In the opinion of Daphne Koller, founder of Coursera, one of the most popular extramural teaching programs, within the next five years, the top colleges may be teaching entirely extramurally. This trend is exemplified by the start-up ProctorEdu, which has solved the problem of passing off one person as another and copying in the taking of examinations extramurally. The company started in March 2016, and by August it had produced a version of a system with automatic detection of dishonest behavior. Today, Artem Kozin, head of the startup. and Anton Skshidlevsky, its technical director, talk about their project.
— How did you learn about the startup ProctorEdu?
— I am an expert of the Indian accelerator EduGild. This is an accelerator which invests in EdTech startups. On September 2nd, a new stage of the accelerator began in will last for four months. From 400 applications we selected seven start-ups, including ProctorEdu. Apart from mentor support, the projects also receive financing. ProctorEdu, for example, will pay five per cent to the company for teaching in the accelerator, and it will also buy out its share for a certain sum, which will be spent on developing this business.
— Why did ProctorEdu in particular get through the accelerator?
— We like the complex technologies this startup uses. It has three strengths: user experiences, artificial intelligence and complex video-analysis. We also assessed the qualities of the project founders. We think that an idea is not worth anything in itself. What is important is how it is brought to life. The accelerator believed in the project team and in its future success.
— In general, do Russian start-up operators differ in some way from others?
— Russian startup operators are suitably modest. In applying to the accelerator, they do not look down on others, but come to learn. Though I do consider that Russia traditionally has very strong universities, which produce excellent specialists in the field of new technologies. Therefore Russian entrepreneurs often choose complex, unusual niches for themselves.
— What markets is ProctorEdu targeting, in your opinion?
— The project has three main targets: Russia, where they are already developing using their own money, India and America. And where America is, there also is Europe. We are deliberately not making special plans to enter the European market, because the economy there is stagnating at the present time.
— But surely Russia has some sort of crisis today too?
— All the same, I think the Russian market is a better prospect than, for example, the Spanish. You have: 1More rapid growth of Gross Domestic Product. 2A higher GDP than the EU. 3GDP consumption is more uniform and sensibly distributed between branches of the economy. 4Rates of growth of industrial production are considerably higher than in many other countries. These are the reasons for our interest.
— Is there some secret about startups successfully entering other, foreign markets?
— A startup can operate in a local market and solve local problems. This is not particularly difficult. But if you go to other markets which you do not know, you absolutely must have a team member who is well versed in the particular local ways of doing business. ProctorEdu is helped not only by the accelerator but also by a strong marketing agency. Furthermore, in making plans for worldwide advancement you must not spread yourself too thin, you have to assess your capabilities objectively and enter different markets gradually.
— What is your role in this project? How often do you communicate with its founders?
— We call each other on Skype several times a week, discussing new tasks every time. Then we see if a target has been reached or not. And we go into the reasons for anything that has not worked out. Then we set further new tasks and again go into the results of their fulfilment...
— Do you think new technologies will radically change the education market?
— Yes, of course. Look how they have already changed people's lives. At one time, someone living in the country could hardly ever get a good education. Now you can study at Stanford from anywhere in the world, and ProctorEdu technologies will help in this.
— Is it riskier to invest in Russian startups than in projects from other countries? What do you think?
— I think investing in any project carries a high degree of risk. The reason for this has nothing to do with the national origin of the startup or of the members of the team trying to advance their innovation. It is just the simple statistic that only 1-2% of startups become truly successful. And in this sense, I see no difference between a Russian startup and any other. If you see a problem, it has to be solved: a startup should be the hammer driving the nail in. And the problems which the project can solve exist in any country.
— What about Russian bureaucracy, which is often mentioned in the West?
— I have heard all that, of course. I can see perfectly well that bureaucracy in Russia differs little from that in other countries. That is a fact. But in any case, I personally consider that this should be seen as presenting not problems, but opportunities: the one who has learned to act quicker and better than the others always wins. In this case, in overcoming bureaucratic obstacles.
— In your opinion, what other Russian startups are worth investing in?
— What I like about Russian startups is that most of them have very capable programmers who can solve the most important problems. I would mention in particular: 1Telegram – a secure messenger which can also be used as a blog. A new successful creation by Pavel Durov, who created VKontakte, one of the most popular social networks in Russia. 2FindFace - a facial recognition service. The technology is based on data from the same VKontakte mentioned above, which is a social network with 350,000,000 active users. ProctorEdu uses similar technology for user verification. 3Appodeal. The development of advertising is one of the most rapidly growing sectors, and Appodeal is the star of this market. The company generates about 100 billion advertisement showings every month. Is that enough? I could go on...
— What factors usually influence the success of a startup?
— I think there are several. 1The product. It is important to choose the right market, where you will be able to satisfy your clients. Remember Google, for example. It entered a market already full of other players, but manage to come up with a product that left the others with no chance of success. 2The team. The project founders are important, of course, but they cannot build a great company on their own. Hire the right people, and you will have no problems. Hire the wrong people, and your best-laid plans can come to naught. 3Cash turnover. In my opinion, this is one of the most important factors in the work of any start-up. If you cannot find an investor or borrow money from friends and relatives, take out a loan. But don't forget to keep an eye on the cash flow. According to some studies, 70% of startups fail in the first three years simply because they do not know how to deal with floating capital properly.
— What factors usually influence the success of a startup?
— I think there are several. 1 — the product. It is important to choose the right market, where you will be able to satisfy your clients. Remember Google, for example. It entered a market already full of other players, but manage to come up with a product that left the others with no chance of success. 2 — the team. The project founders are important, of course, but they cannot build a great company on their own. Hire the right people, and you will have no problems. Hire the wrong people, and your best-laid plans can come to naught. 3Cash turnover. In my opinion, this is one of the most important factors in the work of any start-up. If you cannot find an investor or borrow money from friends and relatives, take out a loan. But don't forget to keep an eye on the cash flow. According to some studies, 70% of startups fail in the first three years simply because they do not know how to deal with floating capital properly.
— How important for startups is government support?
— Thanks to the formation of new companies, new jobs are created and the country's economy benefits, therefore the government of any country should have an interest in creating a favourable business climate. Even at the business starting stage, start-ups have to cooperate actively with the state authorities: the business must be registered, the form of taxation selected and so on. So it is obvious that government support is highly necessary. Nevertheless, many successful startups have reached the heights independently, without government support.
— What advice can you give to potential investors in Russian startups?
— There are several things I can advise, namely: 1Find the right partner to help you adapt to an unfamiliar market. 2Study all documents carefully, regardless of how long it takes. You might find huge risks associated with the deal, which could be significant enough to influence the further development of events. 3Conclude the deal under English law. Russian law is not yet flexible enough. This makes it less desirable in producing the key documents on the deal. That is why the vast majority of Russian deals are regulated by English law. 4Choose arbitration, which is the most widely used mechanism for solving disputes in Russian deals, because an arbitration investigation provides more guarantees that the deal will be considered by a competent specialist, and that the arbitration decision will be recognized as valid, subject to the condition that contractual obligations are fulfilled. Furthermore, there is a positive trend for arbitration decisions to be fulfilled in Russia.