--- Bài mới hơn ---
The Programmer’s Corner “” Various Text Files
Rừng Xà Nu Sách Giáo Khoa
Tuyển Tập Các Đề Văn Về Bài Rừng Xà Nu (Nguyễn Trung Thành) Có Lời Giải
Soạn Bài Rừng Xà Nu (Nguyễn Trung Thành)
Tuần 22. Rừng Xà Nu
Dedicated to my father, Yury Timofeyevich Tinkov (1937‑2002), miner in the Kuznetsk Basin and to Rina Vosman’s father, Valentin Avgustovich Vosman (1935‑2006), Estonian miner
Just like anyone else
Dear reader, this book has been written from my heart and soul. I don’t mean to tell you what to do or to show off, but to tell you the story of my journey of the last 42 years.
Those of us who were born between the end of the 1960s and the start of the 1970s are very fortunate. Our time fell within a time of revolution-on the boundary between socialism and capitalism. I’d like to use my biography to give an account of this dramatic period in our country’s history. This book is not meant to be educational, then; you would be mistaken to see it as such. I had no such goal in writing it.
But to him who has ears: let him hear. I’ll be happy if my experiences are helpful too. Smart people always learn from the mistakes of others; they seek out what other people’s lives have to offer. Please learn, then, and find answers to your questions.
I repeat, though: this isn’t a book on how to create a successful business. It’s not a self-help book and it isn’t a set of teachings-it’s just my life described.
Oleg Tinkov I initially agreed to write this blurb for Oleg’s book because I like him and his family enormously. Having read it I can see how useful it would be for aspiring entrepneurs in Russia to read. Here’s a man who literally built an empire from scratch without the help of handouts from Russian residents or family! He shows the way for the new entrepneurs of the future!
Richard Branson, Virgin
From the Editor
When I was working as a journalist in St. Petersburg, I covered financial topics only. Thus my work never brought me into contact with Oleg Tinkov, who was an electronics salesman, frozen food producer, and owner of a restaurant on Kazanskaya Street. Sometime around 1995, however, I was made aware of this ambitious businessman and was amazed at how rapidly he was changing the game.
At this point Oleg was already involved in what he refers to, in this book, as “speculation.” He began construction on a large brewery. The beer market was already fully saturated, however, and so not an easy place for a small player to stay alive. At the same time there were powerful players that would be able to buy out a new factory. What if they didn’t buy? Intriguing. I was interested to see what Oleg Tinkov would do next.
When I found out in 2005 that Tinkov had sold his company to Belgian InBev for over 200 million dollars, I immediately thought that the history of such a success was worthy of a book. At that time Oleg was busy with his cycling team and, in 2006, he told be he was starting a bank, Tinkoff Credit Systems. His business model was an original one. At that time there were no exclusively Russian credit card companies. To be honest, I didn’t believe the project would be a success (you can’t be successful every time you enter a new market). The fact remains, however, that by 2009 the bank’s net profit had reached nearly 20 million dollars.
In 2007, I offered Oleg a weekly column in Finance magazine. He agreed to write it. At the same time I reminded Oleg about the book idea. I even sent him a first paragraph: “On the 14 th of September, Oleg Tinkov came back from a two-month international tour where he had enjoyed his status as the owner of a cycling team. When he arrived at his office, the first thing he did was go to the massive aquarium by reception to find out how his fish were doing. He was sad to discover that one of the babies had been eaten by one of the larger fish. There were still grounds for optimism, though: after all, the rest of the babies had reached maturity and this meant their safety was now all but secured. Tinkoff Credit Systems was like a little fish in the credit card market.”
Oleg Anisimov
Oleg Tinkov and Oleg Anisimov working on I’m Just Like Anyone Else on the island of Elba
Chapter 1
Between the Beer and the Bank
I spent the summer of 2005 happy as a puppy, in Tuscany, cycling and relaxing. I felt ptty pleasant-removed from it all-as I had just sold my Tinkoff beer business to the Belgian company InBev for 260 million dollars. At 37, I had become a true multimillionaire.
My life offered an interesting vantage point on the evolution of Russian consciousness. When I sold my Tekhnoshok chain of stores in 1998 and my Darya business in 2002, people felt sorry for me. It was as though the sales meant I lost the businesses and that, therefore, I was a loser. When I closed the Tinkoff deal, however, I was praised. This was a sign of rapid evolution in the business world: people now realized that selling your business can be cool. Fortunately, I understood this 10 years before everyone else did. I knew that there is nothing like selling. It’s the only thing that puts your business, your investments, and your talent into monetary terms. And it provides you with both the time and the resources to get started on something new.
After our vacation on Italy’s Tyrrhenian Sea we returned to Moscow. Next, our whole household, nanny included, packed our things and took a Lufthansa flight to San Francisco. Our destination was our home in Marine County, which is made up of a dozen or so small towns just on the far side of the famous Golden Gate Bridge.
In terms of infrastructure this is the best place in the world. Downtown San Francisco is only twenty minutes away. At the same time, however, you’re basically living in the forest with deer nearby. The schools are amazing-and I’m talking about the public schools, not the private ones. My eldest son Pasha went to first grade, and my daughter Dasha started seventh grade at the most ordinary of public schools in Mill Valley. The town is well-known as the birthplace of Timothy Leary, the famous LSD enthusiast, and although my feelings towards drugs are negative, the fact is worthy of note.
I like to spend a year in America once every five years (at least this has usually been the case in my life). The children go to local school and spend time with their peers; I look for new ideas and enjoy the freedoms, so to speak, that America has to offer. To tell the truth, it only takes about a year for me to get tired of it-there’s an awful lot of stupidity in America. The country has a few things in common with the Soviet Union. Its best features are worthy of detailed study and analysis, beyond anything that I can provide in this book.
The statements that follow may seem ungrounded; they constitute my own opinion. America has the highest level of competition of any country. And it’s the only country where business has been elevated to the level of a science. In Russia, we have sociology, political science, physics, and math; in America, they have another science-business. There are massive universities, faculties, schools, and colleges where business is approached from a scientific viewpoint. For this reason competing with American businessmen proves a great challenge indeed. They are the most aggressive, strongest, and at times the most cynical of them all, but they are very effective in their work. They get what they want. They are capable of sharing and of coming to compromises, but they do so with only one goal in mind: to make more money.
In America, business is gutted, cleaned, and sorted. This is partially due to the American mindset and Protestantism, but it is also a result of the way the nation is structured. Our early education involves counting apples, but little Americans learn their numbers in dollars and cents. Everything boils down to money and its accumulation. There is a deep understanding that if you have no money, you’re a loser, and that if you do, then you and your family are doing well. This is what the American dream boils down to.
At the same time the Americans have managed to create a society where businesspeople don’t just talk about their social responsibility; they take an active stance on the latter. They cannot be bought by a phone call from the Kremlin; rather, they do as their hearts lead them to do. Feel the difference!
In general, Americans make interesting and shrewd businesspeople. This may not apply to all of them, but it is true as a general guideline. Due to the recent crisis, however, capitalism has suffered more and more attacks. Every couple of days, people on the radio and television remind us of Marx’s claim (I’m not sure he actually said this) that any businessman is willing to commit a crime to double his profits and willing to kill in order to triple them. It may be true that nineteenth-century mores were much baser, and society less civilized than it is today, but the businessmen of today display high moral standards.
Is it profitable to invest in Russia? Yes, of course! Would it be more profitable than investing in India, China, or Brazil-not to mention Europe? Yes, probably. You could earn twice as much in Russia than in these other places, but a number of American businesspeople feel that the rules of the game that have become established here are incompatible with their social and religious convictions. They have been brought up differently and how they live their lives is different. They feel no need for the extreme profit margins-which helps us answer the question of whether a capitalist is indeed capable of a crime to double his profits. The answer is: not always, by any means. One of America’s richest businessmen, for example, the deeply rational Warren Buffet, would not be.
In America I pfer to hang out with Russians and other expatriates, because it’s hard for us to understand Americans. They are strange people. Immigrants try to stick together. My neighbor John, an Australian, helped me to hook up my home phone. Within a week of our arrival, without having to leave the house, I had opened a bank account, got my TV working, set up insurance policies, connected to the Internet, enrolled my children in school, and bought a car at a nearby dealership. The paperwork was all done over the phone, quickly. This was the land of the telephone!
But don’t think that all I did was play sports and mess around. My main focus was to get a new business up and running. My thoughts were drawn to the idea of a credit card business, and it was in America that this notion was born.
I had been in every database since 1993, when I first came to America and bought a house in Santa Rosa. There is no privacy or secrecy once you’ve filled out a form for a purchase or in order to get something for free, be it diapers or ballpoint pens. It’s not surprising that you start getting mail as soon as you provide someone with your personal information. There is nothing strange or unlawful about it. The form usually states that by default you are releasing your personal information for transfer to third parties. Sometimes you don’t even notice it. This is how your information gets out there, into the world.
When I was studying marketing at Berkeley in 1999, I started to become more interested in how the system worked. Of course I realized that in order to open a bank I would have to have a huge sum of money and, in this respect, I didn’t picture myself as a banker.
Rustam and I quickly came to an agreement with respect to selling his vodka. After all, he is a rational and competent businessman. There has been talk that he foolishly gets himself into trouble, along with other negative publicity. As for me, I know him well and greatly respect his business talents. His lifestyle and love of luxury and glamour do not correspond to my values, but that is his private life and has no bearing on his effectiveness as a businessman. It is possible that he is one of the smartest businessmen in Russia. He, along with Andrei Rogachov, Sergei Galitsky, and a couple others conceived of business ventures that are now worth billions of dollars and created these from the ground up.
During that meeting I said:
“Rustam, why don’t you start making plastic cards? It would be fantastic! It’s profitable, simple, and sexy. What’s the point of these consumer loans stores are giving out?”
“What makes you think we don’t make them? I have three million bank cards.”
“Are you kidding? I’ve never seen any. How come I don’t have even one?”
“Oleg, you aren’t part of the target market for my credit cards. We need people a little poorer than you,” joked Rustam.
“You know, the credit card business is really neat. I’ve watched Americans using them for a long time, and wouldn’t mind getting into it myself.”
“Yes, it’s a serious business, but it would require major investments in both infrastructure and loans.”
“Well, we’ll see. Once I’m done building the brewery works, maybe I’ll sell them…”
The subject was dropped. Now I understand how funny I must have looked then and what sorts of things must have been going through Rustam’s head. At least I found out that Rustam wasn’t just giving out consumer loans at stores, though, but also offering credit cards-and also that he was working in the sub-prime market, that is, with the most ordinary of people.
The scheme he followed was simple: if a person took out a loan at Russian Standard for a fridge or TV and paid it back, the bank would issue a credit card in the client’s name and send it to the person in the mail. The client would then make his or her own decision whether or not to activate the card. Of course a large percentage of the cards were unwanted and a lot of people felt the bank was pssuring them. After all, they hadn’t asked, themselves, for the card to be sent. Some, however, liked the fact that the bank had sent them the card and that it was left up to the customer whether it would be put to use: if you don’t want to use it, don’t activate the card-it is your choice.
Naturally, I analyzed the experiences of Russian Standard as well as Home Credit Bank and decided that my bank’s distribution model would be different, closer to what’s done in America.
* * *
Early in the Autumn of 2005, I met with Stephan Dertnig, chief at the Moscow office of Boston Consulting Group, and asked him to do a feasibility study examining how realistic it would be to turn my idea into an operating business. The document cost several hundred thousand dollars. It embodied a very thorough approach to the analysis, however, since I was potentially going to invest tens of millions in the proposed venture. I asked Stephan to develop a concept and to offer an answer to the question whether it would it be possible to market credit cards, directly, in Russia.
In November, Stephan traveled to San Francisco to psent the final version of the study. Along with Alex Koretsky, a Russian American from San Francisco, I came to a classy hotel in downtown San Francisco and listened to what Stefan had to say. Should the venture be undertaken? Stefan’s psentation offered a solid “yes.” What had to be done in order to get things under way, however, was not really discussed.
I asked those psent if they believed in the idea, and all of them said they did. In the end we all shook hands, there at the table, drank some rum, and decided that my next business would be in credit cards.
“Rustam, I’ve decided to start a credit card bank…”
“Are you sure? You’re getting yourself involved in a serious fight. It’s a complicated technology business.”
“Well what else can I do? I fear new developments may destroy the real estate market and he asked me,
‘What do you think you’re doing? This is big business. There’s no place for you here.’
Now my share of the consumer loan market is several times larger than Alpha-Bank ‘s, and my credit card business is at least ten times larger than theirs.”
“Listen, Rustam, you were just trying to talk me out of it-and then suddenly you’re talking about Freedman. What makes you think I won’t be able to do it?”
“Oleg, it’s your decision. Give it a shot! But you should know that it won’t be easy.”
I think that Rustam just didn’t fully believe I would actually start the project. Maybe he still doesn’t believe in what I’m doing. Nevertheless, I can say that a little while later, in 2009, his bank suffered losses, while my bank’s profit exceeded 18 million dollars.
Funnier still, was a conversation I had with Mikhail Freedman. Alexander Kosyanenko, the General Director of Perekryostok, the grocery store chain, had invited me to his company’s ten-year anniversary. It was there that I bumped into Mr. Freedman. All the managers of Perekryostok sat with us at the table. I shared my idea concerning the credit card bank.
“I’ve been thinking about opening a bank like Capital One in Russia for a long time,” was the reply given by the Chairman of the Board of Directors of Perekryostok, Lev Khasis.
“It’s a fine idea, but it would need some thorough reworking,” added Mikhail Freedman.
“There’s just one thing I’m unsure about. If the bank doesn’t have any branches, how will people pay them off?” I asked.
“What’s the post office for? They can pay at the post office.”
I think that deep down Mikhail Freedman didn’t believe in me either. I had never worked in the financial industry. How was I to compete with Alpha-Bank, which had been established in 1990?
