This post describes Russian digital platforms or we may also call them ecosystems that dominate the market.
I will put it simple – at the moment Russia has 5 main ecosystems that include services from food delivery to online education. The main ones are Sber (Sberbank), Yandex, Mail, MTS and Tinkoff), other ecosystems include VTB, Severgroup, Rostelekom, Megafon and Alfa Bank.
The best example is Yandex. In the pictures below you can see the number of apps Yandex has.
While it is only the list of applications, Yandex also has a number of websites such as Yandex.Q (analogue of Quora) and Yandex.Flow (interactive online English language courses). Yandex is an enormous ecosystem or “Russian Google” whose solutions sometimes outperform the Google ones.
So how does the creation of ecosystems happen?
The core of the ecosystems is services. Companies create services in the markets which customers use everyday: finance, food, transport, entertainment, and then they build synergies.
At first the mentioned companies create common IDs and subscription options that combine different services within the ecosystem. For instance, Yandex has Yandex.Passport, Mail.ru Group and Sberbank have their own Mail.ID and Sberbank.ID respectively. User identification helps companies to gather incredible amounts of data, analyse it and build new services and propose to customers other relevant services included in the ecosystem. Different Combo+ subscription options serve as incentives for customer loyalty, reduced subscription options for Yandex.Music combined with Kinopoisk create powerful customer lock-ins.
On the top of the identification, companies build the voice assistants. While Amazon has Alexa, Russian Yandex has Alisa, Russian Tinkoff has Oleg, Russian Mail.ru has Marusya. Oh, Sberbank and MTS are also developing their ones, MTS calls its voice assistant – Marvin. What name do you prefer? Through their voice assistants the companies integrate in the devices, into machines, into people homes. It is a new level of integration and each piece of it adds value to the ecosystem. At the moment Yandex’s Alisa is not only a smart speaker, she is also in your navigator and soon she will be able to order Yandex.taxi for you. And the users of Sberbank through Sberbank voice assistant and Sberbank.ID will be able to order food in the Delivery Club, watch films in Okko, order taxi from Citymobil, make purchases in SberMarket and much more to come (Sedashov, 2020).
All of these sound pretty cool if we are not taking into consideration privacy issues and numerous markets that are close to become monopolistic. However, the reason why I decided to write this is a recent announcement of Yandex buying Tinkoff. One huge ecosystem is integrating another huge one. It is exciting! Now Alisa will be able to pay for you through Tinkoff bank mobile app. But is it good? The market totally becomes more and more monopolistic.
Another important issue that I wanted to highlight is not only the monopolistic nature of the market, but also the job perspectives for Russian people. It seems that to earn a decent salary and grow either within the company or as an individual, young talents do not have the real choice. They face only 7-10 ecosystems from which they can choose. Of course, these ecosystems are innovative, constantly evolving, but is this limit of the choice a good thing?
At the moment I can list you two advantages of Russian ecosystems for young talents:
– Ecosystems raise intrapreneurs. Each employee has an opportunity to lead its own startup within the company-ecosystem and enhance his or her salary enormously in several months.
– Ecosystems are able to rotate employees among different industries and functions, thus, enhancing your expertise. Of course, each ecosystem has its own characteristics, but in general they are flexible and adjust to the needs of the market (Egorova, 2020).
Nevertheless, I am struck by the limit of choice as I already have some negative experience with the ecosystems mentioned. And I do not want to work in a culture that I do not believe in. Do I need to seek a decent job overseas? Or create my own venture? What should Russian youth do?
References:
Sedashov, N. (2020). How Russian companies build ecosystems? URL:https://vc.ru/u/163530-nikolay-sedashov/105427-kak-rossiyskie-kompanii-stroyat-ekosistemy-chto-proishodit-i-chego-ozhidat
Meduza ( 2020). Yandex agrees to buy Tinkoff. URL: https://meduza.io/en/news/2020/09/22/yandex-agrees-to-buy-tinkoff-bank-to-corner-russia-s-fintech-market
Egorova, A. (2020). Telegram channel @bezaspera.
