They say time moves faster on the internet — and if you’re looking for proof, just ask Marina Treshchova, the CEO of Moscow incubator Fast Lane Ventures. The company, which builds Internet companies focused on the Russian market, only launched in 2010… and yet it celebrated its first major success last month, with the $40 million sale of shoe retailer Sapato.
That’s speedy work.
When I met her in London last week, Treshchova says even the team at Fast Lane — which explicitly targets only ideas that can achieve rapid growth — didn’t expect things to happen quite so quickly. But the deal to sell to Ozon, Russia’s biggest online retailer, was too good to turn down.
The timing may have been a surprise, but selling up was always in the plan.
The name says it all, really: Fast Lane’s ambition is to build and flip Internet companies. It is probably closest in design to Germany’s Rocket Internet, the Berlin-based factory that gets a lot of flack for cloning American startup ideas. Fast Lane is not as blatant about cloning — though it does have sites that are pretty direct copies, like Pinme.ru — but it follows similar ethos to Rocket. It values building and executing business models that have been tested outside Russia much more than chasing novel ideas.
The Sapato deal is testament to the team’s speed of execution, but also reflects the growing amount of activity in the Russian Internet market. After starting from a low base, Russia recently surpassed Germany to become the largest online market in Europe. And that sort of expansion means that right now there’s a lot of investment going into the country, both from local sources and investors in Europe and America who see a chance to make money.
So what lessons does Fast Lane have for the rest of us?
Over the course of my conversation with Treshchova, a few things became apparent.
Your assumptions may not be right
A lot of people have stereotypical views of Russia. That means there are questions that Trechchova says she has to deal with all the time — mostly about the country’s size or scale or politics. Some of them are right (it’s a huge place), but others are wrong.
“We think Russian consumers are just like consumers anywhere else,” says Trechchova. They want the same things, they have the same personal ambitions. In fact, she suggests, after decades of state-enforced communal culture, Russians may be even more interested in expressing their individuality and displaying their success than consumers in many other countries.
That’s not to say there aren’t differences in cultures that can have an affect on decision-making. For example, Russian culture is still very cash-centric and credit cards are less common than elsewhere. That makes a big difference to online purchasing, and has to be taken into account.
It’s easy to overstretch
The rapid growth of the local market means that it seems like wide open territory. But Fast Lane is trying to not get distracted. Its core mission is to build consumer-facing businesses that can grow to $100 million valuations in just a couple of years — primarily through retail.
But it’s as much about the ideas which get rejected as the ones that get accepted. Treshchova says the business looked through nearly 1,000 ideas over the last year: it only has 15 companies in its portfolio today.
You have to build from the roots
The Fast Lane team has discovered that it needs to put a lot of work into the raw materials of startups. First, there’s a lot of infrastructure that’s required — particularly around fulfilment and delivery of goods.
But the bigger gap may simply be in talent: finding good, smart people is hard.
While there are lots of talented developers coming up through the ranks, Russia traditionally has more of a hardcore technology focus that means many shy away from the web industry. Even where people do enter, the success of companies like Yandex has skewed the market and made it expensive for startups to hire. The result is that Fast Lane has adjusted the way it recruits, and is doing a lot of its own training — as well as working with Skolkovo and others to improve the training on offer. But that’s going to take time, says Treshchova.