«The main insight — you don’t have to dig for oil where there is none», — Sergey Korkin, Founder of the Ukrainian social network Connect.ua, Founder at IO Technologies
Sergey Korkin — Founder of Connect.ua, Founder at IO Technologies. Connect.ua is the largest social network ever created in Ukraine. In 2012 it ceased to exist.
On air of Youtube channel «Big Fish» Sergey told us about the stages of Connect.ua development and the reasons of the project closing and whether a local social network oriented on Ukrainian market is possible.
ABOUT THE LAUNCH OF THE SOCIAL NETWORKVladimir Perenniy came up with the idea for the startup. The idea was to have their own social networks in different countries. Vladimir attracted investment and bought Vkontakte’s competitor Faculty.ru along with the engine and the team. It was the very first project of Genesis.
We started at the end of 2007. Our developers were in Moscow and we had to open a Ukrainian office. We started by creating a domain and a media plan for the way we were going to promote the social network. We didn’t have a similar experience and we didn’t rely on anything. We just knew that we had to grow as fast as possible.
ABOUT INVESTMENT AND PROMOTION
Investors looked at the development of Facebook and did not understand how it worked, so they just decided to invest in our project. It happened in the pre-crisis times when people could spend a lot of money. We allocated about half a million dollars for Ukrainian office: 30% — for the office itself and 50% — for advertising. There were four people in the team at that time.
We used banners on the Internet for attracting media traffic: on bigmir.net, on Korrespondent.net but there were very few clicks. We did not count them and did not understand that banner advertising is about image but not about conversion. The second channel was the posting of ads around the universities just like in Vkontakte.
We also ran ads in the subway. But the most successful method of attracting an audience was contests with raffle prizes. Vkontakte also used it. In fact, it was the only method that worked. We gave iPads and iPods for registering a friend.
ABOUT THE ATTEMPTED SALE
In 2008 there were about 330 thousand people in the social network Connect.ua. The permanent target audience of Connect.ua was about 10% of those registered, that is, 30 thousand users. At that time, people didn’t see their friends. They turned around and left. In 2010 the social network already had 2-3 million users.
Mail.ru wanted to buy our company. Our company was valued at $3.3 million (at $10 per user). In June we had an offer but in August the crisis happened and the offer was cancelled. At the end of 2008 we ran out of money and closed the Moscow office. For about two years we lived off the money we earned from advertising: $5,000-6,000 a month and the Mnogoletniy paid the money out of his own pocket.
ABOUT THE DATING SITE
We didn’t close Connect.ua — we transformed it. It took us a while to realize that we were going the wrong way. We had been knocking on closed doors for 3 years. Nevertheless, we saw that the users were there, so we decided to find out who they were. We set up the Google Analytics and it was found out that the people on our website were not communicating with their friends but with the opposite sex: they evaluated photos, profiles and messages.
It became clear that we had built a dating site. We removed music, videos, all sorts of functions about news and work, finally transformed the social network. Now it’s Hitwe — Genesis’ current dating business. In the first 3 months the project doubled in size. So the day of closing Connect.ua was a happy day for us.
ABOUT THE SOCIAL NETWORK IN UKRAINE
The main insight — you don’t have to dig for oil where there is none. It took us 3 years to understand that. If you invest time and money but it does not give results, then the problem is objectively in the market. There is no ground for the emergence of a social network in Ukraine. The main reason is that most of the population speaks Russian. The Russian market absorbs ours. A local player will not pay off: social networks earn on advertising and in Ukraine it will be unprofitable.
ABOUT THE NEW BUSINESS
Now we have a new business: we are developing SaaS products. The first is analytics for news portals. For example, one of our clients is Ukrainska Pravda. There are more media-specific dashboards, more flexible settings, and integration with CRM. We monetize them with monthly payments starting from 1000 dollars per client.
Our second business is for Amazon merchants. We parse the site, we find out the number of sellers and approximate sales volume for each item. We have a database of products which are sold well but have low competition. Most of our clients live in Europe.