As co-owner of an oils and fats plant, Ivan Sidorok dreams about how to one day replace mayonnaise and mustards with healthy food products. Based in Nizhny Novgorod, products flood Moscow, and at the same time are starting to invade the Chinese market. After getting his MBA Sidorok launched his first startup, but didn’t stop at just one, and now runs an entire startup incubator. A correspondent from “Kommersant Money” spent a whole day with the owner of Mabius Food Startup Centre to understand how he manages it all.
Moscow’s new hipster Mecca, Danilovsky Market, is unusually empty this morning. Several young men in skinny jeans drink coffee near the entrance, and a girl in a dark chlamys and sneakers rushes to the fruit and vegetable stands to get fresh pomegranate juice before work. Nearby at United Kitchen, a man who certainly doesn’t fit the hipster profile (he is short and sturdy and wearing a suit) is spreading sauces across pieces of bread, preparing samples with great gusto.
“What’s this green one called? Wasabi lime? Great. A perfect salad story. And what’s that? Swan salt? Mmmmm, I actually tried this is Georgia – but yours is richer, I like it. Oh, and what are these, chilies? Awesome, this is a perfect match to go with Chinese dumplings!”
United Kitchen chef and Mabius director Andrey Ryvkine, watches along and laughs with satisfaction, patting his friend on the shoulder. Ivan’s passion for investing in China-focused food startups is well known, and the chili sauces that he is trying this morning didn’t just come from nowhere. Two years ago, the co-owner of the Nizhny Novgorod oil and fats plant created his own startup incubator (Mabius) in order to add new trendy high-margin items to his product line of margarines and mayonnaises. But he realized quickly that it was difficult to sell these items in the recession-hit Russian market, and after giving it some thought, set his sights on China.
In his lab, located inside the old Kristal distillery in the Lefortovo neighborhood of Moscow, Ivan proudly shows me a row of glass jars with different colored flakes and chips.
“Look, here is my main experiment,” Sidorok said, beaming. “Once developed, they will be DNA-based snacks,” he added.
I was horrified when Ivan removed his hand from one the jars with red flakes, and my look of terror puzzled Ivan.
“What did you think, that there were blood-stained chips in here,” he joked. “They are tomato! From our extrusion press.”
I turn towards a sizable metal machine that looks a bit like a meat grinder: a worker pours a mix from the basis, and then the machine spits the steaming matter into a box. It looks like dog food.
“This is a unique extrusion press, we inherited it from the Institute of Nutrition,” Sidorok said. “The beauty is that it is a relatively small extrusion press. Industrial-sized presses can mix 50 tons per hour, but such volumes are not needed for experimental batches. And it can do anything: dog food – as you mentioned – as well as chips and snacks.
Ivan holds a meeting with specialists about new concept snacks. A few weeks ago half of the Mabius team gave blood to a laboratory that offers “DNA diet” services. The DNA helps decide which range of products best suit the person, and now technology can determine the volume and contents of the snack for the specific test group.
“We need an adaptive traffic light,” Sidorok explained. “Suppose it has five colors (five food combinations) and each color has several flavors. I have northern blood, so for example, my color is white. And from the “white” snacks I have to choose what I like: for example, I love meat. Hence, the snack should taste like meat, even if it doesn’t contain any meat products.”
The specialists nod their heads, even though the task is clearly daunting. As we are leaving the lab, I tell Ivan that I personally think that constantly eating snacks seems problematic.
“Yes it is, because you are a girl,” Sidorok said with a smile. “Us men, this is the way we were created: your body can only digest so much fat, carbohydrates, and proteins, and then you have a customized product for yourself. The package says ‘Men’s food – 5 kilograms.”
