I was born in St. Petersburg, but moved to England when I was 11 years old. After graduating from university, I went to work at Morgan Stanley in California and later relocated to New York. While living in Manhattan, I constantly used a variety of different services that greatly simplified my life. Such services included house cleaning, laundry with home delivery and even parking valets. The hectic lifestyle simply called for it. Soon thereafter, I became obsessed with the idea of launching my own multi-service business with a single interface and app.
I approached some friends in California, who assisted me in creating a platform that acts as the foundation of Helpstar. It was then time for me to decide on the place where I wanted to launch my business. After calculating expenses, Moscow emerged as the most obvious choice. Firstly, while personal incomes in Moscow are five times lower than in New York, starting a business is literally 100 times cheaper. Secondly, I was familiar with the country after spending several years at an investment company, which specialized in CIS markets.
I thought I fully understood what was needed to do business in Russia. Some assumptions were proven to be true, while others became apparent during the process.
Reaping the Rewards Daily
Top managers of successful companies in the US eagerly switch to working in startups. Salaries are lower, the work is harder, but you get a share in the company that you hope one day grows into something bigger after the right IPO or buyout. These people do not need motivation. They will do everything themselves in order to succeed.
On the contrary, in Russia, after speaking with a number of executives from various industries, I realized that even those who have done well for themselves want to make money in the here and now. I reckon that in Moscow, few have confidence in the prospects of tomorrow. The majority prefer high salaries and bonuses over business ownership. I didn’t quickly grasp this mind-set at first and had to adapt on the go.
The Work Will Still Be There Tomorrow
The same goes for employees. In the US, a manager works from dawn till dusk to finish their job. In Russia, many go home strictly at 6pm, regardless of client needs or their involvement in optimizing business processes. This is especially true for office workers in particular. Therefore, finding proactive and flexible personnel took more time than I had expected.
But no issues presented themselves with the cleaners. We used a Western model while selecting candidates, which included performing background checks, trainings and mandatory customer feedbacks. This type of approach helps in finding professional, hard-working cleaners who are serious about long-term cooperation.
In the US, clients usually leave the keys at the reception and do not personally interact with the cleaner, even if it is the first order of the service. In Moscow, this interaction is different. Despite a company’s reputation and insurance, many customers remain in the apartment during the cleaning. They also almost always become acquainted with the cleaner when meeting them for the first time. Some even ask the cleaner for their ID. Russians are not only worried about the safety of their belongings, but are also pickier when it comes to the quality of cleaning. They like to get on your back and preach to you about how to clean properly.
American clients are more accustomed to paying for services by the hour. Thus, you pay extra if more time is needed to finish the job. In Russia, it’s all about the result. Work that is not finished is not accepted. We had to consider this difference that exists between American and Russian clients. An average cleaning fee in Moscow is $33, which includes different options, whereas Americans would pay $100 for the same volume. But, they have different salaries and prices, so it suits their pockets.
It’s All About the Client
Before doing business in Russia, I had worked many years in investment firms, analyzing projects on CIS markets. I often spotted a great number of shortcomings in their business processes. These shortcomings came about as a result of both structural and client-related issues. Work in Russian B2C and B2B companies, I noticed, revolved around departments, not clients.
The primary business scheme in Russia consists of the following. First, you think of a product, its design and other organizational issues. Only then do you start to consider how the customer will purchase, unpack and use the product. This type of logic is foreign to me. Perhaps it is a remnant of the Soviet planned economic legacy, when manufacturers were required to produce 100,000 irons when the actual demand did not exceed 5,000 units. Nobody cared about whether people would buy them or not. Hence a lot of indifference and negligence in this respect is still prevalent today.
We distinctly approached every aspect of the business, making sure customers would always feel comfortable when using our service. First, we created a client interface and thoroughly thought out client interaction processes. Later we took care of the operations within.
The Size Doesn’t Matter
Until recently, I thought that setting up internal processes was the most complicated part of starting a business. I believed that finding contractors and suppliers would not take very long. I was proven wrong. Unlike in the West, communication here is formal. Everything requires the filling out of paperwork and a response can take several days to receive.
I remember an instance in which I was searching for an internet service provider in the US. I left my contact info on the site of one well-known company and received a confirmation email with all of the information and prices an hour later. At the end of the day, a manager followed up the response with a phone call. When I tried to get in touch with two similar companies in Russia, I had to call the providers myself for several days and wait for the pricelist.
In the beginning, we wanted to order 50 company polo shirts. Suppliers immediately refused to fulfill this order. It seemed that everyone was waiting for a 200-lbs gorilla or, in this case, an order of at least 500 units. In the US, you get a free sample at first, and then you are informed that 500 units are much cheaper to order than 50 units. But the customer always has the last word.
However, launching a business in Russia overall did not prove to be as complex as my American colleagues had predicted. I have not encountered any bureaucratic nonsense or lawlessness. But, an echo of the past is still present today. Therefore, it is time for entrepreneurs in Russia to change their attitude and make customer needs a priority, as opposed to satisfying their already insatiable hunger for money.