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Website development market is dying: what to do and where to go? Interview with Mikhail Tokovinin (amoCRM)

I often talk with the owners of Russian web studios and agencies in order to understand and explain to the readers the processes taking place in our market. In fact, the market is changing. I think these changes are felt by all players, including us in Simtech Development. And our work on the international market confirms that the process is global and covers not only Russia, but also most of the western countries.

Recently, CMS Magazine published my interview with Mikhail Tokovinin, one of the partners of QSOFT + AIC, the founder of amoCRM and a very reputable expert. This interview dealt with his published open letter to the editor of the CP, “The Website Development Market Dies - Like Video Rental in 2002.” I think many of you, if not read, have already heard about it.

Michael's opinion caused a wide resonance among web developers and representatives of the digital market, and I decided to learn more about the premises, reasons and, most importantly, Michael’s thoughts about what developers should do and how to adapt to the changes.
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Today I decided to post this interview here. It is interesting to know what you think about this and what we all should prepare for (at the end of the interview there is a survey for statistics). Enjoy your reading!





- Mikhail, you claim that the site development market is dying, the number of orders and customers is decreasing every year and our industry will soon turn into an extremely competitive environment. What are the prerequisites and why others do not notice this?

- Before talking about objective factors and assumptions, it is necessary to make an important reservation. Market participants are always in a distorted reality and do not see objective trends that inevitably affect the market. A huge number of comments to my article on “Zuckerberg will call”, where people say: “No, this can not be, yes, we have been working here for a long time, and we are fine,” they only confirm my words.

It is not by chance that in my letter to the editor’s office I began with a story about video rental. Once the video distribution market in the country was actively developing, and then it stopped. In 2002, a friend of mine, the owner of several large-scale video rentals in Moscow, was worried that his revenue had declined month after month. Of all the reasons, he chose the most obvious one — the director’s poor work, and replaced him with me. I headed the network of 11 video distribution centers, but despite all my vigorous activity and short-term growth, the business went bankrupt and was closed after 2 years. I experienced the experience of working in a falling market, experienced this story and understood how it works.

The situation with video rental in 2002 is very similar to today with sites. It is very difficult to step aside and look at the situation soberly. While you are standing at your machine, you do not notice what is happening. In the reality where you live, sites really make everything. You communicate with people who need websites, you create websites, and your friends create websites.

But there is one marker that reflects whether the market is growing or falling. In a falling market, you have to try, optimize processes, do a better job than others - in general, be good. And the growing market will forgive you any mistakes, you just need to have time to ship. You can mess up, do all the mess - you will still earn. If where you work, it suddenly became important that you have processes, how carefully and carefully you approach them, then most likely your market is already falling.

- So what is objectively happening in our market?

- What are commercial sites for? Globally, I see only two tasks: to attract new customers and sell or service existing customers, provide a service.

Ten years ago, everyone created websites, because the business was confident that the presence of the site itself already brings customers. But if you look at the situation today, it becomes more than obvious that the site itself does not bring customers. Moreover, the site is simply a platform for finding customers and is far from being the most effective. Yes, there is online advertising, it can be considered. But if you objectively calculate where it is easier to get a client: by organizing a point of sale at the station and at the metro or by running an advertisement in Yandex.Direct, interrupting the cost of the lead from competitors, then the answer is not obvious.

Selling online has become expensive and difficult. This environment is very competitive. On the Internet, you are fighting for the consumer, not only with your competitors, but with all the business on earth. The focus of attention is limited, and if at this second a conditional buyer of flowers wants to buy a house on a mortgage, then a flower shop and a bank are fighting for his attention at the same time. The bank clearly wins this battle.

The world of advertising has not yet seen such a highly competitive story. And in the next ten years, online advertising will become hyper-expensive.

Many businesses have already intuitively felt this and stopped making websites without a thought. The number of sites is steadily declining. Of course, there is a part of the market where sites are made for a tick to write on a business card. But this task is perfectly solved by free designers. There are still major projects and large online stores. It's clear.

But the market of sites is not the two hundred customers who do something very expensive, as it seems to my colleagues. Not even a thousand or ten thousand. The market is fifty thousand sites a year. When these fifty thousand become thirty-five thousand, the change seems barely noticeable. Many will say - do not worry. And then thirty-five thousand will turn into ten thousand, ten - in five, and five in one thousand. That's when the market will shrink and become very competitive.

There will be niche players. There may be industry specificity. But for sure, all the little things will be washed away from the market with services, because studios that rivet sites for 100,000 will become completely uncompetitive compared to services.