I’m just like anyone else. If you don’t believe me, listen to the story of my childhood.
This is what a person who has just sold his beer company for 260 million dollars looks like. Here I am in San Francisco in 2005 with the Golden Gate Bridge in the background.
Chapter 2
The Tinkov Homestead in Leninsk-Kuznetsky
The Tinkov family is descended from nobility who lived near Tambov. There is still a village in the area called Tinkovo. I even managed to find my family’s coat of arms in the St. Petersburg Public Library. My grandparents, escaping political repssion during the dekulakization period, or because of the famine, perhaps, boarded a train and left their home in 1921. They disembarked at Kolchugino Station (as Leninsk-Kuznetsky was then known) and settled there. When my grandfather Timofey started working in the mines he was provided with housing-half of a cabin, that is, thirty-two square meters in house #16 on Kooperativnaya Street, 300 meters from the mine.
It was in this house that my father, Yury Timofeyevich Tinkov, was born in 1937, the second youngest of eight brothers and sisters. The eldest, Vasily Timofeyevich, was 15 years older than my father. He manned a tank in the war and is still alive, thank God. After the elder brothers had grown up and married, they began moving their wives into the cabin too. They had to sleep on bunk beds so that everyone would fit. As though this weren’t enough, they started having children. In these Tinkov breeding grounds three generations were born. In time, the family members went their separate ways. But my father remained to live in the cabin.
My grandfather spent his entire life working in the mines. In 1953, he died of acute poisonous gas inhalation after helping to put out a fire.
My mother’s parents were also nobility. They moved from the Far East, from close to Samara, to Khabarovsk Krai. It was there, in 1938, in the city of Dalneperechensk (known as Iman, prior to 1972), that my mother was born. The family had three daughters and no sons. My grandmother was a capable seamstress. She also kept a farm with a cow and some pigs. My maternal grandfather, Volodya, served as Building Superintendent in Iman during World War II. Afterwards he ran a sawmill. Vladimir Petrovich, as they called him, was feared and respected by all. They say I look like him. He passed away not so long ago, in 2001. A portrait of Stalin hung above his bed until the day he died. It always made me feel a little uncomfortable, but I loved my grandpa.
In 1966, my mother, Valentina Vladimirovna, made a trip to Leninsk-Kuznetsky, to visit her sister Nina. She met my father there. So my mother remained there with her eldest son Yura.
As one of my favorite poets, Vladimir Vysotsky, once sang, “I’m not quite sure of the hour I was conceived”. I do know, however, that I was born at 2:45 p.m. on December 25, 1967. I weighed 4 kilograms. The maternity clinic was 15 kilometers away from Leninsk-Kuznetsky, in Polysayevo. That’s where I was born, although my passport says I was born in the city of Leninsk-Kuznetsky, in Kemerovo Province-which is where I spent the first 18 years of my life, in any case.
My father was a very bright man. Both of his older brothers, Uncle Vasya and Uncle Vanya, held degrees and lived quite comfortably. Also wanting an education, my dad spent two years studying at Tomsk University. With a family came the need to make money, however, and he went to work at the mines in the transport section. His job was to operate the wagon dump, a machine used to unload coal coming in from the backwall. Father retired from the mine when he was 50 years old, following an accident where he suffered a head injury. Two of his friends died.
This turn of events ended in Yury Timofeyevich’s untimely death from a stroke in 2002. He was a month shy of his 65 th birthday.
I’ll be ever grateful to my father for giving me my main character traits. He taught me to be honest and to be myself, straightforward and resilient. He also taught me to love freedom and to hate totalitarianism in all its forms.
For a miner he was very sophisticated and articulate, an intellectual. After all, he was descended from blue blood. His genes showed! From the time I was a child, my father implanted in me a hatred of the establishment. Even relative to the current regime in Russia, I remain a nonconformist. And I don’t like what’s been going on around us, especially the recent movement to reinstate the USSR.
I remember the 26 th Convention of the Communist Party of the Soviet Union well. It was in 1981 and it was the last convention of Leonid Brezhnev’s tenure. In Siberia there was only one channel, Channel One, and to get Channel Two you had to hook up a special, enormous antenna. From morning to night all that was broadcast on the only available channel was Brezhnev and the 26 th Convention. Mother turned on the television and Dad pulled out the cord.
“Enough listening to this nonsense!” he exclaimed.
The sun was setting on Communism.
* * *
Thanks to my Father, I was raised with ill feelings towards the Soviet government. Nevertheless, in the eighth grade I was accepted into the Young Communist League. I started at the very bottom of the ranks as a good for nothing. I couldn’t have cared less. I recognized that it was all a sham. My thinking with regard to Communism was fairly lucid. I wrote an application letter to the Communist Party while in the army for the sole purpose of becoming a warrant officer. (Thank God, I changed my mind afterwards, but more on that later.) The story was different when it came to the Pioneers, the Communist government’s children’s organization. It was in an atmosphere of great celebration that they tied the scarf around my neck and pinned the badge to my shirt. I was quite worried when it took me two attempts before I was accepted.
My father, unlike most in the Soviet Union, loved America. He was a miner from a city of 130,000 and had never been abroad. He had only been to Moscow and Leningrad. He called America a “good country.” For him this love was a kind of protest. According to what was always said on television, it was a bad place, but he claimed it was good. In 2001 I completed my mission and brought my 65-year-old father to this country. As it turned out, this was shortly before his death. He lived for a month in California. He was not doing well at the time and was a bit depssed. Of course he liked America, but his emotions didn’t appear to be that strong.
Many of my positive qualities were developed in me by my father. My Pa means everything to me! Of course my involvement in sports and my education at the Mining Institute also had their impact. But it was my father who laid the foundation for how I see myself today. He always pssed me to be constructive and to respect others in order to become an upstanding member of society.
An unquestionable authority in our family was Grandma Senya, my father’s mom, whose full was name Xenia Tinkova. She was a unique woman. In addition to my father and his seven siblings, she gave birth to several other children who passed away. This was in the twenties and thirties, after all, and medical science was still underdeveloped.
Calling me a heretic, Grandma Senya tried to get me involved in the Orthodox Church. It was only when I was twenty and had moved to Leningrad that I began to think seriously about it and was baptized.
Grandma Senya taught me important life lessons:
“You little dummy. Who puts their sugar in the cup?”
“What are you talking about, Grandma Senya?”
“You should eat bits of sugar while you drink. That’s the only way to smell and taste it.”
When she was young, sugar was the only delicacy available and people tried to savor it. People today are worried about how to lose weight; in those days, the problem was different. People were poccupied with their survival. I was reminded of this when I was in the army. Shortly after we had been drafted we were spading butter on our bread and the dischargees laughed at us:
“What kind of person eats like that?” After a couple of weeks we understood them perfectly and found ourselves dipping frozen pieces of meat in salt and eating it without bread so as to taste it better. Until the day that I was discharged, twenty-three and a half months later, I never spad butter on my bread. If you served in the army, you’ll know what I’m talking about.
Grandma Senya stocked up on bags of salt, grain, and peas and kept them hidden in the house. This was surprising to me:
“Grandma Senya, why are you hiding those?”
“You’d be hiding some too, if you’d been through a famine.”
Grandma and Grandpa were alive in the twenties, during the civil war. It was a time of great hunger. Grandma Senya died in the winter of 1980. As a twelve-year-old, I was astonished by the funeral, with the incense wafting from the censer, and by the prayers.
My mother, Valentina Vladimirovna, worked as a seamstress at the local tailor’s shop, sewing and ironing. She led a prudent life. Now she’s over seventy and in good health; she remains active and looks her age. I inherited limitless energy and the seeds of my entrepneurial qualities from my mother: even during Soviet times she tried to make extra money by doing sewing work from home.
For my parents, discipline and routine meant everything. It was a well-established pattern in our family that I would be home by 9 o’clock in the evening, when the TV programme Vremya started. My friends would laugh at me when I would stop playing and head home-even in the long days of the Siberian summer. This was what we called “making a break for home.” We played hide-and-seek. We fought battles with machine guns cut out of wooden panels. We would play soccer in the middle of the street, in the dirt, sometimes with no shoes on. Each of us got only one pair of sneakers for the season and these quickly wore out if they were not torn in half first.
“Mom, why do you come to get me to go home? None of the other children’s parents look for them and it’s embarrassing!”
“I feel better that way. You never know what could happen…”
I would go home, while my friends would keep playing soccer till midnight. Who knows what they did afterwards? As for me, I never hung around. Indeed, it was unheard of for me to spend the night away from home. Only when I was 18 and about to start military service did I finally do so. The first time my parents let me ring in the New Year at a friend’s place was when I was in sixth grade and 16 years old.
I’m very grateful to my parents for all that they invested in me. After all, I grew up in a depssing part of the country. Many of my neighbors were in prison; some remain there to this day. The people I lived among were miners and former inmates and you’d often find them drunk and stoned. After spending time with such people, the St. Petersburg gangsters in their tracksuits seemed like pathetic caricatures.
The Siberian environment is harsh and there are very strict cultural norms to follow. Say the wrong thing and you might get hit. The rules to which one had to adhere came close to what is demanded in prison. There are three penitentiaries around Leninsk-Kuznetsky, two for adults and one for juveniles. This fact left its mark on the city-to the point where, in Leninsk, it’s shameful to call the police. You have to be able to resolve issues on your own, otherwise you will lose respect. You have to be a real man. You have to put your money where your mouth is. I’m still in the habit of not making extra promises.
Many people still remember the infamous scandal involving the mayor of Leninsk-Kuznetsky, Gennady Konyakhin. (Konyakhin and I went to the same school-No. 33.) There was a lot in the pss and on the news saying gangsters had taken over the city. The magazine Izvestiya called its publication on this matter the Bullheaded Times. President Boris Yeltsin fired the mayor himself.
The eighties saw a rise in street fighting, neighborhood against neighborhood, both in Leninsk as well as in other cities throughout the USSR. Compared to the mass fighting in Kazan, the fights in Leninsk were not quite as bloody and got less coverage. Nevertheless, there were a few dozen guys per side. Sticks, knives, and metal bars were the weapons of choice. The teenagers injured and sometimes killed one another. An eighth grade classmate, for instance, was shot through the leg. Sometimes you’d wake up in the morning and the fence outside would be missing, the stakes pulled out during the night to be used in the fights. There was even an article ( The Sweater Thieves) in the Komsmolskaya Pravda about these bloody fights in Leninsk-Kuznetsky.
The park where the municipal discotheque was held was in District 4. If anyone came from a different neighborhood, they’d be beaten up because they were in the minority. Central kids weren’t allowed to go there and neither were the Bazaar kids (of which I was one). I did go to the disco a couple of times. On the first occasion I had to run away though; on the second I got my head smashed in. I tried to avoid showing my face there after that. I’ve never been one to pick a fight-neither on the streets, then, nor in business, now. My experiences in Leninsk gave me a sense of where I ought not to go and a sense of when I ought not to go there.
One day, for example, I went ice-skating at the stadium. These huge punks came up to me. One of them asked,
“Where are you from?”
“From the Bazaar.”
“I see. You’re from the Bazaar.”
Then he socked me in the face.
I fell flat on the ice, blood gushing from my nose. To make a long story short: they beat the crap out of me. I couldn’t run away in the skates and I couldn’t hit those big losers back. What was I to do? I packed up my skates and went home. I never went back there, but instead skated exclusively at my local stadium next to Kirov Mine.
After I finished eighth grade, I changed schools, enrolling at School No. 2 in another part of town. But things got so bad there that I had to switch schools again. I could not study at all because of the emotional and physical torment. Why were they doing this?
Still, these experiences made my self-pservation instinct what it is today. On the one hand, given what I suffered, I’m not afraid of anyone. On the other hand, nowadays, I can see gangsters or tough guys from afar and know exactly how to maneuver away from them.
When people tell me that the Soviet era was a good time, I can’t help but smirk. This is because I remember all the bullshit-and I remember it well. What was good about those times? Maybe you could make a case if you were talking about Moscow or Leningrad-but in our city it was neighborhood against neighborhood, stolen clothes, ex-cons, crime lords, fights, and murder.
The mass fighting stopped in the late eighties, as drugs became more widespad. Getting high brought people together; it rendered them friends and brothers. At first, grass started to circulate; later on, heroin came on the market. In the early nineties, a lot of my peers and some younger kids died. They say that the youth of today saw what was going on back then and are afraid of drugs. From what I can tell, though, drug abuse remains a serious problem.
Strange things were always happening in Leninsk. People would go missing on a regular basis (and still do). When my parents lived in Polysayevo and I was serving in the army, their neighbor’s husband Slava disappeared. The last that anyone saw of him was one day in Kuznetsk Mine. He was gone, after that, for two weeks. As it turned out, three of the miners were standing at the bus stop, waiting for their bus, which was late. A car drove up and three jock types jumped out. They shoved the miners inside and drove away. The three were taken into the wilderness where they were made to do slave labor, hauling cement, bootlegging vodka, and making marijuana products. Somehow Slava managed to escape. Making his way home, he would walk only at night, hiding out during the day. He returned two weeks after his disappearance, all scraped up, wearing clothes he had found in a dumpster. Before he could get inside his apartment he collapsed from exhaustion in front of the elevator.
In the eighties fat women started to go missing. The public said they we were being cut up for ravioli. There was a serial killer in our town too. During the day he worked in the mines; by night he would kill young women in the park.
Our neighbors in the duplex were constantly getting drunk. At night, arguments would develop into screaming matches. Once, as I was falling asleep, I could hear fighting on the other side of the wall-the usual. In the morning, we found out that our neighbor had killed his wife, Auntie Valya. When the police came, I looked in the room. She was still lying on the bed with a knife sticking out of her. My neighbor was sentenced to prison and his son became a virtual orphan.
