Hey Habr! Not so long ago, I managed to talk with Nikolai Vakorin, the founder of an interesting project is a service for sending offline gifts using emoji. During the conversation, Nikolai shared his experience in developing an idea for a startup based on the criteria developed, attracting investments, scaling the product and the difficulties along the way. I give him the floor.
Preparatory work
I have been in business for quite a long time, but earlier it was more and more offline projects in the field of retail. Such a business is very exhausting, I am tired of constant difficulties, often sudden and endless.
Therefore, having sold another project in 2012, I rested a bit and began to think about what to do next. A new, not yet invented project, had to meet the following criteria:
- no physical assets, which you have to buy and spend money to support and which easily turn from assets into liabilities if something goes wrong (example: equipment for a restaurant that closes);
- no accounts receivable. Almost always in my previous projects, there was a situation in which customers demanded post-payment, and the delivery of services and goods - immediately. It is clear that then you just had to beat out your money and spend a lot of time and effort on it, sometimes it was not possible to solve the problem (or it was possible partially);
- opportunity to work with a small team. In offline business, one of the main problems is hiring employees. As a rule, they are difficult to find and motivate, turnover is high, people do not work very well, often steal, a lot of resources need to be spent on control;
- the possibility of capitalization growth. The growth potential of an offline project is always limited, and I wanted to try to take a swing at the global market (although I didn’t understand how yet);
- having an exit strategy. I wanted to get a business that would be liquid and from which I could easily and quickly exit if necessary.
Obviously, it had to be some kind of online startup and that it would be difficult to go from the criteria directly to the idea alone. Therefore, I gathered a group of like-minded people - former partners and colleagues - who might be interested in working on a new project. We got a kind of business club, which periodically met to discuss new ideas. It took several months for such meetings and brainstorms.
As a result, we came up with some good looking business ideas. In order to choose one, we decided that the author of each idea will hold a presentation of his concept. "Protection" was supposed to include a business plan and some kind of algorithm of actions for several years.
At this stage, I had the idea of a “social network with gifts”. As a result of the discussions, it was she who won.
What problems do we want to solve
At that time (2013) there were three unresolved problems related to the gift industry:
- “I don’t know what to give”;
- “I don’t know what to do with unnecessary gifts and how to stop receiving them”;
- "it is not clear how quickly and without problems to send a gift to another city or country."
There were no solutions then. The first problem at least tried to solve various sites with recommendations, but it worked inefficiently. Largely because almost all such collections were poorly hidden advertisements for certain products.
The second problem in general could be solved by compiling wishlists - this is a popular practice in the West, when, for example, on the eve of a birthday, a birthday person writes a list of gifts that he would like to receive, and guests choose what they will buy and report their choice. But in Russia, this tradition has not particularly taken root. With the delivery of gifts, the situation was completely deplorable: it was impossible to send something to another city, or even more so a country, without a lot of gestures.
It was clear that in theory we could do something useful to solve these problems. But the market largely had to be formed independently, and even none of the team members had a technical background.
Therefore, to begin with, we took paper and pencil and began to develop mockups of the screens of the future application. This allowed us to understand that in the first place we should put the third problem on the list - the delivery of gifts. And in the course of discussions on how this could be implemented, the idea was born to use emoji to represent gifts that one person could send online and another receive offline (for example, a cup of coffee).
First difficulties
Since we had no experience working on IT products, everything moved rather slowly. We spent a lot of time and money developing the prototype. So much so that some members of the original team began to lose faith in the project and quit.
Nevertheless, we were able to create a product. Also, thanks to a good network of contacts in our city - Yekaterinburg - we managed to connect about 70 businesses to the platform in a test mode. These were mainly coffee shops, flower shops, car washes, etc. Users could pay for some kind of gift, like a cup of coffee, and send it to someone. The recipient then had to come to the right place and get their coffee for free.
It turned out that everything looks smooth only on paper. In practice, a huge problem has become a misunderstanding on the part of employees of organizations - our partners. In a conventional cafe, turnover is extremely high, and training is often not given enough time. As a result, the managers of the institution could simply not know that it was connected to our platform, and then refused to give out already paid gifts.
