Goods from China, the Conflict at Business Molodost, and Phones from Poland: 10 Real Business Mistakes

AVAlexander Volchek

I took it on for ten thousand dollars. That was definitely my mistake. By 2012, I'd brought it up to a hundred and twenty thousand customers. I sold it and went into a partnership, into a company, a young new company called Business Molodost. In 2012, I became a co-owner of Business Molodost. By 2013, I had a thirty-three percent stake. When I left the business, I created an enormous problem for it. He's the first person in Russia to earn a billion dollars, so to speak, in cash in a bank account, rather than through privatization. Mistakes aren't something to regret. Hello, everyone! You're on Alexander Volchek's channel. Here I talk about life, business, and spirituality. Today it's business. I want to talk about ten mistakes I've made in my professional work and in business over my life. I have quite a broad professional background, and a great many things have happened and are happening right now. I want to single out some vivid, key moments. What's significant about these moments? They're significant because they let us see the areas where problems arise and the areas where, perhaps, we really could have done things a little differently.

I'll go in chronological order through my life. Although, probably, the more recent the moment, the later that event or mistake occurred, the greater its significance and the more fundamental it is. The first event was in 2003. My friends and I decided to sell mobile phones. The four of us got together and said, “Let's start this business.” Two of us went to Poland and bought mobile phones. We came back—we were living in Minsk then—and somehow managed to sell the phones in Minsk. Someone scratched a phone along the way; one of the partners later said they didn't want to work. In the end, we went our separate ways. What was the mistake? The mistake was doing it as a group of four. It was a group where we decided to do something together. It was the energy of four people, not the energy of a real business, an undertaking. And with no understanding at all of whether the four of us could work together. If you look deeper, probably everything we needed to do was missing. No planning, no proper choice of niche, no calculation of the economics, no written partnership agreements, nothing. Just a spontaneous action, a spontaneous action that ended as quickly as it began.

The second mistake. In 2007, I opened my first software development business. I opened it after agreeing to a contract in a cafe a month earlier. What was the contract? We said we'd automate a furniture sales company, and it would pay us ten thousand dollars. Today, I wouldn't take on that automation project for a million dollars, or two million dollars. I wouldn't take it on under any circumstances, because everything had to be automated. We had to build a huge, extensive ERP system. I took it on for ten thousand dollars. That was definitely my mistake. Perhaps it was the impulse that got the business started. But you mustn't take on contracts like that. The third mistake. In 2010, I closed that same first business of mine. It was a company called IT Group. It was based in Belarus. We developed software for clients around the world: Austria, France, Germany, England, the United States, Taiwan. Some projects were in Belarus too. And what was the mistake? Not that I closed it. I'm very glad I left that business.

I originally built this business with my partner, and I had a sixty percent stake while he had forty. Essentially, I came up with the business, went to him, and proposed it. At the time, he worked on my team, reporting to me at the company where I worked. We'd studied together, and the split somehow ended up sixty-forty. It was probably appropriate, probably appropriate. But in 2009, another person appeared who wanted to collaborate and work with us. In 2009, we merged the businesses. We already had a separate business with him. Something was going on here, and we merged the businesses. After the merger, we were three partners with thirty-three percent each. In other words, I reduced my stake significantly. My second partner reduced his a little, and a third appeared. That was an enormous, major mistake. The mistake wasn't letting a third partner in. The mistake was changing my agreement with the person with whom I had the sixty-forty split. That was definitely a mistake. A very big, clear mistake. I think I realized it very quickly. In February 2010, I said, “I'm no longer part of this business,” and left.

The fourth mistake. In 2010, I moved to Moscow and started managing Megaplan. At first I was commercial director, then I became CEO. At that time, Megaplan had ten thousand customers. By 2012, I'd grown its B2B customer base to a hundred and twenty thousand. The company was later bought by 1C. I sold it and went into a partnership, into a company, a young new company called Business Molodost. So, at Megaplan, when I was managing it, we decided... It was a task management system. It was the leader in software as a service in Russia, a leader in these systems generally and in the cloud market as a whole. The shareholders came up with the idea that, besides task management, we should build a CRM system into it. And we started building a CRM system. My mistake was building it according to how the shareholders wanted it built, rather than according to what the market needed in terms of marketing and sales. As it happened, I'd always been incredibly strong in automation, processes, and systems such as CRM. In plain language, those are systems used by salespeople in their work.