It is scary to think about it, but a significant number of my childhood classmates have passed away. Some of them died in jail, others were murdered, and still others drank themselves to death. Strict discipline, routine, and sport were my salvation. Now I’m trying to raise my kids the same way. God forbid they should ever know what it is like to lose their freedom. My daughter Daria is 16; I never let her stay over at her girlfriends’ places, even though she asks.
Of course, I tried to do things my parents did not allow me to do. I tried alcohol for the first time in the eighth grade, at a party on March 8-Women’s Day. I was with my friends Slava Zuyov (who died from pneumonia in 2009) and Misha Artamanov (who was shot five years ago under stupid circumstances on a hunting trip). We drank a bottle of Cahors wine and went to the disco to dance with girls. As though puking all night wasn’t enough, my dad beat me with his belt for disobeying. My classmates, on the other hand, came home drunk and their parents closed their eyes to it.
Later, when I was in the ninth and tenth grades, I drank, of course, but rarely. And I always kept it a secret from my parents. At the same time, though, I was getting into cycling-and sports and alcohol, as you know, are incompatible. Although I messed around with booze that last year before military training, it was mostly out of boredom. We would chip in and buy a bottle of wine for 3 rubles 42 kopeks-or sometimes vodka-and would sit drinking it in the playhouse outside the daycare.
My father almost never drank and I guess he passed those genes on to me. I like to relax with a drink, but I wouldn’t do so more than once or twice a month, to be honest. Large amounts of alcohol make me sick, just like my dad.
In the summer the boys and I would go swimming in Inya creek, a tributary of the Ob river. It was against my parents’ rules, so I had to dry my hair and take measures to pvent them from finding out. Sometimes, though, they pd it out nevertheless and would punish me. But really there was nothing to worry about. We had a blast, daring each other to jump off rocks and cliffs three or four meters high. The creek was small and you had to come straight back out of the water as soon as you dove in if you didn’t want to break your neck. It is true that a lot of people drowned there, so my parents’ worries were not completely unfounded. Now, at least, I can pe head first, five meters down off a yacht with no problem!
One day I smoked a little, and when I came home I smelled like smoke. Once again dad got out his belt. This was a common punishment in our family.
A belt is a handy thing. My father’s was brown and hung in his wardrobe. I was whipped a lot. The worst part was the buckle. It was only when I was 16 or 17 and getting bigger that I grabbed the belt and stopped him from hitting me-and my dad ended the practice.
I feel no resentment towards my father. No, I am thankful for what he taught me. Otherwise I would not have made it, considering what was going on around me as a child. Everything you are comes from your family, from how you were raised. We Tinkovs stood apart. My parents made their living honestly and were not drinkers and this gave me a strong foundation. Up until I left for the army, my parents kept me on a tight leash. I had no choice but to behave myself.
I’m almost three in this 1970 photo. At that time, Leonid Brezhnev ruled the country, which would remain at a standstill for a long time afterwards. From left to right: Marfa Yefanova, Timofey Vasilyevich, and Xenia Evstafyevna Tinkov (my grandparents); Evstafy and Anna Yefanov (my great grandparents) and Praskovya Yefanova My grandfather Timofey Tinkov worked in the mines his whole life. He died in 1953 from inhaling poisonous gases while trying to put out a fire.
My father, Yury Timofeyevich, loved to read the newspaper Trud. Smokey the cat helped him with this.
This honor roll certificate from when I was in the first grade shows how well behaved I was. It was also the last time I made the honor roll.
My father and grandfather ruined their health in Kirov Mine
Valentina Vladimirovna, Oleg Tinkov’s mother:
Oleg was born on December 25, 1967, at 2:35 p.m., weighing 4 kilos. He was always a healthy, active, good boy. He started walking at nine and a half months. We enrolled him in pschool at two and a half. He sang songs there and played on spoons made of wood.
Oleg learned the letters of the alphabet from his older brother Yura. At five, he could read and count and even knew a few English words. The newspaper Leninsky Shakhtyor , the girls wrote a poem for Oleg that went something like this: “Oleg rode far away from us on his bicycle.”
He really did hit the ground running. I worked for 48 years at the school and saw many interesting students graduate. Among them were some that went on to become scientists and arctic explorers. None of them ended up as a successful as Oleg, however.
By eighth grade, some of the kids were trying vodka. Oleg was doing business. My students told me about how Oleg had brought cosmetics back from the Baltics to sell. Oleg traded, exported and imported. At the time, neither his fellow students nor we teachers took these activities seriously.
Chapter 5
The Border Guard, not the Sports Club
When I was working at the mine, all I could think about was the coming Spring-because I hoped to be accepted, then, into the Army Sports Club. If I could not achieve that, then I would have to be a soldier. It was now that my coach Ivan Stepanovich failed me, for the first and probably the last time. I do not resent him for it now. Everything always works out fine in the end. He promised that he would get me a spot in the ASC, but there was only one vacancy. During the 1986 spring draft, it turned out I was not the only athlete born in 1967. There was another, the son of the director of the Novosibirsk ASC. Instead of selecting me, Oleg Tinkov, then-champion of the city and of the Kuznetsk Basin, winner of more than one competition-this son was admitted to the Novosibirsk ASC. He was admitted, too, even though I could have out-pedaled him with one leg.
The strong arm of the old-boy network has always held sway in Russia and always will. Thus I missed out. In April 1986, I was taken into the army and, instead of getting into the ASC, I ended up among the border troops, under the control of the USSR’s KGB. My career as a cyclist, which had held such great promise, ground to a halt. Everything that I did later-my return to sports in 2005-2006, my participation in races, the creation of the Tinkoff cycling team, and the cycling trips to Italy where we cover 4000 km in a month-is connected with the fact that my career was cut short at that time.
As we were being loaded into the railway coach, I looked out the window and saw the new spring growth. It reminded me of a song written by Vladimir Semyonovich Vysotsky:
Spring has just begun,
Most of the people are still indoors,
But I had to get out there, –
Then two arrived suddenly,
With a convoy, with a convoy.
“Get dressed,” they say, “come out!”
I begged the sergeant:
“Let me stay with the Spring!”
But the sergeant took me away. First, we took the train to Krasnoyarsk. From there we flew to Vlapostok and then took the bus to Nakhodka.
When we arrived at the unit, the dischargees took all our food from us. We did not resist. At first we were brisk with them. But they replied: “Let’s get you shaved, then we’ll talk”. We had our hair cut and then were sent to the sauna. Afterwards we were given submachine guns and then mounted Kalashnikov machine guns. This type of gun is very heavy but fires better than the others. It is hard to miss when using it, in contrast to the hand-held variety. We ran cross-country, but the 3-km sprints were easy for me: when I was cycling, after all, we would run 15-20 km during our winter practices.
We would sweat so hard from the heat and the pssure that the fabric of our uniforms would start to dissolve. Within three months they would tear. According to regulations we were supposed to get new clothing every six months, but ours had to be replaced more often. We had to run, jump, and blow things up. Explosions rumbled from all sides-flash! Bang! It is depssing to read about what goes on in the army nowadays. Serious training has been replaced by hazing. The goal then, was to make us into real border guards. If there had been a war we really would have protected our country. The army-or at least the border guard-was really and truly combat-ready.
The rumors about hazing in the Soviet army are highly exaggerated. Things were not all that bad. Believe it or not, we had nothing of the sort in the border guard. It all depended on your officers, their qualifications, and their approach to training. Sure, the army has its hierarchy: I washed the floors, of course, and the senior officers did not. But I was never-not once-punched in the two years that I was there. The worst I suffered was a shove or a minor kick in the butt if I was moving to slow. I was never beat up.
A lot of my friends ended up in the Afghan war and I might have been sent there myself. It was a choice between Afghanistan and the border. Our Fatherland decided that, being 190 cm (6′ 4″) in height, I would be of more use at the border. Three of my classmates who served in Afghanistan came home ruined men. The war taught them how to smoke marijuana and how to do a lot of other things. Up until 1986, when I was in Siberia, I did not know what drugs were. When I got back from the army, though, pot had become commonplace, distributed by veterans of that war. Heroin was next.
* * *
Healthy, young Siberian men were sent in bundles to the border and into Afghanistan. Less were taken from St. Petersburg and Moscow. I have heard terrible stories from friends about how much they were beaten and about how much they drank. The border guard was completely different. Everything was done with pcision and exactitude.
I was admitted to the sergeant training school. For six months, from April to October 1986, I trained to become junior sergeant. These were some of the most trying times of my life, taxing both physically and psychologically. I even considered suicide at one point. After that-until, perhaps, I was training for a race in 2005 (of which more later)-life was never so hard again.
A sergeant lives the good life: no washing floors, no kitchen duty and therefore no dirty dishwater. One day, though, I was stupid and told an officer to screw off. I had my sergeant’s badges ripped off and had to wash the kitchen floors and deal with the trash. This was unpleasant, to say the least, considering that I was in my second and last year of mandatory service. I did get my badges back, though, before being discharged.
Some of you may remember Mikhail Gorbachev’s famous trip to the Far East, to Nakhodka, Vlapostok, in June 1986. He even came to our unit, although I did not see him myself. Our unit was considered an elite one. It was called Nakhodka Independent Identity Check Point and was at the border at Vostochny Port. Because the country’s top official was coming, our combat training all but stopped for two months. Instead, we practiced for Gorbachev’s arrival. What did this involve?
I am not sure how things are today, but in the Soviet Army I was emotionally tormented. It was really a hard thing to take. One would get up in the morning and the clock would be ticking. Instead of socks, you would wrap cloth around your feet and pull on your boots. The blisters would burst and they would have to cut of the wrapping in the medical station. This happened to everyone. Stand, squat, get on the ground, push up! Silence, soldier! Shut up! My calluses got so thick from the binding and the canvas boots that today I can wear new shoes without the slightest discomfort.
My friend Oleg Kakovin, a guy from Leninsk, just could not let go. For three months, he kept fighting with the warrant officers. He would swear at them, but it was pointless. The system was built on the oppssion and destruction of the inpidual. Soldiers are rivets. The goal is to make the person into nothing. When there is no “I,” the color khaki pervades all. As the Soviet rock group Nautilus Pompilius sang: “I haven’t seen a scarier crowd than a crowd dressed in khaki.” Perhaps the same thing happens in western armies.
If my friend Oleg argued or told the sergeant to screw himself, the command would ring out: “Line up, platoon! Three kilometers running. March!” We’d all start running and tell Oleg to cut it out. Or we would be given the order to get up and all of us-except Oleg-would be on our feet. The punishment would be the same: a three-kilometer battle march. But when he refused to obey a third time and we were all forced to run three kilometers as a result, that made us angry. Everyone ran up to him and started kicking him. So you would give up resisting whether you liked it or not. We were disciplined as a group. You simply could not be mouthy or 30 people would get punished on your account. In the end you would suffer. This was very effective psychology. Thank God, I never used this approach in my business relations.
My responsibilities as a border guard included inspecting foreign ships as they were coming into port. We made sure that no one crossed the state border unnoticed and undocumented. It never happened. How crazy would you have to be to want to come illegally into the USSR? There were some that wanted to leave without permission, of course, but it was absurd to think that anyone would want to sneak in! Some Koreans, Japanese, and Chinese did come in legally. We would conduct a formal inspection. Going through the cabins, we saw foreign objects-jeans and magazines-and examined them closely.
This was how I learned my first few words in English:
“Open this.”
” Please, go one by one.”
“Show me your passport, please.”
“Please, open the door.“
In our unit there were two brothers from Bryansk, one of which was a snitch. I beat him up for tattling to our superior, Colonel Zubr, who was scary as hell. If you let one word slip, he would make you dig shit out of the toilet all day long. It was terror: you had to keep your mouth shut and your eyes on the floor. I left the army twenty-two years ago. But if I bumped into Zubr today, I would punch that pig’s face in. Imagine what you would have to put a person through to make him want to kick your head in, twenty years later? And I am not even a resentful guy. I have no hard feelings towards people who have screwed me over, once a year or so has gone by.
* * *
My second year of service was easier, but more hectic too. For the two years I was there I took a break from speculation. After all, it was impossible to sell stuff in the army. My military service marks the only period, two years in all, when I have no memory of doing business. My green shoulder marks kept me barricaded from it. I suddenly had new priorities. I wanted a border guard marks of excellence: level one, level two… The army sucked me in and I found myself working to build my military career, even considering staying on as a warrant officer.
Before I was discharged in April 1988, three of my friends and I applied to serve further. Later, I was even summoned. One of the officers convinced us: what was there to do as civilians? A wide-scale restructuring of the system had begun while we were gone. Everything was a mess. Factory workers were not getting their pay. By contrast, the army meant stability. We were promised full government support, food, and a monthly salary of 200‑250 rubles. Imagine how things would have gone if I had signed that contract! I would be a moron now, a senior warrant officer or captain, stationed in a place like Nikolayevsk-on-Amur.
Border guard captain Tinkov!
But the hand of God was at work. A voice inside me said, “No, Oleg. Go home.” I came to Captain Sayakhov and told him,
“Comrade Captain, I want to take back my application.”
“What! Are you nuts? We’ve already sent everything to Vlapostok and you’ve been approved.”
“I don’t want to be a warrant officer.”
The captain called me an idiot and I was dismissed.
At the same time, Providence protected me from membership in the Communist Party. If you wanted to become a warrant officer you had to be a communist. I even wrote a membership application.
After my discharge, two friends and I flew from Khabarovsk to Kemerovo. From there I needed to make my way home to Leninsk. Gorbachev’s battle with alcoholism was in full swing and it was nearly impossible to buy vodka. We waited in line, bought a bottle, and shared it between the three of us. I got sick, collapsed, and fell asleep right at the station in Kemerovo. I did not manage to get home that night. It was a strange picture: a soldier in full parade uniform with regalia, asleep under a bench in a puddle of vomit. Having slept it off, I went to the house of one of my co-dischargees who lived in Kemerovo. I got a brush from him, cleaned off my clothes, and left for Leninsk.
