Selling a Startup to a Giant: Advice from the Founder of Worki

Contents:

• How to Create a Startup Attractive to Investors
• Innovative Project: Financial Support for Blue-Collar Workers
• How to Find Funding for a Startup
• How to Succeed During a Pandemic
• Advantages of Startups Over Corporations

How to Create a Startup Attractive to Investors

Pavel, the founder of Money Forward, has significant experience in launching startups. One of his notable projects is Worki, which has become an important stage in his career. At Worki, Pavel implemented innovative solutions to optimize work processes and increase team efficiency. The experience gained on this project allowed him to better understand market needs and shape his strategy for future endeavors. Tell us more about how previous projects have influenced your current work.

My journey into the startup world began in 2009 with the development of an online acquiring platform. At the time, accepting online payments was a significant challenge. Our team, Bongo Research & Development, pioneered this field, creating one of the first online payment systems. Over time, we launched many projects, focusing on commercial development, but back then, the term "startup" wasn't yet in common use—everything was simply called a project. In our pursuit of innovation, we laid the foundation for the development of new technologies in the field of electronic payments, which subsequently opened the door for many successful startups in this field.

Initially, our company did not have a clear specialization and covered various areas, including acquiring, developing solutions for customs services and the restaurant business. However, over time, we decided to focus on financial technologies. During the process, some ideas did not find application, while others were successfully implemented and sold, which allowed us to strengthen our position in the fintech field.

Worki became an important project for our company. Development began in 2016, but it was not a high priority at first. In 2017, when difficulties with banking licenses in the fintech industry arose, we decided to focus our efforts on Worki. By increasing investment and resources, we were able to achieve significant results in a short time.

Worki is a multifunctional platform designed to optimize workflows. It offers users a wide range of tools for task management, collaboration, and project organization. Key features of Worki include task planning, setting deadlines, assigning roles, and monitoring progress. The platform also supports integration with other popular applications, allowing users to create flexible and adaptive workflows. Worki is suitable for teams of various sizes and industries, providing a user-friendly interface and access to analytical data to improve work efficiency. The idea for the Worki platform arose from the recognition that many existing job search sites, such as Avito and HeadHunter, have complex interfaces that hinder the search process. Waiters, electricians, plumbers, and other professionals with secondary education often experience difficulties using these services. Worki offers a simplified and convenient job search experience, aimed at users who want to quickly and effectively find suitable vacancies without unnecessary complications. Long resumes, lack of responses from employers, and a large number of irrelevant vacancies created significant barriers for job seekers. We've developed a platform with effective geolocation, allowing users to find jobs close to home. We've simplified the resume creation process to 20 seconds, making it accessible to everyone. We've also focused on mobility, which has become a crucial factor in our success. Our platform provides a convenient and quick job search, significantly increasing your chances of finding a job.

Our team quickly implemented the Worki service concept, allowing users of all ages, both young and old, to appreciate its benefits. As a result, Worki quickly gained popularity among users.

Creating a high-quality product is only the first step. Integrating it into the strategies of companies willing to acquire it is equally important. Yandex, Mail.ru, and Sber remain key players in the Russian market. Therefore, the opportunity to sell the product to other market participants is significantly limited.

Two years ago, you successfully completed the sale of Worki to Mail.ru Group. Although the deal amount was not disclosed, according to Mail.ru's annual report, the holding spent 2.1 billion rubles on three assets, including Worki. Did you initially plan this project with the goal of selling it, or did you receive a favorable offer during its implementation?

I don't see a sale as the end goal. My primary focus is on working on the project, and I cannot determine in advance how it will develop in the future.

Creating a high-quality product is an important step, but its success depends on its alignment with the target audience strategy. If the product doesn't solve customer needs, the likelihood of its sale is significantly reduced. An effective approach is to develop a high-quality product with an emphasis on its self-financing or rapid monetization. This will not only attract consumer attention but also ensure a stable income stream. Integrating marketing strategies early in development will help better understand market needs and tailor the product to customer needs, which will ultimately increase its competitiveness.

Worki has proven its effectiveness, resulting in partnership offers from major companies such as Mail.ru and Yandex. Our success attracts the attention of leading market players, confirming the high level of trust in our services.

The transaction process includes several key stages, from initial negotiations to the signing of the contract. It is important to understand that along this path, a startup needs to be prepared and confident in their actions. Negotiations often require flexibility and listening skills to find common ground and reach a mutually beneficial agreement.

A startup should research a potential partner, their business, and interests in advance. This will help them better understand which arguments will be most persuasive. During negotiations, it is important to remain open and honest, but you should also clearly defend your positions and boundaries. Successful negotiations require not only good preparation but also the ability to handle objections.

