SmartC: A startup story that could have been the plot of a film

Interview with Armen Voskanyan, Development Director of SmartC:

Who and how did you come up with the idea for the startup? Why did you choose telecoms technologies specifically, and how was the concept of the project formed?

I joined the company only in 2018, but I know the story well, it could form the basis of a book or a film. It all started when Ilya Anisimov, a Tyumen scientist, nearly ran over a man on the road in 2011. It was bad weather, a pedestrian suddenly jumped out from behind a bus at a crosswalk near Technopark, right under a car. Everything could have ended sadly, but it didn't.  

Ilya was working at the Tyumen Industrial University at the time, where, as an associate professor and a candidate of technical sciences, he was involved in modelling traffic flows and innovations in urban mobility. That incident on the road made him think about why there was no system to warn drivers about pedestrians. This thought was followed by the next one - why not create such a system.

The system worked like this: when a person appeared in the pedestrian crossing zone, a motion sensor was triggered and rectangular yellow lights with visors were switched on, like T7 traffic lights, but square and luminous.

What resources were available when you started? Where and how did you start? Who was your first client and how did you reach them?

Six months later, Ilya opened his first company. At that time, the company employed three people: Ilya, an installation engineer and an outsourced accountant. By the end of 2017, they had sold 220 systems to 20 regions and 25 cities over the entire time. The assembly was done by specialists brought in from outside, we ourselves only completed and tested the equipment. At that time, SmartC's annual turnover was in the region of 2 million roubles a year, and it was the most profitable year.

What technical difficulties did you encounter? How did you create the first prototype? How long did it take?

There were quite a few problems. The motion sensor turned out to be quite capricious: it reacted to everything from a flying bag and a leaf to air vibrations from the silencers in cars, which were very popular at the time. People would pass by without getting within its range, and the system would not work. Each crossing is a separate story, with its own peculiarities and limitations. Somewhere the support is too far away, somewhere there is no connection to the 220 V network. We constantly have to look for ways to connect to street lighting, but even here there are problems: rephasing, and sometimes the branch we are connected to is switched off at night to save energy. The first prototype was created with funds from a business angel who participated in the first commercial project, paid off the money invested and then withdrew.

The first commercial project was implemented in Tyumen, where for the first time in Russia 6 pedestrian crossings were equipped with this innovative system. Tyumen can safely be called the birthplace of "smart" pedestrian crossings. The same business angel provided us with connections with the city administration, which was then headed by the current governor of the Sverdlovsk region, Evgeny Vladimirovich Kuyvashev. You could say that he became the godfather of smart pedestrian crossings in Russia. Gradually, we began to sell these systems; after Tyumen, there were Vorkuta, Magadan, Kirovsk in the Murmansk region, Salekhard and Sakhalin. They were quite expensive - 440 thousand roubles per set, based on the rouble exchange rate, but things were getting worse every year. Competitors appeared, and the cost of the systems began to fall. It took about 9-10 months from the creation of the first prototype to the commercial model.

Why did you decide to turn to investment and how did you come to KAMA FLOW?

We needed funds for development. Ilya, being a resident of the Tyumen Technopark, received an invitation to speak to investors. Among them were Eduard Adamyan and Evgeny Borisov from KAMA FLOW. They were interested in the project, and Ilya told them about the Perimeter SPIN system, which not only warned drivers about pedestrians, but also fined them for failing to give advantage. After almost a year of consultations and meetings, we came to an agreement with KAMA FLOW. The investors gave not only money, but also me. I was young and very ambitious, and of course I signed up for the project.

With KAMA FLOW funds, we tried to develop software for the Perimeter SPIN system, launched several pilot projects, including in Moscow, and paid salaries to our employees. I think, in aggregate, this is about 10 million roubles. The company also helped us formulate a high-quality application for the Commercialisation-14 grant, which we won.
Sales were hard, our customers were from the B2G segment, we had to go to all of them by appointment through the secretary, write official letters requesting them to "consider applying" and all that sort of thing.
In three months, I sent over 3,000 official letters, of which most were ignored, and met with over 50 heads or deputy heads of cities and regions. People wouldn't even agree to a free, pilot project, sent to state procurement, it was hell. Ilya and I worked 14-16 hours a day, I received only 50,000 roubles, but at the same time I really believed in this project.
How do you realise now that we were selling to those who were curious about what it was like - a man walking along and some light bulbs lighting up? But the number of curious people in Russia quickly dried up, and we had to change the basis of the product and refine additional services.