Hi Katrin,
Really interesting post! I am not familiar with Russia although Russia and China are very similar in many ways. And your post gives me a deeper understanding of Russia. In China, the situation is similar. We have Tencent, Alibaba, these are Internet giants and have their ecosystems. The advantages of such big ecosystem are obvious. For example, the apps can be widely promoted under the ecosystem, and the connection between different apps can offer customers a better experience. However, some issues can also be raised, for example, the car sharing platform Didi (like Uber in US) occupies most of the market share in China through acquisition. As a result, the cost of car-sharing is much higher than the time when there are many players. Also there are other concerns such as privacy. From my perspective, the issues raised by monopoly market should be solved by regulation. In United States, the internet giants such as Facebook, Google, they also try to build the ecosystem. For instance, Facebook acquired Instagram. But the strict regulation prevents them from being monopolistic.
In terms of job, it seems that there are only a few companies for you to choose. However, since they are big ecosystems, under each ecosystem, there are differing companies. In China, people would like to go to big platform such as Tencent or Alibaba, because the broad career perspective. And under the big platform, there are many choices. If people work for Tencent, there are differing unit for them to choose, like WeChat, QQMusic, etc. Also, after you gain some experience on the big platform, you can try to start your own venture. You can really learn a lot from the big company.
I hope we can have a deeper discussion!
Yue
Hi Ekaterina,
Tip from my part: if you happen to be in the Netherlands rightnow and have Dutch television. There is a super interesting documentary regarding Putin and Russia shown each Tuesday evening. Last episode also covered the developments of the Russian economy and its players from the 90s until now. Super interesting!
With regards to your article: very interesting to learn more about digital Russian ecosystems. This was not much covered in the documentary and is not often discussed in Dutch sources. What was discussed in the documentary, was the monopolistic nature of many segments of the Russian economy (the Oligarchs). Interesting to read that seem thing is about to happen with digital oriented companies. This I think is similair to what is happening in the US and China.
You raise a good question for the Russian youth. If you do not feel like you believe in the specific culture within an ecosystem, what sort of culture would you believe in? For what kind of company would you like to work? You studying at RSM gives you perhaps more chances to explore working in a European country. Although I think a lot of markets have the same issue: several big ecosystems controlling most of the market.
Maybe you can find more like minded young (or old) Russians (or Dutchies), who share your believes and want to help you build up an own startup or brand. Easier said than done, but there must be more people who feel the same. Instead of having to come up with your own business idea, you could join a startup yourself. RSM has a Master in Entrepreneurship. Maybe this would be an interesting place to start your search.
And my choice for a name for my Russian voice assistent would 100% be Oleg!
*I forgot to mention: although on Dutch television, the documentary is in English (its probably an international production).
Hi, Tim!
Thanks a lot for your comment. It is really interesting to watch this show – what is the name of it?
I agree with all of your points. Concerning the culture of the ecosystems, I like the way it is presented “open, innovative, friendly, efficient, customer-oriented”, but in reality my friends and I faced the opposite (it can be the cause of the developing monopoly). Of course, there are some companies under these ecosystems that are trustworthy, but the whole perception of the ecosystems and its every part is spoiled.
Hi Ekaterina,
I am from Republic of Moldova and I am aware how business is ran in the post-soviet region, having big companies owned by oligarchs dominating the market. But as mentioned above, the oligopoly in Russia does not differ significantly from the oligopoly in China or in USA. After all, this is the underlying construction of tech giants – taking very parts of the market in a monopolistic way.
But nevertheless, if a really good Russian talent is neglected in the country, the globalisation effect is quite powerful and such talented people are able to find respectable opportunities abroad. I found interesting an interview made by Iurii Vdudi (it is in Russian but with English subtitles) with a lot of Russian entrepreneurs on the Sillicon Valley, all of them with incredible stories – https://www.youtube.com/watch?v=9lO06Zxhu88.
Even if the competition is not as fair as in the western countries, I believe that true talent can still manifest. And if not, there are enough opportunities elsewhere if there is enough motivation. The monopolising system in Russia is unlikely to change unfortunately anyway, which is more because of politics and informal relationships at the top.