Ivan’s big laboratory kitchen is already waiting for startups: two young men and two women. Kirill Prudnikov and Dmitry Kolesnikov have a beef jerky company Smeat, and Anna Yemelyanova and Olga Kuksova are the creators of Naked Granola, breakfast cereals made from buckwheat, seeds, Goji berries, etc. Ivan greets the women like old friends. Naked Granola is already receiving money from Mabius, but it was the mens’ first visit, so we’ll start with them. Opening the packets, Sidorok again enthusiastically tries the dried meats: pork with cranberries and honey, chicken teriyaki, turkey with ginger. The entrepreneurs watch each other with interest and talk while interrupting each other. They came up with their project at Skolkovo, where the realization of the idea took several months, and now the snacks are already sold in fitness clubs and gas stations for 150 rubles per pack. The young men are looking at selling a stake in their business “in order to get to China,” Prudnikov gasped at the end of the presentation. “You can’t deliver meat in China, but snacks prepared from meat can be. That’s our goal,” said Kolesnikov.
Sidorok is clearly satisfied by this approach. He takes some time to talk with the entrepreneurs about how to change the recipe and design it for the Chinese market (brighter, spicier!). He explains the standard conditions for obtaining financing: marketing specialists check the viability of the idea (Mabius is willing to spend up to $5,000 on this), and if the result is positive, then the company receives 1 million rubles in “seed money” for the trial batch and up to 30 million rubles for production. Prudnikov and Kolesnikov leave. After quickly discussing some production details of the buckwheat granola, Ivan sees the girls off.
Ivan inspects the co-working space in the building next to the Kristal laboratory: in one month, Mabius will move in here. With the growing project, it was deiced to acquire more offices and another kitchen for entrepreneurs. Before, the business incubator was more virtual – startups worked at their own locations and would collaborate with Mabius via Strategyzer, a platform that allows you to turn an idea into a business strategy, as well as helps understand niches, human resources, and costs.
Sidorok peaks into the room that has been reserved for the kitchen. For now it is completely torn up, but Ivan already envisions how everything will be.
“If you go to China, you still have to work and tweak the recipes,” he says thoughtfully, and then suddenly he smiles again. “You know, at some point, I realized we needed to get a foot in the market. In December, the team went to China. The trip was in connection with the Enactus project – you know it? It is an international student entrepreneur competition and myself my friend Denis Semykin are involved with the Russian part of the project. So we went to see the Chinese students and brought 60 kilograms of our standard products with us. It was wildly exciting market research, and most importantly, it was incredibly cheap. Students would sneak away food and eat it with their families. They didn’t like anything! So then our head chef asked them to bring him their favorite foods. He tasted them, then after used our products to create slight variations of the food the students brought in. One example is sweet oatmeal porridge with sprouts and adjika (a Georgian spice), quite an odd combination, but the Chinese loved it!
We are joined by Denis Semykin, a tall man with a curly beard. When the accelerator increases to at least a few dozen projects, Ivan will leave to promote them in Hong Kong, and Denis will stay here and look after the business. A thousand details still need to be discussed (such as who the partners will be), but then all of a sudden Ivan says we need to go into the city center to the store “Garden City”, the testing playground for startup sales.
On the car ride there, I had to hurry up and ask all the questions that had accumulated. “Actually, the main thing that interests me is how did the geography of the project developed from Nizhny Novgorod to Moscow to Hong Kong?”
“Well, that’s all due to Skolkovo, perhaps,” Ivan reflects. “Yes, without Skolkovo, of course, our business would be confined to Nizhny Novgorod.”
In preparation for my meeting with Ivan Sidorok, I learned that he was literally born into owning shares in the Nizhny Novgorod Oils and Fats plant. His mother was the last “red director” of the plant, and throughout the perestroika years and the accompanying corporate wars, the family managed to retain a 25% share of the stock, and peacefully shared control with two other shareholder managers. Ivan started working in the family business even as a student (he studied in the best universities in Nizhny Novgorod – the Linguistic University, but in the economics department). After working for several months in financial and accounting positions, in 2002 he relieved his mother of her duties and joined the board of directors and became a managing partner.
