In October we had the second module at Skolkovo focused on marketing. Over a few days, working in a small group with other students, we came up with a new product for the market and built a marketing strategy for it.

We went through the journey: figured out the context → identified the customer’s pain points → answered the question in their head, “What will you change in my life?” → defined the core emotion we want to trigger → described the solution → mapped out which channels and how we’ll connect with our customers.

I was a bit skeptical at first. I’ve already worked on growing both service and product brands, so I worried the module might be full of generic, disconnected stuff. I’d also heard from the MBA-7 that there were some complaints about it. And half of the pre-reading was straight from Kotler, way too academic for my taste.

My worries didn’t come true, I finally pulled my scattered marketing knowledge into a clear structure. Before, I could talk on a single topic and jump from one to another. Now I understand the whole system, I can spot the actual problem faster instead of just the symptom.

We had two guest speakers at the module. The first, Dmitry Kuznetsov, head of Google Russia, talked about VR and artificial intelligence. His presentation was very restrained and corporate. The second guest, Vladimir Pirozhkov, is an industrial designer who spent many years abroad working at Toyota and Citroën. He now runs an innovation and industrial center in Moscow. He spoke about printing living microorganisms, military developments and building factories on asteroids. It was truly inspiring.

One of the groups is presenting their work.

The course was led by Luis Martinez, an eccentric professor from the Spanish business school ESADE. He taught with great energy, guided us and gave feedback on our group work. Teamwork once again turned out to be probably the most important part of the learning experience. Here are a few takeaways from the module:

— Marketing – choose me darling;

— It’s about building skills, not just collecting knowledge, that’s what the module is really about;

— We’re not competing with companies; we’re competing for customers;

— Entrepreneurs build companies based on one of these assumptions:

1. A technological innovation at the core (technology-driven). For example, once it became possible to embed the internet into home appliances, we started seeing refrigerators with screens that let you order groceries right from the door. Fewer than 10% of these companies ever become profitable.
2. The other approach is focusing on “people with problems” (pain point method, customer-centric). Companies that take this route are far more likely to turn a profit.

— A more effective market approach is built around solving people’s pain points now, not in the future;

— A marketer can’t think in terms of B2B or B2C, only H2H, human to human. People buy from people;

— Among all target groups, it’s crucial to understand your main one – marketing resources are limited;

— You can target two audiences, but only if they overlap;

— Strategy is about cutting the excess / denial exercise. When building a strategy, say “no, thanks” as often as possible. Avoid the phrase “why not?” and don’t jump at every new idea;

— The rule of innovations – don’t ask customers what they want in a new product. Air conditioning was invented by understanding the audience’s problem, not by running surveys;

— A customer usually goes through this chain: I know (awareness) → I’d try it (branding) → I got it (distribution strategy) → I use it (product) → I evaluate it (meets expectations). If it’s OK → they go back to “I’d try it” (loyalty). If it’s NOT OK → they’ll never use it again. And right now we’re being bombarded from all sides at the “I know” stage, all those ads and banners everywhere. But the whole chain has to work effectively. Otherwise, you just burn out the market.

— There are key success factors in a company, KSF – the things that let a company win. And there are key not-failure factors, KNF – the basics a company must have by default, like the entry ticket to the industry. For example, if you’re selling real milk while all your competitors are selling powdered water, that’s your KSF. But once everyone starts selling milk, it turns into a KNF.

— When we make mistakes, the only thing we really need is progress;

— The more macro functions you strip away, the more successful you become. That’s basically how new businesses emerge and how competition is won, when a single micro-process ends up changing the entire infrastructure and approach.

Working on the marketing strategy

Steps for building the strategy

Step One. Define the context and try to understand the customer archetype. Here, it’s important to dig into the details, constantly asking “why?” The key is to go deep, not wide, when describing the archetype.

Example: Richard is 38 and has been working at “Ros-Ruki” for the past six years. He’s the company’s technical director and his team is developing a device capable of collecting soil from the moon’s surface. There are eight engineers on Richard’s team, and they all end up working late to meet the project deadline. Because of this, Richard is having family issues, his wife is upset that he spends so little time with their daughter. The head of Ros-Ruki, Mike, is pressuring Richard, since in six months he’ll need to present a spending report for the grant funding the project. Mike knows he could lose his job if he doesn’t show results. Richard feels Mike’s pressure but also realizes hitting the deadline will be tough, they’re currently working on the device’s PCB, which is meticulous and highly responsible work.
A PCB is that green board with all the little soldered bits you see inside any electronic device.

Step Two. Define the customer’s “pain point.” For our team it looked like this: Richard is stuck doing routine work and has no personal time.

Step Three. Define the “flag.” This is the customer’s answer to the question: “Brand X, what do you mean in my life?” Here’s the framework for creating a flag:

1. You…
2. The role you play in my life…
3. How my life will get better…
4. Which part of my life improves, in what context or situation.

For Richard you are Ironman that multiplies the ability to develop edgy technologies.

The flag is never shown directly to the customer and never appears in advertising, it’s for internal use only. Think of it as an internal guideline for the company. For example, it’s a handy way to explain what the company does to a new employee.

Step Four. Choose one core emotion – the main feeling you want the customer to experience when interacting with your brand. You can use an emotion map for this. For engineer Richard we chose empowerment.

Step Five. Think about how everything we’ve outlined so far will be reflected in the product or service. For our fictional engineer, the product was going to be a computer program where he could input the requirements for the final board and it would generate a functional circuit diagram, a list of necessary components and even a layout model for the board.

Step Six. Map out the customer journey — from the first touchpoint to purchase and actual use. Think through every interaction and what happens at each one. In our case, we imagined Richard visiting a website for board components, seeing our banner, getting demo access, exploring the product and then going to his top manager, Ivan, to tell him about the solution…

Group work on the communication strategy

Step Seven. Final implementation of the strategy.

Cortex and limbic System

— There are two systems in the brain involved in decision-making. The limbic system consumes little sugar, works at about 11 MB/s, makes reactive decisions, drives emotions and relies on habits. The cortex is slow, burns glucose, works at about 40 bytes/sec and requires deliberate thinking. The limbic system is involved in decision-making much more often than the cortex.

— It’s great when marketing manages to reach the customer’s limbic system. Customer loyalty is beneficial for both the client and the company. The company spends fewer resources on retaining customers and the client doesn’t waste energy deciding whether to buy. Very often, to save energy, decisions are made in the limbic system.

Example: You’re driving down the road and catch some movement in the woods out of the corner of your eye. If your cortex were in charge, it would go like this: Hmm, something big is moving → maybe it’s an animal → could it be on two legs? → no, too big for that, probably four legs → likely a deer → weighs about 200 kilos… Meanwhile, your limbic system reacts like this: Danger → hit the brakes. That’s how you can survive.

Conclusion

I’d give the module a 6 out of 10. The good part is that it gives a universal framework and can be useful even for people with marketing experience. Group work was awesome. The downside is that the content density was low, I’d double it, and the prereading with old-school Kotler felt outdated and didn’t really connect to the module slides.

In September we had the first Entrepreneurship module as part of my MBA program at Skolkovo. We dove into how investment funds work, how companies are valued at different stages and how decisions are made in high-uncertainty conditions.

Before that, we had an “intro game” to get to know our group and the campus. Besides lectures and group work, the program included two guest speakers, a welcome evening with the MBA-7 group and a few organizational events. The daily schedule went like this: breakfast at 8AM, lectures and group sessions from 9AM to 6PM, a guest speaker from 6PM to 9PM and then group prep for the next day until about 1AM.

Before the module, they sent us pre-readings, mostly case studies, about 200 pages in total, plus a list of recommended books. Each case was a detailed breakdown of a real-world business, packed with metrics and in-depth descriptions of its processes.

