Russian entrepreneur Konstantin Rodchenko: “France is one of our main priorities today”
Are you a Russian startup willing to go global? Find an inspiration on how a Russian startup entered the French tech market!
Why foreign entrepreneurs choose France? How La French Tech helps startups in the field of technology? Discover our exclusive interview with Konstantin Rodchenko.
Recently, French Tech Moscow was hosted by Konstantin Rodchenko, CEO & Founder of LOYALME (a software company that manages comprehensive Loyalty Programmes and CRM). Graduate of INSEAD’s Global Executive MBA, Konstantin is nowadays a successful entrepreneur who shared with us his own experience of doing business in France as well as tips that help startups better prepare to install in a new environment. Konstantin is also an example of a hard-working person, who does not give up when faces difficulties while doing business.
- Konstantin, could please tell us more about LOYALME? What were the recent changes that occurred in your company?
LOYALME was founded in 2010 in Russia, initially, as a consulting company. Back then our focus was on Loyalty Programs and CRM (Customer Relationship Management) projects for large brands: Estée Lauder, LVMH, Unilever and L’Oreal Group. At some point we noticed that certain elements of our services can be automated and since then we have been making a pivot to build a software product.
Recently, we have had to cut our workforce to focus on software business, so now are only 10. Most of our employees are strategy and technology experts as we keep a balance between product and consulting business. We also have a few part-time people in the U.S., Europe, and Asia.
Our technology, a Customer Loyalty Cloud, is used by established brands to automate Loyalty Programs or CRM initiatives. Apart from our office in Moscow, we have opened offices in New York and recently in Paris.
- Excellent! How did you come up with the idea to expand your business abroad? Why France?
To open an office in Paris was a very natural step for us: we have had several reasons. First of all, most of our clients have significant presence in Paris (such as Dior or Guerlain), meaning that being in close proximity to them is strategically important.
Secondly, as an alumni of INSEAD business school I have great connections in Europe, especially in France, so it was very logical to leverage because connections are important for business development.
Lastly, new initiatives of the French Government, including La French Tech, made it highly attractive to enter a French market, made it even sexy for startups.
- How did you find out about Station F? How this experience was useful for you and LOYALME?
Station F is one of the brightest symbol of a new commitment of the government to create a good ecosystem for entrepreneurs in France. The moment I found it was rather unexpected, I did not do any research in advance, I just randomly noticed a web site. Then I learned more about this project and realised that it might be helpful.
We joined Numa Accelerator based in Station F (a French subsidiary of Numa Accelerator) and spent there about six months. During this period we managed to polish our positioning, learned a lot about French market, found an investor and many new friends.
- Konstantin, you mentioned you were accelerated by Numa in France. What steps were undertaken by Numa Accelerator to help your startup advance on the French market?
First, they look at your position and challenge it. The goal is to make sure that what you do is not an attempt to “copy — paste” your previous experience in another country and apply there without adjusting it. Then they craft your positioning to better adapt to a local market.
Besides, they introduce you to investors in Europe and help you start your first interactions with potential clients as well as they give feedbacks whether clients are interested or not in your product. These steps are difficult to implement without a local guidance and we benefited from their support a lot.
- It is great, but what if we look from another angle? What were the difficulties that you faced during your first year in France?
A French market is not massive, at the same time it has great engineering traditions. That is why competing against local startups is very serious (not only for clients, but also for investors’ money).
Language is certainly one of the barriers. Though most of our clients speak English, dealing with SMEs requires a local representative fluent in French. Hiring locally, especially when you would like to save your cost, can be problematic, as in our case, a junior specialist did not speak English, so I had to translate a lot to connect the dots between France, Russia and the USA.
Because of some government incentives, for French investors it is extremely important to make sure whether you have any IP or product headquartered in Paris. Paris should become the centre of your business. Also, they might expect you to open a headquarter in France. At the same time, it’s not the best market for taxes… These were the main barriers for me.
The cultural barriers were not that significant for me as I did the Global Executive MBA at INSEAD in France and I learnt a lot in advance.
Unfortunately, I do not speak French…I think I had three attempts to learn French but… just the way you pronounce 92: four times twenty plus twelve (laughing)…
- But despite these difficulties, is your business successfully developing at the present time?
“Currently, I am very proud with our portfolio. Being a small startup with no serious funding we managed to sign long term contracts with beauty giants like L’Oreal Group, LVMH, Estée Lauder and other brands.”
Even though we were making progress as a consulting business we have realised that in order to focus on software business and grow it we had to “let go” the consulting part. It was a bold move that cost us 70% of the revenue as well as our workforce to focus on one big thing. As a result, we have already enjoyed higher profitability with new projects.
- Have you benefited from French Tech Visa and other programme tools provided by La French Tech?
Unfortunately, the moment when I applied for Numa acceleration, I think it was last year of Numa and La French Tech collaboration in Paris. We were too late, so we could not benefit from it. Next time I will be definitely using this opportunity and apply for French Tech Ticket. I think such tools like French Tech Visa and other instruments that La French Tech offers are great examples of what the other countries can follow.
- What are the goals you aim to achieve in the near future?
Firstly, our product is currently being upgraded with a new beautiful interface. We also working on a number of features powered by Artificial Intelligence that will help our clients get better results from loyalty programmes.
Secondly, most SaaS startups are chasing one particular KPI which is MRR (Monthly Recurring Revenue). Thus, everything contributing to a growth of this number is our priority today.
Lastly, we are resuming our business development outside of Russia. With new, clearer positioning as a software company, we have attracted attention of a number of investors with whom we discuss potential collaboration. Taking into account all these perspectives we are entering a French market again and looking forward to having great results.
“Two our priorities today are the USA and France. There are a number of reasons why we choose these particular countries.”
- Great! What advices could you give to entrepreneurs who are willing to set their business in France?
▶ I would start with that one should never underestimate cultural differences. I was lucky enough to prepare myself for a multicultural environment; however, for others it might be a serious barrier. It can be difficult to do a business when you are not aware of cultural differences. Even though Russia and France have many similarities, still we should know local specifics. I can recommend to read the book “The Culture Map” by Erin Meyer. This is an amazing book that will guide you how exactly to prepare yourself for entering to a new cultural market.
▶ Ensure you have enough resources to last long: decision-making in France is not fast. Try to embrace “Joie de Vivre” concept (laughing), enjoy the process to run your business. It is not quick.
▶ Avoid emotions while deciding to move to France. It should not be your motivation. Having a business in France is not the same as travelling in France. The market has its disadvantages and decision-making should not be clouded by Paris’s beauty.
▶ Learning French will be very beneficial, preferably with a native speaker. In my experience, speaking French is a serious advantage.
▶ Last but not least, it is extremely beneficial for startups to join a good accelerator in France that partners with La French Tech to get a visa, or a feedback very quickly. It also prevents from a mistake to apply same method from an another country to a French market. Just make sure it is a good accelerator.
- Thank you Konstantin! Do you collaborate with other tech startups related to your business under the French Tech label?
Yes, we are very close with what Yannick Tranchier and his team do (note: Yannick Tranchier is a French entrepreneur, Founder at MEF, Founding Partner at Numa Moscow, General Manager at Ob’vious, Board member of French Tech Moscow).
Everything he does, all the connections and experience he has in business development we benefit from. We count on him in many things we plan to do in France, we do it with his guidance.
- Thank you Konstantin for sharing your experience! We wish you great success in your work!
I am always happy to help La French Tech.
French Tech Moscow thanks Konstantin Rodchenko and wishes all the best in his endeavours!
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