Translated material
How to earn $1 billion, create a successful business in the USA and where to invest now? First video interview with Victor Remsha
What can a financier and a dating service have in common? Victor Remsha, who is worth close to a billion dollars, could remain a boring stock investor. But then he would not be "Russian norms." 12 years ago, the founder of Finam invested in the Badoo startup, and now he has tens of millions of acquaintances a year on his conscience. Now Remsha lives in New York and invests in financial startups. They are supposed to blow up the banking industry, which, according to Victor, is working completely wrong.
https://www.youtube.com/watch?v=_KoZHs1c0xs&t=28s
Do you know what impressed me the most? Those who managed not to give a single [video]interview. Never tell from beginning to end about how you decided to go into business. I think that this omission should be corrected.
- If we talk about business: since the beginning of the 90s, everyone wanted to try their hand at business. I was probably about 18 years old. Some small speculative operations in the market (not yet in the securities market) could be made. Helped someone. I had a friend, he traded in the market, he had a marketing technique: he poured horseradish to every customer that he bought from him.
Where was this market?
- I myself am from the city of Grodno (Western Belarus), there is also a border with Poland, with Lithuania. All at a distance of 30-40 kilometers. And when the borders more or less opened, all trade, commerce poured through the borders. I think it was called "shuttles", and it still exists today. Border regions are always commercial.
You were a romantic teenager. They wanted to go into space.
- Well, yes, I first ended up in Mozhayka (A.F. Mozhaysky Military Space Academy. - The Bell). At first I wanted to be a pilot. Then there were two higher educational institutions - [at first] I tried to enter the Kirovograd Higher Flight School of Civil Aviation. I got to the exams, there was a professional selection, it was difficult to enter. And a friend who entered Leningrad said: "Let's go to Mozhaika, you like space." They walk around in white coats, there are scientists, space! Then I saw, of course, that it was more of a military institute, it was not entirely mine, although I do not regret anything. I studied there for two years. Then he studied at Baumanka. When I studied at Baumanka, many of us were engaged in business. Business at the time was...
— ...general concept.
- Well, yes, we had a tent there, we sold something there. The first experience, what is the market. We made mirrored showcases, tried to make something beautiful, sold goods and drinks. We tried to do something unusual and new. And next to it was a tent where they sold beer. Zhigulevskoe. They had a queue and turnover, but we had no one. Then we also switched to Zhiguli.
— But with mirrored display cases. (Laughs.)
— The mirrored display cases were partially dismantled because they made it difficult to see the “beer available” or “no beer” sign. (Laughs.)
— It is not very clear what brought you into finance at that moment. In such a complex and not understandable branch of human life.
- Again, interest. [It was] something new. There, then, privatization began, it was some short period of time, when all ties were broken, people began to trade - some kind of wagons, back and forth. But you had to [have] something behind your back to do it. And I didn't have it. Therefore, I went to securities courses, received a certificate. I went and tried to work in one investment company, again on the stock exchange. I had a clear understanding that there was not enough up-to-date information on the market, we decided to make a newspaper “Investor's Portfolio”. They did and did it until [they] realized that it was hard to make it profitable, but the desire to do something informational remained. And then it poured into the Finam website.
— But in the end, you realized, even before you got to America, that the Finam website should be not just a website, but with the ability to trade. The difference between Finam and other information sites is that you gave people the opportunity to trade, do I understand correctly?
- Until now, there are old-school brokers on the phone, applications by phone are accepted, everything is fine. And there was [then] the Moscow Interbank Currency Exchange. And there the trade was [such]: a trader sat with a terminal and applications came, often in writing (sent by fax). Only these people, traders, had terminals. We've made it more accessible. We first bought a certain number of terminals, they cost a lot of money. And each terminal had a trader and a certain number of clients gathered who looked directly at the market, at prices.
What years are these? The second half of the 90s or the first?
- This is about the 99th.
- Did you already understand that this emerging Internet resource opens up a huge space of opportunities for trading and various other things?
- Honestly, no. (Laughs.) There was an understanding that it was interesting and could give something. It was interesting for me to give something, to give open access to the opinions of traders.
- And there was a moment when at the beginning of the 2000s - when everything was growing steeply - you felt: flooded!