Some of the cases were from Russia, but most were international examples. When I first started reading, I thought, “If it’s not about Russia, how is this going to be relevant?” Turns out, working through a case is really about learning the methods and approaches, and those are universal, no matter the context.

View of the classroom during the lecture

The lecture part is always mixed with group work. Each group session ends with a presentation of our solution, followed by a discussion in the classroom. After that, the professor walks us through how the case actually played out in real life. My group had six people.

Everyone’s different, some have experience running production, others come from consulting or auditing. The group is super active and that’s probably the biggest challenge. At the start we spent a lot of energy just figuring out how to structure our workflow. You learn a ton from your classmates and even more, if you pay attention to how you behave in the process.

The course was led by Benoît Leleux from IMD. He’s originally from Belgium but spent many years in the US. He’s invested in 20 companies and had some level of involvement in every case we studied, you can really feel that. Here are a few key takeaways for me:

Raising money

— The cost of raising money for a startup is different at each stage. There are four main stages:

1. Seed – when there’s just an idea and a team. At this stage, an investor might put money into the idea if the founders can convince them they’ll get a 75–100% annual return;
2. Start-up – when there’s a product and the first sales in the target market. Here, investors expect around 75% annual returns;
3. Growth – by this point, the core ideas are validated and funding is for scaling up. You need to show investors the company can deliver growth, returns of 25–50%;
4. Late – when the company has already gone through its rapid growth phase. Funding usually comes not from funds but from corporate partners. For example, teaming up with a large company to access their customer base. Investors at this stage expect about 15–20% annually.

— A company’s valuation and the size of the funding round is always discussed together with the conditions the company must meet (with all the “ifs”). Valuation by itself is an abstraction, the terms make it real.

— Companies raise money in rounds because it makes the valuation more accurate. You give up a smaller equity stake, promise more predictable results and it’s easier to convince investors. This process is called staging.

— Staging is interesting because if an investor comes in during the first round and the startup delivers on its promises, the valuation goes up in the next round. Then the investor can sell part of their shares at a higher valuation.

— Staging also pushes founders to assess their company and their ability to deliver on all those “ifs” more realistically at each round. If they overvalue the company early on, they risk ending up in a situation where the share price in the next round is lower than in the previous one. And that’s a really bad signal for the market.

For example: we value our company at 10 million and raise 1 million for 10%. We commit that in 18 months we’ll have a working technology that can increase a sow’s litter size from 25 to 32 piglets.

— Reading TechCrunch announcements about funding rounds without all the “ifs” is pretty pointless;

— When raising money, negotiations are often all about those “ifs.” The conversation usually goes like this: “Whatever valuation you want, you can have it. But if you don’t deliver on all the ‘ifs,’ we’re taking it all back”;

— You don’t need to spend hours debating exact deadlines for each “if”, everyone just understands they need to be met fast;

— A normal, healthy entrepreneur hates risk;

— One idea kept coming up: Dilution is nominal. Run out of money is terminal;

— A business plan itself isn’t as important as the process of thinking it through;

— Early-stage startups aren’t really interesting to clients or big companies. First, you have to earn their trust.

Negotiating with investors

— Investors use three moves to test whether a founder is realistic:

1. They ask if the founder understands that a different CEO could be brought in if that person would be more valuable for the company. If the founder freaks out, it’s a red flag, they could end up hurting the company. You can’t think of yourself as untouchable.
2. They set up a board of directors with four investor representatives and only one from the founders’ side. Investment funds have the reputation of being laser-focused on making money, while founders usually don’t have much reputational weight yet.
3. When the founders present their business plan and all the “ifs,” investors might say: “Okay, we agree with your valuation. We believe you’ll hit revenue of N with the profitability you’ve outlined. But let’s include in the agreement that no dividends will be paid until you actually reach N with all the ‘ifs’ met.”

