CNNfn
June 2000

THE CUTTING EDGE  [Excerpt ]

Host: And on the Cutting Edge today, KMGI.com. The company is an interactive advertising agency. KMGI is hoping to revolutionize the Webmercial using high impact animation and graphics - backed by audio effects - that run smoothly and load almost instantly. We make it all sound so easy. This is the guy behind it though. The company's CEO is Alex Konanykhine. And he joins me now to talk about his company. Alex welcome.
Alex: Thank you. It's a pleasure to be here.

Host: Well, good. You are from Russia. You're a long way from home. You made your home in New York. You want to be the Universal Studios of interactive Internet production here.
Alex: We do, and we believe we are on our way there.

Host: You believe you are on your way here. Let's talk about, what your company does. These are commercial on the Web, and you produce them.
Alex: It's more than commercials on the Web. Commercials is just one of the applications of our technology. What we do is a lot of presentations for any production service. You can do, like, infomercials, but interactive and on the Internet, which is good news for TV studios because companies used to have to pay tons of money for running infomercials all over again. But now you can just deliver the same way as TV infomercials and put it on your server.

Host: Is it , in fact, the same quality as TV yet?
Alex: Well, I'll give you that. Visually, we are still catching up with TV technology, but we're winning in interactivity and on cost effectiveness.

Host: Right. It is perhaps cost effective because if you walk around CNN, right behind you in fact, some of the edit suites we have are massive. We've got all the bells and whistles here, but you are telling me that you'll be able to do an awful lot of this production, some of that takes up, you know, the room the size of a tennis court to put together. You can pretty much do it on the computer.
Alex: They do it over the computer and, in fact, we've done it for many clients, including various of the largest companies in the world.

Host: Right. Let's talk about some of the things you have done. What are some of your clients, and what have you produced for them?
Alex: You know, now we are getting assignments from companies from many countries like Canada, United Kingdom.

Host: Here's an example of one. What are we seeing here?
[PRESENTATION]
Alex: It's a recent award that we were awarded, World's Best Page Award. And also they bought World's Best Web Site Award, and many other awards.

Host: All right.
Alex: But we just saw an introduction to our web site. And as you can see, it's dynamic. It tells the story. It is not just static pages with text and some pictures.

Host: So if I log on, this is what I'm going to find. There's KMGI.com right there. You say it's cost effective. Give us an estimate of what you would charge. And how do you charge for these services?
Alex: Well, to produce a Webmercial, which is like a web analogy equivalent to a TV commercial, it's about ten times less expensive than a TV commercial.

Host: Wow!
Alex: It's also less expensive to run it on the Web. And if you do a product presentation, you don't have to pay to run it, and people all over the world can access it free of charge and see it in a number of languages.

Host: So who are you targeting to bring in to make more customers?
Alex: I believe this technology is ideal for any advertiser, large or small just because it's much more cost effective. It's good for manufacturers because they can do product presentations for very little cost. We do a lot of Web sites for major companies.
[PRESENTATION OF TOP CUSTOMERS: DUPONT, AT&T, BEST WESTERN, INTEL, MACROMEDIA]
We are also now switching to entertainment and education industry.

Host: All right. Hence, the Universal Studios analogy there. Let's talk a little bit more about, you are a private company here. Are you getting funds outside, or do you hope to go publicly any time soon.
Alex: You know, we have a positive cash flow which is quickly expanding, so we've no need for vc money technically-speaking. Of course, we're always open for any good opportunities, and we may go public at some point of time in order to seize the largest possible market share. But so far, we've been developing our business the old-fashioned way of getting more clients, getting more business, and building our business based on our cash flow.

Host: The old-fashioned way. You speak English beautifully. Obviously, you're very Americanized, but could you have this type of opportunity back in Russia where you're from?
Alex: I did receive more opportunities during Gorbachev's reforms, perestroika reforms. In fact, I was one of the most successful businessmen in Russia at that point in time.

Host: But now you're here, and you're doing it on the Web. And it looks like you're on your way. Alex Konanykhine, and on-line advertising KMGI. Good luck to you.
Alex: Thank you very much.
Host: Thanks so much.

[END]

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