- From time to time there were such feelings, but there were always feelings that you need to do [something else] and dissatisfaction with what you are doing. Not everything is perfect. The feeling of dissatisfaction moves: if you are satisfied, then you are already dead.
- And what did Finam earn?
- In fact, initially you need to understand that all this trade - and access, and Finam, and electronic commerce - is pampering. Didn't bring money. Of course, we earned something, bought up shares in the regions (Gazprom and so on), sold them, and expanded our business. And this... when the big guys looked at it and when we went somewhere, like London or even New York, they tried to give access, we [were told]: “Online trading? It doesn't interest us." That is, in principle, it was not of interest then to large houses.
- Your main earnings were in another? Is it about buying up shares of some Russian enterprises, as they said then, to pack them, comb them?
- No no no. These were mainly enterprises that are traded on the stock exchange. After privatization, they ended up in the hands of the population, and [required] some kind of elementary ... no, not elementary, it was also serious work.
"Money appears - and a headache appears"
— And when did you realize that you need to invest in the Internet? What prompted you to do this?
- A person has money - and a headache appears: what to do with them.
- And when did you get the money?
— It was the year 2002-2003. Yukos has already begun to be divided for the second time. I wanted to do something, so as not to participate much in all this, so that you would not be touched. As they said in the army, away from the authorities, closer to the kitchen. Therefore, the Internet. As you remember, then the dot-com bubble deflated, and everyone went around spitting: no dot-coms, never again! We thought it was time to think about it.
- Wait, let's see. What do you think, with whom and who are these "we"?
- There have always been people with whom you can talk, consult within the company, friends to some extent. A person does not sit alone, due to communication you hone your own thought, make a more conscious decision.
- “There is such a good guy, he has earned some money, he wants to invest in the Internet, let's introduce you”?
- Yes Yes. This introduction business (from the English introduction, which can be translated as “official presentation.” - The Bell) is already thousands of years old.
- Do I understand correctly that at that time you met your long-term partner [Andrey] Andreev?
- Yes Yes Yes.
- This is such a famous Internet entrepreneur who created many companies: "Mambu", "Runner" and, finally, Badoo . Can you tell us how you met him?
- On a deal. We looked at the company, went to a cafe. They drew on a napkin and made a deal.
- And what company was it?
It was the Runner.
- That is, he has already made the "Runner" and was looking for money?
- Well, he wanted to go out, he had a lot of different ideas in his head, we discussed it. Then technologies appeared that provide new opportunities, micropayments appeared, these SMS messages. It was completely new, because before that it was possible to earn on contextual advertising and clicks. How else can you earn, this was not actually. I won't go into it now, but the idea was born to make money on micropayments. [Before that] there were subscription models and there were advertising models. Conditionally free models with earnings through the purchase of additional services and micropayments - this did not exist, and appeared exactly from that moment.
- Where did you use it?
- In "Mamba" there were payments for raising the questionnaire to the top.
- A! That is, it was an existing dating service "Mamba". And who guessed to offer people to pay for raising, you or Andreev?
- Lift up - this is Andrei. And I ... No, let it all be his.
- I wonder how you looked at this story as an investor. You, roughly speaking, gave money. Why did you think you want to give money to this?
- They used to think. You have to understand that it was a long time ago and the idea of business was also peculiar. I personally liked [investing] in this kind of service on the Internet - a large audience, an understandable service that is not a momentary fashionable service. And it seemed to me that some other things could be strung on it. In principle, this is how it happened with social networks, with portals that pursued the right policy. The same Mail.ru. They managed to screw a bunch of other things on the postal service, create some kind of their own life, a planet there. It was the right direction. And Andrey then tried to make a social network.
- From Mamba?
— From Badoo. And I liked this idea too.
- There was Mamba, and in 2006 he created Badoo from scratch. Was Badoo the first [project] of its kind?
- In that market - the first, of course.
- Is it a social network or a social network of acquaintances?
— There is a generally accepted concept of freemium dating…
- When the start is free, and then ...
- As we see today in the Apple Store: something is free, but inside there are some payments. Now these are subscription models, but then it was exclusively the sale of additional services inside.
