Startup story: how to develop an idea step by step, enter a non-existent market and reach international expansion

Hello, Habr! Not so long ago, I managed to talk with Nikolai Vakorin - the founder of an interesting project Gmoji - a service for sending offline gifts using emoji. During the conversation, Nikolai shared his experience in developing ideas for a startup based on developed criteria, attracting investments, scaling the product and difficulties along the way. I give him the floor.

Preparatory work

I’ve been in business for quite some time, but before, these were more and more offline projects in the retail industry. 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 that you need to buy and spend money to support them and which easily turn from assets into liabilities if something goes wrong (example: equipment for a restaurant that closes);
• lack of receivables . 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 knock out your money and spend a lot of time and effort on it, sometimes it was not possible to solve the problem (or partially succeeded);
• the ability 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 swipe at the world market (although I still did not understand how);
• availability of exit strategy . I wanted to get a business that would be liquidated and from which I could easily and quickly exit if necessary.

Obviously, it was supposed to be some kind of online startup and that it would be difficult to go directly from the criteria to the idea alone. So 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 gathered to discuss new ideas. Such meetings and brain storms took several months.



As a result, we had some good looking business ideas. In order to choose one, we decided that the author of each idea will present his concept. “Protection” was supposed to include a business plan and some kind of algorithm of actions for several years.



At this stage, I came up with the idea of ​​a "social network with gifts." As a result of the discussions, it was she who won.

What problems did we want to solve

At that time (2013) there were three unresolved issues related to the sphere of gifts:

• “I don’t know what to give”;
• “I don’t know where to put 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. At least various sites with recommendations tried to solve the first problem, but it worked inefficiently. Largely because almost all of these collections were poorly hidden advertising for certain products.



The second problem as a whole could be solved by compiling vishlists - 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 they would like to receive, and guests choose what they will buy and inform about their choice. But in Russia, this tradition did not particularly take root. With the delivery of gifts, the situation was completely deplorable: it was impossible to send something to another city or, all the more, 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 was largely to be formed independently, and even none of the team members had a technical background.



Therefore, for starters, we took paper and pencil and began to develop screen mockups for the future application. This allowed us to understand that in the first place we should put the third problem from the list - gift delivery. And in the process of discussing how this can be implemented, the idea was born to use emoji to present gifts that one person could send online and another to 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 a prototype. So much so that some members of the original team began to lose faith in and exit the project.



Nevertheless, we were able to create a product. Also, thanks to a good network of contacts in our city - Yekaterinburg - we were able to connect about 70 businesses to the platform in 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 his coffee for free.



It turned out that everything looks smooth only on paper. In practice, a huge problem was a lack of understanding on the part of employees of organizations - our partners. In a conditional cafe, turnover is extremely high, and training is often not given enough time. As a result, the managers of the institution simply could not know that it was connected to our platform, and then refused to give out gifts already paid.



End users also did not fully understand the product. For example, it seemed to us that we were able to create an ideal system for standardizing gifts. Its essence was that the specific gmoji for displaying the gift was associated with the class of goods, and not the supplier company. That is, when the user sent a cup of cappuccino as a gift, the recipient could receive his coffee in any institution 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, therefore, for many products, in the end, we nevertheless switched to a bunch of "gmoji - a specific supplier." Now often a gift purchased through a specific gmoji can only be obtained in stores and institutions of the network that is attached to this symbol.



It was difficult to expand the number of partners. It was difficult for large networks to explain the value of the product, negotiations were difficult and long, and for the most part there was no result.

Search for new growth points

We experimented with the product - for example, we made not just an application, but a mobile keyboard, with which it was possible to send gifts in any chat application. Entered new cities - in particular, launched in Moscow. But still, the growth rate was not particularly impressive. All this took several years, we still developed at our own expense.



By 2018, it became clear that we need to accelerate - and for this we need money. It seemed to us not very promising to turn to funds and accelerators with a product for a still unformed market, instead I attracted a former partner as an investor in one of our past projects. We managed to attract $ 3.3 million of investments. This allowed us to 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 all over the world actively give gifts to partners, customers, employees, etc. The process of preparing such purchases is often opaque, it has many intermediaries, and the business usually does not have control over the delivery.



We thought that the Gmoji project could solve these problems. Firstly, with delivery - because the recipient himself goes to receive his gift. In addition, since delivery is first digital, the gift image can be customized, branded, even planned - 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 gift sending platform. 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 were able to attract large customers. For example, several companies came to us - and we were able to work out some interesting cases in programs for increasing corporate loyalty and sending corporate gifts, including through push notifications from third-party mobile applications.

A new twist: international expansion

As can be seen from the text above, our development went gradually and we just looked closely at entering foreign markets. At some point, when the project was already noticeable at home, we began to receive requests from entrepreneurs from other countries for the purchase of a franchise.



At first glance, the idea seemed strange: in the world there are few IT startups that scale according to the franchise model. But 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 “packed” our franchise so that we could 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 for this.

Conclusion

The Gmoji project is about seven years old. During this time, we encountered a lot of difficulties and learned a number of lessons. In conclusion, we list them:

• Work on the idea of ​​a startup is a process. We have been honing the idea of ​​the project for a very long time, starting with basic criteria and proceeding to the selection of possible areas, each of which was seriously analyzed. And even after the final choice, the approaches to determining the target audience and working with it changed.
• New markets are very difficult . Despite the fact that there is a chance to earn a lot and become a leader in an unformed market, it is very difficult because people do not always understand your ingenious ideas. Therefore, you should not expect quick success and prepare a lot and hard to work on the product, constantly communicate with the audience.
• It is important to analyze market signals . If any 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 enter,” 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 it for today, thanks for watching! I will be glad to answer questions in the comments.