Sramana Mitra: I’m going to ask you questions so that we can trace your journey of how you put this business together block by block. Tell me how you acquired your first customers for this business.
Ruslan Fazlyev: We didn’t really acquire customers for our business. We got case-by-case freelance requests to build an online store because there were no existing PHP platforms back then. Every store needed to be coded from scratch. We got contracts through freelance marketplaces like Elance.
Sramana Mitra: You were basically marketing your technical development skills on Elance and you were getting companies to outsource e-commerce site development work to you.
Ruslan Fazlyev: Exactly.
Sramana Mitra: Were you building these sites on top of somebody else’s platform? Were you using any of the existing platforms or were you developing each site from scratch?
Ruslan Fazlyev: We would have loved to use someone else’s platform but there were not platforms in PHP at that time. We created our own.
Sramana Mitra: In the process of doing these service projects, you eventually created intellectual property which you could then reuse as you did more and more projects.
Ruslan Fazlyev: Yes.
Sramana Mitra: Talk to me a bit about how you were charging for these projects. How much would an e-commerce site in 2000 cost a client to work with you?
Ruslan Fazlyev: It sounds funny to me now because we would build it from scratch for $3,000 to $4,000. We didn’t have any idea that we are extremely cheap. We licensed it for $100. We didn’t know because Russia was extremely poor back then. As I mentioned, my salary was $14. When we started mass marketing the license, the sales went into hundreds of thousands of dollars. It could sound as not much money for someone in the States but in the country where we were based, that was more than we can spend.
Sramana Mitra: How many people were on the team at the very beginning when you were doing these services projects?
Ruslan Fazlyev: It was three people.
Sramana Mitra: With three people and this mode of getting projects from Elance, how long did you go on in this particular mode of doing service projects?
Ruslan Fazlyev: It all happened very fast. After our first custom project, we had this early idea of selling a platform. A month later, we found out that there was this product that we could use to get customers directly. By October of the same year, Google AdWords was launched. Not many people used AdWords back then.
The moment it was launched, I realized that we can bring our message right to the customers. Because no one was using AdWords, it cost us 5 to 10 cents per click to get a visitor. Essentially, the relevancy of AdWords advertising was higher for customers than organic search. Whoever cared to create an AdWord was probably up to date with the market trends. Click-through rate on AdWords ads was way higher. It was 23% CTR, which is unbelievable these days. We got a customer from the first five cents.
Sramana Mitra: You got a customer from the first five cents of AdWords spend?
Ruslan Fazlyev: Yes!