About 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 HSE University graduates who have discovered themselves through an interesting business or an unexpected profession. The protagonists share their experiences and lessons learnt and talk about how they’ve made the most of the opportunities they were given.
Verisium project founder Vadim Kostomarov is convinced that traditional banks will disappear in the new digital world. Financiers, however, will not be left without work, he adds reassuringly. HSE graduate Vadim Kostomarov tells Success Builder whether people should be divided into ‘techies’ and ‘humanities types,’ how to survive in the fashion industry and consulting, and talk about mistakes in looking for investors, and managing a ‘teal’ company.
I’m guessing you were pegged as a ‘math whiz’ from school age.
In my opinion, it is wrong to divide kids according to this principle and to instil a belief in such segregation over the long years of their study. This approach saves time for teachers and educational institutions, but it likely does a disservice to the students themselves.
The key technical specialist in our team came from Yandex, but he holds a liberal arts degree in journalism from Moscow State University.
What’s more, our very perception of these concepts is ontologically wrong. In fact, ‘techie’ is about how to do things, whereas ‘humanities’ concerns setting goals — that is, what exactly needs to be done. For that reason, people who receive a technical education often know almost nothing about such sciences as philosophy, sociology. and psychology. It is foolish to think that the interests of people today differ from those of people thousands of years ago. If that were the case, why does technical education have so little bearing on the humanities?
It would be great to combine, as far as is possible, technical humanitarian and education — that is, the tools we need with an understanding of the world order. Unfortunately, I was not able to manage this completely, but I try to fill in the gaps by reading books, educating myself and working with tutors — and, of course, communicating with interesting people.
Do you think it is possible to instil this greater awareness among HSE applicants?
The public has an extremely stereotyped understanding of the road to success. Young people are often limited by the opinions of parents, the influence of media, schoolteachers, and friends, but nobody teaches us to listen to and understand ourselves. The idea that ‘elders know better’ often dominates, and young people are told that they should not pretend to know more than they do.
Did you enrol in the ICEF master’s programme on your own initiative?
When I finished my undergraduate studies in IT, I was deeply disillusioned with the field. It seemed that Russian business saw technology as serving a strictly auxiliary function, so I thought: ‘What could be more important for a company than finance?’ and enrolled in the ICEF master’s programme. Now I understand the naiveté of such thoughts, but they still hold a grain of truth.
How can you develop intuition and know yourself if you are used to relying on other people’s opinions?
Intuition comes with experience. The sooner you start doing things yourself, the more mistakes you make and painful knocks you experience, and the more deeply you understand the basic rules of life. You should take responsibility as soon as possible and carry out tasks independently. Your personality takes shape through the wide range of experiences you encounter every day.
We have a large family and I like observing how my younger brother and sister form their identities. Three years ago, I gave my brother a LEGO Mindstorms set with which he can build and program a simple robot. He is now 11 and dreams of becoming a programmer. Another example: my younger sister wants to become a pilot and I have a feeling that my endless stories about flying to this or that country have left their mark. She found a blog by the woman Russian pilot Maria Uvarovskaya and now studies physics and math to enter the Moscow Aviation Institute.
My older sister is a paediatrician and she sometimes takes our younger sister and brother to work. First, this has made them unafraid of doctors and, second, they can see whether medicine would interest them as a future profession.
A person’s environment can have a huge influence on their dreams, goals, and way of thinking.
Universities are working hard to respond to actual market demands. As a businessperson, do you see any progress?
Russian education is not integrated with industry at all, and this is a big problem. But I must say that ICEF is at the forefront of this movement. As a master’s student, I travelled for the BCG company to an international workshop in France. For the company, it was a typical HR event to attract talented students, but for me, it was the first trip abroad. It provided insight into competitors and why a company would want to hire me.
While talking to peers from Germany there, one thing greatly surprised me. They told me that student consulting is developing rapidly in their country. This is where senior students divide into groups and compete in addressing real tasks from several different companies. And those clients pay the students well: one of them boasted that his team earned a six-figure sum for their project.
What’s more, European universities offer many programmes that are created specifically with support from individual companies that literally ‘place orders’ for future employees. This gives students who are just entering the university a vision of their career path for the next 10 years. Business is changing rapidly now, so if education does not integrate with it, graduates simply will not see any prospects for themselves.