The army is simply bad, but I am happy that I enlisted. The experience hardened me physically and emotionally. The army is not for the faint-hearted and it is not for little girls. On the whole it was a negative experience and I would rather not go into too many details. Still, I would recommend military service to anyone: you really gain a lot from it and return, ultimately, a new person. It is easy for me to say this, I suppose, since I have already been through it myself. Believe it or not, I can discern to a high degree of accuracy if someone has been in the army-just by having a conversation with him. People who have served have a soundness of mind at their core. In a similar way, I can tell that a young woman is Russian based on a number of factors, no matter how well she speaks another language. I wrote about this in my blog once, which led to a lot of heated discussion.
Let me tell you an interesting story. On February 23, Fatherland Defenders’ day, which is, traditionally, a holiday when women congratulate men for being-well, men-about 200 people filed into our auditorium. I opened the event in the customary way, with a speech. I started with the words “A display of prowess.” I spoke to those gathered about the army, but they seemed perplexed or oblivious. So I asked: “Which of you guys served in the army, anyway?” There were about 150 men psent. I was expecting half of them to raise their hands-or maybe twenty, fifteen percent at least. Imagine how shocked I was when only three hands went up. I felt sick, quickly wrapped up my speech and left.
We have a lot of double standards in Russia. The spectacle of white-collar workers, none of whom served in the army, celebrating February 23 in Moscow offices-and with a bang-brings the word duplicity to mind. Either refrain from celebrating the holiday at all, or just call it “Men’s Day,” as though it were the male counterpart of Women’s Day on March 8. These days hardly anyone serves in the army. Who knows if this is good or bad?
One way or another, on May 28-Border Guard Day-I arrived back in Leninsk-Kuznetsky. This holiday is celebrated completely differently now than it was then. You can see crazy drunks in green berets running down the streets of Moscow and St. Petersburg, yelling, singing, and jumping in the fountains.
Dear reader, I solemnly declare that I am not one of them!
Even though I remember well our battle song:
A border guard must follow cruel laws,
We can’t sleep when others are asleep,
You and I, pal, we’re back on duty.
A border guard must follow cruel laws.
We were taught that the USSR border was sacred and untouchable. We had been warned about the hazing, but none of it happened in our unit. Sure, we washed the floors, while our senior officers did not, but I never got beat up in the two years that I was there. This letter contains the phrase “the doors of any educational institution are open to you.” I didn’t take it seriously. Oleg Ikonnikov, cyclist:
Oleg and I practiced together, went to training camps, and passed the qualifiers for Master of Sport candidacy. He was a very strong finisher. He’d win the criterium and the group races. He could keep a good pace and hold his own in a team when we went to Russia-wide competitions. Even though his age ought to have put him in the juniors he competed with the grown men. He could have won among the juniors, but he was put into a more senior team to fill in the gaps. If he had stuck to it, he would have achieved great heights. The conditions would have to have been different and the coaches more professional, like in Omsk or Kuibyshev. Whoever got into the Army Sports Club (in Omsk) ended up succeeding. If Oleg hadn’t stopped training, he could have been a champion. He has the talent.
It was hard to get into the ASC. You had to get to Omsk, first, then fall on your knees in front of the coach and beg him to take you. Apparently Oleg wasn’t too interested. The team in Omsk was strong. From there you would get into the Central ASC or into the All-Union team. Once the nineties came, getting into the Omsk ASC was your ticket into professional teams. Of course, back when Oleg and I were training, there was no such opportunity. The ASC in Novosibirsk, though, was run like in a village. There really was no good reason to go there, except as an excuse not to join the army. Coaches should do all they can to keep a hold of and promote athletes like Oleg. But we had to promote ourselves, otherwise nothing would work. But that’s supposed to be the coach’s job.
Chapter 6
There Will Be No Wildfire
I came home from the army certain that I would work in the mines.
I got a call from the Committee for State Security (KGB) immediately. They wanted to recruit me. Because the Border Guard was administered by the committee they told me, “You’re already one of us!” If you paid attention to what I said about the values my father instilled in me, however, you will understand why I politely declined.
I was going to be a miner like my dad! He had just retired, so I pd I could take his place in Kirov Mine. I went and put in an application to work there. But I also thought about how nice it would be to take a vacation beforehand.
I happened to bump into my homeroom teacher from school. She told me she was going to work as director of a Pioneers Camp and asked me if I would like to go with her to get some rest. There was a teachers’ college in our town, which ppared future pschool and primary school teachers. Before placement, the teachers had to complete internships as Pioneers’ counselors at a Young Builder camp belonging to a construction trust located in Leninsk-Kuznetsky. “You’re an athlete. Why not come teach phys ed?” my homeroom teacher asked. I agreed and worked there all summer. I would go to work in the mines in September.
Looking back, I think that June 1988 was the happiest month of my life. It turned out that there were only two men in the whole camp: myself and the art director. The artist painted posters with logos along the lines of “Pioneers ahead!” Unlike me, a good-looking chap recently “emancipated” from the border guard, he enjoyed no success of any kind among the women. If you count all the medics, management, and counselors, the male-to-female ratio at the camp was around 1 to 50. The impact was obvious. I felt like king of the camp! The gains in sexual experience were-fantastic! There were even catfights over me. I had money: that same thousand I had earned from selling the Colnago bike. I bought Hungarian champagne by the caseful-paying 5 rubles 50 kopeks per bottle-and kept it in my room, where we drank. I would get up in the morning to do my workout and the whole camp would laugh at me. The team-leaders understood everything and shouted at me: “Oleg, get some sleep!” They had heard me getting wasted with the girls all night. But I would yell back, “Do some push-ups!”
One day they asked me to lead a game called “Wildfire.” I did not know the rules. In order to get out of it, I had to have an affair with the senior camp counselor. She relented: “Fine. You don’t have to lead the game. Who even cares?” The Pioneers asked me,
“When are we gonna play wildfire, Mr. PE teacher?”
“There will be no wildfire,” I answered with confidence.
The sun, the river, wild berries, girls-what else does a recently discharged soldier need? I’d recommend that everyone coming home from the army work a summer as physical education teacher at a camp. For a soldier, it is as entertaining and romantic as it gets.
While I was at the camp I met a girl named Zhanna Pechorkina. She was doing her internship, working part time in the cafeteria as she ppared for medical school. When I saw her in the cafeteria, about three weeks after I had started working, I knew that my days of fooling around were over. It was love at first sight. She turned 17 that June. Given today’s standards, that seems very young, but this was not so in Soviet-era Siberia. At the time, it was considered normal to have your first child at 18. We went on walks in the forest holding hands. Ah, the romance! An innocent girl-my first true love.
We were inseparable and went to the city together to visit my parents. On June 28, 1988, we got on a yellow Ikarus bus departing from the central market in Leninsk-Kuznetsky and went to the village of Yegozovo. Everyone took a seat; we stood on the floor near the back and kissed. The bus drove at an immense speed and bumped wildly up and down. I wondered why the driver was going so fast. Suddenly there was a crash and a grating sound. I blacked out. The next thing I knew, I was lying on the steps of the bus, which had spun to a stop. Getting up, I saw that half of the bus was missing. The back part of the roof was torn off and the windows shattered. The bus sort of resembled one of those tourist buses in London or Paris. In a state of shock, I started calling for Zhanna. I climbed through the hole in the back of the bus where the window had been. I landed on the road and started looking for her. I found her in the ditch, her dress pulled up over her head so that all I could see were her bare legs and underwear. I told her, “What are you thinking? People can see everything.” I pulled her dress down from her face. And then I saw something that I hope never ever to see again in my life-my beloved girl with no head, in effect. Her casket stayed closed at the funeral.
I grabbed her hand, choked with memory. Then I felt hands grabbing me from behind and I heard someone say, “Get this one to the ambulance immediately!” My head started spinning once I got to the car. I spit and saw eight teeth fall onto the pavement.
What had happened in that fateful moment? As we were standing there, kissing, a KamAZ truck, driving too fast, hit the side of our bus. A pole broke loose from the force of the impact and I was thrown to the floor and onto the steps. I did not fly out of the bus and that saved me. Zhanna had been standing with her back to the pole, while I faced her. The pole just ripped through her head. She got the brunt of the blow, while I was hit with less force. Because Zhanna was six inches shorter than me, she got hit in the head, while I was struck in the teeth. Essentially, she saved my life by blocking the blow with her head. It is ironic that this happened just as we were kissing.
This was the first time that my life was spared. The Lord protected me… I was taken to the hospital. I underwent multiple surgeries. Investigators came and got information from me. I was totally devastated by this tragedy. What a thing for a twenty-year old man to suffer…
I could not look our mutual friends in the eye; I could not look at her parents or at buses or at the town. As Nautilus Pompilius sings: “I looked at these faces and couldn’t forgive them for being able to live without you.”
I had to leave Leninsk-Kuznetsky.
One day I ran into my friend and neighbor Yura, who lived across the way from me on Kooperativnaya Street. He told me that my other neighbor Vitya Starodubtsev had moved to Leningrad in order to attend school at the Mining Institute. Yura and Vitya explained that it was not that complicated. All I had to do was to get a paper from the mine saying that I had worked there. On top of that, I had already completed my military service. I was fascinated and inquired as to when they were accepting applications. It turned out that I had only one week left. My friend Edik Sozinov, who was still living in Leninsk, helped me. Quickly, we gathered all of the required doctor’s notes and I got a letter from the mine stating that I had worked there for nine months. Once I had all of my documents together and had put on my junior sergeant’s uniform, I got on the train and left for St. Petersburg to start school. To stay in Leninsk would have been unbearable.
About ten years ago, I met up with Edik. He told me,
“I remember how we took you to the train station. But no one believed you’d finish what you set out to do.”
I am not so sure that I believed it myself. I was absent for almost all of my last two years of high school. I then served two years in the border guard, which most likely did nothing for my intellectual capabilities. Who knows what kind of impudence it took to think that I could get into the Leningrad Mining Institute, the top university in Russia, established during the reign of Catherine the Great!
I returned from the army in 1988, grown up and hungry for sex. Looking back, I think that the happiest time of my life was spent working at the Pioneers’ Camp in June 1988 Lidia Irincheyevna Baturova, Oleg Tinkov’s homeroom teacher:
I met with Oleg’s class twenty-five years after their graduation. The kids told me what they had achieved. Fourteen of the students finished school with B’s and A’s, but none of them managed to achieve Oleg’s level of success.
When Oleg Tinkov’s generation was growing up, there were eleven mines and factories operating in Leninsk-Kuznetsky. Later, everything shut down. Circumstances during the stagnant Soviet period were stable at least: you finished school, attended an institute or technical school, got an education, and then went to work. Now these kids had taken their first grown-up steps at the end of the eighties, when the country was in turmoil. Few had managed to stand up to the revolution in our way of life.
All of the social facilities that existed then have closed down: the schools, pschools, and stadiums. The stadium and gym where Oleg grew up and trained as a cyclist have been demolished. There are only five mines in the city now and five of the other larger enterprises have been closed as well: the yarn plant, the light bulb plant, Kuzbasselement, Khimprom, and the clothing factory. Thousands of people were thrown overboard, in a manner of speaking. As a consequence, these people were unable to provide a good education for their children. The tragedy in small towns today consists in the fact that children have no opportunities for development and nowhere to go. I’m already teaching the children of my former students and I can say that it’s a rare thing to see someone achieve a level of education higher than trade or technical school. Only a very few inpiduals are capable of breaking free and going further. The children lack the finances and the motivation. Once Oleg had gotten on his feet, he came to Leninsk-Kuznetsky with his kids and brought them to see the school. His daughter Dasha, who had just returned from America, asked,
“Dad, I can’t believe kids actually go here.” The school is small, poorly maintained and has no funds. So Oleg decided to help. He was the first graduate of the school to donate money for repairs and equipment for his class. He wanted the kids to see that you can succeed through knowledge and schooling. I’m grateful to him for using gifts to encourage people in the right direction. His charity gave rise to a conundrum in the graduates’ minds: why is he able, but we are not? A whole movement was started. Everyone wanted to help out as much as they could.
The municipal school board received an official charitable donation in the amount of 150 thousand rubles. The bureaucrats decided to hold on to the money for a while in order to profit from it. I received a call from Oleg, who was in Italy at the time:
“Did you get the money?” My answer was,
“No.” He started swearing,
“Don’t just gape, find it!” He gets like that sometimes. I got in contact with the local criminal authorities, some of whom I had taught in school. Immediately, the money was found.
The municipal school board accounted for every kopek. And I had to keep Oleg just as informed as I was. I know my student. He can be very nice, but when it comes to money, he’s incredibly strict.
We ordered new furniture for the classroom, but it was taking forever for the delivery to come. September 1 was just around the corner. Once again, I had to involve the criminal element. These guys like Oleg a lot and respect him for helping the school. They drove to Kemerovo, where the furniture manufacturer is located. As a result, the furniture arrived the following day. Everything was assembled and set up over night.
When Oleg came, I showed him everything: the new windows, the newly laid linoleum floors, the desks and chairs, the board, the TV-VCR combo, the video camera and the audio library for geography class. It seemed like his mind was elsewhere, but he took note of everything and was interested in the details. He hadn’t just doled out the money like an aristocrat-he wanted to be sure that his money had been put to good use.
The next time he came to see what we’d done, everything had been set up. We reminisced about the new furniture that was brought to the school in the summer of 1980. We workers at the school, as well as the kids and parents, assembled everything ourselves. All of the chairs were still in tact, including the one that Oleg had put together and signed with his name over 20 years ago. We had his son Pasha sit on that chair.
This wasn’t the only time that Oleg helped the school board. We really wanted him to build a school, but he decided to build a playground instead, along with Natalya Vodyanova and Alexei Prilepsky. Good for him! I value his humanity. When he comes to visit, you never get the impssion that he’s stuck up or seeking attention. He always asks about everyone and takes an interest in how things are going and who needs help.