These kinds of questions are called “smoking out of entrepreneurs”.
Experienced founders respond with something like: “No problem, of course we’re committed to hitting the targets we set. But if we reach them in N months, we want to keep a bigger share of the equity.”

— If a company raises funding but doesn’t become a unicorn, just turns into a “walking zombie” with steady revenue, investors can ask to have their money returned with all the accrued interest. Only after that can the founders start taking a share of the dividends.

Due Diligence, the situation in Russia and sexy businesses

— It’s harder for B2B companies to go public because, at the end of the day, it’s “regular” people buying the shares;

— A business plan itself isn’t as important as the process of thinking it through;

—A pitch deck is never truly finished, it’s an endless iterative process;

— Big companies often avoid entering the same market with a new technology because of the “why shoot yourself in the foot?” mentality. (By the way, there’s an explanation of this in The Innovator’s Dilemma );

— Once an investor confirms they’re ready to invest, a Term Sheet is signed and the Due Diligence process begins. During Due Diligence they check the founders’ and key team members’ backgrounds, the functionality of the solution, potential patent infringements and the overall “cleanliness” of the company. This process can take quite a while and cost anywhere from a few thousand to several million dollars. Only after that is the investment agreement signed;

— There are few investment rounds in Russia or business acquisitions because doing a full, legally sound Due Diligence is often nearly impossible;

— If the round closes, the startup pays for the due diligence. The cost is deducted from the funding amount;

— A situation where a startup takes the Due Diligence report from one investor and shows it to another is basically impossible. Investors are usually more like friends than competitors;

— Investors insist on getting preferred shares, which give them priority in getting their money back if the company goes bankrupt;

—It’s always better to have more resources than you think you need. That gives the company more resilience. If you don’t have that buffer, cut down the number of directions you’re working on;

— In developed countries a lot of processes are outsourced. In developing countries that usually doesn’t work, there just aren’t companies with well-established specializations. That’s why many businesses end up being vertically integrated. For example, a model pig farm might start selling specialized feed storage platforms to the market because they had to figure out how to make them themselves and the product turned out to be in demand;

— You win long-term if you’re a maniac about operational work;

— Slip age is when the business is making money overall, but you don’t really know which areas are driving it and you fail to notice when a part of the business is running inefficiently;

— Some brands make products specifically for sales. For example, Nike has collections that are sold only in outlet stores;

— Do not ask for permission, ask for forgiveness. A short way to describe the entrepreneurial spirit inside a company;

— Companies can roughly be divided into three types: VC / Startup – no established model or market yet, business processes are still messy. Growth – the model works, and the company is in a rapid growth phase. Buyout / Mature – the business is stable and fully developed. The VC stage is what many entrepreneurs see as the “sexy” business. But there’s often more money in the third stage, which people tend to ignore because it seems boring. Benoît admitted he loves boring businesses – the more boring, the better, in his view. Sexy businesses always have more competition, full of players chasing their ego rather than making money.

About entrepreneurship

— Management is creating a role that others perform, while you remain responsible for the outcome;

— People see the world differently. Some think it’s completely unpredictable, so why bother making any plans? Others believe it can be predictable, so if you have a stable job and salary, you’re safe. In reality, the world is somewhere in between, with a high level of unpredictability;

— Entrepreneurs spend their time gathering means, methods and leverage points. Once they’ve built up enough, they discover new opportunities. Steve Jobs’ Stanford speech touches on this;

— Methods build up by answering these questions: Who am I? What do I know? Who do I know?

— Start with intention, don’t wait for opportunities to come to you.

Conclusion

The module gets a 9 out of 10. The best part is: it set a high bar for the rest of the courses and the material is packed with value. The pre-readings and group work add a lot. The downside is that the guest speakers didn’t really connect much to the module’s topic.

I first heard about the MBA program in my third year of university when I launched my first project – the branding agency AGRRR. Back then, I thought it would be great to gain that kind of experience. Now, I can explain that I need an MBA to strengthen my skills in financial planning and strategic management. I also want to build useful connections since I plan to continue doing business in and from Russia. But most likely, I actually formed the real reason for pursuing it back in my third year.

