Two common pieces of startup advice that get doled out are: 1) you need to be in Silicon Valley to start your startup; and 2) you need to cater to customers in the US market.
That’s a tall order considering the rising cost of housing, the war on tech talent, and a number of challenges facing immigrant entrepreneurs.
Plus, it’s simply not true. There are a number of startups that are starting up and succeeding outside Silicon Valley.
To help debunk this myth and others, I’ve invited Marina Mogilko, the co-founder of LinguaTrip, an online marketplace that connects language learners around the world to language schools.
Here’s what you’ll learn from Marina in this episode:
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Poornima Vijayashanker: Welcome to another episode of Femgineer TV, brought to you by Pivotal Tracker. I’m your host, Poornima Vijayashanker, the founder of Femgineer. In this show, I invite innovators in tech, and together we debunk myths and misconceptions related to building tech products, and companies. Two very common myths are, “To start a company, you need to be in Silicon Valley.” And, “To scale, you’ve got to have customers in the United States.”
Well, to help us debunk these two myths and many more, I’ve invited Marina Mogilko, who is the co-founder of LinguaTrip. LinguaTrip is a marketplace that connects language schools to language learners, around the world. Thanks so much for joining us today Marina.
Marina Mogilko: Thank you, hi everyone.
Poornima Vijayashanker: Yeah, so it’s wonderful to have you on the show. You and I met back in 2015 when you had kind of focused on LinguaTrip, and taking it from being an offline business, to an online business, and you had just joined 500 Startups Accelerator.
Marina Mogilko: Yeah.
Poornima Vijayashanker: Yeah, so let’s kind of go back in time a little to see how you actually got started in entrepreneurship.
Marina Mogilko: Mm-hmm, so yeah, I have been a language learner myself. When I was 14, my parents sent me to the UK to learn English. I was this straight-A student at school, and I felt when I arrive in the UK, I would be speaking English perfectly. Then I arrived at the Customs, and the guy asked me something. I didn’t get it. I realized that the language that I learned at school is completely different from the real language. Then two weeks in the UK gave me amazing progress. When I came back to St. Petersburg, I won the whole Russian Olympiad in English. I realize this is the way to learn the language, and I did the same for German.
Then when I was 18, I met Demetre, who’s another co-founder. He told me, “You know, you speak languages so well, and you know how to do the whole process, why don’t we start a company together?” We had our classmate in the university who wanted to go to the UK to study English, and we decided to start with her. In 2011 we sent her to the UK to learn English, and started the company.
Poornima Vijayashanker: Wonderful, so you started the original inception of LinguaTrip in St. Petersburg, Russia.
Marina Mogilko: Yes.
Poornima Vijayashanker: It was an offline business.
Marina Mogilko: Yeah, completely offline. You had to come to the office, sign all the papers, everything was manual.
Poornima Vijayashanker: Yeah, and how long were you running that business for?
Marina Mogilko: We’ve been running it for three years, and during the second year we realized that if we want to scale, we need to bring everything online. We tried to open more offices in Russia, but that meant traveling to these locations, and I didn’t really like traveling at all, because I just like my city. It was really complicated.
Poornima Vijayashanker: Yeah, and your business was pretty substantial, right? You had quite a lot of revenue, even as an offline business.
Marina Mogilko: Yeah, yeah.
Poornima Vijayashanker: But decided to go online. Now, neither you nor your co-founder had any experience building an online business.
Marina Mogilko: No. It was the hardest task actually, when we started to look for a technical co-founder. The salaries in Russia are pretty low, but still having somebody technical with good experience costs a lot of money. We had to reinvest everything. Deme started to look for somebody technical, and he’s into carting. He went to some race, and he saw a guy who looked exactly like somebody who would be coding, and he just approached him. He was like, “Are you coding?” He was like, “Yes, I am coding.” That was the first guy who helped us initially start. Then he invited a couple more people, and one of them became our co-founder.
Poornima Vijayashanker: OK, so you originally had that offline business, what happened to that business?
Marina Mogilko: We eventually shut it down. We still have that legal entity, but we don’t do anything offline. The main entity is in America, the online one.
Poornima Vijayashanker: OK, but when you started the online business you originally started it still in St. Petersburg Russia?
Marina Mogilko: Yes, yeah.
Poornima Vijayashanker: OK, when you were getting started your customers were who exactly?
Marina Mogilko: Mostly students, 18–24 willing to learn languages. Just like me, looking for this international experience.
Poornima Vijayashanker: OK, and were a lot of them predominantly Russian, or…?
Marina Mogilko: Yeah, they were all Russians.
Poornima Vijayashanker: OK.
Marina Mogilko: When we started, 100% Russians, 100% from St. Petersburg.
Poornima Vijayashanker: Yeah, and that was a pretty big market to get started.
