Anatoly Smorgonsky, OinSpace co-founder and CEO, is now developing a platform which will protect goods from illegal copying. OinSpace’s pilot launch is expected in 2018’s fourth quarter. By now, major international companies such as Cisco, Nokia, Dell, as well as Big shampoo and cosmetics manufacturer, etc. have stated their intentions to cooperate. Invest Foresight discussed the details of the platform development with Artem Kolganov, CCO at OinSpace, on the sidelines of the second annual Private Equity and M&A conference.
Anatoly Smorgonsky and wines
OinSpace co-founder and CEO Anatoly Smorgonsky has been working in the telecom industry for over 15 years. He was CEO at Skartel (Yota brand), CMO (marketing director) at Rostelecom, Beeline, and Tele2. After leaving Tele2, Anatoly Smorgonsky founded National Center of the Internet of Things, Russia’s operator of IoT solutions which also aggregates local networks of the LoRaWAN standard. In 2017, Anatoly Smorgonsky jointly with Dmitry Samokhin, former CEO at NTV Plus satellite broadcaster, founded Ambite IT holding company which provides services to the three majors of the Russian telecommunications, namely, MTS, Beeline and Megafon, as well as Tele2, Tinkoff Mobile, Novolipetsk Smelter, etc.
OinSpace is not related to telecommunications or IT businesses. It in fact came to existence by chance. Smorgonsky’s friend is a sommelier. She once told him that China consumes three times more high quality French wines than France can produce. Winemakers are unable to put an end to the situation and hence suffer huge losses. Smorgonsky started thinking of the ways of fighting counterfeit products. That is how the OinSpace concept emerged. The problem is not just about wines but about the overall immense counterfeits market.
OinSpace and its operation
According to the Frontier Economics estimates, global counterfeits market is about $620 bln. Worldwide, there is no single mechanism for goods authenticity verification. World Health Organization notes that every tenth pack of medicines in developing countries is either a counterfeit or below its stated quality. The most counterfeited medicines are those intended to cure malaria, as well as contraceptives and food supplements. Fake medications pose a threat to lives and health of millions of buyers and cause immense damage to the global economy.
Manufacturers of original goods have to spend incessantly growing financial resources on their protection. That pushes up marketing and branding budgets and requires introducing broad but often inefficient loyalty program and raising prices.
OinSpace suggests that users, buyers in the first turn, use a free mobile application which allows checking goods authenticity. Having scanned a good’s QR code, a consumer initiates OinSpace application. OinSpace will generate the good’s unique QR code. The code is to be incorporated in an Ethereum blockchain thus allowing to protect the good from counterfeiting. Manufacturers thus are capable of protecting their products at $0.1 per piece. The entire data is to be stored in a cloud. OinSpace can therefore become an ecosystem capable of shaping a common consumer mechanism for goods authenticity verification.
– By now, we have developed an OinSpace platform prototype. Our customers like it and keep saying, let’s launch it in operation at last. The cost price is at the very bottomline. It is merely $0.1 per piece while the result we expect to see can be tremendous, Artem Kolganov, CCO at OinSpace, says.
Nokia needs OinSpace not to protect its cell phones which nowadays are no longer counterfeited, but to collect information (Big Data) on who, where and why buys its products. The information is used to have a more targeted advertizing to expand sales and offer proper accessories. Cisco (read about its network ambitions – IF) and Big have similar needs. Besides, Cisco is interested to learn where the counterfeited products go.
OinSpace and VeChain
OinSpace founders are now engaged in negotiations with the producers of expensive wines, sports shoes, handbags and other items that currently symbolize counterfeiting.
In Singapore, there is a similar startup, VeChain. VeChain is aimed at preventing luxury goods counterfeiting, and ensuring goods safety. VeChain platform issues for a good a unique reference which is both stored in a blockchain and placed onto the product with an NFC chip, RFID tag, or QR code. These arrangements allow VeChain to manage supply chains and monitor goods at any stage of the life cycle. Unlike VeChain, OinSpace is intended for the ultimate consumer, i.e. goods buyer.
“We want to make our service most convenient for a buyer who needs to just press two buttons to get information on the good’s authenticity”, Artem Kolganov says. “VeChain does not offer such an option. We also provide companies with the service of Big Data collection and direct consumer marketing”.
OinSpace pilot launch is scheduled in the last quarter of 2018. OinSpace will have an ICO in September. A private sale is now in progress. Oin tokens will be used for generating goods’ QR codes. Those manufacturers who want to protect their goods from counterfeiting and buy tokens at the private sale, will get discounts for producing QR codes. It is expected the ICO will help raising ETH 50K (about $47 mio). The amount raised by now is not disclosed. Yet Artem Kolganov is certain about the crowdsale success.
By Natalia Kuznetsova