It is also worth paying attention to the communication atmosphere. Building a trusting relationship can significantly facilitate the process. It's important to remember that a good negotiator doesn't just talk; they also actively listen, which helps identify the other party's needs and expectations. Closing a deal isn't just a formality; it's the beginning of a long-term partnership, so it's important to strive to establish a constructive dialogue. Building a network of contacts with potential buyers is a key aspect of a successful business. Social media provides an excellent opportunity to identify clients who share your values ​​and approaches. Understanding a company's corporate culture will help you establish deeper and more productive relationships with clients. Use platforms to actively engage and network, which in turn will lead to increased sales and a stronger brand. Create competition, even if you have a limited number of offerings. It's important to create the impression that you're taking your time making a choice, which can increase buyer interest. Clearly articulating your interests and requirements is also crucial. This will help establish trust and attract more clients, who will appreciate your transparency and confidence in the selection process. Selling a company is a process that requires careful preparation and a strategic approach. It's reminiscent of the events depicted in the movie "The Wolf of Wall Street," but it unfolds more smoothly and without unnecessary excesses. The key is the constant development of the business, which allows potential buyers to see its value. It is necessary to convince them that missing the opportunity to acquire the company now means leaving it to competitors. Therefore, demonstrating growth and successful project results plays a crucial role in the sales process.

Innovative project: financial support for blue-collar workers

The idea for "Money Forward" arose from an in-depth analysis of existing financial models and user needs. We sought to create a unique product that would not only solve current financial problems but also inspire people to manage their funds wisely. During the development process, we studied numerous successful examples and adapted best practices to offer effective solutions.

At Worki, I regularly communicated with line staff and noticed many of their problems. Frequent job changes and vulnerability to employers are a reality faced by many employees. These circumstances create instability and uncertainty in their professional lives, negatively impacting their motivation and productivity. Support and attention to the needs of frontline staff are becoming important factors in creating a more resilient and productive work environment.

By that time, I already had experience working in the fintech industry. I was familiar with the DailyPay service in the US, which allows workers to receive their salaries at any time as they work. In 2019, everything came together: accumulated experience, a team of like-minded people, and a desire to help people formed the basis for a new project. We aimed to create a solution that would change the approach to salary payments and provide financial flexibility for workers.

The "Money Forward" program is a financial instrument that allows users to access the necessary funds as quickly as possible. It operates based on a simple and straightforward mechanism: an application for financing is submitted online, followed by an assessment process. It's important to note that the program is designed for a wide range of users, including entrepreneurs and individuals.

After submitting an application, financial experts analyze the information and make a decision on the allocation of funds. If the application is approved, the funds are transferred to the specified account, allowing clients to quickly resolve emerging financial issues. The "Money Forward" program is distinguished by its convenience, transparent conditions, and high level of accessibility for users.

The benefits of using the program include minimal document requirements, fast application processing, and the ability to receive funds without unnecessary delays. This makes "Money Forward" an attractive choice for those in need of fast financial support.

The cooperation process is simple and convenient. We provide partners with software that easily integrates into their systems, including 1C. After this, we enter into an information exchange agreement. At the initial stage of cooperation, no financial investments are required.

We are pleased to announce the launch of a new non-material motivation program for our employees. Now you can access your earnings any day, without having to go to microfinance institutions, borrow from friends, or use credit cards. This initiative is designed to improve financial flexibility and maintain your motivation. If you're interested in participating in the program, please join us!

You can join the program either through the mobile app or directly in the office. If you apply in person, you must submit a paper application to the accounting department. We closely monitor information about all program participants. For example, as of May 25th, an employee had accumulated 17,845 rubles, which can be transferred to their salary card.

We transfer funds from our own funds and charge a fixed commission of 99 rubles for each transaction, regardless of the amount. Our service is free for employers, although some companies choose to cover the costs of their employees. This is especially relevant in regions where recruiting is more challenging compared to large cities.

How is your project progressing? How many clients are you currently serving, and what financial indicators have you achieved?

As of March 2021, we served over 400 corporate clients, and our client base is growing by at least 15% monthly. We continue to actively develop our services and attract new clients, which demonstrates stable growth and trust in our company.

How to Find Funding for a Startup

Finding investment for a startup is a challenging task, especially for high-cost business models. Effectively raising funds and attracting investor interest in your project requires a strategic approach. It is important to clearly articulate a unique proposition, demonstrate growth potential, and create a detailed business plan. You should also pay attention to building a network of contacts and actively participating in startup events, which will help you find partners and investors willing to support your idea. Your goal is to convince investors that your project has a high probability of success and can generate significant profits.

Our business model effectively mitigates risks, allowing us to closely monitor employers' financial flows, including layoffs, fines, bonuses, and maternity payments. We ensure a short transaction cycle - the turnover does not exceed 14 days. This allows our clients to receive their salaries twice a month and use our service three times on average. This means they contact us when they already have earned funds, making our offer even more attractive and convenient for businesses. Our system is designed to optimize financial processes, which improves Cash Flow and enhances clients' financial stability. We actively present this information to potential partners, demonstrating our service as a reliable investment tool. Collaboration with major banks such as Tinkoff, Alfa Group, and MTS provides us with financial flexibility and market stability. This creates additional guarantees for our clients and strengthens trust in our services. Our goal is to provide safe and effective investment solutions, making us the ideal partner for those seeking reliable investment opportunities. The question of why the payday lending niche remained unoccupied until 2020 is generating considerable interest. While this practice existed in the USSR, no one in Russia in the post-Soviet period has attempted to commercialize this idea. The reasons for this may be varied. First, it may be due to the population's insufficient financial literacy and a lack of demand for such services. Second, the lack of a technological infrastructure that would allow for the implementation of such financial solutions may also have played a role. Third, the large number of financial institutions focused on lending may not have seen any prospects in this market segment. Finally, cultural and social factors may also have influenced people's perceptions and willingness to seek such assistance. Only since 2020, amid a changing economic climate and growing interest in alternative financial services, has this niche begun to actively develop. Legislation permits daily salary payments, which was also relevant several years ago. However, the implementation of such solutions faced numerous difficulties back then. Today, thanks to technological advances, daily payroll services have become accessible and convenient for employers and employees.

