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Gulnaz Khusainova

Completed her undergraduate degree in 2010 and graduated with a master’s from the HSE Faculty of Business and Management in 2012. Gulnaz created her first startup while still a student at HSE. She has worked as the marketing director and department chief at Credit Europe Bank, and in 2013 she took her idea for a new startup to Copenhagen-based accelerator Startupbootcamp, which resulted in a full-fledged business project called Easysize. Gulnaz is in the Top 50 Most Inspiring Women in Nordic Tech 2016 ranking as well as the 2016 Top 100 Female Startup Founders in Europe.

«When You’re an Entrepreneur, You Learn Something Every Day»

Success Builder


About the project
«Success Builder»

How do you find your place in life? How do you find something to do that both comes naturally to you and makes you happy? The answer is that you have to apply the knowledge you’ve gained from university and from life itself correctly. The Success Builder Project features graduates from the Higher School of Economics who have discovered themselves through an interesting business or an unexpected profession. The protagonists share their experiences, and talk about the big shots they’ve schmoozed and how they’ve made the most of the opportunities they were given.

Gulnaz Khusainova is a graduate of the HSE Faculty of Business and Management and the founder of the project Easysize, an online platform that helps online retailers reduce the number of returns. This year Gulnaz made it to Forbes’ list of the most prospective young entrepreneurs in Europe. In the latest edition of Success Builder, she talks about why programming is necessary for someone with a startup, what ‘sustainable fashion’ means, and how this all affects the well-being of Bangladeshi seamstresses.

Where does your passion for startups come from? Is it right that you created your first one while still in school?

Some of my classmates at the Faculty of Management were starting to become interested in startups and this interest rubbed off on me. Before that I hadn’t even thought that it was possible to be an entrepreneur. The folks from my group went on to the HSE Business Incubator, and their experiences sparked my interest in this topic.

Were you able to realise the idea for your first startup successfully?

No. After we made our first prototype and tested it out, we knew that there was an interest on the market, but that no one wanted to pay. We developed a system for restaurant owners that would help analyse table reservations based on certain parameters while at the same time serving as an online reservation system. Actually, it was a mix of Opentable.com and analytical data. The project was a mistake, but gave us some good experience.

 

15-20%

is the percentage of returns Easysize helps reduce

Source: Gulnaz Khusainova

 

How is this unsuccessful experience useful?

Well I think it made it clearer that during the prototype stage, when you are only beginning to learn about the market, no one wants to say negative things about the project, which is why even at the beginning stages when I was interviewing people from the market in search of an adequate opinion, everyone told me, ‘great, carry on!’ But when I started selling the prototype, I understood that everyone liked it, but no one wanted to pay money for it. This was my first realisation that it was necessary to change my approach towards determining market interest, and I subsequently acted with this mistake in mind. The second important realisation was that the product needed to be developed alongside the market. After initial feedback I went away for several months to develop the prototype while launching small portions to the market and receiving an adequate response.

How did you handle the issue of software development for the project? How deeply was it necessary to dive into this?

At that time I didn’t understand development at all. I just asked for help and a prototype was developed for me. I think this was another mistake though; I didn’t understand if development was being done correctly or how much time was needed for it. My team didn’t have someone who could understand and handle all of this. After that startup, I learned the basics of programming and worked on several projects at the company. This allowed me to understand what IT projects were, what their specific requirements were, and how to best manage developers.

When I started selling the prototype, I realized that everyone liked it, but no one wanted to pay

So you weren’t always the mastermind, but had experience as an actual company employee?

It’s hard to say when and how my ‘career’ started. Before I went to HSE I was writing business plans for companies – sometimes for money and sometimes just for experience. When I started at HSE I worked at a marketing agency and launched my first startup. Then I spent some time as a department chief at Credit Europe Bank. In other words, everything always happened in parallel for me – work, school, and startups.

Those coveted self-organisation skills…

I was just always interested in doing several things at once, and when this is all combined, it’s an interesting experiment with conclusions. One thing feeds another, then the third happens, and so forth.