- With a small business that goes to designers to save resources, it is clear. But where will medium and large projects go?

- Most likely, the fattest part, and these are the most expensive, large and complex projects, will also be gone. More precisely will flow in in-house.

The customer becomes more professional. Moreover, for many, attracting a client and working with him on the Internet is becoming a key business process. Roughly speaking, on one side of the scale is a bank a la “Tinkoff”, which has its own most powerful web development department, where it doesn’t save on salaries, and on the other - a conditional bank “Siberian Credit”, which has an external contractor on salary. And then the question arises, not how much the developer services cost, and which bundle is more competitive and more efficient.

I can say from my own experience, and I ran several startups in different ways, no one can compete in quality with full-time specialists. And all the famous cases on the market prove it. Own team is more expensive, but the service it performs better.

If quality becomes very critical for competition in the client’s market, then a bleak future is expected for contractors. That is why I do not understand what the future of this market is at a distance of 5 - 7 years. Most likely, it is not.

What will remain? Serednyak. Projects in the range from 200 000 to 1 000 000 rubles. Oddly enough, now it is a very small part of the market. We have a very strong imbalance of projects in the cheap segment and a lot of offers in the expensive. And the middle has always been not too populous. And she, most likely, will continue to live.

Of course, it is slightly exaggerated to compare our market with video rental, which has completely disappeared. The web development market will look more like car tuning. There is a mass consumer, and there is some small caste of fans of non-standard disks - a club of fans to change wheels.

- What about online shopping? Who will do them?

- The online stores have a rather sad future. There is such a story as aggregators, which greatly change the picture of the market. Little things will not work, several dominant large monsters will work. And barely a lively middle for exotic needs. This story, the absence of a long tail, is global, and it is logical for any online business.

Offline there are two - three giants and further millions of small stores that have an advantage in the form of geographic location. Online, everyone is just a click away. Therefore, the degree of consolidation of any online business should be disproportionately higher than in traditional areas.

- In this case, web studios and agencies can switch to online promotion and digital advertising. The need for digital advertising will only grow if competition for the attention of the consumer becomes tougher. Is it so?

- The idea of ​​selling advertising is the idea of ​​selling a certain contact with the target audience, selling the target audience to a business. Suppose we publish a magazine about cars and sell contacts of people who read our magazine, car dealerships. However, the problem of modern advertising is that competition for human attention is changing, as I said. No matter what site a person reads about cars. We just know that he needs a car and can even catch him on a porn resource. It changes the history of advertising.

In addition, the ability to attract an audience becomes such a unique and important competence that it makes no sense to sell leads when you can sell customers. Booking sells hotels no leads, he sells them customers. And picks up the lion's share of revenue. We are entering a wide phase of large aggregators, which initially will consolidate all the demand on themselves and will not need advertising.

We must understand that the ability to find an audience and sell becomes more important than the product itself. See what Tinkoff Bank is doing now. He sells a mortgage, while not his own. It is believed that for a bank the key competence is to buy and sell money. But it turns out that now the main ability has become the ability to find a client and sell him a product. And Tinkoff is selling the mortgage of another bank. Who is the bank? Who earns more? Which of them need advertising?

Surely, they have already invented a term, how to call what is happening now in the economy - something like a post-industrial economy, when customer ownership is the main value.

For example, do you see how an advertisement for a musical group can now look when there is Apple Music, iTunes, VKontakte, YouTube?

- But after all, iTunes itself will not provide recognition to the group. Need promotion within these services.

- Everything is easier. If you write good music, then people share it, share it with each other, and you will become popular. Now you do not have to unwind anyone, to produce, iTunes will still earn money.

That is, in the case of artists, producers of goods, nothing changes. A production centers and advertising are not needed, as superfluous intermediaries.

Another example is hotels and Booking. You can engage in promotion of a hotel in Paris, and if you are a monster of PR, then even something will turn out. But compared to the flow of customers this Booking Hotel brings, it will be nothing. A Booking does not care where to send people. Where reviews are better, there is more flow. Therefore, the main task of the hotel is to change more often the sheets and toilets are more thoroughly cleaned. This is the best he can do. PR still has some potential, but there is no advertising.

- Then we turn to the important question, what should the web development market do? How to avoid a sad fate, save the team and profits?