— You know what is very unusual about Badoo, in addition to 110,000 other things? Now it's a network that has 390 million users, 60 million audience a day, you go to Crunchb *ase, [and there] - one round, the final *. This does not happen at all. There is some kind of project, there is a founder, he created the project and all the time attracts money and new partners. You have a completely closed box. There is Finam, there is you, there is Andreev.
“On Crunchbase, there are just special companies. [And] there are many other companies that have generations of owners. Well, we know ourselves: in technology startups, raising rounds is [often] the goal of startups. Many already measure a person's success by how well they have raised the round. We have a slightly different attitude to the whole matter.
How to calmly survive the 2008 crisis and start a business in the USA
— How did you and your model pass 2008?
— And what happened in 2008?
- A crisis!
- It was in 1998, and then. Well, crises do happen, that's okay.
“A lot of people have lost money. Everything collapsed. And you have a startup that is only two years old. It was small then. badoo .
- Investments lived their own lives, all these companies felt fine. Where there are micropayments, companies are best able to cope with the crisis. The brokerage business... it also does not depend much [on crises]. I would put it this way: by 2008, I didn't understand why 2008 didn't happen earlier. It seemed to me that everything was wrong before [done]. It was too big an advance to Russia and Russian business. All the investments that we received in the 1990s and 2000s were adventurism, mainly from foreign investors. I didn't understand this boom in the real estate market at all in the absence of any movement in the right direction. 2008 is like a trigger that exposed unresolved issues.
- Nevertheless, you then left the Russian office and went to seek your fortune somewhere in the world. You then continued to earn in Russia?
— Well, firstly, if we trace the evolution of consciousness... When we came to New York in 2001 or 2002, when we tried to find some options for our business, we were told: come to us, come, let's do business . We answered: you are bored, uninteresting, everything is cooler in Russia.
- Then in Russia everything was energetic. Everything seemed to start.
“These were advances to a young student that he would grow into a serious professor. Everything was moving there. Life was seething.
— Dvižuha.
There was movement, yes. And then somehow gradually the movement went somewhere in a different direction. And it began to seem that something was not right.
- And when did you feel it?
Probably 1995 or 1996. When everything was pearling, I did not understand what it was, why.
When did you decide for yourself that it was time to expand, to look beyond?
- And always. We have always looked.
- What was it?
— Internet companies.
— Foreign, international Internet companies?
— Companies that, among other things, were engaged in online advertising. We entered these markets and achieved some success when there was an understanding. As one good friend of mine said, when you start a business in another country, you don’t need to spend money, because everything you spend in the first years in this business will be lost money, and there is no point in focusing on it. After a while, understanding, a sense of the market, the country will come. You come with your own ideas, but people have their own history, their own companies that once existed offered some kind of services. People tried some services, they liked something, they were disappointed in something. They have accumulated experience that you do not know.
— What exactly happened in 2014 that you took and registered a fund called FinSight Ventures?
— By this time [there were] various scattered investments. I wanted to streamline myself and all this economy.
- Fintech?
- Fintech.
- You say “we”, in FinSight you, unlike Finam, have a partner in this American company.
— Yes.
- And his name is?
— Alexey Garyunov. Hi to him. (Waving hands.)
How did fate bring you together?
- We invested in Begun, and then invested. Since he runs this business better, knows how to make deals better, we have such a right partnership.
- He makes deals better, and you give money better?
- And I'm from the point of view of analysis, evaluation. The history of transactions, investments, it is positive, so why not?
- And at what point did you decide to physically move [to New York], move? Do you spend most of your time in the States? And we are in the FinSight office, right?
- I decided to move physically in the year, probably, 2005.
- And when did this happen?
- In 2014. This is the same process: you move, you start flying back and forth.
- Did Crimea influence [business] or not?
- The question is interesting. We were already here when the Crimea was and everything else. Crimea influenced something else: it became even more difficult for Russians to do business.
— Here? And what has become even more difficult to lead?
— First of all, we are in the financial market. We invest and so on.
— Origin of money?
- Of course. All these compliances - they have become monstrous. It’s probably a little easier now, because immediately after [Crimea] there was hopelessness, everyone said that everything Russian should be hidden and not shown at all.
- And when did you first appear on the Forbes list?
Well, lists and lists. I don't know. I don't follow.
Let me explain why I'm asking. You are very lucky to be on the Forbes list in the right place. That is, you have $50 million less than a billion.