I set myself a deadline - if I didn't sell anything by the end of the year, I would honestly come to the investors and quit. And so August came, the start of the new school year was imminent, and everyone was finalising measures to address safety issues near schools and kindergartens. I received a call from the deputy head of one of the towns in the neighbouring Moscow region and said: "You have a week to install me a free pilot on a single adapter. Ready?"
I realised that with our hands he wanted to close his KPIs, but of course I agreed. There was only one "but" - I didn't know how to do it at all, there were no installers, there was only one engineer and that was in Tyumen, I had to buy equipment, etc. In short, I had to improvise. I took a friend and together with him went to install this complex. Naturally, it was not without mishaps, everything went wrong all the time, but we managed to get everything done.
In September I was invited to the council of deputies of this city, I presented everything to them once again, told them everything, and it turned out to agree that they allocated funds for 30 such complexes. Then everything went according to the standard procedure - bureaucracy, technical specifications, auction, where we competed with another company and fell in price, but still took this contact. We fought to the end and made it, it was such a holiday!

In 2019, we installed systems, hit some bumps, but everything seems fine - the project was handed over, we got the money, well, fairy tale. And the next year, the coronavirus. Everything was closed, budgets were cut, it seemed that we would end up at a broken trough. But we weren't. Suddenly we were remembered by everyone we knocked on the door in 2018. We certainly didn't expect this. All year long we've been hiring new staff, buying equipment, pushing the boundaries, making money. It was a great year for our business, and already in the next 2021 we started looking for opportunities to scale.
We really wanted to work with Moscow transport. We learnt that there would be an accelerator called Transport Innovations of Moscow (TIM), and applied for the first stream. In the end, we got more than we asked for. Then we launched a pilot in Moscow, conducted tests, prepared a report, and the statistics showed that it was 82% effective. We were heard about "from every iron", as they say.
In the same period we invented a new product - "smart stop", went to the second stream of TIM, this time we were even shown on the federal channel, and it began - the demand grew, as well as loyalty from customers, we became residents of "Skolkovo", received a grant from the Foundation for Assistance to Innovations, in general, everything was super, we were making grandiose plans. And then 2022 comes around - "it's never happened before, and here it is again".

Sanctions, currencies, no components... customers have other things on their minds. But we remembered that "the crisis is a time of new opportunities", rearranged our business processes as quickly as possible, and decided to "finish" the bugs in the old products and develop new ones while probing the market. In the same year, a branch of Russian Railways from the Leningrad region approached us with a proposal to create a "smart" system for lighting remote stations. The world is in chaos and sanctions, but we are developing.

How do your technologies differ from foreign analogues, and are there any analogues at all?

You know, in 2011, when the project started, we found two foreign companies that were selling something similar: one in the Czech Republic, one in Austria, and the Austrian equipment was in Astana. If you look now, there are many more competing companies abroad, a lot more, and even Huawei has started doing something similar.

What are your plans for the future?

We are looking at the CIS market, looking for young, ambitious guys who, like us, do not want to sit and wait for the weather.
The future and ultimate goal of our product development is its integration into the V2X network to transmit information about the presence of a pedestrian near a pedestrian crossing to an unmanned vehicle. Today, a drone, in terms of perceiving the world, acts similarly to a human. If a human doesn't see a pedestrian from behind a bus, the drone won't notice it either. Our system will make it possible to warn all cars in the vicinity in time, informing them that a pedestrian is moving at certain coordinates, in a certain direction and at a certain speed, which should be taken into account when passing this place.
Co-operation with KAMA FLOW is, above all, support, status, and community, and this helps a lot in our work.

As someone who has waited a long time for results and believed in them, what advice do you have for companies starting out today?

In five years, we have gone from a super-small start-up from Tyumen to a company that operates in 38 regions, has two branches and a team of ambitious, cool employees. We do not rest on our laurels, we invent new products in different industries, and we are looking for opportunities for growth.
Don't be afraid of anything, go ahead and try new things as much as possible, look around - there are many options to start your own business. Read and act instead of criticising. And don't be afraid of making mistakes. No mistake is made by someone who does nothing.