Internet Business: Catching the Last Train or Is It Just the Beginning?


Is It Too Late to Start an Online Business?

Vladimir Mnogoletny: The best time to start an online business was probably three years ago: there were already a lot of investments, the competition was not so tough, the market was growing rapidly.

But today, the market is still developing, there are a lot of opportunities. If you have money (several million dollars or at least hundreds of thousands), willingness to work very hard, a fundamental education, then online is the best place for a starting entrepreneur. However, the ‘train’ is running rather quickly, and in a couple of years it will be much harder to start something big.

How do all markets develop? First, it is the dark times, then rapid growth, then large multinational corporations take control of everything. So in the online business, the time when it was possible to build a company with just three people is long gone.

Ilya Shirokov: I am sure that it is definitely not too late. Every year sets a new record both in the number of deals and in the amount of investments. When we started the business, it seemed to me that we were catching the last train. And today I am starting to understand that only now we are reaching the market, which the Internet and technologies have not actually reached.

Yes, the times when several people in a garage or apartment and without money could do something cool are over. The competition was very low back then. Now, all obvious segments have already been taken over. But there are still a lot of unexpected ideas that become a success. Therefore, it seems to me that there are quite a lot of opportunities.

In general, online business has become almost traditional: you need to gather a team, make it follow your plans and find the money. If you look at the statistics, the average age of entrepreneurs in e-business is growing and is approaching the one common for offline industries.


How Did Online Business Start in Russia?

Vladimir Mnogoletny: When I started working in the online segment (note: Mnogoletny worked at Renaissance Capital before), there was still no mass market in Russia, there was very little money and even less opportunities to quickly enter a niche and earn a lot. I remember saying to my colleague that we will open a website in Kazakhstan. He looked at me as if I had said something wrong.

At that time, online advertising was starting to grow. The money and an understanding of how to earn it were only in that segment. We thought for a while, looked at and decided: “Let's launch a copy of it in other countries.”

Ilya Shirokov: My story was even more extreme. I started working in the online business in 2004, right after NES. In half a year, I changed about seven different jobs, including hedge funds, investment banks, consulting companies. I just didn't like it all. All my classmates wanted to work in finance, in investment banks and looked at me with surprise, because back then no one perceived the Internet as an industry. I didn't even have a salary at that time, I had just my interest. I was looking for something that will drive me.


What is More Important – Luck or the Ability to Take Advantage of Opportunities?

Vladimir Mnogoletny: In my opinion, lucky choice plays a tremendous role in the life of a person, in the life of a company. I am very superstitious and believe that there are almost certainly some supernatural forces. And that luck is needed extremely badly.

Life is a set of decisions. I am from Severodvinsk, and school was my bifurcation point. I was in the 7th grade when my father was given a huge apartment on the outskirts of the city. There was a bad school there. But the school where I studied was excellent! I came to my mother and said: "Mom, there is a girl studying there, which I like, let me stay in the old school." I still think that I would not have achieved anything if my parents had transferred me then.

Ilya Shirokov: I disagree with Vladimir’s opinion about luck. I follow my acquaintances, with whom we started working 20 years ago. They have all become successful because they knew how to take advantage of the opportunities that life offered them. And life gives these opportunities to everyone, most people just do not notice them. To build a systemic business, you need a certain type of thinking, which is born from education and work in systemic organizations.


What Role Does Education Play?

Vladimir Mnogoletny: NES gives the best education in Russia. The School was originally designed to give more of an American-style education rather than the Russian one. NES gives amazing foundations for a wide variety of projects. It taught me much and helped a lot when I started working and organizing the work of other people.

Ilya Shirokov: It seems to me that education does not prepare you to be an entrepreneur, and, perhaps, even repels you from this, because it teaches you to avoid risks. I graduated from four universities. If I had spent the 10 years which I was studying on developing my own business, I would probably be even more successful than I am today.


Why Is Someone Else's Experience Important?

Ilya Shirokov: Business is not a difficult thing: you earn something, you pay something, and you live on the difference. Common sense and the ability to work with people are important. Leaders know how to manage people, to select really the strongest, and to assign them to the right positions. They have ideals, values and a long-term strategy.

Vladimir Mnogoletny: It is very important to meet with other entrepreneurs. If five entrepreneurs say that there should be a certain process in your firm, you should listen to them.

At the dawn of my online career, I came to Ilya with a piece of paper and wrote down the results of our meetings as commandments. I still remember how Ilya told me that he divided the company into 20 teams, each with 20 people and a leader, and how he worked with those leaders. I have done a lot following what Ilya had done at Odnoklassniki (note: Shirokov was the head of the Odnoklassniki social network). Most successful companies have a remarkably similar structure and processes.


How to Survive a Crisis?

Vladimir Mnogoletny: Our first business was a social network, which did not go well. The crisis of 2009 hit, there was no money at all, investors ran out of money, and they had to somehow survive. We made money on everything we could: we rented our servers, paid salaries with banners, and we also had a mega-advertiser MMM. It was not allowed on television, and they advertised on our platform for three months. Then we threw them out. It was a different time back then.

There have been three major stages in the history of the company. The first was when we did not understand at all how to work online, how to measure traffic, how to work with it, how to develop a product. We did everything we could. At the second stage, we already understood how to work, but we had no money. Fortunately, we were lucky and we attracted funding. I am still grateful to Ilya, because his team believed in our company back then. The third stage was already with quite a lot of money and there was an understanding of how to do business, we already had experience. Based on this, Genesis was created.

Ilya Shirokov: Bad companies die from crises, mediocre ones survive them, and strong ones become stronger. Oftentimes, panic-stricken entrepreneurs start to fuss and make emotional decisions. This harms business much more than the crisis itself.

We had a rather difficult story during the coronavirus crisis. What could we possibly do if international trade stopped? We [Joom Group] thought that the end of the world would happen in three months, and we should only do what we have time for before the end of the world. Thanks to this, we found niches that are tens, if not hundreds of times larger than the one where we worked before.


How to Build an International Business?

Ilya Shirokov: Russia is a very unstable country for an online business. If you have a large local business, then you need to be ready to compete with the giants. And they will always compete in a standard way: trying to take you over with much money, trying to headhunt you to their team, to get your service to their ecosystem. When we launched Joom, big companies like Yandex, came to us and said: either let's get together, or we will interfere with you in every possible way and start developing our own competing services. They tried, but they didn't succeed. We were lucky because we had an international business. In the West, giants don't try to immediately take over or replicate a good startup.

Today we have about 70%, if not 80% of our revenue coming from markets outside of Russia. I think that in a few years Russia will account for less than 5% of the revenue.

Vladimir Mnogoletny: It is about a combination of many things, but in general, almost the entire business model needs to be rebuilt. Few entrepreneurs can build a company in the Russian-speaking segment, and then turn it into an international business. It is very bad when the geography of your firm allows you to become a "fly in amber".


How Do You See Your Companies in Five Years?

Vladimir Mnogoletny: The size of business matters a lot. It is important for me that several of our companies become large businesses with good access to the capital market.

Ilya Shirokov: To be honest, it is not so important for me where we will be in five years. We want to create services that make us an integral part of global commerce. We want to build the largest IT company. And I am sure that we will be worth $100 billion. But I am not interested in the estimate itself, it is just a measure of the impact on the modern world. If we get big, then we can bring more benefits to society.