- Forbes knows better.
But does it look like the truth?
— I am not finishing my work. Do not count your chickens before they are hatched. When I finish, I'll retire, then we'll count.
- On retire? Taking into account new trends? How old are you - 47?
- We still have to work.
How to build successful internet projects in the USA
- Can you name your five most successful projects in America or globally that you did when you focused on international markets?
“I haven't done anything yet.
“Wait, I posted here. Earnest Student Loans is the fifth investment in alternative lending in the US. Lending Club - lending between people (peer-to-peer), this is not a very successful story.
Why? This is a good story. This is where it all started. We just exited this investment.
— I will explain to the audience why this company was promising. She placed shares: at first, one share was worth $24, then it rose a little to $26, and then everything went wrong, and now the share is worth $3-4. And the CEO and the founder are generally in prison.
- It happens. Companies have their own cycle - there is a phase of birth, flourishing and death. When we invested, we perfectly understood where we were investing. But we thought that the cycle would last a little longer.
- Lending between people?
- No. Here we are talking about the fact that after the crisis of 2008, when banks actually left the lending market, a certain field was vacated. Such companies appeared on it, they grew, there were few of them on the market. But we understood the cyclicality of the economy and the fact that banks with cheaper money would gradually come in and that the quality of loans would become worse. These are natural things.
— What is the quality of loans?
“This is how borrowers give back money. We looked at their systems at the very beginning, when we arrived and met Renault.
Renault is the founder of the Lending Club. It was the most promising fintech startup, worth billions of dollars in 2014.
- It was estimated at about $ 1-2 billion. Everything was much simpler here than in Russia - there were practically no IT systems, scoring, and delays.
- When investing, did you believe that this would turn out to be a new big bank?
- There was such a thought. Large banks are created infrequently and cost a lot. Now in this market there are companies such as Sofa, which go for banking licenses and turn into banks. They are pumped up with credit mass (peer-to-peer, student loans) and receive channels to attract new customers. In principle, this is a direct path to the creation of a bank. But it's okay, there are other interesting projects.
- With this “it’s okay” you want to say: “Once you screwed up - it happens”?
- We came out without losses, and many of our people had successful investments (both the first and subsequent ones). We developed because we had our own understanding and did not have such templates as our foreign partners. Why is it being said that business schools need to be dispersed? They teach patterns that don't work, but you have to work without patterns. If you work according to templates, it turns out that Yuri Milner did not need to invest in Facebook, because there were no other investors who, according to such an assessment, could buy such a company. But it wasn't a pattern.
- This was not a pattern for Facebook either.
- Yes, but no one gave money. Now I think a little differently: at certain points you need to do not follow a pattern, but in the long run, the right patterns work. All the time to work not according to the template is also wrong.
— Do you have a favorite promising startup that you believe in? Not necessarily a startup - a project?
- I don't want to name. I don't want to jinx it.
Are you superstitious?
- (Laughs.) Think so.
Can you describe what it is about?
“I like things that make people say “wow!” when faced with it. I want to achieve this wow effect. I am not going to be engaged in fintech all my life, only for a certain period of time. Fintech was formed because of what? Due to the fact that banks could not quickly adapt to the new opportunities provided by technology. And they could not, not because they were stupid, but because they were big.
Banks are a huge code, a huge number of systems. Banking regulation appeared everywhere, banks, in fact, were turned into policemen. The 2008 crisis gave fintech an opportunity to enter the market. In general, I think that banks are wrong and bad.
- In terms of?
- On the fingers - how crises occur, how it all happens. There is an enterprise, it wants to grow, the entrepreneur borrows money from the bank, and he is sure that he will pay it back. An entrepreneur is generally an optimist.
“Otherwise I wouldn’t be doing it.
But life, unfortunately, is not entirely rosy and optimistic. The enterprise that the businessman "grows" faces crises - in the country or at the enterprise. Previously, this enterprise was integral (a plant, for example), and it gradually flowed into a bank. And so the banks grew.
- Overgrown with enterprises, banks grew.
“Today the situation is different. An enterprise is a living organism, people, intellectual property, connections. The bank cannot take it away and continue to produce it. The company is likely to be destroyed. If the bank does not receive many loans from such enterprises, it may burst. And so on the chain.