That last time we got together as a class, we noted with great sadness that six of the students have now passed away. All of them were Oleg’s good friends. Each of them went down a different path. Some got involved with organized crime and two girls drank themselves to death. Their male classmates can’t believe it.
Some of my earlier graduates fought in Afghanistan, and some of my more recent ones served in Chechnya. The have found it difficult to readjust to normal life.
To tell the truth, some of the groups of kids I’ve seen through to graduation ended up much worse off than Oleg’s class. In one class, for example, all but one of the boys served time. Many have died. The neighborhood where Oleg grew up became a hotbed of drugs. Thanks to sport, Oleg was able to catch hold of life and get further than these others.
My memories of Oleg are all good ones. He can be harsh and severe, but he always keeps his head about him. I really hope that he retained his grasp of, and sensitivity to, the situation at hand. This is a skill we lack. May everything be good for him.
Young people are living a modern life. You are insiders. We stand at the curb and can do little to affect what’s going on-except through you. Students are smarter than their teachers. We provide a base; we lay a foundation. What grows from this is up to the child. Every student, no matter who he or she is, is unique. As long as you don’t put too much pssure on kids, they will rise by themselves. My motto is “Teachers should bring up children so they can be learned from.”
Chapter 7
Change! We Wait for Change!
When I applied to the Leningrad Mining Institute, the physics professor took pity on me. At the exam I could not explain Newton’s second law. He looked at my sergeant’s shoulder marks, and my badges of excellence from the border guard and said,
“Do you promise to bring your physics up to snuff before the start of the semester?”
“I promise!”
“Okay, I’m giving you a C.”
“Thank you!”
I was really pleased, considering that I had already been given B’s in composition and math. I got in! It was a good thing that I had come dressed in uniform. Otherwise I would have ended up at Moskovsky Station waiting for a train to Leninsk-Kuznetsky-something I did not want at all. I cannot remember what that professor’s name was, but I would thank him, if I were to see him again, for offering me the chance to give life in Leningrad a shot.
Strangely enough, I did well in school. Because I had barely made it into the program, I had to promise myself that I would study hard. I sat in the first row, the best place for absorbing knowledge. I can still remember our math professor, Lobazin, and our physics professor, Mezentsev. If I could not understand something, I would come up to the teacher after class and ask him to explain further. My studies bore fruit: I was the first in my class to write my final exams and I was even one of only four students who passed physics on the first try.
At the institute I met the most cultured intellectual people. The best people in the country. The professors were the embodiment of intelligence. Their speech, their approach to the material, their love of liberty, and their ambition captivated me. It amazes me to think that such obviously anti-Soviet ps could end up teaching in a state-run university in the USSR. They criticized Soviet authority-some of them doing so indirectly, but the more courageous ones just telling it like it was. Some of them would make post-lecture announcements such as, “Remember, Nautilus Pompilius has a concert tonight.” The professors at the Mining Institute planted the seeds of nonconformism and inner freedom in me.
I do not know how things were in Moscow at that time, but in St. Petersburg everything was light and color. After its founding in 1703, the city was originally the freethinking capital of Russia. The Decembrist uprising of December 14, 1825, the workers’ revolt of January 9, 1905, and the 1917 revolution all happened there. It is not surprising that the years 1988-1990 saw an intensification of anti-Soviet sentiment in Leningrad. I just cannot understand why there has been no protest in St. Petersburg during the current stagnant period in our country.
Back then, freedom was in the air. I was really excited about all of it. I remember buying a badge reading, “Yegor, you’re wrong!” The slogan referred to Yegor Ligachev, who had interrupted one of Boris Yeltsin’s speeches, saying, “Boris, you’re wrong. It’s not just tactics that make us different now. Boris, you possess a great deal of energy, but it’s not creative energy. Rather, it’s destructive.” People decided that Yegor was wrong. We supported Yeltsin because we believed that he would save the country from communism.
Of course, it was Mikhail Sergeyevich Gorbachev who got the ball rolling. He had the strength and courage to take down the Soviet system from the inside. Of all the leaders of the USSR and Russia in the twentieth century, I respect him the most. He was a member of the communist mafia-there’s no other way to put it-and decided to fight against it. He was a rule-breaker. He broke down the very organization of which he was a part, in order to offer us freedom.
A lot of people say that Gorbachev had no choice-that everything would have unfolded exactly as it did regardless of his involvement, but I disagree. I think he had a choice. He could have tightened the bolts, as Andropov did in 1982-1983. But this was a person who had been elected as the General Secretary of the only political party in the country-and it turned out that he held democratic and liberal views. Gorbachev is the sharpest and greatest Russian politician ever. It is not for nothing that he has garnered praise and respect in the West. The only thing that he did wrong was the alcohol reform. Without a doubt, he will go down in history as the man who put an end to communism. Yeltsin will be remembered as Russia’s first psident. Lenin and Stalin will be remembered too, but with the least fondness. As for the others, my gut feeling is that their memory will be all but erased.
When he dies, we will cry. We will pay him our respects and remember what a good person he was. For now though, as long as he is still with us, I would like to expss my gratitude to him for conquering the communist dragon.
Mikhail Sergeyevich, THANK YOU! My deepest respect!
We still hear the voices of those idiots that praise the Soviet Union. What is there to praise, anyway? It is unfortunate that those in power in Russia today often appeal to the USSR. Some even anticipate its restoration. But that is something that I would most certainly not want to see. I would not want to see a specific quota of mohair scarves allocated to Dushanbe, Tajikistan, where the coldest it gets is plus 10. Nor would I want to see big shipments of plastic ice hockey sticks being sent to Tashkent, Uzbekistan. The Soviet economy was inoperable. The system’s collapse was just a matter of time. And then there was America dragging us into the arms race. But even if that had not happened, the crash would have been inevitable.
In the last few years we have seen a governmentalization of the economy; once again, today, we see socialism baring its teeth. Half of the economy now hangs on Gazprom, along with some soccer and hockey teams. We are treading water, in spite of Gorbachev’s breakthroughs and in spite of the work that Yeltsin did towards accelerating our country’s development. We have strayed from the path. We have taken one step forward and two steps back.
I would stress that my argument must be understood from an economic standpoint. I am no political scientist or politician. I do not know how many parties there are in the country. But I am certain that there are more than one. The economy must operate in accordance with capitalist mechanisms. It is the best approach that we have thought of. Take, for example, communist China’s economic successes. They are based on market principles. In this respect, their approach has not been socialist in the least.
In the summer of 1988, before I started my studies at the Mining Institute, the nineteenth Party Conference was held. At this conference, changes were announced, changes bearing on the Communist Party of the Soviet Union. It had become clear that communism was weak and could not last. The wind of change was blowing from the Baltic Sea, the Bay of Finland, and from Europe. The Scorpions would sing about the wind of change in the nineties. In Russia, the rock group Kino was already singing about it:
Change! Our hearts require it.
Change! Our eyes need it. In our laughter and tears and in our pulsing veins:
Change! We wait for change!
During my very first semester at the institute, our trigonometry professor told us about Anatoly Sobchak, a teacher at a nearby university. Sobchak’s star was only starting to rise. He was fighting for the most basic of western values: democracy, inpidual liberty, and private property.
At the end of the 1980s, we believed that everything would change and we would be the ones to make it happen. There is a reason why university students are considered key to revolutions. In spring 1989, a miracle happened: we elected Anatoly Alexandrovich Sobchak to the USSR parliament, repsenting the Vasilievsky Island District 47. I am glad that my vote played a part in that victory. Sobchak could not win in the first round, even though he had a majority of votes. But in the second round his win was unequivocal. One of the voting stations was in our dormitory in Building 5, Shkipersky Stream.
I fell in love with St. Petersburg. Vasilievsky Island, the buses full of foreigners, the imported goods, the colored lights, the wide prospects, the steamships-it was a country boy’s dream come true, especially after I had come so close to becoming a warrant officer. I just went crazy. I was in awe of the wealth of knowledge available at the mining institute, the statues by the entrance, the huge staircase leading down to the Neva River, the neighboring Baltic factory, where a reconstruction of the icebreaker Lenin was on display. I had only ever seen such things on TV. I would call my state upon arrival in Leningrad euphoric. It was as though I was high all time.
Ever since, I have had my own special relationship with the city. It was in this great, beautiful city that I grew up and became the person and the businessman I am today. It is disappointing to have to say it, but I am not a native Leningrader. And yet I am probably more of a patriot than many who were born there. Of course I consider myself Siberian, but after thirteen happy years in St. Petersburg, I am a most genuine Petersburger.
I went to university in this city, I met my future wife there, and this is where I started nearly all of my businesses. No city in the world has given me anything remotely like what this city has.
So I’ll quote Iosif Brodskoi:
There’s no country or graveyard,
Which I would pfer.
It’s on Vasilievsky Island
That I’ll be interred.
I associate the Leningrad of the late nineteen-eighties with the rock band Kino and its lead singer Viktor Tsoi. My Baptism
In December 1988, I went to Nikolsky Church to be baptized. The priest asked me,
“Do you know the Lord’s Prayer?”
“No.”
“Then I can’t baptize you. Go learn it.”
I memorized the prayer on the plane on one of my trips to Siberia. I still remember it:
“Our father, who art in heaven. Hallowed be thy name. Thy kingdom come, thy will be done on Earth, as it is in Heaven. Give us this day our daily bread. And forgive us our trespasses, as we forgive those who trespass against us. Lead us not into temptation, but deliver us from evil. Amen.”
On December 25, 1988-my birthday-the priest baptized me.
Chapter 8
The Mining Trade Institute
The Leningrad Mining Institute is the oldest technical school in Russia and is, for all intents and purposes, where international mining science originated. Because of this, at the end of the eighties, the Institute’s student body included people, not just from the socialist camp, but Americans and Western Germans as well. For the most part though, international students came, naturally, from “third-world” countries in Asia and Africa.
When they came back from holidays, they would bring merchandise with them. A lot of them flew through Berlin, while students from former French colonies (Algeria, Burkina Faso, Côte d’Ivoire) had stopovers in Paris. They all wanted to earn some extra cash. They came to Russia with jeans, perfume, and cassette tapes. After exams were over they would return home with their money in foreign currency-dollars, marks, or francs.
The foreigners were not good at selling on the street. Maybe they were just scared to do it. Instead they sold their goods to Russian speculators, like me. On the street, my profit would reach fifty to one hundred percent. I lived off this margin. To tell the truth, though, I did not save much as we loved to party in the dorms.
I soon realized that, in Siberia, goods that were in short supply could be sold for twice as much again. For instance, I could sell cosmetics kits in Leningrad for 25 rubles, while in Leninsk-Kuznetsky they sold for 50. Lipstick was 15 rubles in the city, but 25 in Siberia. Of course, when I could, then, I tried to sell in Siberia.
In Leninsk I would come to the shoe or yarn factory, which were staffed mostly by women. Because they would not let me in through reception, I had to climb through a window. The workers already knew that there was this guy named Oleg from Leningrad and that he traded in scarce, imported products. I was able to make even more money there than I would have if I had sold the stuff at the local market. This was because the women liked the idea of making their purchases from the comfort of their own place of employment. This is just another example of the importance of service in business.
(I still remember the lessons that I learned then. In particular, the savings program launched in 2010 by Tinkoff Credit Systems is based on the same principle: a bank repsentative comes to where you are when you want to open an account.)
Of course, sometimes, the merchandise turned out to be complete crap. Once I bought lipstick with glitter in it from some Gypsies on Staronevsky Prospect. Later I saw how they made it. They would take shiny chocolate wrappers, cut them into tiny pieces, and add them to the lipstick.
In the main, I sourced my merchandise from foreigners. Another source, however, was a fellow student at the Mining Institute, Igor Spiridonov. He was from Prokopyevsk in Kemerovo Province. Igor sold in small bulk: cosmetic kits came in full boxes; lipstick in blocks of 100 each; VHS cassettes in packs. I bought my first consignment in cash and sold the goods inpidually in Siberia. A week later, I bought more. Because Igor and I were fellow Siberians, he offered me a larger consignment and said I could pay him back after I had sold the product. In this way I made money off the difference with no investment.
At one point I was flying three or four times a month. I would load up a couple bags, buy a ticket to Kemerovo for 60 rubles, and then sell the goods in Siberia for twice as much or more than they would have cost in St. Petersburg. Of course my trips were not just about business. I also spent time with my friends, Edik Sozinov, Alexei Smirnov, Zhenya Brekhov, and Alexei Prilepsky. I even convinced the latter two to apply for university in Leningrad.
Later, I started bringing stuff back to sell. A group of Yugoslavian construction workers were building a hospital in Leninsk-Kuznetsky. They lived in what was called the Yugoslavian Village, in trailers. They brought German marks with them from Europe. You could not buy anything in Soviet stores with foreign currency, however-be it vodka or treats for the girls. Because the Siberians had no need for foreign money, I bought the marks from them at a ludicrously low price and sold them to speculators on Vasilievsky Island. If I remember correctly, they cost me five rubles each and I sold them for nine. Such was the Soviet Forex!
Most of the people studying at the Mining Institute were from regions where there was an active extraction industry. There were a lot of students from the Kuznetsk Basin, Don Basin (Donetsk, Chervonograd and Shakhty), Vorkuty, and Ukhty. There were a few students, too, from Slantsy and Yakutia, where diamonds are mined. I tried to stick with guys from Kemerovo Province; we were from the same area and I was used to trusting my own. I considered them more reliable and understanding.
But this approach almost backfired. Vitalik from Kemerovo, who was about five years older than me, got me involved in some shady dealings having to do with gold. And I crossed a few lines. I am ashamed to admit it, but it got to the point where I was taking part in some straight-up thievery. Thank God, I had the strength and soundness of mind to get away from these people. The Lord led me away. They wanted to expel me from the Institute. I lost so much. Worst of all, I lost my good name in the dormitory. The most important thing, though, is that I stopped hanging out with that crowd.