In the next 10 years business at the plant was going well: it acquired a dozen grain elevators and oil extraction plants, became market leaders with the margarine product “Hostess” and the mayonnaise product “Ryaba”, and began supply sunflower seed oil to India and China. But by early 2010s, Ivan became restless, and to break the monotony, started a one and a half year MBA program at Skolkovo. And now, as they say, life is split into “pre-MBA” and “post-MBA”.
“Now nearly everyone with whom I work are either people from Skolkovo or people I was introduced to through Skolkovo. And they are absolutely mind-blowing people. On my phone I have the private number of a professor who taught a course on the art of negotiation. I can always give him a call and consult or take him on for negotiations,” Sidorok said.
We arrived at Garden City, and Ivan showed Daria Lisichenko, the storekeeper, sample products from their startups that they would like to sell there. Daria seemed to like everything. I look at the shelves and see pumpkin and chia seed super foods for just 500 rubles, a bag of hemp oil for 1500 rubles, and a bottle of juice for more 300 rubles and upward. The neighborhood of Patriarchy Prudy is inhabited by people who value healthy food and lifestyle and are not limited by prices.
“Look!” Ivan said, returning to our previously interrupted conversation, “after Skolkovo, I understand the main thing is that if you come up with a lot of hot and high-margin products and produce them at a factory at 10% capacity, the overall profitability can nearly be doubled.
Soon after finishing negotiations with Daria, we proceeded to go check out the venue that will host the final Enactus startup competition, as part of the effort to reestablish a development of events.
After Skolkovo, Ivan Sidorok moved to Moscow and began creating Mabius. The task was to gather the ideas and energy of young entrepreneurs to create a large number of successful projects. But he only had so much energy after Skolkovo that one of his projects didn’t come to fruition. But at the same time, he occupied himself with Enactus, the online gallery Art-icon, philanthropy, and mentoring.
When the economic crisis hit Russia, it became clear that products such as margarine and mayonnaise would continue being staples, but that chia-based DNA chocolate bars would better be oriented somewhere else. Europe and the US were both ruled out, and Asia proved to be a more attractive market. By this time, Ivan was already the co-owner of the CIS division of Willmar International Ltd., one of Asia’s leading agribusiness groups. This group was already actively selling oils in China in order to access the Chinese market, and the prospects were breathtaking.
“Remember, if you want to win 1% of the market in Russia or China, you need to spend the same amount of money. But in China, 1% of the market is massively bigger than in Russia. This is especially true when we talk about the middle class. In China, hundreds of millions of people have a salary more than $3,000 per month, in Russia, this demographic is almost non-existent, especially now after the crisis,” Sidorok explained.
“Look, did you see this? We spent three months searching, but look, here it is!” Sergey Efremenko, a Skolkovo professor and coordinator of Russian Enactus program, shows Sidorok the massive, newly renovated culture center of the National University of Science and Technology (MISiS). Bobbing up and down with impatience on the stairs, he drags Ivan through a paneled hallway and opens the door to a brand new and well-lit amphitheater, where musicians are practicing before a ceremony. The two men quickly make there way to the jury room moving around chairs, making sure everything is ready for the coffee break.
It is evident that Enactus is very important to Ivan, and he was happy to return to it. “It’s clear that the majority of student projects – whether students discover the world, or create a utopian vision to ‘steal from the rich and give to the poor’ – it’s great that people aren’t just wasting their lives away while their parents pay for their education, and instead they want to develop and think about business. It’s very inspiring,” Sidorok said.
Ivan is now working just down the street from his alma mater, MiSiS. His office has a view of the Crimean Bridge over the Moscow River and the Stalin skyscraper that is home to the Ministry of Foreign Affairs. As he is signing papers and finalizing his meetings and visits schedule, his son calls. His family (wife and two sons) is visiting him from Nizhny Novgorod. “Usually I drive (I’m a fast driver) to Nizhny on the weekends, but now since I have some back pain, I travel on the high-speed Strizh (Swift) train. But today they come to me to see me before I fly to China tomorrow.