Oleg Tumanov is the co-founder and CEO of ivi which is a video-on-demand platform that brings the traditional television experience online with a free video player. The company has raised $200 million from investors such as Tiger Global Management, RTP Global, Flashpoint, Baring Vostok Capital Partners, Mubadala Capital, Russian Direct Investment Fund, Frontier Ventures, Winter Capital, Alfa-Bank, and Prof-Media to name a few.
In this episode you will learn:
- Oleg’s top advice for aspiring entrepreneurs
- How creativity and arts fuel innovation
- What he would tell his younger self early in his career
- How to get in touch with us
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About Oleg Tumanov:
Oleg Tumanov is an entrepreneur and manager with 24 years’ experience in major Russian and international companies, including 20 years in senior management positions Founder and CEO of a leading Russian company in the field of online video ivi.ru Media.
Ivi is an OTT VOD service with a monthly audience ranging from 20 to 27 million unique visitors generating more than 230 million video views (54 million hours). It is positioned as an online cinema and provides access to a variety of top professional video content mostly focused on movies, TV series, TV programs, and shows, animation, and music.
The content catalog is the largest in Russia and covers major movie and TV producers from the US (including all 6 US major studios), Europe, Russia, and some other countries relevant for the Russian audience. The service works in Russia and other CIS countries, Ukraine and Georgia (former USSR republics except for Baltic states).
Prior to launching Ivi.ru in 2010, Oleg Tumanov was managing director for Russia and CIS at US-based Access Industries. From 2001 to 2004, Oleg Tumanov was deputy chief executive officer of Russia’s Alfa Bank.
In 2000-2001, Oleg Tumanov was deputy chairman of the executive board at NIKoil. From 1994 to 2000, Oleg Tumanov held senior executive positions in several US and Swiss financial services firms.
Between 1990 and 1994, Oleg Tumanov was deputy chairman of the board at Mosbusinessbank.
Connect with Oleg Tumanov:
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FULL TRANSCRIPTION OF THE INTERVIEW:
Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. Today we have an exciting founder from Russia, actually, and I think that we’re going to be learning quite a bit from his story of how he built and scaled his company, which is full of super-exciting stories, many breakdowns that led to breakthroughs, and I think that we are all going to have a very, very good time full of insights and lessons learned. So without further ado, let me welcome our guest today. Oleg Tumanov, welcome to the show.
Oleg Tumanov: Hi, everyone. Alejandro, thank you very much. It’s a pleasure to be on your show.
Alejandro: So, originally born and raised in Moscow 55 years ago. How was life growing up in Moscow?
Oleg Tumanov: Believe it or not, we didn’t know any other life. We didn’t travel at that time. Although, the life was not easy in the former Soviet Union, but as we did not know any alternative, we thought that we had a very good life. We were not rich, but there was something very good about those times – making friends, true friends, we lived in a bit of a romantic world, I would say, and also propaganda made its impact. We felt that it was the best society of all. Now, we definitely rethink in many things, but at that time, we were very happy.
Alejandro: And at that point, too, you grew up in a family where there were musicians, so definitely a lot of creativity going on.
Oleg Tumanov: Yeah. My father and my mother both were musicians. They taught me music. I was learning piano. I’m still playing piano; actually, I compose music, which is still a very significant part of my life. By the way, Alejandro, you can find me as a composer, not only as an entrepreneur. You can look on the web Oleg, Tumanov – composer, olegtumanov.com. I just recently released a new CD in Brazil.
Alejandro: Wow. In Brazil, out of all the places. I guess this creativity, I would assume that it has also shaped and also been very helpful in your professional career. There are people like Steve Jobs that said that some of his best engineers had that musician-type of skill set. Would you say that it has also helped you in your professional career, and perhaps more in your entrepreneurial journey?
Oleg Tumanov: Definitely, yes. I think to be in this industry and in this rapidly changing world and facing all the challenges, you have to be very creative, and you have to invent or reinvent yourself, basically, every day – at least every month. Every month, I have a brainstorming with myself of what else I can do, if I’m going in the right direction, what else we can create in different parts of our businesses. There are many things in our lives which have a lot of similarities. It seems that it’s totally different areas of humanity, of human activities, but there are many common things, whether it’s in the business or in creating work or music or in sports, there are philosophical rules, and the creativity can manifest itself in all different parts of our lives. Definitely, yes, it’s very important.
Alejandro: And your father recommended not following the professional route of becoming a musician, but why did you choose finance?
Oleg Tumanov: At that time, I did not understand much in my life. Yes, my father actually taught me music, and he also told me that the life of a musician in the former Soviet Union would be very, very challenging for me and that I should have another job, another profession. The Moscow Finance Institute was, at that time, a prestigious institute. I was a good student, so I entered this institute or its university, actually, and got my degree. But, again, I think what happened there was good. So, I have a very good life as a professional in the economy, in the finance, and ultimately, I because an entrepreneur, but still, I’ve been keeping music very close to me as part of my life as well.