So why am I writing about this? None of us is perfect. Young men arriving in a new city are bound to get mixed up with bad apples. You have to try your best to avoid them, but if it is too late for that, then you have to have the strength to walk away. Now, I never judge people for their mistakes-remember that even Pinocchio got mixed up with the wrong crowd. But he showed what his character was like by breaking away. I was like Pinocchio in that story. I was led astray by their high life: the restaurants, discos, and strip chúng tôi was all so tempting. After all, before I came to Leningrad I had not even seen the inside of a restaurant, really.
One way or another, I decided that I would never become involved with crime. And although the article against speculation was only removed from the Criminal Code in 1991, it had been largely unenforced for a long while before then. Undoubtedly, I should have been more careful, but I was afraid of nothing in pursuit of the good life. I had to keep speculating.
Every day, during our long break after second period, we speculators would meet at the Mining Institute, in a wide square hall, which we called the “meeting spot.” People could get onto campus without documents and speculators from various neighborhoods, from places like Aprashka (Appraising Door) and Galyora (Gusting Door), came to the Institute to buy product. The meeting spot was a place of intense commercial activity. Items for sale included clothing, appliances, and electronics. Currency was also exchanged. Trade was evolving. At first clothing and perfume were the most sought after items; later, demand for electronic gear grew. For two years dual-cassette tape recorders were all the rage. We called them soapboxes.
We students made money any way we could. I would buy vodka at the store, during the day, and then sell it in the dorm, at night, for 20 rubles. Some people accused me of being an animal for this, but I disagree. If you do not go to the store, during the day, to get your vodka-and you want some at night-then you have to pay up. Nothing is free, including drink, when a sudden urge to have some sets in. My fellow students would get mad about it, but they would buy the vodka. One kid got a VCR from his parents and he used to charge a ruble to anyone who wanted to watch a movie in his room. All was right and fair: the VCR was an asset and assets should bring you profit. We would stay up all night watching movies starring Sylvester Stallone, Bruce Lee, and Arnold Schwarzenegger. We thought action movies were the height of cinematography.
* * *
I liked it in Leningrad, but I missed my friends in Leninsk dearly. In the winter after I had finished my first midterms, I almost made the biggest mistake of my life. There was a university transfer system in the Soviet Union, which allowed you to transfer to a more pstigious school after you had been accepted to a lesser one. In the winter of 1989 I went to the Kuznetsk Basin Polytechnical Institute in Kemerovo. Like the Mining Institute in Leningrad, it trained future mineworkers.
The young woman in the transfer department looked at me like I was an idiot.
“What! Are you stupid?”
“I’m sorry. What do you mean?”
“We have fifty students waiting on transfers from Kemerovo to Leningrad. What are you doing, man? Don’t screw around.”
She changed my mind; I withdrew my transfer documents. I feel like God was at work here too. That girl at the Institute could have taken all my papers without saying anything. I probably would have ended up working as an engineer or something in the mines in Leninsk!
Cosmetic kits cost 25 rubles in Leningrad. In Siberia, their price was double. One of my first investors, Oleg Korostelev, his wife Vera, Rina, and I in Morskoi Restaurant. Eduard Sozinov, a friend of Oleg’s from school:
Every time Oleg came to Leninsk-Kuznetsky, he would bring something to sell. It was the simplest way to make extra money. Before, this was called speculation; now we call it business. At the time, though, I thought it was a completely normal thing to do. He’d bring jeans and coats people had ordered-in small amounts, though. Mostly he sold cosmetics, however. Women go crazy over things like that and the stores didn’t carry anything. Lipstick and perfume sold like hotcakes, because the price was reasonable. Jeans, on the other hand, were something very few people could afford…
Igor Spiridonov, Oleg’s business partner during his university years:
I lived in a dormitory on Maly Prospect (Oleg lived on Shkipersky Stream). Oleg had good connections when it came to sales in Siberia. I knew where you could get stuff cheap in Leningrad. During our early days of speculation, the main products were clothing and toiletries. Later we started speculating on currency and electronics and started making grown-up money.
The first time Oleg came to my dorm on Maly Prospect, he told me that he was from Leninsk-Kuznetsky (we were practically neighbors, as I was born in Prokopyevsk in Kemerovo Province). He had heard from someone that I had merchandise for sale. A week later he came back and said he had sold everything. “Nice turnover,” I thought. Mostly Oleg bought cosmetic kits, VHS cassettes, and lipstick. Later on, like good neighbors, we agreed that he would take a bigger shipment of merchandise to Siberia and pay me when he got back.
Chapter 9
Gangster Stories
In Leninsk-Kuznetsky I saw some real tough gangsters. When I moved to Leningrad, I came into contact with athletes who called themselves gangsters. They were from Tambov, Kazan, and Vokruty, and because they did not know how to do anything else, they took up hustling. You would join a gang based on what part of the country you came from. Unlike in other cities, in St. Petersburg there were few people from the south. Chechens and Dagestanis played only a minor role there. The top guns were from Slavic gangs, which were dominated by former athletes. They were not really gangsters in an ordinary sense.
At the end of the eighties in St. Petersburg, if you were doing business then gangsters would inevitably become involved. This happened, for the first time, when I managed to sell a can of black caviar to some foreigners at the Pribaltiyskaya Hotel for fifty dollars-an insane amount of money at the time. It was the first time I had ever held a fifty-dollar bill in my hand. I nearly went nuts. To my dismay, the in-house gangsters saw me making the sale and decided that they deserved a cut. I had to escape through the restaurant kitchen, running past the frying pans with food cooking in them, just like in mafia movies.
The Mining Institute was under the protection of some guys from Vorkuty. They were big and aggressive and liked to rock it out at nightclubs. You would not say that they were well-structured, but they sure had biomass. The prostitutes on Vasilievsky Ostrov paid them for protection, as did the currency dealers and rich kids who sold matryoshka dolls. This was nothing serious, just old-fashioned racketeering. Now I realize that the gangsters did not make all that much money, but at the time they seemed super-rich, driving 2109 Ladas and eating out at restaurants.
My first encounter with the Vorkutians came when I was in my first year of university. I and our Komsomol rep, Vitya Cherkashin, were returning home from the pub across from Kazan Cathedral. We were a little tipsy when we got back to the dorm. We noticed the Vorkutians loitering there, as they often did. Their boxer, Igor, was harassing people and a few of the others stood nearby watching and laughing. Vitya and I were walking down the hall. They were walking towards us. I was certain that we were going to get punched and possibly kicked. If we pushed up against the wall, they would take exception; if we walked straight towards them, they would get mad. They would get pissed no matter what. Once we had reached them, the boxer took his stance.
“Whatchya gonna do, Tinky?” he sneered.
What was I to do? The beer and lack of options gave me the guts to act. I had nowhere to turn. I remember that I had been taking boxing at the Mining Institute for six months, at that point, and we had only worked through one punch-the right straight. I did not think about matters for long. I took up my position and followed through with the punch. It was a good hit, for me, but not so much for Igor. I got him in the jaw. Boxers know that this is the worse place to be hit-you can fall down immediately. I thought it was over, that they would kill me. Contrary to what I expected, though, his buddies, who were standing close by, opted not to get involved. None of them wanted to go down second. They just shit themselves! I shouted something along the lines of,
“That’s what’ll happen to every one of you!”-and withdrew.
Realizing I would be screwed if I stayed around, I ran out of the dormitory five minutes later, caught a cab, and went to my girlfriend’s place. She was studying economics and lived on Bolshaya Morskaya Street. The next day, after class, I came back to my room. I sat waiting, knowing they would be coming. The ringleader entered and said,
Suddenly, I was recognized all over and my reputation inched upward. One fine day during the long break, some strong men from Vorkuty, wearing black leather jackets, approached me.
“We’re going outside. We need to talk,” one of them said.
We went outside and stopped on the staircase in front of the chemistry department.
“So, you’re selling here?” one asked.
“Yeah, I’ve been trying to earn some money.”
“You’re going to have to pay us. You’ve got to feed the bros.”
“What does this have to do with me?”
“Listen, you! Are you looking for trouble?”
Of course I was already ppared for this moment.
“I couldn’t care less who you need to feed. I have a dad, mom and brother. They’re the only ones I owe anything to-no one else. If you harass me again, I’m writing a police statement.”
“Listen, what the hell is your problem? Don’t you know the rules?”
“I’m not interested in your rules. I set my own.”
“Okay, fine. What point is there talking to this piece of trash?” They threatened me and left.
Naturally, I never had to deal with them again and I kept on working.
Ever since then, I have understood that the dumb underdog gangsters are easily scared, while their leaders should be used; you might borrow money from them. They are rich and they have their head on their shoulders. Later on, I borrowed money from certain organizations, understanding clearly that they were controlled by people whose names were often mentioned in criminal histories. I took loans from them rather than from banks, at interest rates that were reasonable-to say the least. Should it make a difference where I get my loans? They had capital and I did not have the money I needed for various projects. And you would never hurt someone who owes you. No one would. They thought they were using me, but, in my view, they were the ones being used. Not many of those people are still alive today, although now and then I do see some of them around St. Petersburg. Now they have realized who was using who. After all, I was paying them at a fixed interest rate, but in the end their money earned me much, much more.
In the 1990s gangsters liked to follow a scheme called “raising hogs.” They would give money to an entrepneur, would get a share in the business, and then, when the company started to go under, they would milk the owner dry. Or kill him. I would never give gangsters a share in my business, because it always ended badly.
As long as he has something to hide, a businessman will always fall victim to extortion. For the moment, unfortunately, law-abiding businessmen are few and far between. A lot of people want to get rich in six months, buy a yacht and plane, and move to Monaco. In order to achieve this, they avoid paying taxes, or customs duty, and they bribe officials. They give extortionists something to work with.
My situation is different. I have been laboring hard for 20 years and yet I have not acquired anything extraordinary for myself. Compared to the average man, I am very rich, to be sure. But from the point of view of the richest, I am poverty-stricken. I am not accustomed to fast money and I am not willing to break the law in order to make a profit. I will not go against my own conscience. That is why I will not let anyone make my life difficult. It would be unfair. I will protect my rights by whatever means possible. As for those who steal from their country or from others, their lives should be made difficult. You must not forget, I have a home in St. Petersburg and a lot of my friends are high up now. I am respected. I receive offers of help as soon as I have a problem. A lot of people might say, “Well, I haven’t got any influential friends from St. Petersburg!” I am just saying that you must use your head and act in a way that protects you from harassment.
Again, I never got involved in any business with a really high profit margin that would be of interest to the mafia. A lot of my friends and other acquaintances have been killed, sometimes for no apparent reason. But I have never had bullets flying by my head-not even during those dark and dreary days when human life had lost nearly all its value.
I do have one story involving bullets, actually, but it has nothing to do with business. It was December 25, 1992, and I was celebrating my birthday in the Pribaltiyskaya Hotel. After dinner I invited all of my guests (there were eight or ten of us) to the dance club Eldorado in Karelia Hotel. It was controlled by thugs from the town of Tambov. A few of them sat a couple of tables away, giving us dirty looks. As the night wore on, most of the girls left the club. Finally, our wives were the only women left. One of the smaller thugs, who wore a cap, came up to Rina, pulled at her hand and said,
“Come on. Don’t ya wanna dance?”
I took hold of his hat, pulled it down over his face, and told him to you-know-what off. He hit me first, I hit back, and so the fight started. There were five of us and nine of them. The police put an end to the fight, but the gangsters went outside, got in their cars, and waited for us. The cops that worked at Karelia enjoyed some kind of relationship with the gangsters and maybe even got money from them. The policemen told us straight up,
“Guys, you’re screwed. You’ve got no chance. Get whoever protects you in here, otherwise you’re dead.”
The cops were slow to understand their pdicament. Half an hour later they realized that if we were killed, they would get in trouble too. In view of this, they offered to take us to the station. They backed a police van up to the exit and one by one we jumped inside. When they saw that we were going to get away with our offensive behavior, the gangsters drew their guns and jumped out of their BMWs.
The cops started shooting into the air.
“Everyone in your vehicles!”
When the van started moving, the mob cars followed us. They followed us all the way to the station. I was on the edge of my seat, as though I were in a movie. When we got to the police station, we were put in a cell. The police told us to wait until morning and then to call whoever it was that protected us to come pick us up. I really value my freedom, but I was totally fine with spending that night behind bars. By morning, the thugs had gone. We all went back to our homes and for the next couple of weeks tried not to stray outside.
Eduard Sozinov, a friend of Oleg’s from school:
The street fighting in Leninsk-Kuznetsky stopped after we were discharged from the army in 1988. The reason was the rising popularity of drugs. Within what seemed like moments, everyone united and became friends and brothers. At first grass and bud were the mainstay, but later on heroin made an appearance. During the early nineties, the shit infected the city and a lot of our peers died. Practically every single young adult used. No one tried to avoid it. At least everyone tried it once. I’m not sure about Moscow and St. Petersburg, but I think that drug-use thrives to this day across the country.
During those terrible, dark times, Oleg tried his best to stay away. The place was a cesspool of drugs and murder. For several years the shootings and funerals were incessant.
Oleg took pains to be careful. He made sure no one knew he was coming. One day, we were told some people were looking for him; it sounded as though they wanted to kill him. The boys had found out that he had money. They wanted to take everything they could from him. Probably the first order of business was to track him down, harass him for money, and then, based on his reaction, decide whether to put the squeeze on him further.
Oleg used to say that you could actually talk to the gangsters in St. Pete’s, but the ones back home wouldn’t listen, no matter what you said. He never even tried talking to them. Still, his trips were frequent, because he had to keep up his business in Leninsk. And he had to visit his parents. For safety’s sake, he avoided spending the night there. We found him a rental each time he came.
