Business regulations are tightening worldwide, with regulatory requirements becoming increasingly complex and frequently updated. In this environment, the demand for RegTech solutions is on the rise. Rusprofile, one of the most visited resources for information on Russian legal entities, is a notable example. This service conveniently aggregates data on companies, including their financial positions, legal cases, bankruptcies, affiliations, and more.
Over 700,000 visitors use the site daily, ranging from corporate accountants and lawyers to individuals looking to verify car or apartment sellers. Its audience grows at over 30% annually, and all traffic is acquired organically.
Today, Rusprofile stands out as a leader in its segment, but it has come a long way to reach this point. Founder Ilia Moshin and his co-founder introduced a new monetization model that helped the business survive the pandemic. They also expanded the team, implemented a product vision approach, and developed a new product with substantial growth potential.
In an interview, Mr. Moshin shares the evolution of Rusprofile, its diverse user base, and how an iterative approach to introducing new functionality has fueled its growth. He also highlights the current projects the team is developing for international markets.
Before Rusprofile, you worked on several projects, including Propartner.ru and Orgpage.ru. Will you share more about those experiences?
Propartner.ru was a project I developed with Dmitry Strelkov, co-founder of Rusprofile. We studied computational mathematics and cybernetics at the Moscow State University but took different paths for a few years. I worked in the U.S. for a while before starting my own business, which focused on delivering American brands to Russia. Meanwhile, Dmitry gained entrepreneurial experience by founding a premium alcohol store.
At some point, we reunited in Moscow and became intrigued by the B2B trade sector in construction. Noticing that many manufacturers offered a wide product range, we decided to create a convenient and reliable marketplace. With effective SEO optimization, we reached 200,000 daily visitors in about five years, attracting over 3,500 paying clients, and regularly ranked among the top three websites in our category in Russia.
A few years later, Yandex entered the market with a similar product, making competition with such an IT giant challenging. As a result, we halted the development of Propartner.ru and shifted our focus to other projects. Despite this, the site continued generating traffic, and in 2019, a private investor expressed interest, leading to our exit.
A similar story unfolded with Orgpage, a leading catalog of Russian companies that I developed independently with an outsourced team. We collected information on over 2 million organizations and attracted 500,000 daily users. Within just three years, the site ranked among Russia's top five online catalogs. However, as Yandex Directory expanded, maintaining Orgpage became unprofitable, although it still continues to generate revenue.
Is that when you switched to Rusprofile?
Yes, Rusprofile was launched in 2013, but we didn't actively develop it at first. Nevertheless, users were organically discovering the site. By 2016, we revisited it and found that the audience had reached 400,000 daily users, who regularly provided feedback and requested updated legal entity data.
This made us realize the project's potential, so we decided to focus our efforts on it. We initially hired one developer but quickly recognized the need for a larger team. We started integrating new data sources and developing the product, and by 2018, we had officially registered the legal entity.
What have been the main changes in Rusprofile since its launch?
The primary change was our monetization model. Initially, we relied on advertising, but during the pandemic, companies drastically cut their budgets, leading to a significant drop in revenue. With a team of 10 that we wanted to retain, we quickly began testing different hypotheses. Although we hadn't initially seen Rusprofile as valuable enough to charge users, we soon discovered that visitors were willing to pay for the information. We first implemented a paywall model inspired by Bloomberg. In just a few months, even with a rough version, we earned more than we had with the advertising model.
We developed the idea further, building a subscription model within a month and a half. In just one month after launching it, we generated as much revenue as we had in the previous six months. Instead of closing the company, we began expanding our team. Essentially, we didn't just change monetization; we fully pivoted the service.
What other changes have occurred since the shift in monetization?
First, our team grew 2.5 times, with significant expansion in the product and development departments. Our previous model, where Dmitry and I were involved in all areas, became unsustainable. Now, our main focus is on finding leaders for each team and training them to work effectively together. We've already brought on an experienced product department head and an HR director.
Secondly, we began broadening our offerings. Through experimentation, we developed a side product with great potential—a service providing information on individuals. We're in the process of building a separate team for this direction.
Lastly, I introduced a product vision approach, allowing us to launch new features iteratively based on client feedback.
Could you elaborate on what the product vision approach entails?
Often, founders or project managers have a vision for a service based on their expertise and market knowledge. They invest heavily in development and spend months building a product, only to find that users don't need it. In my experience, only one in five ideas succeed in this way.
The product vision approach involves quickly and cost-effectively testing any feature, even to the extent of selling a non-existent one. Decisions are based on user feedback, and we avoid investing in development until we receive a clear signal from customers that there's a genuine demand.
This approach has significantly accelerated our progress. In the past, we invested in exciting projects that our target audience wasn't willing to pay for, which often led to team frustration. Now, we validate the demand for every feature from the outset, even those related to convenience.
How do you test new features and gather feedback?
For example, if we want to understand whether users will pay for a product that offers information on individuals, we create a landing page describing the tool, launch it, and monitor sales to assess demand. To ensure we don't negatively impact the user experience, we then refund the money and offer additional value, like a discount on another product.
We use various methods, including surveys and interviews, to gather insights. The key is to design experiments that reveal users' willingness to pay. Based on this data, we draw informed conclusions. This approach requires thoughtful planning, knowledge of market practices, and the ability to combine these elements effectively.
You mentioned a product for analyzing individuals. Who is its target audience?