Marina Mogilko: Yeah. It’s good money. With one customer we make around 25% in commission, and the average course would be like $1,000, $2,000. Once you get one customer, you can do a lot of things. Once we had our first customer, we built our basic website. With the second customer, rented a table and co-working space so we could do things, it was just one customer.
Poornima Vijayashanker: Yeah, but you were pretty successful at getting it off the ground, and building a customer base outside of Silicon Valley, and outside the US?
Marina Mogilko: Yeah, yeah, yeah.
Poornima Vijayashanker: Walk me through why you decided to shut down that successful offline business, and then take it online?
Marina Mogilko: We couldn’t do two things simultaneously. Offline business requires a lot of people, because customers would come to your office, they would have coffee, they would sit with you for an hour asking all of the random questions like, “What do I do in London?” All of that. Our mission is to have a small team, but a lot of revenue. We decided to concentrate and put all our efforts in the online venture.
Poornima Vijayashanker: Aside from reducing overhead around employees, and wanting to have more revenue, what other potential did you see in going from offline to online?
Marina Mogilko: Another thing is not traveling. I didn’t like traveling to all the Russian cities and starting offices, especially in winter. Also, I think removing people from the chain itself, like meeting customers in person, and signing all the papers. That was a great relief for me, because I’m not personally really willing to meet all of the people when there are like 20 or 30 people.
Poornima Vijayashanker: Sure, OK.
Marina Mogilko: Yeah, reducing that human factor.
Poornima Vijayashanker: OK, so you wanted to basically scale how you were managing your customers.
Marina Mogilko: Yeah, and also an opportunity to reach to other, to people in different destinations. The first booking that we had on our online platform came from far East Russia, and it was so surprising. That was our first customer, not from St. Petersburg and Moscow where we had offices. Potentially we wanted to reach international people from other countries as well.
Poornima Vijayashanker: Yeah, so a great reason to go online was to get more reach within your own country, but also into other markets.
Marina Mogilko: Yeah, exactly.
Poornima Vijayashanker: Yeah, talk to me about that. How big is the language-learning market across the world?
Marina Mogilko: I think it’s around 20 billion, so it’s pretty big.
Poornima Vijayashanker: Wow.
Marina Mogilko: People don’t realize it, especially if you’re in the states. The majority of the market is outside the states, it’s actually people coming to the states to learn English, and UK, Australia, are the main destinations. The market is pretty big, and in Asia, Chinese, I have friends who have companies in the same market, and they have airplanes leaving everyday with students. That’s so exciting. Russia is pretty big, and then Brazil, so South America. A lot of students do that.
Poornima Vijayashanker: Yeah, that’s great. You have a big enough international market where you don’t have to worry about starting in the US, or being in Silicon Valley.
Marina Mogilko: We still have customers from the states going to learn Spanish, and German, going to different locations in the world, Thailand.
Poornima Vijayashanker: OK, but it’s a smaller percentage?
Marina Mogilko: It’s a smaller market definitely. Americans do languages for fun mostly, and if we’re talking about a Russian person for example, they wouldn’t be able to grow internationally if they don’t speak good English. You cannot really learn good English when you’re in Russia.
Poornima Vijayashanker: Sure, as you experienced growing up.
Marina Mogilko: Yeah.
Poornima Vijayashanker: Yeah, so then walk me through what ultimately enticed you to then want to move from Russia to the US.
Marina Mogilko: Yeah, so growing internationally and being a Russian company, that doesn’t work together. If you want to be an international company, you have to have background in a country that people would trust. If you’re an American company, they would percept you better. In Asia, in South America, anywhere in the world. Then of course, 500 Startups, that was the reason why we moved initially, and receiving investment, and getting access to all of the network. Everybody came in together, and then started my blog about moving to the states, and it all kind of grew.
Poornima Vijayashanker: Yeah, so let’s go back a little bit. You were actually still in St. Petersburg building your startup LinguaTrip, when some people came to visit you, right? Walk us through that story of how you got introduced to 500 Startups and to Silicon Valley.
Marina Mogilko: Yeah, so initially we tried to raise in Russia. We had this…
Poornima Vijayashanker: OK, you tried to raise capital in Russia?
Marina Mogilko: Yeah, raise capital in Russia. We had these offers, they would give us 200,000 Euros, but they would take 40% of the company, they would have two members and a board. That wasn’t acceptable. We tried to look outside Russia, and we finally got into this accelerator in St. Petersburg, which was then a university. They didn’t take equity, but they introduced us to this startup community, so we started visiting a lot of meetups. During one of the meetups, John Ramey came, who introduced us to you. That was my 100th meetup. I was so tired, I didn’t really want to go.