Choosing a school

To choose the right school, I attended two MBA program fairs and spoke with students from Harvard, Haas, INSEAD and HEC. In 2015 I went to London for a presentation at the London Business School. There were 7 people at the presentation: 5 Indians, 1 American and 1 Norwegian.

At the same time, I was learning English because I knew I needed a couple of certifications such as GMAT and TOEFL for admission. By the end of university, my English was still weak, so I had to start from scratch. I decided to begin with the TV show “The Walking Dead,” watching it in English with subtitles. Not the best choice, since most of the episodes were filled with zombie growls. After that, I switched to lessons with tutors.

The more I looked into the schools, the more I realized that the program is primarily for those building corporate careers. Even at institutions that promote entrepreneurial spirit, like Haas, after graduation, most students end up working as employees. The second thing that bothered me was the need to take a break from the projects I was working on for a year or two. At that point, I wasn’t considering part-time programs.

Getting to know Skolkovo

In February 2017 I saw an ad for the MBA at Skolkovo and decided to visit the campus. I was sure it would be my first and last visit to the school, as I was biased against MBA programs in Russia. It seemed like in Russia, everyone was just trying to make money off MBA education, no matter who they were. During the presentation at Skolkovo, I heard some important points:

1. The program lasts for 18 months, in a modular format – one module, one topic, one week per month. During this week, you live on campus, with classes running from morning until late evening. You balance the program with work, immediately applying what you’ve learned in practice;
2. There are 50 people in the class, half of them are entrepreneurs. Maybe there are a lot of entrepreneurs at Stanford or MIT, but this is not typical for European institutions. And it’s always more interesting with practitioners, people who know how to take responsibility;
3. Classes are in English and the instructors are visiting professors from Cambridge, IMD, ESADE, IESE. The way they present it is this: the format of bringing in professors from other schools allows them to invite the best experts in their fields. International practices are taught with a focus on the specifics of the Russian market. The program also includes two international modules: one in Silicon Valley and another in China.

The building where classes take place

How I applied

I decided to apply. The first step was preparing the document package: my diploma, resume, a couple of recommendations and answers to 4 questions about motivation and plans. I sent the documents on April 5th. The second step was an interview on campus, an English proficiency test and a logic test. I arrived on campus on April 18th. The interview was with Nadezhda Agapova and it lasted an hour and a half in the format of a friendly conversation. That same day I received confirmation that I passed to the next stage – an in-person interview with one of the founders of Skolkovo.

On April 25th along with 5 other potential students, I went to a meeting with Andrey Rappoport. At the stage of the interview with the founder, 30% of the students are eliminated. What I remember most from the meeting is how Andrey Rappoport explained that he and the other founders created Skolkovo because they realized the need to develop a new generation of managers in Russia if we want meaningful changes in the country. We discussed how Skolkovo pays attention to the legacy of the Russian management school of Georgy Shchedrovitsky. When I read Organizational Management Thinking, I couldn’t believe that someone in Russia could think so comprehensively and consistently about management processes, highly recommend reading it. A week later, I received word that the interview went well, and I was accepted.

Grant competition

At Skolkovo you can win a grant that covers up to 50% of the tuition fees and I decided to participate. By early June, there were 270 people applying for the MBA program. Among those who passed all the admission stages 16 projects were selected to take part in the competition.

As part of the competition, we had to present our project in a 5-minute pitch and answer questions from the jury. The jury consisted of top managers from renowned companies like MasterCard, Wimm-Bill-Dann and Rostelecom. I was the first to present, which I was glad about. Waiting for your turn while watching others present can be nervous. The projects varied: medicine, blockchain, real estate, oil development. The main prize of €30,000 went to my future classmate Samvel, who develops electric vehicle charging stations using Russian-made components. Most of the projects were strong, well-developed, with excellent presentations. It was especially satisfying to win a €15,000 grant in such a competitive field.