This will be a separate service aimed at a mass audience. While Rusprofile provides all the necessary information about a legal entity, every organization has a director and founders, and any issues they face are likely to affect the company as well. This is the reality of Russian business. Therefore, when conducting checks, it's better to also study information about the individuals associated with the organization. Our product will address this need.
Moreover, the service could be valuable beyond just companies. For example, a family looking to hire a nanny might want to make sure the individual isn't wanted by the police. Similarly, someone planning to buy a car or apartment may want to verify that the seller isn't a scammer or involved in any legal disputes.
Another use case would involve a business needing to hire hundreds of couriers or taxi drivers and quickly verify them. In short, this product will be relevant across B2B, B2C, and C2C segments.
Who is the target audience for your main product, and what kinds of users benefit from it?
There are numerous scenarios for using this product, with the primary one being the verification of an organization's reliability. This check can be conducted by various professionals in different contexts, such as lawyers and accountants.
For example, a company seeking a contractor wants to ensure the contractor has a stable financial situation and can fulfill their obligations. The specific indicators of interest depend on the industry. In real estate, the absence of overdue accounts receivable is crucial, while in wholesale trade, the presence of fixed assets may be more relevant. Similarly, a contractor checking the company purchasing their services must be cautious, as tax issues with a client can quickly impact the contractor's business.
A significant segment of our target audience is small and medium-sized business owners who use Rusprofile to monitor information about their companies. Our service provides them with aggregated, up-to-date information faster than official sources. For example, if the tax authorities raise an issue, they will send a letter, which takes time to reach the business owner. With Rusprofile, users receive a notification on the same day.
These are just a few examples. There are also more unconventional use cases, such as profiling target audiences for sales departments. Salespeople can extract information about organizations in specific regions and industries and analyze revenue dynamics. However, this is considered an off-label use of Rusprofile, as salespeople usually need contact details after profiling. One of our goals is to incorporate up-to-date contact information into Rusprofile.
Do you offer services to enterprises?
We see great potential here and are considering introducing an enterprise tariff, but we have other priorities at the moment. There are still opportunities to monetize search engine traffic more effectively and increase conversion rates. We're experimenting with pricing strategies and aiming to raise the average transaction value. We also want to implement performance marketing and a referral program to diversify our marketing channels.
Building an effective sales department is a more global task that we plan to tackle later once we have more resources available.
How do you maintain growth, given that SEO optimization is becoming more challenging?
I wouldn't say that SEO optimization has become more difficult; if anything, it's getting easier. I've noticed a decline in SEO expertise in the market, which has led to reduced competition. Many people prefer to pursue roles as product managers or designers, leaving fewer willing to focus on SEO. With my mathematical background, I find it easy to set up SEO optimization. In the past, I simply read forums and started building websites that attracted hundreds of thousands of users. Now, it's even easier as many are chasing opportunities in other fields.
This perspective is justified, especially as we may witness the decline of search engines with the rise of artificial intelligence. But for now, there's still money to be made in this field. While search engine algorithms change periodically, investing in quality content and understanding the basics can help maintain steady growth, as Rusprofile has experienced over the past five years.
We currently have a strong in-house SEO team of just three people, but they bring extensive experience. They monitor trends using a complex monitoring system and help implement experiments.
What are your future plans, and can you share any specific numbers?
Our goal is to become the leading platform in terms of users within the next 2-3 years. To achieve this, we aim to capture 30% of the market or secure 200,000 paying users. We also plan to grow our revenue by at least 50% annually.
In addition to developing the product for individuals and expanding our marketing channels, we're considering the verticalization of Rusprofile. This could involve creating specialized services for salespeople, lawyers, and other professionals. By thoroughly developing these services, we can benefit from their synergy.
In this scenario, we need to convey the value of the solution to the different segments of our vast audience. This involves clearly identifying each segment and establishing a high-quality onboarding process.
Do you plan to expand into international markets?
Yes, in fact, we're already exploring the U.S. and Brazilian markets. In the U.S., we've built a website that aggregates data about American companies and started driving traffic to it. Our next challenge is to understand who these users are and what they need. I'm confident that we can offer value to any audience, especially in a large market like the U.S.
The American market is very different from the Russian one. In the U.S., it's not common to check their business partners as thoroughly; for instance, while investors might conduct due diligence, there's generally an assumption that potential contractors or clients are trustworthy market participants. If issues arise, one can leave a negative review on the Better Business Bureau website. In Russia, companies are almost legally required to verify their partners to avoid potential issues with tax authorities.
We've also started experimenting in Brazil, where the local landscape is quite similar to the Russian one, especially regarding the interest in checking individuals. This similarity allows us to quickly build an audience and start engaging with them. We've already tested this idea, and the results confirmed our hypothesis. However, our primary focus remains on the U.S. market simply because it is much larger.
What trends do you see in your segment abroad?
A clear trend in RegTech is the increasing use of machine learning and artificial intelligence, including generative AI. We've implemented machine learning ourselves to process data from various sources and present it in a convenient, standardized format. AI can help different platforms analyze new legislative bills, generate reports, and respond to user inquiries. However, I see many companies in our field positioning AI as their main competitive advantage, even when neural networks aren't their core value. I doubt this strategy will lead them to long-term success.
The second trend is the tightening of regulations. For a long time, the world moved towards globalization, but now it's shifting in the opposite direction. This shift has led to stricter legal restrictions in various areas, including data storage and processing, which will further drive demand for RegTech solutions.