I called Deme in the morning. I said, “Hey, I just got this email. Should I go?” He was like, “I don’t know, but you know, go and do that.” I went there, and John was sitting like a king on the sofa. There were people, Russian startup people coming up to him, and presenting the startup. He was like, “OK, let’s go…” I was like, “Ah, OK.” I came, I pushed, and I saw him standing up, and he looked interested. He said, “I don’t have a lot of time right now, and I’m leaving tomorrow. But we can meet tomorrow morning and I will help you with your application,” because we were applying to different accelerators. Yeah, we met, and he introduced me to you. I think within 24 hours we had an interview with you.
I was sitting in my kitchen, 3 am in Russia, wearing my pajamas, and talking, and presenting to you.
Poornima Vijayashanker: OK, yeah.
Marina Mogilko: Then within the next few days we received an offer, and it was so exciting.
Poornima Vijayashanker: Yeah, so walk me through what that was like going from being in Russia, to being in Silicon Valley.
Marina Mogilko: That was unbelievable. That was just this tremendous growth. Nobody really wanted to talk to us in Russia. We reached out to this media people and they’re like, “Interesting. We don’t know if even people do that, travel to learn languages. This is not something common that you would do,” but it’s still a big market. That was really tough, and it was really tough in terms of growth as well.
Then we moved to the Valley and everything changed completely. One article came out that we got into the Valley, and everybody followed up, and we got a lot of press. Then raising money, and being able to try different marketing channels. Yeah, that was like a life-changing experience.
Poornima Vijayashanker: Yeah, but you still had some level of difficulty even being in Silicon Valley, right? Maybe you can walk us through some of those obstacles.
Marina Mogilko: There are loads, starting a company and being a foreign person, getting all the EINs. That was complicated. Starting a bank account was easier because you introduced us to the right person.
Poornima Vijayashanker: OK, sure.
Marina Mogilko: What else? Getting visas. We wanted tourist visa initially, and that was OK to start a company, but you cannot work for your company while you’re in a tourist visa. We had to change, and we had to hire a lawyer, which was a lot of money. He got us the work visas. The rent is pretty high in the Silicon Valley. I was looking at Airbnb before we arrived and I was like, “Oh, we could rent the van for $1,000 a month and we can just live there.” We finally found an apartment. I was surprised how expensive it is.
Yeah, and also I think another challenge during the program was because we wanted to do everything we could, meet people, attend all the lectures, but at the same time we had to grow the company to show this curve on demo day. That was also really challenging. We had all this press reaching out, so prioritizing wa …
Poornima Vijayashanker: Even after you moved to Silicon Valley though, because of the visa issue and all of that, you ended up having to go back to Russia, right?
Marina Mogilko: Yeah.
Poornima Vijayashanker: Walk us through what that was like.
Marina Mogilko: Yeah, so I stayed in the states for eight months, and then I received the approval of my work visa, and I needed to go to Russia to have it stamped. I came to Russia, I went to the embassy, and the guy was interviewing me, he didn’t really know what kind of visa I was applying for, because it’s an extraordinary talent visa, it’s a rare one. He looked me up in the system, he couldn’t find me. He said, “I’m refusing your visa because I don’t see you in the system.” I was like, “What’s going on? Everything is in the states. The company, investors, everything, and I couldn’t go there.” I call my lawyer and he said, “Don’t worry, I had this case. You’re the second person who has this case in the last 10 years.”
Poornima Vijayashanker: Oh.
Marina Mogilko: “But the last guy, we managed to do that within a year, so we managed to get his visa in a year.” I was like, “OK, one year. OK, great.” I realized I would have to stay in Russia for awhile, so he was trying to reach out to the embassy, I was trying to meet more people who were enrolled with America like McFaul, the guy who’s in Stanford now, he used to be. The US Consul in Russia. We did a lot of things, and finally three months they said, “Sorry, yeah, we finally found you in the system. Here’s your visa.” But that was so stressful.
Then we decided to stay in Russia for some time because we needed to become at full positive. Being in the Valley, and losing money every month is not a really good idea. We became cash-flow positive in summer, and then we came back in autumn.
Poornima Vijayashanker: OK, so there was quite a bit of back and forth. You weren’t just like, once you were in the Valley it wasn’t a hockey stick, and a lot of success. It took you a little while, so you had to go back and forth.
Marina Mogilko: Yeah, yeah.
Poornima Vijayashanker: Now you still operate a lot in Russia as well as in the Valley, right?
Marina Mogilko: Yeah.
Poornima Vijayashanker: Walk us through what your day to day is like given having to run the teams, and how you split your team, and your time.
Marina Mogilko: Yeah, so every morning I wake up. We do everything on Telegram, and I have like 17 messages on Telegram. I get back to our team, and I check our e-commerce, what they’ve done during the day. Then I answer my emails, I also have private consultations, like higher education. This also helps me to get the sense of what’s going on with the customers, because they tell me their concerns, sometimes they tell me what they don’t like on our website, and I know their initial goals to actually going to LinguaTrip. Yeah, so during the day I have meetings and phone calls with the US, and then back in the evening Russia wakes up, so we do some work with Russia.