Alejandro: Got it. On the finance side, you went into banking. You actually started scaling up the ranks very quickly. You even lived in New York, in Geneva, and you name it. But one of the most interesting segues here is when you finally make the jump from banking and explore other types of segments, so tell us about this.
Oleg Tumanov: I should have done this long before, to start my own entrepreneurial career. When the Soviet Union started to collapse, it happened so that I go to a unique opportunity to become a top manager in a big, big bank in Russia. So, I became that manager. I was Deputy Chief of the Executive Board of a big bank. It was a huge career jump for me, but you know, there is an English saying, “A blessing in disguise when something bad happens to you,” but back in the sense, ultimately, it works out pretty well for you. There is something opposite. When something good happens to you, but in a sense, it keeps you from something much bigger or more interesting opportunities, so I should have become an entrepreneur at that time when at the very early days of the modern Russia after the collapse of the former Soviet Union and not pursue this career job, this career opportunity because most people who started at that time in the early ‘90s, they built empires, and for me, I’ve been moving from one good executive position to another with better pay, a better position, and ultimately, I ended up as an entrepreneur. But, again, I should have started it sooner. But in any case. It worked out, I would say, good for me, so it was a good professional life as a manager. Now, I’m very happy with what I’ve been doing as an entrepreneur. I started this company in 2007, and so I’ve been running it for 13 years.
Alejandro: And the way that it started, it started with challenges even from the beginning with some of the shareholders confronting each other. First and foremost, how did this idea come to life, and then after you tell us how this idea came to life, then you can tell us about those confrontations that happened.
Oleg Tumanov: Well, this company was, in a sense, born when I was Chief Executive of a big industrial group called Access Industries. This group is owned by Leonard Blavatnik, who is a businessman of Russian origin, but he’s now an American businessman and entrepreneur and a well-known investor. I was the CEO of his Russian holding. As a CEO of his Russian holding, I met with one of the top executives of Warner Music and Access Industries is controlled and still controls Warner Music. Actually, they made an IPO recently, just a couple of months ago. So, I met with one of the executives of Warner Music and suggested to create a company which would distribute digital music in Russia in the former USSR countries. He supported it, but he made one condition that I would bring another music major. I struggled for one-and-a-half years to find another music major and convince to create a joint venture. Ultimately, Sony Music also joined this initiative. Once we started to operate, these two majors started to confront each other and did not find a common view, and ultimately, it did not work out. So, I, with my partner, made an offer to buy this company out, and this is how my independent journey began. I took this company and started to develop it on my own, and I moved from the musical digital distribution business to a direct-to-consumer online video company. Since 2010, we’ve been doing only that. It’s an online TV company.
Alejandro: Then tell us about the issue that happened between the two shareholders.
Oleg Tumanov: Well, they didn’t have a common view on the way to distribute music, and the pricing policy, and who needs to do what. It’s already an old story. I don’t think that anyone would be interested. The point is that it did not work out for these two majors, and I didn’t see any point to try to somehow make them both happy, so it was much better for me to buy it out and to develop my own business. Now, the company that I bought and started with an online video company, which is called Ivi, is now the leading Russian online video company.
Alejandro: Very cool, and to develop something like this, you needed a lot of courage and vision because there was no legal online video companies back then. So, what happened here?
Oleg Tumanov: Right. It was a challenge from the very beginning. When we first launched our online video site, on the web, there was only a website. We launched it in an environment, which was 100% pirate environment. There was no legal or legitimate streaming service in Russia, and many people believed that we were crazy to launch an illegal streaming service inside such an environment, but somehow, I was a believer that the world is changing in a big way, that this linear TV model with [14:45] would be obsolete because people would benefit from an on-demand streaming opportunity and what we can bring to the customer because the customer [15:02] the personalization of the user experience. With all that, we could bring and give a better user experience than even pirates could do at that time. Of course, pirates could offer a lot of content and fresh content, and it was hard to compete with that, but not the good user experience. Also, if you think that pirates can efficiently solve a problem and to offer you the content you want to watch when you know what you want to watch. But pirates are not very good when you don’t know what you want to watch, and you need some kind of guidance. Here, by providing a better user experience and recommendations, knowing the customer, then you can win, even with pirates. So we started to develop the legitimate content, streaming business in Russia, and we started to win the audience. We started with an advertising-supportive model at that time. It is still an important model, but for ten years, many things have changed, and now we derive most of our earnings from the paid model customer payments.
Alejandro: One of the things that has changed is the development of smart TV platforms. Is that correct?
