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Young entrepreneur discusses starting a business in Russia
Yury Pronin is co-founder and CEO of Whypronin. He served as part of the Russian delegation to the G20 Young Entrepreneur Summit in Mexico.
Tell us a little about your company.
Whypronin is an “offline IT/technology/web/marketing/process building” business. Our role is to change a company’s infrastructure by using third party or in-house tools, and then grow the business globally. We are not a private equity company, but we have a lot in common with one.
Whypronin has several current investments and functions as a process consultant to these projects. The first is ProstoCarRENTAL, a car rental company based on a franchising mode similar to that of ZipCar. In the last few years, we built up our infrastructure, and now we are starting to open offices in new locations. Our second ProstoCarSALES is an online store where you can get new or used cars and apply for car loans. One of our key features is that we are a paper-free business; we work only with digital data, and all our transactions could be done by one click of the mouse. Lastly, PaperFree is our division that invests in systems, and we have built a scalable and efficient cloud-based infrastructure. We are looking for partners to build something exciting, an e-government solution that would bring huge value to global consumers.
As a young entrepreneur, what is your feeling about the availability of opportunities in Russia?
The Russian economy is unique. We have cash inflow from foreign countries. We have business models copied from developed countries. More importantly, we have repatriated Russian money. People understand that they can get better returns in a growing country compared to developed ones. I would say the ecosystem of Russian business has organic growth - no one has added "fertilizer.”
Russia, as any young economy, has tons of opportunities, even in sectors where strong players already exist. Established players move very slowly because they are big. You can leap ahead by leveraging modern technologies. In some industries, efficiency is so low that you can win business by opening exactly the same as what is next door, but with a more modern approach.
What qualities do you need to be a successful entrepreneur in Russia? You recently participated in the G20 YES in Mexico. How did these qualities compare to those of other young entrepreneurs?
To be a successful entrepreneur in Russia you have to start thinking outside the box. The country is very young, especially from the business point of view. There are not many good examples you can learn from. You need to envision the bigger global picture and study your industry based on international experience. These qualities are necessary for any entrepreneur from the G20.
What sort of infrastructure did you need to establish in Russia to enable your business? What were the steps required?
To establish business in Russia you need to find your market, measure its size today and three and a half years down the road. Once you choose to pursue an idea, start your due diligence. Research online and read books and white papers. Talk to people from your prospective market in your country and abroad.
We talked to managers from Avis and Hertz in different countries. We rented cars from different brands in various countries. The goal was to understand what works best and then extend it to our local market.
Furthermore, I suggest new companies use as much available technology from around the globe as possible. I highly recommend having an online infrastructure - you may be surprised how much more scalable a business you may build for less. By replacing paper flow with a web-based platform, we decreased transaction costs by 200 percent.
Our business was easy to build, but it has been a challenge to constantly adapt to changing innovations and teach them to our employees.
None of these steps are unique to Russia; the same steps are required in any other country.
Your operations run the gamut from Russia to Ukraine to the U.S. How is it running a business across such distances and across different cultures and business environments?
We are in a new era of business development, with so many virtual tools that give us unlimited means of communication. With access to new technology, new computer languages and new information sources, integration is much easier. Bridging the cultural differences requires time and practice; there are no tools or software for that.
What is the demand in Russia for car rentals and car sales? How has it changed over time?
In Russia and post-Soviet countries, demand is growing more than 25 percent per year in some segments. Global players are coming, and we are trying to establish partnerships.
There was no culture of renting cars 10 years ago. Many did not even know that such a service existed in Russia. Ten years ago, I rented a Ford Focus in Nizhniy Novgorod, and it was a big surprise to many people that you could get a $15,000 car for only $500. At the time, I could not get 50 percent of the services I do now. The situation is much better now, but we still have a lot to change. It takes time to change business culture as well as consumer culture. The good thing is we are moving, not stagnating.
People have changed because they travel much more now than 10 or 15 years ago. They have become accustomed to “service” as a concept. Now Russians compare services to those they experience abroad. This creates demand. The next push will come from the expansion of credit card use. At present, we still have to deal with cash transactions, and this is not cheap to manage. Renting a car has been complicated in the past because of the paperwork involved. This is why we called our brand Prosto Car (“Simple” Car), and every day we work hard to make renting a car even more “prosto” for our customers.