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Russian Start-ups Continue to Multiply. And No, They're Not Selling Fur Hats

New small businesses celebrate the unique creative spirit of Russia

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This post first appeared on Russia Insider

Paul Goncharoff is Chairman, Disciplinary Committee, National Association of Corporate Directors, Russia

Much has been written about Russia’s huge “oligarchic” industries where state and private interests jumble together. Similarly, a popular business theme reported on are the blue chip firms traded on the MOEX. Meanwhile small businesses and start-ups in Russia continue to multiply.

<figcaption>Many of these small companies and their founders have compelling stories of their journey with a dream or a vision to the reality of conducting their business in Russia.</figcaption>
Many of these small companies and their founders have compelling stories of their journey with a dream or a vision to the reality of conducting their business in Russia.

Most are so far below any investor’s radar that news about them is largely ignored. It also does not help that most information available is only in Russian. Many of these small companies and their founders have compelling stories of their journey with a dream or a vision to the reality of conducting their business in Russia.

Recently I was introduced to such a small business, a one-person fashion startup called “Born2bRU”. What drew me was that it started growing organically, by customer word of mouth, loyal fans and not through investors or loans. The very creative owner, designer and do-everything person is Lena. She was born during the last years of the Soviet Union in a rural logging region of Siberia.

She had to learn about business, finance, risk, budgets, law and all the myriad details that comprise living in an all-of-a sudden hard competitive world, without safety nets, by jumping in and doing things on her own. The volatile vicissitudes of her career are an accurate reflection of what Russia as a whole went through in order to find itself, and this journey continues today.

Curious to learn from her, with all the hype out there on the barriers and difficulties for small business in Russia, how she managed to set everything in motion by herself, and on a financial shoestring. It seems over these past few years both official procedures and supportive service companies have become quite user-friendly through the web in Russia. Today anyone can handle just about all business phases needed with the comfort of laptop efficiency. She told me that she did it all on her own; setting up the company, registering her trademark, establishing a simplified tax system for her firm, opening a mobile bank account, accepting card and electronic payments in Rubles as well as Dollars, warehousing, global shipping and courier services.

Lena kindly agreed to go over some of the key steps to give us a feel for her journey, if not a roadmap. Deciding to set up as a limited liability company, known here as an “OOO” which flat-taxes at 15% on profits using what is known as the simplified tax regimen. She then went to one of many law firms who specialize in doing this turnkey. Paying for their service, plus government registration duty she had her firm and stamp in one week for under $200. The Born2bRU trademark search with registration was fully completed online for less than $1,000. It took them two weeks to complete their search and submit relevant application documents.

The bank account was opened free with an e-bank in five minutes online, requiring only one visit later (conveniently on a Sunday) to sign original agreements. Lena made her website herself using a new Russian online web-building site with full domain and hosting for less than $150 per year. The online store with all delivery functions (including international) which easily dovetailed with her website she got via enabling major card or cash payments, also for less than $150 a year. All bookkeeping is outsourced, and there are many firms to choose from who directly e-link to the bank to track revenues, doing all tax paperwork preparation and filings required for quarterly submissions. This service ranges from $25 to $50 per quarter, depending on trade volumes. This, in a nutshell, was how she was able with no staff to make her small business official, legal and fully operational costing her less than $2,000. Everything else is her sweat-equity, organizing, making the products, photographing, calling, writing, marketing and selling.

The spark, which lit her fuse to create her first collection called “Malyavin-Grunge”, was a chance event. On November 5, 2015, she received an invitation to attend the grand opening of a permanent exhibit given to the "Alexander Solzhenitsyn House of Russia Abroad" by the French-born son of Russian emigres Andrew Smetankin. It is a collection of paintings by Russian artists he and his late wife steadily acquired since 1930 living in France. Among the masterpieces are several works never exhibited anywhere before.

While gazing at the Malyavin she talked at some length with the collector about art, and how they both saw this Russia that they love. With typical inspired single-mindedness, she went to the Tretyakov Gallery and immersed herself in the other works by Malyavin whom she strongly feels best captures that elusive essence called the “Russian soul”. The colors and themes he used struck a deep chord of empathy with her. The Malyavin-Grunge collection emerged from this epiphany. She was deeply affected by Smetankin’s selfless gift of positivity to enrich Russians that will live on well after his time with us. She added wistfully that his was “the way of a true Russian soul”. Later she told me, “I believe Russia possesses at its heart a pure cultural spirit untouched by any ideology. We are original, self-sufficient, and have our own tastes, which have nothing to do with the common ‘Russianness for export’. It is our style which stands on its own merits needing no approval from anyone”.

Everything that goes into Born2bRU is absolutely 100% Russian both in materials and spirit. Lena insisted that every molecule in her collection be hand created locally and produced to her exact requirements by small artisans in the regions. The one-of-a kind soft voluminous yarns she uses are handmade and spun from raw cotton; the dyes are locally concocted using skilled professionals who exactingly introduce these colors. Every item is knit or sewn individually, then boiled, softened, and as she says, ‘tortured’ enough to satisfy her exacting standards of quality and ruggedness. Even buttons she uses are hand forged on an anvil by a blacksmith, and her logo is made of solid Russian brass (engraved with a Russian laser!). The people who share Lena’s vision are several, and all continue to contribute their time and talent in making sure Born2bRU is not stillborn.

With no financing or similar support, much of what has enabled Lena to make her business happen was thanks to the people she has attracted to work with her, not for her, and who strongly share in her vision that Born2bRU highlights in its own small way what is truly special in Russia. While she designs her pieces for Russian customers, there has been international resonance so she made certain that her site was also in English, saying, “Language should never limit our ability to share, that can only be for the best, as we feel truth when spoken to our heart”.

Her principles and values give a completely new meaning and pride to “Made in Russia”. She said to me with a certain intensity, “the best you can possibly do will make its own future, as demand for that sort of quality will never go out of style”. Entirely disconnected from the world of vodka, oil, caviar, gas, matreshkas, palekh boxes and fur hats, her small business vision celebrates the unique creative spirit of Russia, with honesty to itself and those who choose to “Wear and be Russian”.

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