Oleg Tumanov: Yes. It’s very correct. Honestly, when we started the business with the ad-supported model, we were not delivers in a chance that Russians would pay for the content, but we could not get the most interesting content on the ad-supported model, but you go from the U.S. majors, Hollywood Studios. The Hollywood Studios have this global policy that, in certain windows, the customer has to pay for the content. They, the majors, would not give content for the ad-supported model no matter how much money we were ready to offer. In 2011, we made the big round with the U.S.-based private equity firm, Tiger Global, and the big round was a couple of thousands of millions of dollars. Tiger insisted that we should conclude the agreements with U.S. majors and to get the content, no matter what. So I went to [18:18], and I concluded these expensive deals, and we started to offer this content on the paid model, on Pay-Per-View, and the transactional. Our customers let us down. Nobody was willing to buy, so it was a disaster, actually. We were off like ten times to our initial calculations, so we thought that it was an epic failure, and we saw that these contracts would expire, it would run out, and we would not prolong these contracts with the U.S. majors. But then, something interesting started to happen. On the smart TV, we noticed that there is a certain trend that people were buying more than on the PC web. We started to develop a more conversion mechanics and focus on this conversion into paying customers. And little by little, we improved our ratios, and we saw more and more payments come in from smart TV platforms. Now, with this major part of our revenues, the paid model, in particular, was smart TV. So, now, this year, probably 80% of our revenues would come from the paid model, believe it or not, and we were just about to discontinue it.
Alejandro: That’s amazing.
Oleg Tumanov: That would be a major mistake.
Alejandro: Absolutely. How much capital have you guys raised for the business?
Oleg Tumanov: How much money?
Alejandro: Yeah. How much money have you guys raised for the business, for Ivi?
Oleg Tumanov: Close to 200 million. Recently, we made a banking financing round. We borrowed close to 50 million U.S. dollars in rubles from Alfa-Bank, believe it or not, the bank I was running.
Alejandro: Everything comes around; everything comes in full circle, so very, very cool. I know that at one point here when you were raising money, there was certain legislation that was prohibiting for any investments in the OTT sector. I know that this was really tough for you guys because literally, the business was on the brink of survival. So, what happened there?
Oleg Tumanov: Yes. In 2017, there was an initiative in the Russian Parliament to prohibit foreign investors to operate in the Russian OTT segment to control more than 20% of Russian OTT companies or to offer streaming services in Russia. That was a draft of the law. It came out quite unexpectedly for us. It was pulling the law of mass media, which basically prohibited for investors to participate in the Russian mass media companies, so control more than 20% of Russian mass media companies. There was a similar law introduced, and I was actually very much shocked with the draft of this law because basically, it would mean the end of our business because we were financing our company mostly by the foreign money. Not because we liked foreign money more than Russian money, just the question that there were no Russian investors thinking about this kind of horizon like five to ten years, so they were not growing VC businesses for five to ten years. They were more short-term oriented. For the investors, so now they can have this notion of building a business, which had a big potential, but within a timeframe of three, five, maybe seven years wasn’t supposed to make money; it was producing losses. So the action of this law would be disaster for us. I had to meet with a lot of Russian officials, the Russian government, and to explain to them that they would kill the Russian legitimate and legal streaming market nascent and all the stage growing market. Somehow, I managed to convince them, so they kept the condition that for strategic players, operators like Netflix or similar companies, they would not operate in Russia without a special license from the Russian government. But they still allowed foreign financial investors to keep shares in the Russian companies, or even to control Russian companies.
Alejandro: Wow. Then how much runway did you guys have until that money came in?
Oleg Tumanov: I was making rounds by rounds during these 13 years of our operations. At every round, I was thinking that in the worst time, I had to live on my own money. So the whole time, I had a plan to downsize if necessary, and somehow to try to meet ends. It was only the question of how fast we would be growing. We can become very profitable, but we believe still that the big bottle for the market is still ahead of us, and we continue to fight for the market share and for the size. We are getting prepared for an IPO. It may happen over the next year on one of the U.S. exchanges. This is the 13th anniversary of our operations and the 10th year anniversary of Ivi as a streaming business, but I still think that we’re at the lowest stage of development of our company.
Alejandro: Let’s talk about this just for a second. For the folks that are listening, would it be possible for you to share anything that gives them a picture of how big Ivi is today?
Oleg Tumanov: Yeah, I can give you some numbers. In terms of the revenues, we should make this year between 9 to 9.5 billion rubles in revenue. The ruble development recently by 15% to 20%, so we thought that we would be making 150 million dollars this year in revenues. I think it will be more like $135 million, plus or minus, because of the valuation. We have been growing by 50-60% every year. Before 2014, we have been growing by 100%, and during the last six years, we’ve been growing by 50-60%. This year we are growing close to these numbers, close to 60% as well. We have a big audience, 50 million unique visitors come to our service every month. This audience is converted into 20 million unique watchers, and we have a paying audience of 3.2 million people paying us over the last month, so this gives you a bit of the size of our operations.