But isn’t higher education more fundamental in nature, helping graduates to adapt to change, analyze and apply critical thinking?
It sounds funny, but I wanted to study at ICEF to understand what they write about in Vedomosti. Now I understand. I like thinking of education as an erector set. When you have a foundation for thinking, you can quickly add new courses to it that reflect real conditions as closely as possible. A math course is like gymnastics for the brain, figuratively speaking. We rarely use higher math in our work, but it provides a powerful stimulus to logical thinking.
Why didn’t you pursue a career in finance after graduating from ICEF?
I haven’t ruled that out completely, but I don’t like finance because of the culture that reigns there. It is extremely tough and, in my opinion, overly aggressive — which is understandable considering the sums of money involved. Actually, such sums are present in many areas, but the finance industry has traditionally been subjected to greater regulation.
I realized that I could build a career in finance, but that I would have trouble feeling happy with it
It is an emotionally forbidding industry, and I still cannot accept it. Personal warmth, mutual encouragement and the pleasure of communicating with colleagues are more important for me, and I am prepared to sacrifice money in return for those.
How did you come to understand this?
It probably happened after my job at McKinsey. In no way do I want to say that it was bad there. Because of the nature of the work, communication happens at a very high level right from the start, and this helps provide an understanding of the financial world. They tell employees: you’re cool, you wear the most awesome suits, drive the best cars, and work with top management. In general, they try in every possible way to inculcate an elite professional image. Many people internalize this. There is a temptation to become a snob and look down on everyone else. And when you’re new there, you notice it all the more.
Another reason was the realization that the familiar financial world in the format of traditional banks was disappearing. IT giants are taking over their functions. Apple has already issued a digital card and Google is in the process of doing the same. This means that either banks will have to transform themselves into IT companies or else they will be forgotten. At the same time, banks are having to make cuts, as happened recently with Deutsche Bank.
Speaking of Apple, huge numbers of people are already using their phones to make payments and the Apple card will simplify that process and make it several times cheaper for everyone involved. That is, the digital equivalent of cash already exists and is becoming unnecessary in physical, offline form. Cash payments have almost completely disappeared in some countries. So, why would these gigantic companies with unlimited resources need an intermediary such as a bank? They don’t.
Are you suggesting that students deepen their knowledge of fintech?
I don’t think ICEF graduates will have trouble finding work. I’m just saying that most banks will either fail or become IT companies and that students should be aware of this. [Sberbank CEO] Herman Gref confirms that this will happen in five years. I wouldn’t argue that and I think that educational institutions need to devote as much attention as possible to the link between finance and technology.
What prompted you to risk starting your own business?
It’s the excitement, inspiration, ambition. I really wanted to prove to myself what I was capable of, that I could change the world somehow. Some people always need to prove something and look for meaning: I’m probably one of them.
You also worked at Lamoda. Is that why you started a business connected with clothing?
I went to Lamoda right after graduating from the master’s programme. I worked on projects for the digital transformation of the business. For example, I connected various communication channels so that the company had a complete understanding of the entire history of customer relations. This is called a ‘360 channel custom view.’ This provides a more personalized service and all retailers are moving in this direction now. It was there that I saw how strategically important it is for a company to monitor its interactions with clients, and not only on the macro level but at the level of the individual client.
How did the idea for Verisium come about?
My friend and fellow undergraduate had the idea. I called him to wish him a happy birthday and he asked me to draw up a couple of slides for a presentation. It turned out he needed not just a couple of slides, but a whole business plan, including a financial model. And so I worked on that, step by step. The original idea underwent a major transformation and we took the revised project to the Kaspersky Lab Innovation Incubator in 2017. Unexpectedly for us, Kaspersky Lab invested in the project. I worked for both Verisium and Lamoda until I was sleeping only four hours a night, at which point I had to make a choice.
