Co-founder of Parallels
Parallels’s business has been west oriented from the start. The reasons are very simple: we had no choice. We started in the early 2000s, when two topics were very actively discussed in the West - Linux and ASP (Application Service Providers; then these were web hosts, a bit later service providers, now they are called cloud service providers). At that time in Russia the number of clients of all web hosters barely reached 10,000, while the average western hoster had 50,000 clients. If we offered our system to all domestic providers, we could not even pay back the development. Thanks to the experience gained by me and other founders in Solomon and Pervasive in Southeast Asia, we were versed in commercial software development, marketing, customer service and sales channels. Therefore, we had no thoughts that we need to conquer some other market besides the USA.
Only at the end of 2009 we decided to catch up and went to our homeland odyssey. The domestic IT market is a few percent of the world. This is true for hardware, software, services. But it all depends on the company's turnover, on the size of its business: a few percent of a billion dollars no longer seem like modest money. We had to sell on the Russian market what we sell around the world.
The first problem was software piracy.
Over the past 10 years, the situation has changed dramatically, a legal software market has formed, but the level of piracy was extremely high - about 60%. Part of the Parallels business focused on private users suffered from this. Therefore, we had to play the role of fighters with these pirates, unusual for us, to cooperate with the “Russian shield”, which blocks product keys that appear on the Internet, participate in various events, calls and so on. If in the West, due to the greater elaboration of legal and financial issues, you should not take care of pirates - the system is busy with this - then in Russia you need to take part of its functions on yourself.
Another important difference: in the USA, once in the Apple channel, it is enough to develop it. It seems logical there that resellers try to offer the widest possible range of goods and services, one way or another connected with the main sales brand. And in Russia there is no retail representative, we have Apple Premium Resellers - single-brand, but not Apple-owned stores. There are several of them, and all of them earned several times more on ordinary accessories for Apple technology than on the software that we offered them.
For example, we could not agree with re: Store for more than a year and a half. They managed to sell the idea only when they realized that Parallels Desktop for Mac was not a tool for earning money in itself, but a way to increase laptop sales (in 2009, 99.9% of Russian Mac users were Windows switchers, and our software took away the headache of absence Mac for popular Windows counterparts). Then other “buns” for the reseller aimed at increasing the margin from one sale — marketing campaigns and other mechanisms that are basically impossible in the USA — were already used.
The same goes for online sales. We do not have the wonder company Digital River. It was necessary to negotiate with the local Softkey, Allsoft, sales through which cost us more than through Western counterparts. But in the end, cooperation with them brought us great marketing agility.
However, these features could not be compared with a purely Russian chip - the dependence of success on personal relationships with potential B2B customers. It is this specificity that makes many argue that the MBA in Russia does not mean anything, it is important to be able to drink on time and, as Dostoevsky wrote, “to hug morally.”
Another "plug" covered
In the world, only Russia and China do not use global accounting standards. At the same time, our automation platform had billing functionality - that is, we had to re-cut accounting under domestic rules. Additional development cost $ 200,000-300,000, although there were no customers yet and no one agreed to pay for future functionality.
Plus, we, a high-tech company, had to recruit people who track changes related to financial reporting in Russia. This could be considered as part of the work related to the localization of the product, but in total all these movements resulted in more than $ 1 million of investments (sales at that time amounted to about $ 2 million).
In parallel with this, we struggled with the immaturity of the ideas of service providers about what cloud services are. For more than three years, we did not sell solutions, but business models, drew investment plans. And then, as in the famous joke about the connection between the lack of sex and acne, there are no sales yet, and customers say: show us local stories. Therefore, the first contracts with large hosters and telecom operators (Reg.ru, Ru-Center, RTK, Megafon) became critical for promotion at home.
Was the game worth the candle? Do Odysseys need to return to their homeland? Undoubtedly. In the several years that have passed since the beginning of the active hostilities of Parallels in Russia, our local business has grown rapidly. Yes, this is growth from scratch, but looking at absolute numbers, we are satisfied with the work done.
Those who want to return to the Russian market should not forget an important detail: Russia is the gateway to the CIS countries. You can cover a very large market. However, I would caution company management against extrapolating work experience in other countries from the forehead. Russia is still special to become.
Take and do
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Illustration: Sergey Rodionov