I really like it as a manager, because I spend some time in Russia during the year, holidays. When you’re in the office, they ask you all of the questions. You’re here, and, “Oh Marina there’s something, what can I do with this problem?” When you remove yourself, they can find the solutions themselves. They don’t have to take up your time. Yeah, it really…
Poornima Vijayashanker: It helps you scale yourself.
Marina Mogilko: Yeah, exactly, exactly.
Poornima Vijayashanker: Initially we started talking about how you were attracting a lot of your customers outside of the US for your offline business. Let’s talk about how you started acquiring customers for your online business now, LinguaTrip as it is in the marketplace. How do you go about reaching everything in all these different countries and timezones?
Marina Mogilko: The first thing that really helps is PR. We had an article in Tech Crunch, all of the American media about us, about getting into 500. Then I also started my YouTube blog when we got into the states. I started in Russia, and I saw it growing, and I started doing it more regularly. Then I realized it was actually in 2016 spring when I realized that I can do the same content, but in English. I started my English channel, and they both took off. This is how we’re able to reach to many people in the whole world. If you type in, “TOEFL,” for example, which is an English language exam, I will be the first in every country in the world. If you type, “GMAT,” which is an MBA exam, I would be the first in every country in the world, and then, “Learn German.”
It was all personal, so I talked about my own experience. Not like actually teaching people, but sharing what I went through. It really helped. For example, if I make a video about learning German for example, I would also talk about my school that I went to, and the school is, “Bookable on LinguaTrip,” and I can give a link to LinguaTrip. This is how it all works. It’s not really advertising, but just sharing what I went through.
Poornima Vijayashanker: Yeah, because I think you had done some advertising before, right? Has it really…
Marina Mogilko: Yeah, surprisingly we were thinking Google AdWords is the key, but it doesn’t really work. Facebook might work a little, but it’s all about building trust. The average purchase on our website is $2,000. You have to convince people, especially Russian speakers, and people from South America, that you’re not some scam, because they’re used to having a lot of scams. It’s about building this brand, and building trust.
Poornima Vijayashanker: Great, so now you have a YouTube channel that you’re producing content for, and you have your main business that you’re running. That’s quite a lot.
Marina Mogilko: Yeah, they work together.
Poornima Vijayashanker: How do you plan for that? Yeah.
Marina Mogilko: Yeah, it’s a lot of work, and I have people helping me with YouTube, editing videos, and we have an amazing team who do everything with LinguaTrip. Yeah, it’s a lot of work. I try to delegate as much as I can, but still I have to produce like four videos a week, and run my own company. Yeah, I work all the time. I feel like YouTube is more like relaxation for me. I talk to my followers, I don’t think I do a lot of scripts, it’s just I sit down and talk to them, which is exciting.
Poornima Vijayashanker: Yeah, wonderful. What’s next for LinguaTrip?
Marina Mogilko: Growth, growth, and growth.
Poornima Vijayashanker: OK.
Marina Mogilko: That’s all we’re concentrating on, getting into new markets. We just had this amazing Spanish blogger come to Russia to learn Russian, and he has 1.6 million followers.
Poornima Vijayashanker: Oh, wow.
Marina Mogilko: He’s top 20 bloggers in Spain. This will be our strategy, working more with influencers.
Poornima Vijayashanker: Any last words of wisdom for our founders out there who might be outside of the US, and looking to build their startup and attract customers who are also outside the US?
Marina Mogilko: Mm-hmm, I would say the first thing you should do is have traction in your market, in your country because it’s easier, and it’s cheaper because you probably have a place to stay in your parents house, or rent at a low cost. Coming to the states and being cash flow negative is really tough. Life, and everything is really expensive here. We still have the majority of our employees in Russia, because the costs are really low. Yeah, make sure your product grows, and you’re cash-flow positive, and then come to the states.
Poornima Vijayashanker: Great, wonderful. Thank you so much for joining us today Marina.
Marina Mogilko: Thank you, thank you for inviting us. Thank you for your impact on our lives.
Poornima Vijayashanker: Oh, you’re welcome.
Marina Mogilko: I’m like blushing. Yeah, that conversation with you at 3 am in Russia, it was life changing. Thank you.
Poornima Vijayashanker: Well, I’m happy to be a part of that journey.
Marina Mogilko: Thank you.
Poornima Vijayashanker: Yeah. Thanks for tuning in today, and special thanks to our sponsor Pivotal Tracker, for their help in producing this episode of Femgineer TV. If you’ve enjoyed this episode, then please be sure to share it with your friends, and all the folks you know who are eager to start companies whether they’re in, or outside of the US. Be sure to subscribe to our YouTube channel, to receive the next episode. Ciao for now.
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