A heavily sanctioned country might seem like an entrepreneur's worst nightmare. However, starting a business in these places might not be as hard as people think. Nikita Bragin, a young and ambitious startup founder, shares his story of creating a business in Russia.
In 2013, I founded Soshace in Russia as a social blog. Now, in 2019, Soshace has grown into an online platform that connects IT professionals and companies.
We have completed projects for clients from more than 20 countries.
Here is how I established my company in a highly sanctioned country.
How I Became Interested in Programming
I was born in a little town, Sosnovy Bor, in the Leningrad region of Russia. In 2006, I entered LITMO, a university in Russia (now ITMO), with a specialization in optical technology.
Now, looking back, I think I chose the wrong specialty: I didn’t see myself in the profession. I started programming quite late, in 2009, when I was already in my third year at the university.
My first job was at a small design and development studio, where I worked for a year and a half, and that was the exact experience that gave me an entrance ticket to the profession.
How I Realized I Wanted to Work for Myself
Starting in 2011, closer to my graduation date, I began looking for coding jobs. I was fired from my first two jobs: I didn’t have enough experience and, honestly, I didn’t take it very seriously.
From that moment onward, things got a little better. However, I still felt that I lacked a formal programming education. I took every possible opportunity to apply for great companies such as Yandex, Yota, LG, JetBrains, Motorola, TopFace, Fotostrana, and Wrike, but no one was willing to hire me. I tried to land a job at Yandex three times.
Nevertheless, I persevered.
In my opinion, my frontend skills finally kicked off at my last job. The company I worked for was building a web platform for banking products, and although I was not particularly inspired by the concept, I was excited watching how people worked and finally felt like I was part of a real team. I wanted to build something similar.
Things changed when at the end of 2014, the Russian ruble collapsed. I decided to find a freelance job, where I could actually earn U.S. dollars.
I chose Elance (now UpWork) because it seemed more professional than any other platform I looked into. In November 2014, I completely transitioned to freelance.
Now that I think of it, if not for the sanctions and the fall of the ruble, perhaps I would have never started my business.
How I Started My Business and Came up With the Name “Soshace”
Ever since I started thinking about my own business, I began my long-lasting hunt for the perfect name. I actually ended up buying a domain in 2012.
I came up with something similar to Medium and was looking for a relevant domain in “.com” zone. As it turned out, unsurprisingly, most reasonable names were already taken, so I needed to invent something.
Soshace is a rather inconvenient name, I agree; it’s hard to remember, and people of varying nationalities pronounce it differently. However, it was unique, and I decided to stick with it.
By the beginning of 2015, I’d already landed several orders and decided to open a real company. I took a small loan from a bank, rented an office, and bought furniture.
Now, looking back, I might have opened the business without an office, at least to begin with.
How Soshace Became a Hiring Platform for Web Developers
Before I thought about the agency, I had this crazy idea of creating a Medium-type blog. The idea of building the blog on my own turned out to be pretty utopian, so I had to abandon it.
Until mid-2017, I tried to build an out-staff web development agency. However, it didn’t work out: I had no idea what to do with people between assignments, and there was low collaboration because everyone worked on different projects.
I began thinking of other business models:
- Build a full-cycle development agency, where we’d work on both programming and design
- Create a new product or service
- Focus on hiring remote workers and enable developers to sign contracts directly with companies
The first variant was not very close to what I had in mind; the second one required lots of time and possibly more investment; the third option seemed to be more organic. From what I thought, there were great opportunities in systematization and automation of managerial functions. With time, I imagined, the idea could grow into an online service or platform.
Since the end of 2017, we have been engaged in hiring remote professionals, and this is the only service we provide at the moment.
In the long run, I want our company to become a full-fledged service provider for professionals who are looking for remote work.
I want us to solve more than just hiring issues but help people find coworking spaces, assist clients with the organization of business trips and on-site work opportunities, provide discounts on software, offer legal assistance, and organize forums and conferences for professionals.
Difficulties I Have Faced When Building a Business in Russia
I want to start with the pros, despite the great skepticism about starting and running a business in Russia.
From my own experience, I can say that there are some favorable conditions for developing a small business: low tax burden and high-quality banking services.
During my four years of running a business, I have never had any problems with tax revenue services. We always submit the reports on time, and no one seems to care to complicate our business further.
Another advantage is the availability of highly skilled professionals with salary expectations much lower than in other developed countries.
However, the disadvantages are primarily connected with the unfavorable image of our country and the authorities’ total unwillingness to work with foreign companies.
In addition, most of the popular payment systems that I considered, such as Stripe and Braintree Payments, do not work in Russia.
In Russia, there are practically no banks that will issue corporate foreign currency cards for payment settlements with foreign contractors. When the rest of the world deals with invoices, we have to deal with currency controls and formal acts; it’s challenging to explain to foreign clients why they need to sign different documents every month.
In addition, there’s a great deal of distrust of Russian law. We need to translate all documents into Russian, even if they were originally written in English. In my opinion, our government should have already accepted English as a standard language for all international contracts.
However, when opening a small business, Russia is not such a bad place, but if we talk about international business, it’s best to choose other jurisdictions with more environment-friendly conditions.
Did My Clients Change Their Attitude Toward My Business Because of the Sanctions?
When I started Soshace, the sanctions had been already levied, so I could not really compare to owning a business before the sanctions.
However, what I can say for sure is that some foreign companies refuse to make payments directly to Russia, and we have to resort to using the Upwork platform. Of course, in such circumstances, Russia’s reputation works against us.
But that doesn’t mean we can’t have a successful business.
How Do Foreigners Feel About Doing Business With Russians?
Foreigners are mainly cautious and skeptical when it comes to Russian law.
We often have to change the country of dispute resolution from Russia to a European country or the U.S. There are mainly two categories of foreign clients we face: those who can work with Russia and those who cannot.
If the company has shares that are owned by the state, then most likely it won’t work with us.
What My Company Looks Like Now
If we talk about our full-time remote employees, then all seven of them are Russian residents from different cities, mainly the western and central parts of Russia.
As of March 2019, we have signed more than 70 agency agreements with programmers from around the world, who come from more than 20 countries.
Advice for People Who Want to Start a Business in a Country With an Unstable Political Situation
I believe that entrepreneurs should not be confined to a particular country but rather choose a jurisdiction based on tasks the business plans to solve.
If the target market is not tied to a specific place, then I advise choosing more advanced jurisdictions that provide maximum opportunities for growth – the countries of Europe, the U.S., Singapore, Hong Kong, and others.
My other advice might be very obvious, yet people often get discouraged and abandon their childhood dreams and ideas; I advise you to persevere, despite everything, even if the whole world turns against you. Stick to your guts and do your job.
Disclosure: Marina Vorontsova, a copywriter, who is fully employed with Soshace.com, interviewed her employer and translated his answers from Russian into English.