5 Important Business Lessons Learnt from Ruslan Kogan
Earlier this month, the Australian Institute of Business hosted an Alumni event at the Grand Hyatt Melbourne, with a business-leading keynote speaker. Ruslan Kogan, successful technology entrepreneur and the creator of Kogan Technologies, graciously took the stage to share his insights and anecdotes from his time within the business industry, and his experiences as an entrepreneur. At the event he shared a great deal of details about the highs and lows of his own business endeavours – and here are 5 crucial lessons we learnt from his speech.
1. You Can Learn Everywhere
On stage at the Entrepreneur of the Year awards, Ruslan was asked if he learnt any of his business skills from his parents. His response? “We came from the communist Soviet Union, there was no such thing as business skills.” But backstage at the same awards, someone wisely pointed out that he may have learned a lot more than he thought.
“Think about what it takes to be an immigrant – you’ve got to drop everything you’ve got, take a massive risk, travel into the unknown and work your ass off for a potential benefit that might not even be there. Think about what it takes to be an entrepreneur – you’ve got to drop everything you’ve got, take a massive risk, travel into the unknown and work your ass off for a potential benefit that might not even be there.”
Though Kogan, as an incorporated company, began in 2006, his journey to entrepreneurship actually began in 1989, when his parents took a risk and moved to Australia with 2 kids and $90 in their pocket.
2. Your Interests Can Create a Business Opportunity
While working at Accenture, Ruslan was in the market for a new TV.
“I was always a gadget man, I loved gadgets – consistently getting new phones and so on. And flat screen TVs, they were a big deal at the time. I looked at all the big name stores, and despite earning some decent coin, I couldn’t afford one.”
So then he got an idea.
“I found a lot of factories in Asia, I emailed them all, and I said “I’d like to manufacture 100,000 televisions. Please provide me with your best price.” At the time, I was thinking they would provide me with a quote, I would ask for a sample, and that would then be my new TV.”
The factories, they started responding – and what he noticed was that the TVs worth $3,000 or $4,000 in Australia, they could be manufactured and imported for around $1,000. Ruslan also discovered that even though there are thousands of television brands around the world, the panels (which are around 90% of the television) are made by one of four main panel manufacturers – Samsung, Hitachi, LG and Sharp. A Sony TV? It’s a Sharp panel. And a Bang and Olufsen television uses a Samsung panel.
“The product being offered by the factories in Asia was a high quality product for a fraction of the price in Australia. I also thought to myself, it’s the perfect product for online retail – because online retail is about maximum value per cubic centimetre. All the ducks lined up.
3. Take Reasonable Risks:
“I went and shared my idea with a few people, and they all told me I was crazy.”
Ruslan’s friends, family and business advisors didn’t have a lot of faith. Online retail at that point was only for books and CDs at that point – nobody bought televisions online. But Ruslan had other ideas.
“I thought, if I line the specifications up side by side, educate the consumer, create a few videos, show them what they’re buying and give them a money back guarantee, they’ll buy it. It’s cheaper.”
He told his friends, who said no-one would buy a TV without being able to see it first. He told his mother that he was quitting his job at Accenture to pursue this business – and she cried. But he had to do what he believed in.
On a Wednesday, Ruslan walked into Accenture and elected to resign from his position. By Sunday, after a few sleepless nights and a great deal of work, the first effort of Kogan.com was born. The website was ready, the TVs were listed, and Kogan Technologies was born.
It wasn’t all smooth sailing for the business – manufacturing issues, a lack of cash flow and no starting capital. Luckily, Ruslan stumbled on the idea of encouraging customers to pre-purchase their televisions, in order to build the funds he needed to put a deposit on the first run of Kogan brand TV’s.
4. Don’t Be Afraid to Think Outside the Box
“Every transaction in business is about creating a win-win scenario.”
Ruslan wanted to manufacture 80 TV’s, to start Kogan at a reasonable level. The manufacturer he’d chosen in China, however – they weren’t prepared to do such a small order, given that they could reasonably complete 100,000 piece orders. So Ruslan came up with a deal.
“What could I do to convince this factory to make my order? Then it hit me. I don’t know how many of you have dealt with China, but even the most professional organisations – all of their marketing material is in Chinglish. I spent a few days and nights translating their brochures, I edited user manuals, I added diagrams and images – I made everything look like a professional document. And then I emailed it back to the factory, and explained that there may be little commercial value for them in making my order, but I can add value to this transaction in other ways. They accepted my order, and gave me a better price.”
Thinking outside the square is advantageous – and the factory won a huge customer in America shortly after Ruslan’s efforts, due to the quality of their marketing material.
5. Bad Things Happen – It’s How You Deal With Them That Defines a Great Businessperson
“I woke up one morning to an email from eBay – along the lines of “Dear Mr Kogan, we’ve noticed some irregular selling on your account. You have sold a large volume of products, but you have not received any feedback from these sales, so as such, we are suspending your account until you receive feedback for these items.” That was a problem.”
Without eBay, Kogan would struggle to sell the full container of emails prior to when the payment was due to his manufacturers. He had no way to get the money required, and he needed it fast. He applied for several credit cards, and asked a few of his most trusted friends to do the same. This created a situation where everything was on the line – so he jumped on a plane, flew to China, and checked every television piece by piece to ensure that every product was in perfect condition. Ruslan then watched the container being loaded into the ship that would bring his televisions to Australia. This extra effort, and the reassurance that his products were on their way, made sure that his customers would get what they were after.
Bad things do happen – but being productive, keeping a cool head, and taking every necessary step and precaution to protect his products (and therefore the reputation of his growing brand) helped to make Kogan a great brand, and make Ruslan a fantastic business leader.
Were you at the event? What important business lesson did you take away from Ruslan’s fantastic presentation? Let us know in the comments below!
This article was written by Simone Ball on behalf of the Australian Institute of Business. All opinions are that of the writer and do not necessarily reflect the opinion of AIB.