Two middle-aged men in business suits are walking across the quiet green yard of an early-19th century building in the Presnensky District in Moscow. Twenty-two years ago, Yury Shmelkin and Aleksey Solomakhov, along with their colleague Yury Yusupov, left Roshydromet’s Main Calculation Centre (MCC) to start their own business. Today, their company MapMaker is the leading Russian meteorological software developer, widely known for its Gismeteo website.
“We keep doing the same thing – designing professional weather prediction software,” says Shmelkin, who has nearly five decades of experience in this field. Apart from its flagship product GIS Meteo, which is used by meteorologists nationwide, MapMaker offers a variety of other solutions for industrial, transport and military application. It also runs the GIS Meteo website, which tops Russian popularity ratings, second only to Yandex.Weather. According to SPARK, the company made 486 million roubles in 2014.
Made in the USSR
Forty years ago, Yury Shmelkin, then a staff worker of the USSR Hydro-Meteorological Centre (Hydrometcentre), met his new trainee Aleksey Solomakhov for the first time. The undergraduate student of the Department of Mathematics and Mechanics at Moscow State University was recommended to Shmelkin by his brother, who was Aleksey’s research advisor. The newcomer gave Shmelkin quite a surprise when he said he enjoyed programming – an activity most meteorologists at the time treated as a necessary evil. “Now there are plenty of people who can’t imagine their life without programming – most of our young workers are like this,” Solomakhov adds. MapMaker’s top executives, CEO Shmelkin and Chief Operations Officer Solomakhov, are sitting at the large table in the elegantly re-decorated meeting room, which looks nothing like the shabby interior they moved into 5 years ago. The founding fathers of MapMaker spent about 25 years of their working life in the building across the street - the office of the Hydrometcentre MCC. “During the Soviet times, we enjoyed a lot of independence – we chose what we wanted to work on, without any schedules or pressure from the management,” Shmelkin says. “On the other hand, the management didn’t understand much about weather analysis or computers.”
The team received software development assignments from different organizations and collaborated with the Youth Centres of Scientific and Technological Creativity (also known as NTTMs) – a network established in the late Soviet Union in the bid to commercialize R&D products. The principal field of interest for the future MapMaker leaders was computerized data processing tools, which eventually superseded the traditional printed maps. In the late 1980s and early 1990s, most projects of commercial value that came through NTTMs as state-run enterprises were not allowed to pay their contractors directly. Shmelkin has preserved several payment vouchers signed by Mikhail Khodorkovsky, who was the head of one such centre.
Shortly after the collapse of the Soviet Union, Shmelkin’s cash-starved department experienced a drastic staff loss. Payments for projects were delayed by several months. When they did arrive, they were completely devalued as a result of inflation. Shmelkin still has a photo of his team taken in 1992: two years later, 8 out of the 16 people shown in the picture emigrated from Russia. “I remember I walked into the shop one day and realized I had absolutely no money on me,” Yury Yusupov shares. In April 1994, Shmelkin approached his key workers Solomakhov and Yusupov with the idea to start their own business.
The parting with Hydrometcentre took a while. “They didn’t sign my resignation papers for an entire year. I had to hand in the inventory — the desks, the chairs, the typewriter…” Shmelkin remembers. However, the newly-minted businesspeople continued to work in the same offices, with the same team, since nearly all Shmelkin’s ex-colleagues eventually left their department at Hydrometcentre for MapMaker due to constant salary delays. As the company founders continued to provide maintenance of the MCC software, which they had been working on since the beginning of their careers, they were exempted from having to make rent payments. But most importantly, MapMaker had a viable ready-to-market product. The new meteorological data processing and visualization tool was named GIS Meteo and, according to Shmelkin, became the first-ever Russian programme of this type that was developed for personal computers.
