Million-dollar man: Ruslan's rise and rise
Ruslan Kogan relishes a good fight. Photo: John Woudstra
Six years ago Ruslan Kogan was running his fledgling electronics business from his parents' house. Last month Kogan did $1 million of turnover in a single day - three times more than his first year of sales. The entrepreneur talks to Jane Lee about building his business.
“We're nobody's bitch.”
I'd make $10 or $20 a weekend, which isn't much to most people but at nine you're pimp at the milk bar with that sort of money.
Self-made millionaire Ruslan Kogan is talking about Kogan, the online electronics store he founded in his parents' garage six years ago.
Unlike its bricks-and-mortar rivals, it also designs, builds and delivers its own branded products – including televisions, home appliances and computers - removing costs and ties with middle-man suppliers and distributors.
But he could just as easily be talking about himself.
He was five when he and his parents immigrated to Australia from Belarus with $90 and not a word of English.
When he was nine and tired of being told they couldn't afford the lollies and football cards he wanted, he started re-selling stray golf balls back to players at a course near the Elsternwick housing commission where he grew up.
“I'd make $10 or $20 a weekend, which isn't much to most people but at nine you're pimp at the milk bar with that sort of money.”
Now 29, he says Kogan – the business – has made more than a million dollars in one day's worth of sales for the first time in its six years. He will not be drawn on the exact figure but says the milestone was reached two weeks ago with the help of a number of promotions, with more than 5000 sales by 8pm.
He likens the experience to winning an Olympic gold medal.
“It's a very sweet feeling,” he says. “It's (like knowing) that 'I have worked my butt off for four years, training 15 hours a day and it's finally paid off.'”
But a congratulatory mass email to a staff of about 50 was all the celebration the man would allow himself.
“We plan to be the biggest technology retailer in Australia and when that happens we'll have a celebration," he says.
“It'd be like an athlete celebrating a (superb) training session. You don't celebrate that; you celebrate when you win a gold medal.”
Last year, Kogan was listed on BRW's young rich list, reportedly worth $62 million. But he insists that apart from a few more trips overseas for work, his lifestyle has changed little.
“The way McDonald's tastes at 4am after a massive night out is (still) the best meal in the world.”
The only visible signs of his success are the sparkling diamonds on his watch. His voice softens as he confirms it was made by luxury brand Hublot. It is the only time he appears self-conscious in an hour-long interview.
Kogan relishes a good fight.
He smiles as he unzips his army green camouflage jacket to reveal a T-shirt bearing the slogan “I got haterz (sic) everywhere I go”.
The first Chinese manufacturer Kogan approached turned his order of 80 televisions down for being too small in the first year of business. He later secured the deal by offering to edit and stylise their marketing materials for Western markets.
“I had to beg them to work with us. Now we've got the biggest factories in China and Asia begging to work with us. Our volumes are massive, we're a significant customer for any organisation that we deal with.”
Kogan the business is no different. Its turnover has expanded from $300,000 in its first year to $20 million last year as the proportion of Australian consumers going online to shop has also grown. Meanwhile declining retail conditions have made life difficult for bricks-and-mortar rivals such as Harvey Norman and JB Hi-Fi.
“They all hate what we're doing and (it's) no wonder. We're taking away their market share,” Kogan says. “We now sell three times more in one day than we did in our entire first year and that's a growth pattern you can't ignore. They can no longer say 'these guys are insignificant' when we're doing a million dollars a day in sales.
“If the current trends continue we will be bigger than Harvey Norman in four years.”
The internet appealed to Kogan as the ultimate level-playing field on which to start a business from scratch.
“For Kogan to start 20 years ago, I would've needed an investment of $5 billion, retail stores all over the country, millions of dollars' worth of stock, some serious backing. I started Kogan with zero dollars in the bank account - that's why I love technology.”
But he says traditional retailers would do better to focus on new ways to service customers through their existing physical stores, rather than trying to compete with Kogan's online model, which allows him to source parts at cheaper rates.
“Going online for (bricks-and-mortar) stores isn't going to fix anything. They have invested in real estate and that's their business.
“Someone who wants something right here, right now, is a customer that's not all about price. Officeworks can deliver a USB stick to you (when) you need it in 15 minutes.
“Harvey Norman and JB-Hi Fi can try to compete with Kogan online all they like, as much as they want. We'll whoop their arse,” Kogan says, slamming his hand on the table before him for extra emphasis.
“They have absolutely no idea what they're doing (online).”
Self-sufficiency is a running theme for Kogan.
Over the years the business and the man behind it have won headlines for everything from launching a heavily criticised 'Tradeleaks' website (the self-proclaimed Wikileaks for bad business practices) to challenging Harvey Norman's chairman Gerry Harvey to a national debate (he declined) and even taxing customers for using an outdated version of Internet Explorer.
But he says the media has had at best a “negligible” impact on the number of customers visiting Kogan's website, which he says averages 50,000 a day.
“Our site would get 100 times more views a day than your article's going to get. So it's got very little to do with it,” he says.
Kogan has plans to expand to the US “very soon” but apart from warehousing facilities will not hire any staff to manage it on the ground. The US branch, like its UK operations, will rely solely on its Australian office.
“We don't need to … these days someone can ring an American number and a phone in our office will ring. It doesn't matter if an email gets responded to from here or there,” he says.
Kogan the man prides also himself on his personal independence.
He does not rely on the success of the business for his salary as he lives off the proceeds of other businesses he has a stake in, including online furniture store MilanDirect.
He is also “happily single” following the demise of a four-year relationship while running the business, but says the 120-hour working weeks have not come at a personal cost.
“You've got to do what makes you happy. At the moment I'm so passionate about (Kogan)…that if I was doing anything else, that thing would be at the expense of my happiness.”