With a yellow leaf: how to make billions on the free guide

With a yellow leaf: how to make billions on the free guide

Engineer from Novosibirsk Alexander Sysoyev in 1994 and did not suspect that the project to create a digital map of the capital of Siberia will grow multi-billion dollar business. 20 years later, in 2014, a free mobile mapping application 2GIS, according to research firm app Annie, took 9-th place in the ranking of the most downloaded in Russia, ahead of “Navigator” from “Yandex”. Almost mastered Russia, Sysoev is preparing to conquer the world: using partners the project is working in Kazakhstan and Belarus, Italy, UAE and Chile.

With yellow sheet

Started with the fact that the city telephone network of Novosibirsk wanted to create an electronic map of their networks (this was 1994, they were all on paper). Sysoev decided that this order suits him, and created the company “technograd plus”. “We agreed that an initiative for your money do and if it works, they’ll take him for a large system, he said in an interview . — Plan of the city we took a satellite image and as a result became the first private company in the country to have its own plan of the city.” To work on a plan for a telephone network “technograd plus” went almost two years with lots of different agreements and verification schemes on the ground. The exact amount of investment in the start of the project Sysoev’t remember: it was “several thousand dollars” that he had due to garment production wife Marina and their own business initiatives (he “chelnoki” goods from Poland and fulfill single orders for automation companies of Novosibirsk).

During the execution of the order for the telephone network in Novosibirsk in Sysoeva and the idea of “Doublegis” is a digital information guide, which combines the functionality of geographic information systems (GIS) and urban information system (GIS). “The concept was my idea, says Sysoyev. — It is based on free independently distributed the product of living through advertising: directory “Yellow pages”, transcribed into electronic form”. According to the businessman, he was one of the first who invented it: “It was good and bad at the same time, because the market is free, but nobody could understand what niche is and how to use it”.

The first version was released in 1999 on CD-ROM. Sysoev has signed agreements with several advertising agencies of Novosibirsk, which were to attract for little money participants guide, but this approach didn’t work because advertisers wouldn’t pay for registering in the guide. “Then, — says Sysoyev, we decided the minimum information in the guide to post for free, and advertisers to look for yourself”. To learn how to sell advertising helped the case: two Directors of Yellow pages “directory of” buy the digital plan of Novosibirsk and a friend called Sysoeva courses on active sales (“They saw us as a competitor,” smiles the entrepreneur). Courses Sysoeva explained that sellers should have to work under the Agency scheme: small salary plus a percentage of sales.

Detectives with tablets

Specialist information gathering — the official name of the employees “Doublegis”, “feet” relevance check card daily walk around half-time. They visit shopping malls, through the streets and check data on open and closed points you actually. Thanks to Hiking operators the accuracy of the information in 2GIS is about 95%, according to Alexander Sysoyev. Popular sites are inspected every two months, sleeping areas — at least twice a year. The information obtained was further illustrated by in the companies — owners of the point. One operator per working day updated 100 points. As a result maps of cities are updated almost daily.

By 2004, the project has reached the payback period, and Sysoev decided that they should do purposefully: he had founded together with his son Dmitry in the company “Doublegis”, in which took part the employees of “technograd plus”. At the end of the year was opened the first branch “Doublegis” in Omsk, and in 2005 sold the first franchise in Tomsk. In 2006 the company launched an online version of the product, and in 2008 — a Java application for handhelds and smartphones. In mobile applications 2GIS has a function of interacting with the map offline without a connection to the Internet that sets it apart from cartographic applications of “Yandex”, Google and Apple.

“Double what?”

In 2010-2011 Sysoev, having mastered the whole of Siberia, is actively developing company in the European part of the country. In the cities (except Rostov-on-don, Volgograd and Voronezh), the company works independently, and in the spring of 2011 goes to the markets of Moscow and St. Petersburg. Here the project encountered an unexpected problem. Calls from call-center constantly ran into another question “Double what? Copy what?”. It turned out that the brace is tightly associated with the copy. To butt heads with windmills in the company and changed the name of the product on concise 2GIS.

Investment in the development of maps of Moscow, according to Sysoev, amounted to “some tens millions roubles”: employees of the company for almost a year was the guide of the 300 thousand organizations of the capital. From reporting “Doublegis”, it follows that at the time she first appeared large Bank loans in 2011, it took 230 million rubles at Raiffeisenbank, laying the trademark “Doublegis” (in February 2015, the pledge was withdrawn). According to Sysoev, the amount provided in tranches: 180 million roubles in Moscow and St Petersburg, and 50 million roubles – on replenishment of circulating capital.

In the spirit of Google

The surge in business 2GIS in 2009-2012 required the company to large investments in infrastructure and staff. Until 2011 the “Doublegis” in Novosibirsk there were seven offices in different parts of the city, and Alexander Sysoev decided to combine them under one roof. The company rented first four floors of a 22-storey business-center “sun city” in Novosibirsk, close to the metro (it was later leased five floors). At the end of 2014 “Doublegis” bought 12 floors of the building on the Sberbank loan. A new office was equipped with “in the spirit of the best IT companies of the world.” “We had to Google and looked how they work, — the businessman tells. — As part of his budget wanted to do something similar. Our designers are driving the factories in China and chose the furniture.” On each floor there are two coffee point and a relaxation area. The names of the divisions also received quite modern sounding: accounting and audit office, the marketing Department is the engine of Commerce, the revenue Department — Paradise dates, the Treasurer — dear. In total the headquarters employs 900 people, whose average age is 27 years.