Did you learn this at HSE?

At that time I didn’t even think the ability to organise your time came during school. I think the system that existed at HSE proved itself later on and prepared me for life after college. I had to constantly focus on our modules and be ready for exams every two months, be able to make decisions and reach conclusions… This helped me become more collected. We also had a really friendly group. I met my current friends back at HSE. We’d help each other prepare for exams, and we taught each other a lot not only in a professional sense, but in personal sense as well.

When did you become a businessperson?

This happened with my second startup. It was an online store for unusual gifts. I started it with two of my friends from HSE, one of whom was a business informatics student, which is important. But I sold my share rather quickly because I started working on the Easysize project.

Photo: Easysize

Where did the idea for Easysize come from and how was it bringing the idea to life?

Our company is a shining example that an idea by itself is not worth a lot and what’s more important is how the idea is carried out. As is often the case with startups, an idea arises, but as soon as you start working on it, it changes drastically. When I worked at the bank – this was during my break between startups – I often bought clothing online abroad and was typically unsuccessful with sizing. This is where I got the idea to create a product that would allow people to find the right clothing size, thereby lowering the amount of returns. At first I thought the best thing was a mobile application that would allow you to determine sizes though photographs. I took this idea to the Startupbootcamp accelerator programme in Copenhagen. But after working on a pilot version, I realised that it was futile. It would be difficult for users to deal with the application’s demands for the photographs, as it would require the right lighting and a certain angle. It was also not exactly clear how to monetise this.

The idea for the app transformed into software, and we started focusing on users’ historical purchases and returns. This is how we came up with the polished product that exists today.

Easysize is an artificial intelligence algorithm that analyses users’ historical purchases and behaviour on a website and uses this to determine the likelihood that an item will be returned. As soon as a user goes to a website and starts adding things to the cart, Easysize allows us to understand how likely a return is and why a return will take place. We focus on so-called behavioural returns that happen due to either user error (usually selecting the wrong size), or because of a user’s desire to exploit the return policy for his or her benefit. There are, for example, buyers who take advantage of returns in order to buy something, wear it a few times, and then try to return it at the store. Some buyers also order a large amount of items on sale or during an online flash sale, try to resell these items, and then return the items they were unable to resell. Our software helps online stores understand which orders will likely be returned and why. Using this information, stores can help their buyers avoid mistakes, while they themselves can avoid unfounded returns.

As soon as a user goes to a website and starts adding things to the cart, Easysize allows us to understand how likely a return is and why a return will take place

At what point did you achieve stability and start attracting investments in Easysize?

In April 2014 I decided to give the project three months and use that time to talk with stores and interview buyers. The stores’ reviews made it clear that investors would be interested in the product, and nine months after putting the finishing touches on the project we completed our first round of investments.

Is there any sort of pre-set action plan for successfully launching a startup?

Plans like this likely vary, but the first thing that has to be done is understand if the market is interested in your idea. In our case, this took interviews with storeowners, who are the consumers of the product. In another case, this might be b2c consumers and so forth. A key factor in understanding the problem you’re trying to solve lies in the question, how important is this problem for the most number of people or companies? How urgently do they want to solve this problem? Will people really pay money for it? In other words, the more information you get in the beginning stages, the more convinced you’ll be that this is not a complete waste of time.

Why did you move to Copenhagen?

I’m often asked this question, and I usually say that I like the weather here. It’s rarely below zero in the winter or above 25 degrees Celsius in the summer.

Really though, there are a few reasons. Copenhagen is in a convenient location in relation to other European countries. It was important at the beginning stages of the project for it to be easy to communicate with people, and in Denmark 96% of people speak English fluently, so it’s easy to interview people here and test out ideas. As concerns business etiquette, even at large companies here with a certain hierarchy, the organizational structure is often horizontal, and people are more open to communication. Earlier on, it was really easy for me to send a proposal to a fashion company or store, and in most cases they would reply. Also, Denmark has an active startup community with massive interest among investors from all over the world. It’s important to enter into a community like this, where it’s easy to raise money and hire people.

It would be dumb to go to a new country and start from scratch there. There’s an interesting market here in terms of e-commerce. Europe is a region with a ton of countries, each with their own laws, and consumer behavior varies considerably. This was an interesting challenge for our project – seeing how we are able to understand user behavior and interpret it into data.

 

 >12  mln

online shoppers use Easysize software

Source: Gulnaz Khusainova

 

What sort of developments does e-commerce require right now, particularly in the field of artificial intelligence?

We specialise in fashion, which has huge potential and is one of the fastest growing industries in the digital sphere. According to recent data, 25%-26% of fashion purchases are made online. The industry has a ton of problems as well, including high customer acquisition costs, logistical and assortment optimisation, market consolidation, unending price competition (which leads to dumping and a huge number of stores that are unable to achieve profitability), and of course the increasing impact of Amazon. As for technologies, there are certain waves of innovation, for example innovations aimed at recognising user behaviour in order to recommend items to these users. The majority of innovations still focus on the goal of ‘selling more.’ We believe that it’s necessary to concentrate not so much on getting users to buy more, but on giving them the opportunity to buy things they will not need to return.

As for customer acquisition, how does the eco trend of consumer ‘awareness’ work currently?

The sustainable fashion philosophy has good reasoning behind it. Fashion is ranked second after gas and oil in terms of industries that have a negative impact on the environment. This is a huge problem, and currently many innovations are aimed at telling people about smart consumption and teaching companies to select the best methods for production and sales. This concerns not only the environment, but also a humane approach towards production – for example, increasing wages for Chinese factory workers. A lot of brands try to bring consumers into this through social networks and the media. There is now support for conscious consumption, particularly at smaller online stores and for fashion brands that are not aimed at making money through overconsumption like Amazon is, for example. Often important in an item’s description is information about how the good was produced, e.g., where, by whom, from what, by hand, etc. This is why a t-shirt by a certain brand might cost more, but that’s because the brand pays its Bangladeshi seamstresses more than other producers. This works.

Photo: Easysize

How can you use modern online marketing to pave a path for your product?

I’ve been working largely on b2b marketing at my company for the last four years and have made several observations. First, you have to inspire trust in the company and in the product. There are tons of digitals tools now that allow you to create and maintain this support: reviews, recommendations, and an evaluation of the company within its industry.

Second, you have to be a real leader because it’s important for people to see a human face behind a product. Given the popularity of social media, companies have started creating a ‘face’ for themselves in the form of a personal account, and company fans look to interact with them as experts in the industry.

Third, due to the development of digital technologies, everything is happening faster and faster, from developing products to responding to users. Accordingly, the company must respond more quickly in order to meet consumer demands. Whereas three years ago you could respond by mail within a couple of days, now this has to happen within a couple of hours. And this is the same reaction time companies expect from the suppliers of the products they use.

Can you talk about your office a little? For example, how do you hire employees?

The most important thing in any business is your team. When we hire new employees, we try to introduce them to key individuals at the company right away. It’s important for us that the person fit in not only in terms of professional skills, but that they also fit the culture and share the same principles as the company, such as transparency. We also try to hire people who can be leaders in their vertical. Each employee has their own area of responsibility, and they work in this area completely and make important decisions. Aside from Copenhagen, we also have two smaller offices – one in Paris for the French market and one in India that will be our hub for Asian markets. Company management and IT are based in Copenhagen currently, while Paris and India focus on business development for certain markets.

How do you see your future trajectory?

As the head of the company and the originator of the idea, I understand that when you are an entrepreneur, you learn something every day. Your company develops as soon as you reach a new level. The objectives change, and you have to learn something new. I was really lucky to have wonderful investors and mentors. They not only gave us money, but also constantly help us with professional support. As for the future, I have several projects I’ve decided to work on that are on the hobby side of things. I’m launching a podcast in which I’ll talk to interesting individuals and discuss various topics from their technological sphere. I also actively support Scandinavian entrepreneurs and participate in several organisations in this domain.