Interview with VeeRoute Operational Director
The project of brothers Vladislav and Mikhail Kudinov, alumni of ITMO and SPbU universities, reached its first great success in the year 2014. They created a service called VeeRoute that is designed to optimize logistical processes and suggest solutions to manage couriers and routes in real-time. In 2014 their project won GenerationS, an IT competition for technological startups with a prize of 1.25 million rubles. During its three first years the startup managed to get more than 50 companies as clients and powerful sponsors and lately they received an investment of more than one million dollars from Bank Saint Petersburg and a consortium of angel investors. Now the brothers are preparing to enter the global market and developing a new version of their product. We asked the operational director of VeeRoute Igor Kudinov to share how to gain the trust of the “monsters of the market” for a small startup and other resolutions of his 12 year experience in the business.
Around five years ago the Kudinov brothers were known as some of the founders of the startup movement in Saint Petersburg. At that time ITMO University started to work on the Business Incubator. Back then you were still mainly teaching technological entrepreneurship at the university, how did you come to understand that you wanted to start your own business?
Until that time Vlad and Mikhail (editorial note: Vladislav Kudinov is the general director of VeeRoute, alumni of SPbU, and Mikhail Kudinov is the commercial director, alumni of ITMO University) had a couple of projects connected to different applications and websites. Then they created Esprito, a social media for scientists. In 2008 they organized an informal meeting called Innovators Club exactly around the time when the startup movement became more active in Russia.
In 2011 Vladimir Nikolayevich Vasilyev came to know about these activities and invited the brothers to join the team of ITMO University. That’s how the Center for Promotion of Innovations of Youth was created. Later this center was renamed as the Business Incubator and a lot of events connected to startups were organized for the students. One of the biggest projects was the startup school SUMIT, which was organized in cooperation with the University of California.
After three years of working with the Business Incubator we (editorial note: Kudinov brothers) understood, that to guide our students on an even higher lever, we should work on our own business projects to gain more experience. That’s why in 2014 we started with VeeRoute.
How did you come up with the idea for VeeRoute? Was it sudden like business ideas often are?
Some entrepreneurs that I know told me, that they came up with the idea for their business while cooking pasta. For us it was not like that. We did an analysis of the market to find the idea. And why did we end up working with logistics? One of our friends and business partners Ilya Antipov (editorial note: development director of VeeRoute, alumni of Carnegie Mellon University, Massachusetts Technological University and University of California) already had some experience in this field. In the beginning of 2000s he did a similar project connected to optimizing in the USA market. It was Ilya who thought about trying to do the same in the Russian market. Vlad on the other hand had knowledge about the problems in the delivery market through his work in the Business Incubator. We discussed all of this together, and decided to start a business.
Did you personally have experience in running your own business at that time?
After graduation (editorial note: Igor Kudinov graduated from the Saint Petersburg State University of Economics) I worked for some time in consulting. In 2009 we decided to start our own consulting company AxisPoint Consulting with a couple of friends as we had gained experience in that area. The first idea was to concentrate on the north-western parts of Russia, but in fact we had a lot of clients from Moscow. After actively working with this company for four years, I understood that consulting was not the most interesting field for me.
In 2013 I was invited to join the team of ITMO University, where we started to work with a project connected to the development of the innovation infrastructure in different regions of Russia. In my opinion we had the best results with the Samara region. There’s a team called StartupSamara (later renamed YellowRockets) which was recognized at the national level as the best at developing the regional innovation environment. From 2013 to 2016 I was the head of the Business Incubator at ITMO University, as well as the head of the department of technological entrepreneurship and innovations, which I still am. I joined VeeRoute more actively in 2016. At that time VeeRoute already had the victory from GenerationS, and after several smaller investments, we managed to agree on a bigger one this year with Bank Saint Petersburg.
Your parents are also entrepreneurs. Did you have the dream of starting your own business already as a child?
My parents had their own business in the 90s, and we helped them a lot in our childhood. I remember one story: when I was 12, my parents left for a business trip and I stayed with my grandmother. My parents gave me a task – to collect receipts from retail outlets. Afterwards my mom told me that one of the assistants was shocked to see the 12-year-old boy checking all the calculations.
Our parents raised us to be very independent and ambitious. From childhood I have always been quite competitive. I feel that ambition brings you the motivation that is needed to run your own business.
What is the VeeRoute team working on right now?
We have realized that our clients have a lot of situations that require even more complex technological solutions.
That is why we are now actively working on a new version of our product, which will meet the growing needs of the modern logistics industry. This new version is designed for the big market, for companies that have a big budget for logistics and need to improve effectiveness as well as customer service in that area.
We are also actively trying to integrate our product to the Internet of Things. This way the new product will be flexible for integration with various systems.
How exactly is it going to work?
The main idea of the product is to have software that is able to track the changes that occur during transportation of cargo. The product includes a few units. The first module automatically plans the optimal route between the starting point and the destination, taking into consideration the traffic, the wishes of the client, the length of work shift of the courier, the capacity of the vehicle and many other parameters. The second module includes the work platform of the dispatcher and a mobile application for the courier. This module is needed to manage the couriers and drivers in a real-time regime. The third module analyses the effectiveness of the whole software.
Right now you are working with some of the most important companies of the market, for example M.Video, Novardis, SAP and others. Is the amount of big clients growing?
We have been concentrating more on big clients for the last two years. In 2015 we still signed many new contracts with smaller companies of three to four vehicles, but at the moment we are more oriented towards bigger companies.
Usually it is quite difficult for startups to get big companies as clients. How did you succeed?
Some of the biggest companies never agree to take the risk of working with startups. Obviously, if a startup doesn’t have any clients at all, it will be very difficult to suggest cooperation with a big company.
We have been working with determination. With some of our clients, the negotiations took even two years before they were ready to sign a contract. The process of cooperation includes many stages. The best way to gain the trust of a big company is to work well with the clients you already have and to show the results of your work. There is no easier way.
Most of the big companies are after all open-minded and ready to negotiate with startups, as they are looking for new, fresh products. According to our experience it is worth it to collect recommendations and support of a small group of clients. It seems that the middle-sized companies will see the value of the startup first, and once the startup has gained some experience with them, it is already safer to try to establish cooperation with the bigger “monsters”.
What kind of goals have you set for yourself for the future?
For a company success means entering the global market, competing with big, famous companies, gaining commercial benefit and bringing profit to the investors. This is a long term goal that allows working with interesting technologies and adding something of our own to the changing market of logistics. There have been predictions that in 30 years the delivery industry will be fully automated. Globally thinking, for our company it would be interesting to move towards this trend.
Translated by Mia Eriksson