Today, GIS Meteo collects weather data through the World Meteorological Organization (WMO), from satellites or radio-location instruments, and through the Russian Federal Service for Hydrometeorology and Environmental Monitoring (Roshydromet). The data can be plotted on maps or fed into models which are of use to weather forecasters, hydrologists, oceanographers and other interested parties. The product comes in several different versions: Synoptic, Avia, Hydro, Ocean, Agro and Eco. There is also a software tool named Toxy+GIS Meteo which makes it possible to model areas of risk to humans in the event of chemical emergencies. The first contract signed by MapMaker, however, did not involve software development. The new company was requested to design a meteorological support system for a proposed Arctic air route. MapMaker became an obvious choice for this project because of their long-standing partnership with Hydrometcentre and their connections on the tight-knit meteorology market. The detailed concept elaborated by MapMaker covered the number and position of the control centres, equipment requirements and methods of meteorological data transfer. The project was completed in 3 months and brought MapMaker $10,000. The air route opened 3-4 years later. Most of the fee was paid out as salaries ($300 per month for the founders; $100 for the rank-and-file staff). During the first 10 years of the company’s existence, the management never pulled the funds out of the business, spending every single dollar on wages and development.
MapMaker’s end product users are primarily governmental agencies. GIS Meteo is supplied to regional offices of Roshydromet and a number of other entities, including the military. The package comprises meteorological software, one or two servers and several automated work stations. A single work-station costs the client $50,000 on average, but the price generally depends on the number of modules. The company’s product prices are reported to have remained stable in terms of the dollar since the 1990s. Marketing was difficult in the beginning. “When we first offered a workstation with 640 х 480 resolution (which carries about the same amount of information as an iPhone 4 screen. — Sekret Firmy), the Roshydromet staff winced,” Shmelkin says. “When they opened the map of, say, the North Hemisphere, they couldn’t read the small letters on the screen. When they opened individual map segments, they couldn’t see the whole picture. The guys preferred the good old square-yard maps printed on paper.” Things seemed to be more promising in 1995–1996, when state-controlled organizations were given more freedom to plan their own budgets. Shmelkin remembers the Roshydromet director calling a staff meeting and saying: “We have a limited amount of available funding to cover all our expenses, including the wages, cleaning costs and map printing. Yury Shmelkin suggests replacing printed maps with computer images. This means we can save on printing costs and use the money to improve staff salaries”. The decision to go digital was passed by a unanimous vote.
At present, there are over 150 GIS Meteo systems installed in Roshydromet offices. An additional 100 serve the military. Other GIS Meteo users include the Federal Security Service, Russian Railroads and airports. A number of systems were sold abroad to Hong Kong, Estonia, Kazakhstan, Uzbekistan and other countries. Altogether, MapMakers has made an estimated $50 million, selling around 350 GIS Meteo systems with a total of 1,000 workstations. According to SPARK, MapMaker’s profits amounted to 486 million roubles in 2014. The company’s turnover has been growing by over 100 million roubles annually since. Over the past 7 years, however, most of the company’s earnings come from GIS Meteo – a website designed as a platform for advertising MapMaker services.
“At one point, we hired a young geographer, who wasn’t much of a forecaster or meteorologist,” Yury Shmelkin begins. “(He’s) not much of a programmer either,” Yury Yusupov smiles. “Yes, but he had a lot of energy and business flair,” the CEO concluded. The “brilliant businessman” was commissioned to design a website showcasing the company’s technological and visualization capacities.
The new resource, named Weather from Phobos and MapMaker, was launched in the spring of 1998 and, according to Aleksey Solomakhov, attracted about 10,000 visitors within the first few days. However, the website had to stop functioning soon after its launch, as in April 1998 Roshydromet was temporarily closed down and its data supply was terminated. Following the re-opening of Roshydromet in September, MapMaker resumed its partnership with Roshydromet and started exploring the possibilities of putting the website to commercial use. They flirted with the idea of charging users for weather forecasts, but it was quickly given up on. The resource continued forward without much change for several years. The first advertisements appeared in 2002, but no significant revenue came as a result. The watershed moment came in 2005 when the Russian media giant RBC Information Systems requested permission to publish its headlines on MapMaker’s website. “They offered us 500,000 roubles per month – an amount unheard of in those days,” Shmelkin remembers. “The RBC contract made it possible to increase staff salaries by several times.” Other advertisers followed suit shortly thereafter. As of today, apart from the RBC News column, the website offers links to publications by Gazeta.ru, Vesti.ru and Rambler News Service. “The channel accounts for a relatively minor proportion of our traffic, but we have retained the platform out of respect for our readers who are used to this method of content delivery,” says RBC spokesperson Yegor Timofeev.