After the collapse of 1991, Oleg brought a large consignment back home. There was wine, vodka, and some kind of clothing-denim skirts, perhaps. The city bomb shelter was stuffed full. But there was a robbery and a lot was stolen. Oleg even went to the police, but they ended up finding nothing. It’s a good thing that Zhenya Brekhov and I had sold off some of the vodka and wine to various stores the day before.
Chapter 10
The Girl from Estonia
The dorm on Nalichnaya Street housed students from various faculties of the Mining Institute. I met an awesome girl there, at a dance, in April 1989. Here name was Ira. We danced and I fell in love. I always try to bring things to their logical conclusion. That night, though, it did not work out. The night was nearing its climax and I noticed that she had disappeared. She must have gone to her room. My search turned up nothing.
The next day I was walking by the math department and saw her (or was it someone else?).
“Ira! Hey!” I said with a start.
“I’m not Ira, I’m Rina.”
That is how, thanks to a random dance with a girl named Ira, I met my future wife, Rina. It was not until twenty years later that we were officially married-but more on that later. The next time we met was two months later, in June. I had gone into the grocery store at the corner of Gavanskaya Street and Shkipersky Stream to buy some sausage. As I stood in line, I noticed the same girl that I’d seen before, as I was walking by the math department-Rina.
I bought her a birch beverage for 11 kopeks and she had the indiscretion to tell me her room number. The following Saturday, I and my friend Edik, from Vorkutia, grabbed a bottle of wine and went to visit Rina on Nalichnaya Street. She had two female roommates and so Edik and I were happily outnumbered.
The Gavan Hotel had recently opened on Maly Prospect on Vasilievsky Island. It was not long before I took Rina there. We paid three rubles for entrance to the Hotel because it was part of the Intourist system and was not technically intended for Soviet citizens. You had to walk up to the glass door and show the doorman your open palm with a bill in it. He would open the door, take your money slyly, so that no one would notice, and let you into the hotel. There was a bar on the top floor. The barman Albert was an enterprising man in glasses. According to the menu, beer cost 55 kopeks, but everyone paid a ruble. Some people asked for change. When they came back for more beer, Albert would say, matter-of-factly,
“We haven’t got any beer.”
On this occasion, I got Rina really drunk and brought her back to my dorm. She gave in immediately, of course. It was not just anybody that could show a girl the kind of good time that I had. The moral of the story is simple: without money, you can accomplish nothing with women. I am kidding, of course. Rina is not materialistic. I took her to some cooperative restaurants, a few times, but later my money ran out. So Rina started taking me out! My sense was that she had money because she was from a fairly well-to-do Estonian family. According to her, however, it was because she was careful about how she spent her stipend. Whatever the case might have been, a girl paying my way was unacceptable. I started feeling shabby about it. I realized that the time had come to start making real money. I started putting twice the energy into my speculation business. My motive was simple: I wanted to take this beautiful girl to restaurants. The size of my consignments grew.
But I proved unable to get rich quick. I remained in the dorm and Rina moved in with me. It was we two, plus Andrei Pavlov from Kingisepp. Hungry days ensued. Andrei’s mom would bring him a sack of potatoes once a month and that is how we fed ourselves. I cannot stand potatoes to this day.
One day I stepped out of the kitchen to get some salt. When I came back, I discovered that someone had taken the whole pan of potatoes. There was an unwritten rule that said: make sure you stay with your potatoes during the last five minutes of frying-otherwise they will be stolen and later you will find your empty pan back in the kitchen. Sometimes people’s soup even went missing. There was no point in looking for it as 150 students lived on our floor alone.
There were bedbugs in the rooms. We would poison them, but they were never gone for long. Moving the beds away from the wall and into the center of the room afforded us some protection, but they would still climb up the walls, along the ceiling, and then fall on us from above, feeding on us once more. All of these domestic annoyances pushed me to do greater things. After all, I’d seen fortunate speculators who rented or bought their own apartments, drove their own cars, and were always going from restaurant to restaurant.
Sometime after I had finished my first term, I went to a regular store and bought some cans of red caviar at government prices. I got into a commuter train at Finlyandsky Station and got a ticket to Repino. I walked to Penaty Estate Museum where the Finnish tourists were filing out of the buses. I simply repeated the phrase “sata marka,” which means a hundred marks in Finnish. I quickly sold all the caviar for ten times what I had paid for it at the store.
After I pulled that off, I felt incredible. The business was easy and the profits huge. I told a kid in my dorm, Volodya, that there was money to be made. The next morning, we bought two whole cases of caviar and made the trip to Repino. After a couple days business with the Finns we found ourselves surrounded with 2106 Ladas with tinted windows. We did not know if it was the mob or the cops. Either way, since nothing good would come of us sticking around, Volodya and I started running in opposite directions. I raced along the tree line, tossing caviar into the bushes as I went. My hands were empty of cash. Even though I was an athlete, I could not outrun the officer, who wore a leather jacket. He caught up and twisted my arm behind my back, told me to pick up the jars that I had discarded, and took me to the Repino police department.
He took me to the special cases section, wrote me up, and confiscated my caviar. I sat across from that overstuffed cop, filling out the papers.
“You know what makes you lucky?” he asked
“What?”
“These problems you had today, they’re minor.”
“Minor? You caught me, didn’t you?”
“If you had been caught by the mobsters that control that spot, your problems would be much more significant. You were only here briefly. Now don’t come back.”
It seemed the cops were more afraid of the gangsters than I was. Maybe they were even getting a cut for protecting people that were essentially their superior officers. After these events, the Mining Institute received a letter saying that I was involved in the black market. For the second time they wanted to expel me. I’m not sure how they could let me leave to Poland with a service record like this: it must have been the lack of a unified information system.
I never again made the trip to Repino after this. In July, though, I received invaluable work experience in Soviet commerce. Nikolai Nikolayevich, the manager of the produce store on the Corner of Havana Street and Little Avenue, gave me a job selling fruit and vegetables at the stand. The kiosk still stands on that corner, next to the dairy store.
Our business was unique. You would weigh a kilogram of tomatoes. Then, before putting them in the bag, you would throw one of them under the table. Bananas, being both heavy and expensive, were especially profitable to tip in this way. Not stealing was not an option here. For instance, when a delivery would come in, they would tell us, “Here are a hundred kilos of tomatoes” and you would weigh them and there would be only ninety. But when you would say that some were missing they would always ask the same question: “Do you want to keep working here?” So really, you had to cheat-just another feature internal to the socialist system. To this day, when I go to the market, I always keep close watch on the shopkeepers’ fingers.
In August, Rina and I headed south with the money that I had “earned.”
Because I was only ever taken to Yevpatoria as a child, it was with pleasure that I took my love to the same small Crimean town. Memories of beach sex have blotted out all other recollections from the trip. Not surprising? Maybe not-except that we had sex during the crowded part of the day. We just covered ourselves with a blanket and assumed that nobody would notice what we were doing. As it turned out, we were mistaken.
At the same time, merchants from Moscow and Leningrad started sweeping up chainsaws and other electrical appliances and exporting them to eastern European countries. These products were still available for sale in the towns and villages of Kemerovo Province. I scooped them up with a view to selling them in Poland.
Rina came from Estonia to study at the Mining Institute. Estonia, though part of the USSR, was more like a foreign country. Rina Vosman, Oleg Tinkov’s wife:
Oleg was a Siberian guy, different from the others, unique. Life in Siberia is tough. I’m softer, more intelligent (laughs).
He was always different from the others-from the moment I met him. He wasn’t like anyone else. When I came to St. Petersburg, I was 20, a young, cute girl. And I knew a lot of people. But everything changed as soon as Tinkov came into my life. The last twenty years have flown by. Oleg has said that I’m from a rich family and that that’s why I had money kicking around. But it really was because I saved bit by bit. He loved to have a good time. When Tinkov got his stipend, everyone would have a good time. Every girl in the dorm would be in his room. He really loved girls ( laughs). There were girls named Mashka and Svetka and Lenka-all different kinds. He’d spend his whole stipend on champagne, then he’d eat fried potatoes or go hungry all month. But that’s how he’s always been: he has a big heart. As soon as I started coming to his dorm, the girls stayed away. It was the easiest thing in the world for me to achieve. Slowly I started moving my stuff in. When we lived in the dorm, we were poor. We had nothing to eat. After the third period in the day, we’d skip school and stand for three hours waiting in line to buy “blue birds.” That’s what we called the Soviet chickens due to their peculiar coloration. Fried potatoes and a three-liter jar of tomato juice-now that was a hearty meal! So we thought in those days, at least.
Chapter 11
Hello, Europe!
Rina’s parents lived in Estonia, while here maternal grandparents were in Szczecin, Poland. This made it easy for her to get into Poland. As for me, I had to get approval from various offices, the trade-union committee, the Communist youth league, and so on. Since Poland was still part of the Soviet bloc, the first time we went there, in 1989, we did not even have to apply for a foreign travel passport. Our Soviet ones were enough.
After we arrived at the home of Rina’s relatives in Warsaw, the first thing we did was head to Voskhodny Market, which means “Eastern Market” in English. We made the acquaintance of a Polish man there-Juliusz. He told us which goods from the USSR were in highest demand and so we started to bring these in.
In Poland, the price on anything with a power chord was three times higher than in the USSR. We would buy Raduga television sets in the Kozitsky Union Store on Maly Prospect on Vasilievsky Island. I would load them onto the train, disembark in Warsaw, sell them for 200 dollars apiece, and come home. Rina transported TV’s too. I would load them on the train in Leningrad and Juliusz would unload them in Warsaw.
In 1990, we made things more complicated. Rina spent the whole summer in Warsaw and I traveled back and forth. I flew to Siberia, bought Taiga chainsaws at various general stores for 200 rubles each, brought them with me to the airport in Kemerovo, paid for the excess baggage, and then flew on to Leningrad. From the station, I brought the saws to the room we rented in a co-op apartment on Gavanskaya Street. The next day, I was off to the station and, a twenty-four-hour train-ride later, I was in Warsaw. The logistics took up an awful lot of time. But it was totally worth it: in Poland we sold the saws for 200 dollars each, which was enough to buy another six or seven of them back in Russia.
From time to time, I’d fly in to Novosibirsk, hire a cab, and drive around to general and co-op stores, buying every electric appliance they had. In the cities, speculators had bought everything up, while in the villages, the stores were still stocked. Sometimes I would drop by my mom’s place in Leninsk-Kuznetsky for five minutes or so. She was always surprised because she thought I was in class.
* * *
One day Juliusz told us about a particular kind of business that the Poles liked conducting: taking cigarettes to Berlin. A pack cost one mark there, which was twice as much as in Poland. My Soviet passport allowed me to go to Poland, but not Germany. I took the risk and went with him anyway. I simply handed my passport to the German border guard, who decided he would not trouble me and put a red stamp in it.
In Berlin I was surprised by the stark contrast between capitalism and socialism, between West and East Berlin. It was at that time that they began tearing down the famous Berlin wall. I got on the S-Bahn train, which connected East Berlin with the West. It was like some crazy dream: like moving from a black and white movie into a colored one.
I got off the train at the Zoologische Garten Station, and found myself surrounded by the most delicious of aromas. There were little lights and flashing signs all around. In stalls along the street, you could buy all kinds of exotic fruit: kiwis, bananas, and pineapples. There was nothing like it in the USSR, nor in Poland. There, in West Berlin, I was finally set completely free from the illusions of communism and my father’s words-that capitalism is cool-were confirmed once and for all.
In Berlin, Rina and I had to sleep at the station. Once, while we were walking along the street, I saw a hotel with a sign out front stating that they charged 50 marks per night for a room. This may sound cheesy now, but I said,
“Trust me, Rina. A day will come when I will be making money and we’ll be able to stay in that hotel.”
Later, I stopped taking the risk of going to Berlin without a foreign travel passport. Rina started to go instead. Apart from cigarettes, skirts and shirts were big sellers. At the open-air market in Warsaw, we bought black Turkish skirts with belts as well as military shirts (faux denim) with tags reading, “US Army.” Rina is thin, so she would put on five or seven layers of shirts and skirts.
At the station in Berlin, Gypsies would spend mark upon mark to buy this crappy junk. It is a mystery where they sold it. After all, the quality was revolting. In any case, though, we made good money selling it. Within 15-20 minutes, the Gypsies would gobble everything up and Rina would board the train heading back to Warsaw.
Some of our imports from Europe included gas canisters, pistols, and cartridges. All of these things sold well in St. Petersburg. By the end of summer 1990, we had made a few thousand marks. I used the money to buy a computer, which I took with me on an LOT airlines flight to Leningrad. At Pulkovo airport everything might have come crashing down. A customs official took one look at my suspicious facial expssion and said,
“Would you mind stopping, sir?” I ptended I did not understand what it was he wanted. He was distracted and I managed to slip through.
After I sold the computer, I flew to Tyumen and bought my first Lada 2109. The color was called “wet asphalt.” It cost me somewhere in the range of 25,000 to 35,000 rubles. Lada aficionados will know what I mean when I say it had “long fenders.” The license plate had “TYU” on it, which meant that I was Tyumenian, automatically. I barely knew how to drive and so my friend Sergei Abakumov helped me to get the car back to Leningrad. As we were coming into the city he said that he was tired, so I got behind the wheel. You had to see my steering as we drove past Moskovsky Department Store to believe it! Somehow, though, I made it back to Vasilievsky Island.
Rina was not pleased:
“I slaved away all summer long and wore ten dresses at a time for you-and you went and bought a car?” And she was right. While we were in Europe we pinched pennies everywhere and we often went hungry. We did not want to spend our foreign currency. In Germany, for example, a kebab would cost a mark, while in the Soviet Union you could survive for a whole week on the same money. We would skip dinner and have sex instead. We went hungry so that we could make money. After all that-pig that I was-I went and bought a 2109. I am sorry, Rina! Remember, though, how it took us a mere three hours to drive that 2109 from Vasilievsky Island to your home in Kohtla-Jarve?
