs is growing. And they need to speak Russian to succeed
It’s an interesting time to be here because we finally are appearing on the investment map. I think Yandex and Mail.ru have done a great job with their appeal to educate investors. We’re going to see a lot more capital coming in, which is really important because, no matter what a lot of people seem to think, internet businesses are capital-intensive. It was probably less than it was 15 years ago because of cloud computing (for example), but it’s still relatively intensive – especially for people like us who are focusing on retail which is a highly capital-intensive business.
We’re slowing getting more and more entrepreneurs here. But frankly, there’s not as many as you’d see elsewhere – it’s no booming Berlin or Silicon Valley, but it’s certainly accelerating. The fact that we’re the biggest market in Europe in terms of Internet users, means we’ve reached a tipping point of an addressable market. We’re big enough now to actually make money from that, which makes for an exciting time for us. It’s a growing hub for foreign investments. However, it’s impossible to be a foreign entrepreneur in Russia if you don’t speak the language. That’s one of the key barriers. Top online companies managed by foreigners are ones who speak fluent Russian.
Russian clones outperform originals due to attention to infrastructure
Ozon’s success is due to the fact that it is structured around Russian life, and not a mirror copy of its Western counterparts. For example, our company, in contrast to Amazon, has created and vastly developed its own delivery service O’Courier – in order to overcome infrastructure barriers in Russia that may not necessarily exist in the US or other parts of Europe.
The Russian internet scene will see a lot of takeovers in the next couple of years…
There’ll definitely be a lot more companies. At the moment, there’s not enough of them, you can get to know the entire Russian internet scene by talking to a small crowd of people who, more or less, control everything that’s happening in there. We’ll see a lot more projects coming up and a lot of them dying too, but I expect many more takeovers – because the only way most are able to exist is if they’re part of a bigger company.
The paperwork here is a nightmare
The worst thing about living here? Paperwork! It’s a nightmare. You have to be willing to spend a lot of time, energy and resources to make sure that you’ve got all the paperwork sorted for how the Russian administration want it. It’s not he friendliest place to start a business, which is a pity because it’s a great country to be in. There’s so much to do and people strive to do so many things, but it takes so much energy and determination to make things to happen. Businesses face this because of this huge administrative bottleneck on a constant basis.
Schedule your visit around one of the web conferences
The RIF+CIB annual conference is great, as well as the RIW (Russian Internet Week) conference. They’re both the best for attracting wider audiences within a scene that’s normally for a close circle of CEOs.
Relax with a cocktail at a former chocolate factory
It’s a great city. If you want to party there’s a small island in the middle of the city which used to be a chocolate factory and now they’ve entirely reconstructed everything. The redone factory is full of really nice bars, clubs and restaurants. There’s a cocktail bar/nightclub that I really like, it’s called Bar Belka [pictured, above]. It’s one of the few places where you’re not allowed to smoke… and they also make amazing cocktails!
For more reading on Russia’s business scene, check out: