Culturally, socially and historically, Silicon Valley and Moscow are worlds (or at least 5800 miles) apart. But in a small pocket of Moscow, a growing number of entrepreneurs – supported by a growing number of enthusiastic local venture capitalists – are beginning to make the Russian capital a key pushpin on the tech startup map.
The international success of these startups will ultimately dictate how the Russian high-tech community is viewed, but there is a raw (and at times admittedly naïve) passion for creating high tech that has begun to get Russia international attention. Being part of this tightly knit and communally supportive group of Moscow-based startups for the past three years, I’ve learned first hand – alongside my fellow entrepreneurs – just how challenging it can be. For many of us, the big question is: when and how should we expand into the United States market?
Our startup, which allows website visitors to place calls to companies through their browsers, couldn’t wait to launch in the United States. We knew that’s where the biggest customers would be, where our most tech-savvy users would be, where the best startup advisors would be, where the top venture capitalist firms set up shop. But we put all of that on hold and bunkered down to focus on the technology and on acquiring customers in our own hemisphere first. Like a game of Risk, gradual expansion was probably the best business decision Zingaya made in the first year of our startup.
Here are three reasons why debuting in your own country before launching in the United States might make sense:
1. Good developers can come cheap
We’ve since moved some operations to the United States, which includes hiring American staff. That’s feasible for us now, but early growth and software development might not have been possible if we weren’t able to hire Russian programmers for a more reasonable cost (for us, at least) than the market rate of similarly skilled developers in the U.S. Technical knowledge is increasingly rapidly in places like Eastern Europe, and the global gap between U.S. developers and those abroad has narrowed significantly.
2. Take advantage of nascent markets
The Internet audience in Russia is huge – estimated to be around 60 million and growing quickly. But for all that online activity, there is relatively little competition for tools and services in many key web categories, such as e-commerce, which is seeing a huge growth potential as more Russians sign up for their first credit card. Competition is good because it forces products to continually improve, but being first-to-market with a startup in a budding market should not be overlooked.
3. Technology flaws are ok
The pervading goal of almost all Russian startups I know is to be successful in the United States. Most of it is economic – it’s the largest market with the most money to spend on technology. But it’s also symbolic – the pulse of startup culture still beats through Silicon Valley and the glamour of being successful in the states is an unavoidable motivation.
But the United States is also unforgiving. Most tech startups have one chance to launch stateside and attract initial users or customers. Bugs in the system? Poor user interface? Privacy issues? These are problems many (if not most) startups will inevitably face. The key, then, is to use your own environment to perfect your technology, your sales process, and your marketing tactics. Itching to launch in the U.S., it took patience to go through this step. But after working through the kinks with some of Russia’s largest banking and airline companies, we quickly understood why launching in the U.S. without first finding initial success closer to home would have been disastrous.
Are you a foreign startup that has (or plans to) launch in the U.S.? What do you think is more important: one international launch or multiple launches for different markets?