Moscow, where, unsurprisingly, many of Russia’s startups call home, is a far cry — culturally, socially, and historically — from Silicon Valley, but the growing number of entrepreneurs and enthusiastic local venture capitalists has made Russia a key producer of tech startups on the international stage.
Of course, Russian high technology is not new to the international scene (the anti-virus software, Kaspersky, and the note-taking service, Evernote, can attest to that), but the shiny, new products and ideas hawked by startups and the passion that backs them up are what is attracting international attention to the Russian tech industry. For me and my peers, the big question from the moment we conceive our startup idea has always been “when and how should we expand into the U.S. market?” Before my fellow startup peers get ahead of themselves and get swept away by the wave of their own entrepreneurial spirit, taking advantage of homegrown benefits are just as important.
Our own startup, which allows website visitors to call companies through their browsers, couldn’t wait to launch in the United States. We knew our product would work best with e-commerce businesses. While e-commerce is still a relatively small industry in Russia, the U.S. market is much more robust. As such, we knew that our biggest customers and our most tech-savvy users would be from the United States. However, debuting in Russia before we made a single foray into the United States was just as important. Here are my top three reasons:
It don’t mean a thing if you ain’t got…top developer talent that you can afford
Even the best startup idea will fail if you don’t have the talent to turn your idea into reality. Unless you’re one of the startups sitting on top of tens of millions of venture money, every dollar spent has to be efficient and justifiable. One of the best features about working at home before launching in the United States is the ability to hire top talent for much, much less. Though these programmers may not have newly minted degrees from MIT, technical knowledge is rapidly increasing in Eastern Europe, and the global gap between U.S. developers and those outside of the U.S. has narrowed significantly.
On that debutante ball
Though we wanted to hurry up and dive into the deep end that is the U.S. e-commerce market, starting out in the still-developing Russian e-commerce market turned out to be a huge boon. Russia has a large internet audience — an estimated 60 million users and growing rapidly. However, there’s very little e-commerce activity as of yet, so there is very little competition within this segment. As more and more Russians sign up for their first credit cards, there’s huge growth potential and possible ROIs to working in the Russian e-commerce market over the large but very competitive U.S. market. While competition is necessary for product innovation and to ensure quality of service, being first-to-market with a startup in an industry that is only beginning to bud should not be overlooked as an advantage. Beginning as the big fish in a small pond can allow you to build up a solid foundation before you jump into that deep end.
Too small to fail big
It’s obvious why Russian startups all want to launch in the United States. Not only does it have the biggest market, it’s also the heart of the startup culture as the home of Silicon Valley. However, launching in the U.S. can also be unforgiving, and startups usually only have one chance to make an impression. Smaller home markets can be a sandbox to test and work out all the problems startups will inevitably encounter to prep for their U.S. launch. Bugs in the system? Poor user interface? Privacy issues? All those issues can be sorted out before launching in the United States. With our own startup, working with some of Russia’s largest banking and airline companies allowed to work through some of our biggest problems and made it clear that launching in the U.S. without finding initial success closer to home would have been a disaster.
Launching in the United States is a big deal for a Russian startup and understandably so. Taking advantage of home field, however, can help make sure that launch doesn’t go to waste.