And there, I definitely wasn't guided by the market, the customer, or my own vision and understanding of what lay ahead. I was guided by how the shareholders thought things should be done. As a result, Megaplan gained no leadership in CRM systems. Bitrix24, a newly emerging company with a task management system, created a CRM system that overtook Megaplan in customer numbers specifically in the CRM segment. Most importantly, amoCRM appeared, did what customers needed, and even learned a great deal from us back at Business Molodost, in the sales department and everything else. And of course, it became an enormous, major, tremendously strong player in the market. My fifth mistake. In 2011, when I was managing Megaplan, the company was partly owned by shareholders including Mikhail Ukolov. Mikhail Ukolov owned Utinet. Utinet was the first marketplace and e-commerce company in Russia to go public. It went public in 2011, I think. That year, 2011, I began talking a lot with... I made a close friend in China, Zhenya, and many of my later experiences were connected with China. We saw a video of flying fish. There were these flying fish you could control with a remote and fly through the air.

They were filled with helium and could fly and be controlled. It looked incredible. And we—I suggested to Mikhail Ukolov that we bring in a container, or several containers, I don't remember anymore, of these fish and sell them in Russia. We ordered them from a factory in China. They made them for us in China, we brought them to Russia, and all those containers sat there, completely stuck, unsold. It turned out that the fish flew in the video, but in real life it wasn't that interesting. Nobody needed it. In the video, it looked like, “Wow!” In real life, it didn't work and came with an enormous number of problems. What's more, when we brought them in, an enormous number of other people started bringing them in too. Perhaps if we'd done it earlier, perhaps if those fish had been free of problems and defects, perhaps if we'd had different distribution, it would have worked. But it didn't happen then. And of course, it was a business mistake. One of the fundamental mistakes in my life, and we'll put it at number six here: in 2012, I became a co-owner of Business Molodost. By 2013, I had a thirty-three percent stake.

Mikhail Dashkiev had one-third, Petr Osipov had one-third, and I had one-third. Mikhail Dashkiev's stake was actually shared among several people: his thirty-three percent covered five people. And the big mistake I made in 2014... Toward the end of the year, conflict started, some problems began in the business, and in 2014 a conflict arose between me and the shareholders, including the other shareholders. I was no longer CEO. I'd still managed the company for part of that time, had been CEO. Since the middle of 2013—2014, I was no longer CEO. In 2014, the conflict began, and in 2015, at the beginning of 2015, Petya Osipov and I met in a cafe and decided—

With Osipov in a cafe, we decided to part ways in the business. It was an utterly unprofessional decision, not a business decision. Not all the partners took part. Misha wasn't involved at all; he disappeared, and Petya and I simply made this decision together and parted ways. Leaving the business was my mistake, because when I left, I created an enormous problem for it. Overall, the business could have developed and moved forward very substantially. Of course, without me it lost enormous strength and enormous opportunities, and I also lost the business. The seventh mistake. In 2016, Andrey Rogachev and I launched Agro24. Andrey Rogachev is the person who created Pyaterochka in Russia. He's the first person in Russia to earn a billion dollars, so to speak, in cash in a bank account, rather than through privatization. At least, that's what he said. Andrey and I opened Agro24. It was a B2B trading platform. A startup, a very technology-intensive startup, a company in the wholesale food trade. An enormous mistake I personally made in the business—one we made overall—was testing a very large number of hypotheses. I tested a great many hypotheses; I built a technology product.

Probably, to this day, hardly anyone in the Russian-speaking market has worked toward a technology solution that large. Very few companies, a very small number of companies, manage to do that. A very large number of hypotheses, an enormous amount of functionality. Overall, the business didn't work out, and at some point we closed it. The mistake was testing a large number of hypotheses in that particular place, at that particular time. The eighth mistake. At Agro24, Andrey Rogachev and I had a fifty-fifty partnership. The mistake I made may sound very strange, but it's a fact. If we recall mistake number three, I said the mistake was that we let a partner in, but essentially my stake changed, and that was the mistake. With mistake number eight, my mistake was that we didn't let a partner in. What we were doing, overall, was constantly looking for funding. But we weren't looking for funding to cover current expenses; we wanted the asset to have a valuation. And we began by setting a high figure. I remember Goldman Sachs was the first potential buyer, the team at Goldman Sachs.