The first module starts in September. Let’s go.

Thanks to: Oksana Sichenikova, Maria Polikarpova, Nadezhda Agapova, Maxim Feldman, Erik Brovko, Denis Sobe-Panek, Boris Fizulov, Evgenia Gekman, Darya Kholodova, Lydia Agafonova, Grisha Maslak and Vladimir Gorovoy.

About half of our clients come through marketplaces and classifieds, so we’re always working on improving how we market through those channels. For Biz-cen.ru we use platforms like Cian, Yandex Realty, Avito and others. With LavishShoestring.com, our vintage goods project, we listed items on Amazon, eBay and Etsy. While paid search ads come with tons of settings and detailed analytics, marketplaces don’t give you that kind of control. So, to attract more customers, we build custom tools on top of those platforms.

The built-in marketing tools on marketplaces often make it surprisingly hard to understand how listings are ranked. For instance, on Amazon, tracking daily views for a specific category means manually logging stats day by day, adjusting the date range each time. And Avito still doesn’t show a daily breakdown of views, you can only see the total number of views since the listing went live.

There are two main reasons:
— First, marketplaces don’t want to overwhelm users with too many settings. They stick to a simple model: want more customers? Pay the platform more. On eBay, for example, you can boost your ranking in search results, but only if you agree to give the platform a bigger cut when the item sells.
— Second, building solid advertising tools inside a platform is tricky. It’s a balancing act. If they give sellers too much clarity, say, explaining how headlines affect ranking, some businesses will game the system to climb higher in the results. That might work for sellers, but it often leads to messy, unreadable titles for buyers.

We study each marketplace’s search algorithm and build custom layers on top of their internal analytics systems. To make sure the way we optimize our listings actually leads to more sales, we run experiments. And since marketplaces don’t offer tools for quick testing, we automate the whole process ourselves.

An example of our work to boost sales on Amazon
To boost item sales on Amazon, we started by building keyword sets for each product category, vases had their own, decanters had a different one. Next, we created an auto-generator for titles that pulled info from each item’s questionnaire and began testing how the order of words in the title affected search rankings. Then we moved on to bullet points, experimenting with how different descriptions impacted visibility and conversions. After that, we added up to 1500 relevant keywords to each product. Amazon doesn’t let you include keywords during bulk uploads. So we had to build a separate module that updated each listing after it was already live.

Working to grow customer traffic from marketplaces is a niche in marketing that very few people tackle professionally. Every now and then, a new tool pops up that automates a small part of the process, but I’ve never seen a single product that fully covers even one marketplace end to end yet.

In our company, there are people who know their stuff way better than I do. And when everything goes according to plan, things run smoothly. But real work always brings surprises. So how do you tell if something went wrong because of the employee or not?

When progress in some area stalls for a while, I see two possible scenarios. In the first one, the work is actually being done right: solid hypotheses are built, tested and refined. Let’s call these folks the Problem-Solvers. In the second case, the person just doesn’t have the necessary knowledge or skills. Let’s call them the Pretenders.

Over time, I’ve come up with a way to spot the difference. Problem-Solvers are open during discussions. They take responsibility for mistakes, explain what’s going on in plain language and lay out a clear path forward. Their mindset is: “I know I can figure this out, I learn from my mistakes.” Pretenders, on the other hand, speak in circles, avoid clear answers and tend to blame others. Their driving force is fear of being discovered. They often rely on past achievements to cover up current gaps.

I’ve never been able to turn a Pretender into a Problem-Solver. My take is that the Pretenders have built a life around avoiding responsibility, not just at work. Real growth, I believe, only happens when someone takes ownership of their life. But when fear is the main motivator, people only learn just enough to stay hidden. That’s a dead end.

In a perfect world, a good leader knows how to spot and keep the Problem-Solvers and filter out the Pretenders before they even make it past the interview.