Our product development is based on advanced technologies and effective financial management. We handle large volumes of funds, introducing a new approach to the market and demonstrating to companies the legitimacy of our service. We have all the necessary legal documents confirming the legality of our activities, and our work has been audited by tax authorities. This challenging path helps us establish a stable position in our niche. We strive for transparency and trusting interactions with clients, which contributes to the development of our business and strengthening its reputation.

How to Succeed During a Pandemic

The COVID-19 pandemic and the associated economic crisis have significantly changed the business landscape. It is important to ask yourself: have you been able to adapt to the new conditions and achieve growth during this difficult period? Successful companies found ways to rethink their strategies, implement new technologies, and optimize processes, enabling them not only to survive but also to thrive. Adaptation to change and a willingness to innovate became key factors for success during the crisis.

Our company began operations in December 2019, when the first reports of coronavirus from China began arriving globally. In Russia, most people didn't take it seriously until March 2020. During this period, we managed to connect our first clients and gather initial market data. However, at the end of March, large companies with whom we were negotiating suspended cooperation, citing the need to address non-working days and the departure of migrants. This crisis presented us with a challenge, but also an opportunity to adapt to new conditions and rethink our strategies.

The situation remained tense until August, when many businesses were unprepared for new investments. However, in August and September, a new wave of hiring was observed, caused by a shortage of migrants. Companies began actively seeking innovative ways to attract workers. In this context, the ability to receive daily salaries became especially important, as it did not increase personnel costs. This strategy allows employers to attract and retain employees, which is especially important in a competitive environment.

Despite the crisis, we demonstrated significant growth, increasing the number of clients from two in December 2019 to hundreds by the end of 2020. This success confirms our ability to adapt and develop even in a challenging economic situation.

What are your plans for 2021? Do you intend to expand your business geographically or introduce new services?

We are preparing to launch partnerships with leading Russian companies, which will allow us to expand the range of services offered. Our main goal is to provide users with access to all the necessary services through our platform. For example, why transfer your salary to a card when you can instantly order food from Yandex.Food or buy medicine at a pharmacy using Money Forward? This creates significant opportunities for users and opens up new horizons in the market.

The infrastructure for implementing this solution is already fully prepared. We are currently in the final stages of coordinating with our partners for the successful launch of this system. This will allow us to effectively implement the solution and ensure its smooth operation, which will positively impact customer interactions and improve the quality of services provided.

We are actively exploring international opportunities and are already collaborating with a reliable partner in Kazakhstan to launch new projects. We are also negotiating with companies in Ukraine and Belarus, which opens up additional horizons for our business.

Advantages of Startups vs. Corporations

Creating a startup instead of working for large corporations has many advantages. Firstly, startups provide a unique opportunity to realize your ideas and vision without being limited by the rigid framework of a corporate structure. Secondly, working in a startup implies greater flexibility and speed of decision-making, which allows you to quickly adapt to changes in the market.

Furthermore, startups often offer a higher degree of involvement and responsibility, which contributes to personal and professional growth. Unlike large companies, where employees may feel like just a part of the machine, in startups, every team member has the chance to make a significant contribution to the common cause.

It is also worth noting that startups can provide opportunities for financial reward, especially in the case of successful business development. Participation in a startup can lead to significant income if the project achieves its goals.

Thus, creating a startup opens doors to innovation, professional development, and potential financial success, making this path attractive to many ambitious people.

Independence is a key aspect of working in a startup. It offers a unique opportunity to experiment with new approaches, change directions, and even move to new locations. Startups create the ideal environment for those who value freedom of choice and want to develop in a dynamic atmosphere. Working in such an environment allows you not only to realize your ideas but also to actively influence the company's development, making every day new and exciting.

If VKontakte had been developed at Mail.ru, it might have taken approximately ten years. However, startups have the flexibility to quickly adapt to market changes and respond to new challenges.

The second key aspect is the team. In large corporations, you often don't have the opportunity to independently choose your colleagues, as they are appointed by management. In startups, you have the unique opportunity to form a dream team in which everyone shares your values ​​and vision. This not only creates a more productive work environment but also contributes to the achievement of shared goals and the successful development of the business. Building a team based on trust and shared interests plays a crucial role in a startup's success.

The third key aspect is the speed of change. Startups have a unique ability to quickly adapt to new conditions and implement innovative solutions. This not only allows them to take a leading position in their niche but also significantly outpace their competitors in the market. The rapid transformation of reality gives startups an advantage in developing new products and services, which contributes to their successful development and growth.