And we said, “Our valuation will be fifty million dollars, not a penny less. We're prepared to sell a small slice of equity at a fifty-million-dollar valuation.” And my mistake came when a person appeared, someone certainly quite well known in the Russian market for investing in various technology startups. I often mention names and talk about various things. In this case, though, I probably haven't discussed this matter with him, so I won't give his name. The point is that he offered to become a partner. When Andrey and I were discussing the partnership, Andrey said, “Sasha, listen, why do we need a third partner? We have enough money.” I thought, “Well, we probably have enough money.” That was my big mistake, because he had enough money and I didn't. In other words, “We have enough money” wasn't true. And of course, we should have brought in a third partner. If a third partner had joined, he would have balanced some aspects of our relationship and the things that happened later, because those later things happened because the two of us were constantly clashing so much. A third person would have balanced us considerably, because Andrey and I had an incredibly good relationship.

The ninth mistake, quite a big mistake and a very interesting one. In 2015–2016, Andrey Rogachev and I came up with a business. We wanted to take stakes in various companies, probably following the model of the American company BlackRock: acquire a small stake, scale those companies, and exit. One company we discussed joining was VseInstrumenti. At the time, VseInstrumenti... Today it's one of Russia's largest e-commerce retailers, perhaps one of the largest, certainly in some segments. Clearly, it now generates more than a billion dollars in revenue. Back then, it generated a hundred million dollars in revenue. What was our mistake? We reached an agreement that we'd receive ten percent, and we insisted that the ten percent be transferred to us immediately. The guys proposed transferring it subject to achieving certain targets. At the same time, we'd receive dividends on that ten percent right away. Andrey and I both declined, thinking it was wrong, that we should own the stake immediately, that we didn't want to work on anything that didn't belong to us. I have a feeling this was more my decision than Andrey's. And probably Andrey would have agreed if I'd made a different decision.

Of course, that was a mistake, because, as I understand it, the company now has more than a billion dollars in revenue. And our goal overall was to grow it to a billion dollars in revenue and multiply its value enormously. Essentially, going from a company worth a hundred million to a billion dollars, the valuation is already at least ten times greater. That is, in effect, as if we'd received not ten percent but a hundred percent of the company. And that's an incredible amount. We'd effectively have received a hundred percent of the company. That's mistake number nine. Of course, I've made far more mistakes. But the tenth mistake I've singled out is this: in many businesses, I personally foresaw many things in the world ahead of time and did them ahead of time. I did things whose time hadn't yet come. I did things that needed to be done a little later. That's how we created an electronic ticketing system in 2009. That's how, at Business Molodost, we worked very seriously on a technology platform. That's how, at Business Molodost, we worked very seriously on structuring the business. Even then, we paid all salaries officially and paid the company's VAT. That's how I made a mistake at Agro24, when I began creating technology solutions the market wasn't even ready for.

That's how, at GeekBrains, we created an incredibly strong training program for the future of education in the technology world, something a great many people couldn't even understand. And of course, the shareholders couldn't even understand it. And that was a mistake. From a business perspective, it was a mistake. Very often in business, to earn money, you have to do things you don't like. You even have to do them with people you don't like. You have to do them in the right place, in the right niche, and most importantly, at the right time. Timing matters enormously. Today I talked about ten of my mistakes. It's a completely different format, unusual for my channel, but I wanted to do it, to offer this interesting, vivid clarity. If you're new to the channel, subscribe. I have an Instagram channel, and a private V100 group on Telegram with a small monthly fee of a hundred and fifteen, or a hundred and twenty dollars, whatever the price may be. I talk a great deal about business. I have a very strong understanding of management in different styles and formats. I talk a great deal about life, personal development, spirituality, everything that leads a person toward scaling and freedom. I'd be glad to read your comments. And what mistakes stand out in your own life when it comes to business?

Mistakes aren't something to regret. They're something you can simply look back on, as I did in this video today. And there's an incredibly good video about mistakes on my channel. Watch it.