Alejandro: That’s fantastic, and how many employees do you guys have?
Oleg Tumanov: I think now we have 670 people, and there will be about 700 by the end of this year.
Alejandro: Those numbers are amazing, and I’m sure that in order for you to get this company to this level, you also had to grow yourself as a leader, so how did you go about that?
Oleg Tumanov: I don’t have a special technique growing myself into a leader. It just happened naturally because, since 1990, I’ve been at the top management positions, but always I’ve had something entrepreneurial in every company that I worked. But there are definitely, certain corporate cultures that I nourish in my company and my own kind of technique of leading this company and dealing with people. Yeah, I believe the corporate culture and leadership are extremely important. I don’t remember who said that work with culture is strategy on breakfast. [Peter Drucker, Harvard Business Review, said, “Culture eats strategy for breakfast.”] One of the lecturers at Harvard. I think it’s a very right phrase.
Alejandro: Absolutely, and obviously surrounding yourself, in that regard, with the right people and now over 600 employees. That’s a fair amount of employees, but I’m wondering during this process of onboarding all of these folks, I’m sure that you were very careful as to who you would bring to the business to help you. I’m wondering, during your recruiting, is there one specific question that you typically ask that you pay the most attention to what will be the potential answer?
Oleg Tumanov: I have an approach for my interview, and dependent on the person, and dependent on how the conversation goes, I try to sense and get the feeling if the person has leadership skills, how he thinks he’s able to keep a big picture if he has a systematic approach to things and if he is a proactive person. I’m trying to find and sense his personality and values. For me, these things are even more important than particular professional skills. I also try to find the creativity level and what person achieved and at what conditions he was able to achieve what he achieved. These things are important. Again, because our world is so uncertain, and so many things are changing so rapidly, a person must learn all the time, he must not be arrogant. It is a very bad quality to be arrogant, in my view, in this kind of world.
Oleg Tumanov: So I try to evaluate these kinds of qualities more, even more than the profession because you will learn in three to six months if you have all these right qualities, and if you are eager to learn, if you are a proactive person, if you have the right values, if you have the leadership skills, if you have a systematic mind, you can catch up on every part of our business. But if you don’t have these qualities, no matter what your professional level is, somehow, we will confront each other. We will not survive together in my view, and this story has confirmed itself many times.
Alejandro: Very cool. For the folks that are listening, I think that they’re going to appreciate this, and this is a question that I typically ask the guests that come on the show. If you had the opportunity to go back in time – you’ve been with Ivi for quite some time operating, building, and executing the business – if you had the opportunity to speak with your younger self, with that younger Oleg that is thinking about launching a business, what would be that one piece of business advice before launching a business that you would give to your younger self and why knowing what you know now?
Oleg Tumanov: First of all, I would definitely say to my younger self, go ahead because when I was younger, perhaps I did not make the right choices for me because I was playing someone else’s game if you know what I mean. Actually, I wrote the book, and it’s available on Amazon. It’s called Choose Yourself: How to Free your Personality and Create your World. It’s a view on the world. It’s not only about business, but it’s more like a philosophical book. This is one good example: when I was young for me to be the Deputy Chief Executive of a big bank, it was a matter of prestige. Launching a small business, how can it be compared with being Deputy CEO of a big bank? There was no comparison, and really, it was wrong, basically, and I was playing someone else’s game if you know what I mean. If I would have gone ahead with my own dream, I would have done much better, I’m sure. So, my first advice would be to go with my dream, to dream big, and definitely to find the model with a good potential and a good scale and just focus – these things I would say to myself. So, be persistent and focus and think big, and it would give an inspiration and the focus and the persistence. You know, the market and the work would do the thing.
Alejandro: That’s amazing. It’s like the saying that “If you don’t build your dream, someone else will hire you to help build theirs.” I love it.
Oleg Tumanov: The most important thing I would say is be yourself. Be yourself. Don’t play any other people’s games. And this is not only about business, but anything in our lives, I would say. A lot of people do not understand this. It’s a pity because they have something that someone else believes this is great, but because it’s not natural for them to have what they have, and if they would be themselves, they would probably go with a different past, with different values and would be much happier. So, that’s what I mean.
Alejandro: Very profound, Oleg. So, for the folks that are listening, what is the best way for them to reach out and say hi?
Oleg Tumanov: For them to say hi, maybe send me a message on my email: firstname.lastname@example.org.
Alejandro: Amazing. Well, Oleg, thank you so much for being on the DealMakers show today.
Oleg Tumanov: It’s a pleasure to be on your show and thank you very much for inviting me.
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