Own offices “Doublegis” work only in 13 cities, most of 282 cities covered by the franchisee. The principle is simple, says Sysoyev: the company selects potentially interesting cities to run 2GIS, and then finds a local partner to develop the business in this locality, and creates for him the map and guide of the city. The task of the partner is the duty to attract advertisers and to monitor the relevance of the card guide. The average cost of franchise — $200 thousand Despite the devaluation of the ruble, the claimed cost of entry into the 2GIS business has not declined. For example, the company is now looking for partners in Minsk (the cost of a franchise for ten years — $236 thousand). Sysoev noted that the size of the lump-sum payment is calculated individually and depends on population and economic welfare of the city, the size of royalties is also dynamic and after three years can reach 20% and higher advertising revenues from franchisees.

Income “Doublegis” and its franchisees are generated through advertising. Minimum package of contextual advertising in the app and on the website in Moscow is 5.3 thousand rubles a month. The most expensive position — banner-skyscraper VIP (a personal Manager) in the version for PC: almost 3 million rubles for the four months of placement. Sysoyev said that the average bill for advertising in the country is about 9 thousand rubles per month in Moscow on 14-15 thousand rubles Revenue “Doublegis” for 2014 amounted to about 3 billion rubles, of which 85% was advertising revenue, and 15% is the fees the franchisee. The volume of advertising in the system of 2GIS franchise and branch network almost equal: 45 to 55%, respectively. “Small town almost did not feel the crisis, there are only seasonal fluctuations, says Sysoyev. The main advertiser is the small and medium businesses, they are least susceptible to crisis.”

Sysoyev argues that the new city on the return achievable in two years, but there are pleasant exceptions. “We at the city of Magnitogorsk, where 400 thousand population, not relied on commercially interesting city, but we were approached by two graduates whose parents gave money to buy the franchise, says Sysoyev. — At first I was against it, but colleagues persuaded, reasoning glowing eyes applicants. As a result, the city showed the maximum growth rate, reaching breakeven in five months.”

Rahat kisanov running 2GIS in Ust-Kamenogorsk (Kazakhstan) in June 2013, claims that has already reached payback. “The difficulty, of course, there were — first of all in recruitment, he said . — Now we reached break-even and started to return the investment. This is in line with our expectations”. Kisanov won’t talk about the money, but said that the program 210 is installed on thousands of mobile devices 315 thousand residents of the city. “The average profitability of our franchisees to 28%, revenue varies in the range of 28-98 million rubles per year,” says Sysoyev. The revenue of LLC “Doublegis-Magnitogorsk” in 2013 amounted to 25,6 million rbl., net profit — 3,5 million rbl.

Photo: Ekaterina Kuzmina/

Boris Levin, owner of 2GIS franchise in Astrakhan, Krasnodar and Sochi, said that the most difficult at the start to convince advertisers of the effectiveness of the product. “We are often told: “Stay in the market two or three years, then will come to you,” he says . — Sales growth began only three years after launch. But last year revenue increased by 45%, and this year will grow by 50%”. Data on the revenue of LLC “Doublegis-Krasnodar” could not be found, but the franchise in Astrakhan brought in 2013, Levin 38.4 million rubles of revenue and 9.7 million rubles of net profit.

From Santiago to Prague

In 2013, “Doublegis” came out a few Italian businessmen: they offered to open offices in Venice and Padua. According to Sysoev, the investment in the development of maps and the creation of the directory for each city amounted to €0.5 million But after starting the experiment, the positive dynamics was not. “We came to office: like operator sits, says something on the phone, and the number of effective calls a day or two, — says the businessman. — Decided to change the employee, we immediately went to the local trade Union, which simulates rough activity. It turned out the nuances inherent in this region of Italy is not taken to answer the phone”. As a result, the office had to close (the product is supported remotely), and the company has suffered substantial losses.

Partners abroad Sysoev not looking, they turn on their own, and usually come from the CIS, who left for permanent residence in another country, but accustomed to product 2GIS. According to the head “Doublegis”, the cost of opening 2GIS in the big city abroad starts from $1.5 million Already working projects in Limassol (Cyprus), Santiago (Chile), Prague (Czech Republic), Dubai (UAE). None of them has entered the ROI. “It’s just an experiment, testing the technology, says Sysoyev. — You need to make the search engine working in a foreign language, the system of local search, is able to speak the language of the user”. Entrepreneur notes that in future years the model of franchising abroad, most likely, will refuse. “We do map by images, on which it is impossible to see house numbers, so must be work on place — explains Sysoev. — Are we going to do, or joint venture, or own, because you cannot make a quality product, not working on site”. In “Doublegis” has suspended the sale of franchises abroad and studying places with a high need for information. Thanks to the new points of growth in the companies intend to triple revenue in the next few years.

The numbers 2GIS

$300 — the cost of an aerial photo of Novosibirsk in 1994

$236 thousand — the cost of a franchise in Minsk

282 cities in 8 countries

3 billion rubles of revenue in 2014

Of 2.6 million companies

The 2.2 million requests per day

9 thousand rubles — the average check of advertising in Russia

37 thousand advertisers cooperate with 2GIS

Source: company data