End users didn't fully understand the product either. For example, it seemed to us that we were able to create an ideal gift standardization system. Its essence was that a specific gmoji for displaying a gift was associated with a class of goods, and not a supplier company. That is, when a user sent a cup of cappuccino as a gift, the recipient could receive his coffee at any establishment connected to the platform. At the same time, the price of a cup varies in different places - and users did not understand that this was not their problem at all and they could go anywhere.
It was not possible to explain our idea to the audience, so for many products we eventually switched to the “gmoji - a specific supplier” bundle. Now often a gift purchased through a specific gmoji can only be received in stores and establishments of the network that is tied to this symbol.
It was also difficult to expand the number of partners. It was difficult for large networks to explain the value of the product, the negotiations were difficult and long, and for the most part there was no result.
Search for new points of growth
We experimented with the product - for example, we made not just an application, but a mobile keyboard, with which it became possible to send gifts in any chat application. They went to new cities - in particular, they launched in Moscow. Still, the growth rate was not particularly impressive. All this took several years, we were still developing at our own expense.
By 2018, it became clear that we needed to accelerate - and for this we need money. It seemed to us not very promising to apply to funds and accelerators with a product for a still unformed market; instead, I attracted a former partner in one of the past projects as an investor. We managed to attract $3,3 million in investments. This allowed us to more boldly work out various marketing hypotheses and actively engage in expansion.
This work made it possible to understand that we are missing something important, namely the corporate segment. Companies around the world actively give gifts to partners, customers, employees, etc. The process of preparing such purchases is often opaque, there are many intermediaries, and the business usually has no control over delivery.
We thought that the Gmoji project could solve these problems. Firstly, with delivery - after all, the addressee himself goes to receive his gift. In addition, since the delivery is first digital, the image of the gift can be customized, branded, even scheduled - for example, right before the new year, at 23:59, send an alert with an emoji gift from the company. The company also has more data and control: who, where and when received the gift, etc.
As a result, we used the raised money to develop a B2B platform for sending gifts. This is a marketplace where suppliers can offer their products, and companies can buy them, brand them with emoji and send them.
As a result, we managed to attract large customers. For example, we were contacted by several companies and we were able to work out some interesting cases in programs to increase corporate loyalty and send corporate gifts, including through push notifications of third-party mobile applications.
New twist: international expansion
As can be seen from the text above, our development proceeded gradually and we were just looking at entering foreign markets. At some point, when the project had already become noticeable at home, we began to receive requests from entrepreneurs from other countries to purchase a franchise.
At first glance, the idea seemed strange: there are few IT startups in the world that scale like a franchise. But the requests kept coming in, so we decided to give it a try. So the Gmoji project went to two countries of the former USSR. And as practice has shown, such a model turned out to be working for us. We have packed to get started quickly. As a result, by the end of this year, the number of supported countries will grow to six, and by 2021 we plan to be present in 50 countries - and are actively looking for partners to do this.
Conclusion
The Gmoji project has been around for about seven years now. During this time, we have faced a lot of difficulties and learned a number of lessons. In conclusion, we list them:
- Working on a startup idea is a process. We have been honing the idea of the project for a very long time, starting with the basic criteria, moving on to the selection of possible directions, each of which was seriously analyzed. And even after the final choice, approaches to determining the target audience and working with it changed.
- New markets are very difficult. Despite the fact that in a market that has not yet been formed, there is a chance to earn a lot and become a leader, it is very difficult, because people do not always understand your brilliant ideas. Therefore, you should not expect quick success and get ready to work hard and hard on the product, constantly communicate with the audience.
- It is important to analyze market signals. If some idea seems unsuccessful, this is no reason not to analyze it. So it was with the idea of scaling through franchises: at first the idea didn’t work, but in the end we got a new profit channel, entered new markets, and attracted tens of thousands of new users. Because in the end they listened to the market, which signaled the demand for the idea.
That's all for today, thank you for your attention! I will be glad to answer questions in the comments.
Source: habr.com