Since launching operations a year ago, Fast Lane Ventures has affirmed itself as one of the most active investors on the Russian Internet scene. Among its most notable startups have been online shoe retailer Sapato.ru, daily deal site KupiBonus.ru, airfare search service Jizo.ru, real estate database Domgeo.ru and Q&A content provider Relevant Media.
Fast Lane co-founder and CEO Marina Treshchova spoke openly with EWDN about her projects, methods and strategy as well as about the difficulties of running online businesses in Russia’s specific conditions.
How do you define Fast Lane Ventures? What is its specific value add or know-how advantage compared to other Moscow incubators?
The term of business incubator is not the most exact way to describe Fast Lane Ventures. We are a company that, in contrast to a business incubator, builds new businesses. This includes selecting ideas, developing a business model, investing seed-money, forming a core team with a leader, and other processes. In this sense we should be called a business accelerator. In contrast, the classic business incubator model in the West includes a certain range of services – secretarial, accounting, legal, consulting, business education as well as assistance in obtaining financing, office space and so on.
We are not a venture fund either. Unlike a venture capital fund, we are involved in the operational management of the business. We actively cooperate with startups in the early development stage, in the first 9-12 months after launch. When the core team is formed and all processes are running, on average it takes us 50-60 days to build a business, we support their promotion and development with strong operational control – while continuing to support the company by providing expertise in recruitment, marketing and investment search. This is very different from what venture capital funds usually do. There are 45 top level experts in the Fast Lane Ventures team today, while traditional investment funds usually have about 5 people.
Who is behind Fast Lane Ventures?
Fast Lane Ventures is a Russian company with a Western capital structure and model. Our firm was founded Pascal Clément, our chief inspiration and president of Direct Group, Oskar Hartmann, CEO of KupiVIP, and myself. Pascal and Oskar are well known figures on the market with a strong track record. Pascal’s former success stories include Rusfinance Bank, the introduction of the Otto Group on the Russian market as well as leading Russian online store Ozon.ru. Oskar has attracted as unprecedented amount of investment in his online shopping club KupiVip.
We received external investor support from EVenture Capital Partners. A number of other strong Western and Russian funds have participated in financing rounds for our portfolio companies.
Are international startup models replicable in Russia?
The only difference is in the degree of market maturity. In this sense, the Russian Internet could almost be described as tabula rasa with huge potential for opportunity and growth. In contrast with America, Europe or China, where hundreds of companies compete in online consumer segments, many online services are still unavailable to Russian consumers. Fast Lane Ventures aims to address this imbalance.
Consumers all around the world have exactly the same needs: Russian women, like women in Brazil or in Japan want to take care of their appearance and make the process affordable. KupiBonus.ru, our daily deal site, helps them with this. Our airfare metasearch engine Jizo.ru is intended for those who do not want to pay too much for flights and hotels. Vitaportal.ru provides a large Russian audience with information on health issues that have been reviewed by health professionals.
In these examples, we haven’t ‘reinvented the wheel’. We just looked at what had been done in other countries, chose the models that proved their relevance and then adapted them to the Russian market. Of course, there are some national characteristics unique to Russia when it comes to payments – we still have 90% of payments being done offline. We don’t have the ubiquitous quick and cheap logistics found in western countries. But these are purely technical issues, not obstacles to the business flow.
Fast Lane Ventures claims it can get projects up and running in 50 days. How do you do this? Isn’t it quite a short time for complex projects?
The first company we launched was the online shoe retailer Sapato. At that time, Russia had no specialized online shoe store, but the idea was in the air. We knew we would capture significant market share if we were the first mover, and so we worked out the concept in a matter of days instead of weeks or months. Following our example, other companies quickly began to open online shoe stores, cloning our sites and strategy.
To win in the Internet business, you don’t always need to be the best, but you have to be the fastest. Speed is the main corporate value of our company and our main business principle. The faster we launch a new business, the more enthusiasm we have. If you don’t realize ideas quickly, someone else will beat you to it, and you’ll never be number one on the market. Its important to create new opportunities for customers rapidly, otherwise they will go to other online resources.
When Marc Cenedella, the founder of TheLadders, one of the most successful online recruitment projects over the last decade, was told that the development of a new site would take three months, he studied textbooks in programming which he had not previously studied and launched a site from scratch in three weeks on his own!
How many startups has Fast Lane Ventures launched? How many other projects are you planning to launch in the forthcoming 12-18 months?
Since the official launch of Fast Lane Ventures April 2011, we have established 13 running Internet companies. In total we plan to launch between 20 and 25 companies. From our perspective, this is the optimal number, particularly considering the fact that companies are at different development stages.
Which of your projects have been the most successful? Have there been any exit cases yet?
Sapato.ru was launched in June 2010. In September 2010, gross demand amounted to $56,000. In September 2011, it reached $26 million! To date 130,000 orders have been made and there are now more than 5,700 shoe and accessory items available in the collection across a range of 200 brands for women, men and children. The number of repeat customers exceeds 100,000.
During a short test period, our health and wellness portal VitaPortal was visited by almost 2 million users. Given the current dynamics, by the end of 2011 we estimate that this figure will grow to 3.5 million. Six months after the launch more than 25,000 unique users were visiting the portal on a daily basis. The bounce rate is as low as 50%. It is very good indicator because our competitors who are much older have 65-70%!
We recently celebrated another breakthrough for Relevant Media – the number of unique visitors to its affiliated site Kakprosto.ru in October exceeded 4 million. The total number of unique visitors for all affiliated sites exceeds 5 million.
We plan exits in the framework of our strategy no earlier than 3-5 years after the launch of operations. In the past we have received offers to buy some of our businesses that were just 14 months old. However we declined at that point as we believed that there was further scope to develop the company and ultimately increase its value over time.
Did you have less successful, or failed projects?
Of course failures can never be excluded in the venture business, but for the moment our projects are all either too successful – or too young – to speak of any failure. I do not see any serious obstacles to achieving our goals, since we rely on proven business models and operate on market segments experiencing booming demand.
We work in accordance with Western standards adhering strictly to set KPI and most importantly, we have – I am saying this say without exaggeration – the best team on the Internet market.
True, we sometimes also face difficulties. One of them is to find the right leader for a project. Not just a leader in fact, a real star capable of leading the team, persuading investors, and ensuring proper execution. Needless to say it is difficult to find 15 stars with entrepreneurial background on the Russian labor market. Sometimes leaders change, and this is always painful.
Staffing in general is a big issue. We use a variety of different ways to attract people. In the last fifteen years we have assembled a team of 500 people and it continues to grow.
Another problem is the stereotypes about Russia which still circulate in the West. Not all Western funds consider investing in Russia. For investors it can be difficult to correlate the actual risks and prospects. Websites like EWDN, by popularizing Russian IT among an international business audience, help overcome these barriers. Certainly, the current global economic situation does provide challenges, but in my view Russia is less at risk from the current macro-economic climate than many other countries.
• Marina Treshchova is the co-founder and CEO of Fast Lane Ventures. She joined Pascal Clément’s Direct Group in 2002, after six years of experience with a US telecom company and completing a BA in business administration and finance at the University of Washington in the US. She co-founded Fast Lane Ventures in 2010, where her primary role is the development, implementation, and operational management of corporate activities. She is also responsible for setting business targets in line with the group’s business objectives, identifying and developing future business opportunities, integrating best management practice. She controls operations according to target KPIs, executes corporate governance and commercial risk management processes.