Verisium is a platform for tracking the ‘biography’ of a product — from its creation, the choice of materials, and manufacture to its design and tracking it in the store. Everything the brand wants to monitor in its products is coded into an NFC chip. There is a big demand now for environmental friendliness and informed consumption. People are willing to pay more for information about the things they buy: which materials were used, whether they contain any harmful dyes, where and how it was manufactured and whether it is a Chinese knock-off. Society is beginning to support socially responsible businesses. Labelling projects are being launched at the state level now and even in Russia.
products were registered on the Verisium platform in 2019.
And this includes fur coats.
Yes, and leather products. The state is also launching a project to track medicines and food products, but its goal differs from ours: it wants to collect more taxes from businesses and exercise greater control. We are making a system for business and want it to be of real benefit to brands by using technology to connect the manufacturer with the buyer. For example, brands frequently sell things wholesale and don’t know who the end purchasers are. Our technology enables brands to receive feedback from their new clients.
On the other hand, clients would like to know if the item is an original before paying top dollar for it. You can scan the chip and check to be sure it’s not a fake, and register in the system to receive a guarantee. This creates a unique and personalized relationship with the client. The brand can learn more about the consumer, provide special offers, and share exclusive deals. When the company knows a buyer's musical tastes, it can offer tickets to a concert by his favourite performer as a birthday gift.
All the brands like the idea, but I understood one thing.
There is a myth that fashion is wall-to-wall innovation, something progressive and avant-garde. Unfortunately, this is a terrible misconception
In terms of innovation, fashion is a super-conservative industry and many companies have not had enough time to reorganize their businesses along digital lines.
Is it really impossible to forge an NFC chip?
Any security system can be compromised. But the mass production of fake chips will not be possible for at least 15 years because it is simply unprofitable: it costs approximately $100,000 to make a copy of a single chip.
We did not set a goal of making a tamper-proof system, but of increasing the cost so that it became economically impractical to do so.
How did you manage to find investors so quickly?
Actually, now I understand how unprofessionally we approached the search for investors. We just got lucky. We did not hold even one full-fledged 'roadshow' and selection process. We just came to the first investor and were given money. That’s not the best approach: it is too costly. Now we are preparing for the next round of investments. We have selected some investors with whom we are in communication and have already received several offers.
Don’t you worry that start-ups are often weak and fail in the early stages?
Life always involves risk. The only thing you can do is have a personal financial cushion to hold you over for several months in case everything falls apart. By the way, it is interesting that 60% of Russians live without any savings. This is a separate topic for a discourse on the financial literacy of the population.
How do you structure relations with employees?
I am now two years into this and I am still hoping to build a ‘teal’ organization without a formal hierarchy.
I dream of a format of interactions in business in which everyone understands their role and you don’t have to control people by wielding your authority
This requires that employees demonstrate a very high level of responsibility, motivation, and understanding of who does what. This is not easy and not all people are comfortable working in this way. We had part ways with some staff. Still, it is incredibly pleasant to be part of the team that has taken shape based on this principle.
The ‘teal’ culture is a term that I learned from Valve, the largest developer of a platform for selling Steam games. Interestingly, the company has one billion in revenues with only a relatively small staff. This broke down to an average of $6.5 million in revenue per employee in 2014. This is far more than Apple or Google and comes from the fact that the team works in complete unity.
What happened with the Verisium project in 2017?
Last year, we earned our first international revenue — approximately $200,000. This is important for us because the company has focused on the Western market from the start. This is because Western investors are not very interested in projects without international revenue. We spent two years developing the product, made our first sales and are now preparing to scale up. This is the most difficult phase. This is not a purely digital product: we also have a physical element, a chip, and this restrains our development somewhat. For example, now we have to send our chips around the world, and that means dealing with customs clearance, delivery, lost parcels, etc. Our task is to resolve this issue.
How deeply have you had to immerse yourselves in the fashion world for this project?
I began looking at clothes from a more functional perspective. Clothes do not just protect you from the elements: they also send a signal about who you are.
We had to adopt a certain dress code based on fashion brands to communicate with our customers. So, we regularly travel to Paris and Milan for Fashion Week because that is where our clients and the main sales channels are found. There are certain rules of the game: if you go around in a sweater and jeans offering everyone an innovative product, you will have little chance of success. Your appearance should communicate a certain idea that your target clients will interpret correctly. At one point, we had to hire a stylist to understand this, work on our images and be able to speak with fashion brands in the same language.