In 2008, MapMaker landed a $2 million contract to install GIS Meteo in over 20 offices of Roshydromet and provide the relevant staff training. Two years later, after the contract had been fulfilled, it turned out that the website had generated more profit than the MapMaker software products. Although a few copies of GIS Meteo are still sold every year, the online resource has been firmly established as the company’s key earner. The advertising content appearing online must meet stringent requirements. GIS Meteo does not publish advertisements of tobacco, gambling or erotic content. The resource will not accept any anti-governmental content or display ads which mislead customers or are discordant with the website design. IMHO VI, one of the major Russian ad sellers, is in charge of above-the-fold ads; other formats, such as banners and background skin advertising, are available directly through MapMaker. The CPM rate varies from 150 to 300 roubles per 1,000 impressions, depending on the package size. There is also a 20-50% surcharge for targeting by area, time, weather, gender, age, interests and ad frequency. GIS Meteo also makes additional profit designing personalized weather informers for corporate websites, including weather forecasts for specific locations (updated 4 times a day), meteorological maps and animation. The personalized solutions, carefully tailored to the customers’ needs, are paid for by a monthly subscription. Free informers carrying the GIS Meteo logo can be built by users or selected from a menu of standard options. According to TNS, 14 million individual users access GIS Meteo per month, while Yandex.Weather and Weather.Mail.Ru receive 16 million and 4.8 million attendance, respectively. There are a several dozen Russian web resources that publish weather forecasts. “The market entry threshold is fairly low – all a person has to do is buy or use free meteorological data and publish it,” explains Dmitry Solomentsev, Head of Weather Forecasting Unit, Yandex. However, it’s not as easy as it looks.
All Russian organizations engaging in weather forecasting and weather data collection must obtain a Roshydromet licence. The requirement applies to data providers carrying out their own instrumental weather observations and to those dependent on second-hand data. The major Russian market players borrowing weather information process it with the help of their proprietary technologies before publishing online. The data comes from a variety of sources, including international companies and Roshydromet. The national meteorological service transfers part of its data to the WMO and sells information through its regional offices. In May 2016, Yandex launched Meteum, a data processing instrument based on complex mathematical modelling and machine learning. Prior to this, the resource could only provide information fetched from Foreca’s servers. MapMaker does not have similar proprietary technology. The company warns users that GIS Meteo weather data doesn’t undergo professional quality control procedures, so its reliability cannot be guaranteed.
Weather for Tomorrow
In the foreseeable future, MapMaker is planning to focus more on the B2B segment of the weather information market and supply industrial, transport and energy companies with specific meteorological data and customized services to meet their individual business goals. As of now, competition in this segment is not very high due to the fairly small number of players, whose competitive edge is based on weather prediction accuracy. Despite the apparent challenges, the segment has a lot of appeal, as the global B2B market, according to Yandex, has a current estimated worth of over $5 billion. MapMaker is working on a service targeted towards corporate customers that do not have any meteorologists on their staff. The service, which is scheduled to be launched next year, will provide weather forecasts and make recommendations to help companies effectively plan their activities (e.g. snow cleaning). “Hydrometcentre is unable to satisfy many of the time, content and format requirements that are essential for businesses,” says Yury Yusupov. “Forecasts are sent as text files, therefore companies have to hire extra staff to enter the data in special forms. We will be the only ones that will provide automated data supply.” The company will need to make a considerable effort to remain a dominant player on the well-developed market for professional weather data solutions. MapMaker is currently testing GIS Meteo Web, an interactive web-based service for professional meteorologists. Roshydromet, however, is planning to utilize other systems along with its proprietary product Izograf and GIS Meteo. “It is important to note that Gis Meteo workstation software is of little use without MapMaker’s servers. The high cost of the system precludes its use in many settings where graphic presentation of meteorological data is required,” stresses Roshydromet’s online report that analyses the comparative advantages of weather data systems.
At this moment, MapMaker is not planning to go global. “One must be more flexible and better prepared for this task as the negotiation process requires a lot of effort,” explains Yury Shmelkin.
Author: Victoria Charochkina