Europe's 100 hottest startups 2012: Moscow
This article was taken from the September 2012 issue of Wired magazine. Be the first to read Wired's articles in print before they're posted online, and get your hands on loads of additional content bysubscribing online.
"Russia's unique feature is its size," says Yuri Milner, founder of investment firm DST Global. "When someone invests in Russia, it's also about Ukraine, Belarus and the Russian-speaking universe." And the size of the market means that most Russian entrepreneurs are happy to stay close to home -- "We can grow 20 times where we are now, so why leave?" says Oskar Hartmann, CEO of Moscow-based flash-sales startup KupiVIP.
But Milner hopes that attitude will change. "Silicon Valley thinks global straight away," he says. "Russian founders will have that ambition over time."
KupiVIP Samokatnaya Dom 1, 111033, Moscow
In 2008, fashion e-commerce in Russia was an enormous vacuum. "We were the first ones online," says Oscar Hartmann, CEO of KupiVIP -- a members-only Russian e-shopping club that offers daily flash sales of a claimed 1,700 brands. "No one else was telling Russian women they could look good for 70 per cent less, so what we were doing was a powerful thing," he says. Five years later, KupiVIP has 8.5 million members, $200 million (£127 million) net revenue and hopes to be a billion-dollar company by 2017. That may be small change for an outfit such as Amazon, but Hartmann's startup was jumping into "cold water". "A lot of our customers made the first online purchase of their lives with us," says fellow German Damian Doberstein, KupiVIP's cofounder. Despite being in a country of 53 million internet users with an impulsive buying culture, KupiVIP had to contend with the country's infamously absent logistics infrastructure. The company had to build its own digital production arm and call centre, and owns and leases hundreds of trucks that deliver to 190 cities around Russia. Delivery staff even wait at the door while customers try on their new clothes. Did they know what they were getting into? "We had zero expertise when we started," says Hartmann. "Sometimes it is good to be foolish."