- You have to understand that all current web studios have a unique and fantastic resource. They have in their hands a group of developers that they are feeding for now. Demand for developers will only grow, site-building technologies will not disappear anywhere. Web development as a technology is not in danger. But very soon, web studios will not be able to pay their developers a salary, and they will lose this resource. One day, a conditional bank will come in and redeem these developers for the money that no web studio can keep them. Already, all the most powerful web developers are being washed out of the market. Web-studios are increasingly required to engage in training, staff development.

Today there is a unique opportunity, having these resources, to turn around and make your project, a startup.

- In what area should a startup be run? Create aggregators? Our company has recently increased the number of orders for large marketplaces. Is this the trend?

- Yes, marketplaces, as well as aggregators, is an attempt to get into a niche and distribute customer traffic. But it is not necessary to make aggregators. In theory, aggregators sound cool, but in practice this is, to put it mildly, a non-trivial thing. To win on the aggregator market, to become a recognized leader there, is the most important task for the few.

When you choose an idea for a startup, it is important to be not very late and, which is much worse, not too early. So you need to choose such topics, where the first promising projects were already, but they failed. And you know why this happened, how to eliminate the shortcomings and overcome the so-called chasm. This is a classic Jeffrey Moore.

There are millions of projects that are now in the abyss. From obvious, like 3D printers, to less predictable, like project management. All project management systems are in the abyss. For many, many years, no one can crawl it. And the potential is so huge that when some more or less breakthrough idea appears, like Slack, it just explodes with an atomic bomb. In order to achieve a capitalization of $ 3 billion in a year, you need to understand that this is not only Slack done, this is market readiness.

Explosive growth demonstrates not the potential of the team, but the potential of demand and the market. This means that in this industry lies an oil field, from where it climbs from all the cracks. Project management, no doubt, such a topic. I myself have developed a project in this area, project management software. But I lost and left early.

Another promising area is education. Russia already understood this. All classic markets, like real estate (real estate aggregators, catalogs), are also in the abyss.

In general, the ideas - the car. I repeat: you need to take an idea that no longer seems original, and where someone is already doing this. Just answer the question: if many are already engaged in this, what is the proportion of penetration of all combined.

Many people think that the CRM market has already formed. After all, there are so many CRM-systems. I myself thought so four years ago, when we launched our amoCRM project. I was sure that the market had long been divided. And what percentage of the business in the world generally uses CRM? God forbid, if one. This is a typical example of the abyss. You will figure out how to transfer from one percent to twenty - you will earn billions of dollars.

Therefore, I believe that now, when there is a team of two or three developers (and more is not necessary, since it is already harmful for a startup), design competence, usability and, even more valuable, mobile development, the worst idea that one could invent oneself, do something to order.

It has always been a bad idea. We started in 2004. We were stupid and did not come up with an idea better than creating a web studio (now it's QSOFT. - From the author). Durov in 2004 launched VKontakte, Zuckerberg - Facebook. And we opened a studio. Someone is clearly a fool of us, and this is clearly not Zuckerberg (laughs).

- Michael, the last time you live in the United States. Your business operates in the USA. We also have more than 30% of customers from North America. And, as it seems to me, the story about which you are telling has been developing for a long time on the American market. Small business uses designers, modifying them a little to fit their needs, for large business there are very expensive enterprise proposals, there is almost no middle peasant. How do you see the American market and how is it different from the Russian one?

- In fact, the Russian web development market is not so far behind the US. Moreover, it is unique in that it is at the forefront. Take the story of the taxi drivers. Uber is in the US and Europe. And in Russia, besides Uber, there are two more aggregators that compete with it - Gett and Yandex.Taxi. At the same time there are many countries like Australia, Africa, Latin America, where everything is still very backward. Everything that happens in the States happens in ours. When you talk to local web studios, the talk is the same: something has become tough, competition.

And also the American market is a market with great traditions, a large number of players, a very large share of small business, which, by the way, is very seriously protected. There are cities where chain stores are prohibited at the local administration level. In the US, you can still pay in stores with hand-drawn checks.

America, being the heir to great traditions in business, is developing more slowly than the Russian market. Much slower. I can say that the story of a taxi in Moscow will be cooler than in San Francisco. On the void is easier to build.

How many Americans wake up on a standard alarm clock that stands on the nightstand? And how many Muscovites wake up on an alarm clock in a smartphone? It struck me that in the American Windows Phone only recently appeared an alarm clock. Yes, in Russia it is impossible to imagine the sale of a mobile phone without an alarm clock.

- And what about e-commerce?

- There are differences, since we do not have such players as eBay or Amazon. Such aggregators are the toughest competition to the rest of the market. . .

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: CMS Magazine

Source: https://habr.com/ru/post/296270/


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