(Excerpt from) Kaspersky, Eugene Kaspersky, CEO and Founder interview

Extendance: When did the company start?

Eugene: Officially in June 1997, but I had been working on this as a hobby since 1989. In 1991, I got a job at a Russian IT company; well actually that was not the Soviet Union any more — in '91 there were some private companies already (in the Soviet Union there were no private businesses at all). There were the first private companies, and an IT company managed by my former teacher. He knew me, believed in me and let me work with computer viruses. That was my hobby, there was a bit of money, and at that time in Russia a hundred US dollars' salary a month was good money, so I survived!

Slowly it became a business. I developed it step-by-step. I got people one by one, building this team where all of them in the beginning were just software engineers. I made these guys pay more attention to the quality of the protection, to the quality of the engine, to the quality of the product. And in '94 we got the first awards — actually that was the first anti-virus tests in Hamburg University, the first anti-virus tests in the world, and in these tests we came first. So we started to get requests from European companies from individuals, from small companies, because who was going to work with an unknown Russian software security company, in '94?

Extendance: Obviously, Kaspersky is a Russian company. In retrospect would you say that it was more difficult or easier to be a Russian company?

Eugene: Yes and no. In the past there was also that perception that Russian companies were not trustworthy. The question was not direct (but it was) "They are an IT security company from Russia!?" Now it's different: there are no more questions of trust. It's the opposite — Russia is respected as a country with very well educated software engineers, so now it works in different ways. But what was more difficult is that we didn't have the experience, we didn't have teachers. We had to learn it by ourselves. Actually, we were the first generation of IT businessmen, the first generation of people who started international businesses, and still in Russia many people have the Iron Curtain in their minds because they were born in the Soviet Union, so we are the exception. People of my age, they have this. So that was a very negative impact of our Russian origin. But I think there are more positive impacts. First of all, being Russian, we are partly European and partly Asian — so is Russia Eastern Europe or Western Asia? I think that it's easier for us to understand both West and East. And also there are not two Russians. It's a much younger society than Germany or Britain. English, Scottish, Welsh, they do not mix. We have an employee from Cambridge. She was 30 years old, she went to London to an exhibition center. She had never been there before starting the job! That was her first time in London. So the positive thing is that it's easier to us to understand others. We can feel the differences. And the most positive thing is that Russia has a very strong technical education system. So we have direct access to Russian brains!

Extendance: Educational public relations?

Eugene: Yes really we educate people, we explain what's bad, what's good, what to do, what not to do. And actually I think that's our major part of marketing. Actually, we also have the traditional marketing, we have advertising, but it's not so important. I think that much more important is to educate people and by education we just build the brand. We build the respect for the brand, we make people trust the brand.

When you're talking about security, people don't buy products, they buy trust. If you don't trust a security product, why would you buy it? So I think that's the key in marketing. That's where we are different to others.

When we were starting up, many of our partners (not all of course but some) cheated us; that's reality. But we agreed to that, because that was a kind of promotion. Let them not report 100% of sales, that's okay, they promote us. Because we didn't have any money at all. And later, when we got some muscles, we started to develop our annual presence at CeBit in Germany starting from '96. It was a very small booth, now it's like 500 square meters. Actually, that was quite interesting, because at that time we didn't have money so we followed the optimal way in terms of money because we had nothing to spend, but at the same time that was the optimal business way because we didn't waste our money on the traditional activities, we did it differently, we understood the psychology of the malware creators, we understood what they were doing, we were able — still are able — to predict what's next, and we were spreading this news.

Extendance: What is the division between online marketing versus traditional marketing in spending?

Eugene: In the future it will be 10% traditional, 90% online, and in online, it will be 10% traditional online and 90% the new generation online, communities, because the real difference (from) traditional marketing is you can talk to the wall, but the wall doesn't talk; but online in the future people will exchange their information, exchange their opinions, especially the younger ones who were born in the Internet era. We're the old guys, we're the dinosaurs, we still remember how we were living without the Internet, without mobile phones without smartphones.

Extendance: So in online marketing... search engine optimization, do you do any of that?

Eugene: I think there are people who do this, but I don't know it. I don't know all the details. I don't think people type “antivirus” on Google when they want to buy an antivirus. People know which product to buy, or they call experts.

Extendance: ...so that's where the education comes in...

Eugene: Exactly, yes. Also, they ask kids these days. I heard many stories from journalists or from our partners or distributors, people that have business with us, that people say “We used your product because my granddaughter told me about it”.

“ The task is how to get the communities, how to build the communities. That's not easy because the people in the communities are not slaves, they are free people. If you don't like that, then forget about it. ”

Extendance: Which online marketing activities will you be more interested in doing in the future? I think you've probably already answered this!

Eugene: Yes, communities. The thing is, the task is how to get the communities, how to build the communities. That's not easy because the people in the communities are not slaves, they are free people. If you don't like that, then forget about it.

Extendance: Have you got any examples of very successful marketing tools, marketing campaigns you started from the beginning without knowing beforehand whether they would be successful or not?

Eugene: The best marketing tool, which really accelerated sales, was a special technology which we used to control the piracy level. So we have a list of the activation codes and a list of key files — we don't sell products, we sell subscriptions, because we provide updates to technology: 1, 2, 3 are all technology, and the technology is developing updates. It's like petrol in your car. An antivirus without updates is nothing. We could see that millions of people were using the same key file. And we put this key file on a blacklist, so when your key file is on a blacklist you can't get updates any more. The product still works. Our sales jumped 3 to 4 times in Russia, in Germany, in the UK, in the USA and in France: that was a surprise. When we block the key, some people will switch to another product, some will find another pirated version and many people will switch to the legal version. That was a “DoS attack” on our activation service (laughs) — the head of operations in America called up the VP marketing in America and said, “What did you do?” The company strategy is that piracy is not a question of mind, piracy is a question of the wallet. And actually this is one of the reasons that we are building a business very effectively, although now we are predicting that the speed of our growth would be a bit less than 100%, because people are switching to pirated versions. At the same time, we have special antipiracy protection in our products, and that means about 10 things that they have to do to make the pirated version work... So if it's more expensive to buy the legal version you will do that. It depends if your time costs more. It's a kind of balance.

Extendance: Is there anything that the US and Europe can learn from each other to improve their marketing approach?

Eugene: Good question. It's not a question about Europe and the United States. I think it's a question of Europe, the States, and Asia. We can learn from different markets, we can learn different things. What Americans can learn from Europe is European service, because in the United States in some cases it's not as comfortable as in the same situation in Europe. Like in Texas, in a five-star hotel I go to the restaurant and there is a menu. On the left side is hamburgers, meat, chicken, fish, vegetarian. On the right side, hamburgers, sandwiches, meat, fish, chicken, vegetarian. Drinks: Coca-Cola, Coca-Cola light. I can't remember which airline it was, I was sitting in first class in seat A1. Facing the toilet. Americans don't have the same feel as the Europeans, the British are somewhere in between. What we can learn from Oriental countries is a higher level of service. In Japan, everything is done in such a way that you want to be Japanese! What European countries can learn from the United States is global expansion, not to be afraid of global expansion, not to be afraid of having offices around the globe, not to spend on the domestic market only but to spread, not to be afraid to invest a lot of money into the business — actually investment is not the right word nowadays. I think the different countries, different cultures can learn a lot from each other and their colleagues around the globe.