- All victims.
- Yes. If we imagine the situation that the ultimate holder of the debt is still a person or a group of people, then why does the enterprise go bankrupt? Because people run to banks to withdraw money, because they are afraid that they will not get anything. In order to give money to people, the bank must bankrupt this enterprise, take it to the balance sheet or take some money out of it. And everything goes down the chain. But, if I know that my duty and the enterprise are alive, I do not have such urgency. I can survive this crisis. I'm in a stock, and I don't have to rush to sell this stock and close the position, because the stock can go up. And there is a significant chance that the enterprise will survive. Will work successfully and I will get my funds back.
— Victor, so you are an idealist.
- Certainly. Therefore, I believe that this system should be a little different. And fintech is making these changes. And this seems right to me.
“Crypt is a different reality”
— Victor, a completely sideways question. I often meet here Russian investors whose eyes burn with only one word - crypto. And you?
- And I specifically, and we (FinSight) have been looking at this case for three or four years already - this is quite a long time by the standards of the crypt. During this time, a lot of things have changed for me.
But now I have a feeling that the crypt has taken place and it will remain for a long time. As one person said, if you think about the fundamental component of the crypt and make decisions based on this, then you need to forget everything that you knew before.
Although there are several concerns. The first fear that I myself have is that the number of people who adhere to the reality of the crypt is still limited. The idea turned out to be so driving and absorbing that it very quickly sucked this flow of people into itself and showed growth. How will it be next?
The second concern concerns regulation. Although they say that it is impossible to "strangle", but if you really want it, then it can probably be done. There is no big threat yet in the USA, they are trying not to “strangle” it. If a big threat appears - security or something, then they can interfere.
— You know, one of my acquaintances, a banker, expressed an idea that might seem close to you. He said that blockchain and cryptocurrencies can bring together potential investors and ordinary people who participate in loyalty programs in relation to some companies. Relatively speaking, if Starbucks issued a crypt, then instead of a loyalty card - which in essence is the interchange of money and bonuses - I could get a crypt.
— A large number of people wanted to try themselves as investors and invested in various ICOs. To some extent, it will continue to exist. This is an easy way to invest without problems, if we are talking about small amounts. In principle, there are many angles from which you can look at it. But this seems interesting to me.
"In America, people don't stress anymore"
— Is there anything that puts Russian investors in a special position? Why are they so concerned about this topic? Hypertrophied. American investors are not crazy about crypto.
— They don’t, because, firstly, they have their own tools for risky investment. And to be frank and honest, one friend told me: “Don't think that the Americans will use what Russian investors will use - some individual means, analysis, and so on. This is used by the Chinese, Russians - who have a good mathematical school. And in America they use simple methods.” In general, it is best to give money to trust management - and there will be income.
Is this the theory of the superiority of developing nations over developed ones?
- Some nations are beginning to live for their own pleasure, while others have not yet reached this level.
- Do you think that in America you can relax? I didn't think so.
- If we talk about the discoveries that I made, then many are connected with people. The biggest disappointment - when I was driving, I thought that in America, in New York, you can find any people and solve any problem, but this is not so. Let's take a simple example - you need to rebuild a house and hire an architect. I suffered with one for a year, I had to take another, although in Russia all this happened simply and quickly. And I thought: am I such a loser? And one of my good acquaintances says: the architect is normal, he graduated from the university and went to work on large objects, and rebuilding your house is for the most losers. People who can do something immediately fly away. When the market is big, these people fill the whole market. And it turns out that the quality of services suffers.
- You said that at the end you should always talk about dating, because this is an endless topic. Can you answer me why people don't meet on Facebook, Snapchat, Instagram, why do they need other services for this?
— People meet everywhere — both on Facebook and on forums. You can buy bread in the supermarket and in the bakery. People use what is convenient for them. We understand that online dating is the main channel for finding people, meeting people, even starting a family. Everyone uses what he can.
- Are social networks with us forever or will there be something next?
— Internet giants are with us for a long time. The formation of open interest from users and the creation of sustainable habits has already happened. And if these companies do not make big mistakes, they will hold their place for a long time. They have become smart and sophisticated. Such companies may still appear, but rather rarely.
- Now I understand why you are looking at finances, and not at the Internet.
- I look at what interests me.
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