I spent all of our money on the car because I was sure that I would make more soon-which I did. In 1990 I met a man named Andrei Rogochov, who later started the Pyatyorochka retail chain and became the richest person in St. Petersburg. We started as equals, opening a company called LEK-kontakt. He held a 50 percent stake, while I shared the other fifty percent with the Pakhomov brothers (better known as the Ilyiches). My trips to Germany became more serious. I got a foreign travel passport. Rina now stayed home, happy to get treats, such as pineapples, from Europe.
I brought cash into Germany, but not altogether legally. I would hide it in a mattress or-no need to fret-in my own ass. I would then buy fairly large batches of printer cartridges and toner. Andrei was in charge of selling these in St. Petersburg.
Once, when I was taking our assets to Germany, I came close to losing everything. One night on the train, after the other passengers in my compartment had fallen asleep, I carefully opened a stretch of seam on the mattress, put the money inside, and sewed it back up. At customs, I had to roll up the mattress and wait for the officer. He caught me off guard when he said,
“All right, take out your money.”
“What money?”
“In the mattress.”
Catastrophe. I broke out in a cold sweat. The problem was not just that I might lose all the money. There would surely be a criminal investigation, as well, and I might even end up behind bars.
“I don’t have any money.”
“What do you mean, you don’t have any money? You do…”
The official started pinching and pulling at the mattress-touching the very place where the money was hidden. But he did not feel anything! He rolled the mattress up again and said, “You’re right, there’s nothing.”
What was that all about? Had one of the other passengers snitched? Was the officer bluffing?
You know what I think: it was God, protecting me once again from very serious trouble.
In Poland and Germany I honed my mastery of business. I bought Xerox toner in this store in Germany. On Meeting a Polish Man
One day, I wanted to get some zloty, but the currency exchange was already closed. An elderly Pole came up to me, and asked,
“Did you need something?”
“I wanted to changed some money. I have some German marks, but I need some zloty so that I can get something to eat.
I must have looked a bit unkempt, so the man took me into a bar and bought a sandwich and some tea.
“Are you Russian?” he asked
“Yes,” I replied.
He began telling me the story of the emancipation of Poland by Soviet forces. In 1944 the Poles revolted, but they could not get the support of the Red Army and the Germans crushed the revolt. According to his version of events, the Russians declined to help the Poles on purpose, in order to get rid of the dissidents of the day. He also talked of the violence committed by Russians against the local population. I had been raised to believe that we saved Europe, so this was a shock to me. Here I was, sitting in Europe, hungry; one of our “emancipated” Poles was feeding me and telling me about how evil we were.
“So why did you feed me?”
“I have no pjudice against you. You’re a poor hungry student. But you must know these facts.”
Now I understood that the same historical events may be interpted differently by different people. The Soviet version of these events was very different from the Polish one: Konstantin Rokossovsky, the commanding officer of the First Belorussian Front, who later became Poland’s National Defense Minister, asserted that the Polish uprising was in no way supported by the Red Army.
Rina Vosman, Oleg Tinkov’s wife:
We trekked to Poland to make money. Time after time, I made the trip from Warsaw to Berlin wearing military-style shirts that were supposed to look like they were made out of faded denim and ugly black skirts with gold-colored buckles and elastic waistbands. Oleg could not do it, because he did not have a foreign travel passport. The Gypsies would scoop everything up within 20 minutes of my arrival at the station and I would have to keep my wits about me to make sure that I was not ripped off in the frenzy. I failed to understand the business. Did someone need this junk somehow? The Gypsies paid in marks. I could not get my head around the fact that people in Germany paid two Deutschmarks for a Pepsi. To me, that seemed like crazy money. In Russia you could survive for quite a few days on two marks. That is why we packed sandwiches and water. We would do anything to hold onto those marks. One day I found myself in a stressful situation. Usually, the customs officers were men. They would simply look the other way, as it were, when faced with a women bundled up in clothes for sale. This time, however, the officer was a woman and she started to strip search me. The next thing I knew, they had taken Juliusz and me off the train. We had to spend the whole night on the platform. Some Germans walked by with dogs that sniffed at us. We had this uncanny feeling-as though it were 1943 again. We sat there until the sun came up. Then we took the next train back to Warsaw. We were lucky not to have had everything confiscated. We escaped with minor bruises, so to speak.
After our first trip to Europe, Oleg got a photocopier to bring home and sell. After our second trip, he brought back two of them. After our third, he was driving a “wet asphalt” colored number 9 Lada with long fenders.
Nikolai Nikitich Zhuravlev, former psident of Kuzbassprombank:
I met with a huge number of clients during my time at the bank. Oleg Tinkov left the best impssion of any of them. He came to me, told me what his business was about, and asked for a loan. I liked his reasoning, so we gave him a million rubles. He bought various goods with the money and then sold them inpidually. He even came to our bank to sell stuff. The girls loved that kind of shopping. So we started giving him more. Oleg was always careful to pay back his debts. Later he got into more serious business. He started opening stores that sold household appliances. In spite of our forty-year age difference, we became friends. I watched Oleg as he worked. He had clear and specific goals and he always got right down to business. He can talk to anyone and is good at building strong relationships, qualities that were given to him by nature.
It is amazing how good a worker he is. He is highly energetic and picks everything up as he goes along. That is why I was not surprised in the least when I heard that he had opened a pasta factory and later a brewery in St. Petersburg. He is curious. I have been with him at different meetings in the Central Bank and he always showed a keen interest in the inner workings of the financial industry.
To tell the truth, if there were fifty people like him in Russia, then they could keep the economy growing. I think Oleg would make a fine Minister of Finance.
Chapter 12
From the Soviet Union to Singapore
One rainy autumn day in 1990, I parked my No. 9, once again, across from the Institute. Our drilling-and-blasting professor parked his No. 1 in the next spot over. He looked at me and we went together into the lecture hall. What could he teach me? Well he could teach me about drilling and blasting. But when it came to making money, there was nothing he knew that I did not. In the end, I never wrote my final exams. I never crossed the finish line at the Institute.
This decision followed logically from my priorities at the time. Why had I started my studies? Well, my goal at the time had been to return later to Leninsk-Kuznetsky and to work as a section superintendent in one of the mines.
The peak of my career, then, would have been becoming mine director. If that had happened, my pay would have been 1000 rubles a month and I would have been given a Volga to drive. In my third year of university, however, I was already earning 10,000-15,000 rubles each month and the prospect of becoming a mine director held no attraction for me whatsoever.
Everything I do is based on economics. Sometimes, of course, I am motivated by charity, care, a desire to help, but I believe that if a person spends dozens of hours a month on something, he should reap the rewards. From that perspective, it seemed there was no point at all in continuing my studies at the Mining Institute. Moreover, with the help of the widely respected Novosibirsk businessman, Voldemar Basalayev, I and the Ilyiches had gotten into the car business. This business was nothing out of the ordinary, but the potential profits were huge and it would take some time to achieve them.
We came up with the idea of delivering cars by air. At the Chkalov factory we got soldiers to agree to take our cars on flights to Moscow or, less often, directly to Leningrad. Two cars could fit in an An-26. We paid the soldiers 5,000 rubles cash for each car and then drove them into the cargo hold. We stayed in them during the flight, which included a refueling stop in Chelyabinsk.
Every few days, my neighbors would be shocked to see me driving up to my building on Nakhimov Street (nearby the Pribaltiyskaya Hotel)-where Rina and I paid 500 rubles rent per month for an apartment with just one room and a kitchen-in a brand new car, either a 2108 or a 2109. We did not worry in the least about selling the cars at the market. Instead, we would just sell them at a slightly reduced price to people we knew-people who would actually go to the market and sell the cars there. I had around twenty cars registered under my name at the Department of Motor Vehicles.
Just think how ineffective the economic policies of the Soviet Union were. They would assemble a car in Tolyatti and ship it 2500 kilometers to Novosibirsk, via Ufa, Chelyabinsk, and Omsk. From there we would fly the car to Moscow and then drive the seven hundred kilometers from there to Leningrad. But we would still manage a huge profit margin. That is how inefficient the system was!
And I was not the least bit surprised that 1991 was the year in which the USSR collapsed. Events were unfolding rapidly. It was hard for me to keep on top of it all. Starting on August 19, a group of Communist Party hardliners put Gorbachev under house arrest at his summer cottage in Foros. Then they announced the creation of the USSR State Emergency Committee. The committee was made up of Vice President Gennady Yanayev, Prime Minister Valentin Pavlov, KGB chairman Vladimir Kryuchkov, Minister of Defense Dmitry Yazov, Minister of Internal Affairs Boris Pugo, First Deputy Chairman of the Defense Soviet Oleg Baklanov, Chairman of the Farmers’ Union Vasily Starodubtsev, and the President of the Association of State Enterprises and Industrial, Construction, Transport and Communication Facilities, Alexander Tizyakov. I remember how Yanayev’s hands were shaking when the state of emergency was declared. I could already see that the people who were trying to seize power had no control. None of them were particularly enthusiastic about their cause.
The people involved in the coup really believed that somehow the USSR could be saved. All they accomplished, however, was to ensure that its downfall was irreversible. The people were already taking big gulps of freedom and no one liked the bans that the SEC was trying to introduce. No one took to the streets in support of the committee. In contrast, the President of the RSFSR, Boris Yeltsin, who was leading the fight against the coup, garnered the support of hundreds of thousands. Thank heavens, the coup was over soon enough: on August 22 the members of the SEC were arrested and Mikhail Gorbachev returned to Moscow. Real power in Moscow had been transferred to Yeltsin though. The “parade of sovereign states” began: on August 24, Ukraine declared its independence, on 27 August, Moldova declared its sovereignty, Kyrgyzstan did so on August 31, and so on.
On September 6, the Presidium of the Supme Soviet of the RSFSR issued an order, renaming Leningrad Saint Petersburg. Of course, I was happy with this decision, as I had a clear understanding of the role Lenin played in Russia’s history.
It so happens that I spent my childhood in Leninsk-Kuznetsky, went to cycling camp in Leninabad, and later moved to Leningrad. Both my childhood and my youth, then, were connected to Lenin. When I was young, Soviet propaganda encouraged us to deify him. It was only at the end of the eighties, when I was in Leningrad, that I realized he was simply a Jewish weirdo who had made an agreement with the Petrograd bankers of the time and plunged the country into poverty, essentially destroying Russia and the Russians. He brought suffering upon the Russian people. We are still suffering. I would have had him burnt at the stake.
The last nail was hammered into the USSR’s coffin in Bialowieza Forest on December 8. Boris Yeltsin, Stanislav Shushkevich, and Leonid Kravchuk signed an agreement: “We, the Republic of Belarus, the Russian Federation (RSFSR), and the Ukraine, as founding states of the Union of Soviet Socialist Republics, hereinafter called the Supme Parties to the Agreement, having signed the Union Agreement of 1922, hereby declare the dissolution of the USSR as a subject of international law and as a geopolitical reality.”
Thus Gorbachev became the psident of a non-existent country. On December 25-on my birthday to be pcise-he retired.
By that time, the country’s economy was faltering badly and had reached a dead end: the government kept issuing unsecured money, which led to major deficits and a massive rate of inflation against the US dollar. The government simply could not go on regulating prices; regulation had bled itself dry. As we looked on, the ruble lost its value and respectability. Everyone was trying to get rid of any rubles that they had, buying foreign currency or goods. The shelves were empty. The whole country was collapsing. What was there to do? On November 6, Boris Yeltsin appointed Yegor Gaidar as deputy chairman of the economic policy committee of the RSFSR. Mr. Gaidar decided that shock tactics were the best medicine for the economy. On January 2, 1992, shoppers discovered that prices had increased enormously.
To tell the truth, however, these problems were no worry of mine. I kept my savings in dollars, but constantly turned them over. The value of the ruble against the dollar was shrinking faster than the prices of goods were growing. In January 2002, I was worth a ten thousand dollar wad of cash. I took that same pack of money with me on my first trip to Singapore. I really started making big money on that trip and, at the same time, my Tekhnoshok retail chain put down its roots.
Igor Sukhanov let me in on the Singapore idea. This man was a renowned speculator who went by the nickname Dushny, which means “soulful.” I bought computers and fax machines, which I was able to sell for a total of 30,000 dollars on the day of my return. I really liked this three-to-one business model and my trips to Singapore became very frequent indeed.
Each trip took a few days and a visa was required, but we had our tricks. I got some people at Aeroflot to give us a few stickers that were normally used to change the dates on tickets. In Singapore, we would stick them on our tickets to make it look like we were leaving the next day. They would let us into the country and then we would throw the stickers away. When our day of departure arrived, the customs officials would sometime noticed that we had exceeded the twenty-four hour visa-free period. They would put a red stamp in our passports, indicating our violation. Never once, however, did this lead to further problems. The officials in Singapore had the right to arrest us at the airport upon our third violation. In view of this fact, we always got new foreign travel passports after our second warning.
The idiocy of the Soviet system played into our hands. First of all, when one was leaving the country, it was possible to exchange 300 rubles for dollars at the government rate. In order to do that, we would have to stand in line for two or three hours at the Vneshekonombank on Gertsen Street. But it was not quite so simple. The wait-time was only two to three hours if you bought your place in line (another widespad phenomenon of the early nineties). Basically, there were people who made money by waiting in line outside, all night, in order to sell you their spot in line in the morning.
Secondly, because of the low dollar-exchange rate, business class tickets turned out to be incredibly cheap. In the West they would cost 1000 dollars, but in Russia you could get them for around 600 rubles. In other words, at the black market exchange rate of 15 rubles on the dollar, the cost of a business class ticket would work out to 40 bucks.
Igor Sukhanov gave me lessons on how to transport cash. Using Mr. Taya’s company, Future Systems Electronics, we would hand it over in Russia, then picked it up again upon our arrival in Singapore. This was an ideal method-particularly because it meant that I did not have to shove the bills through my back door as I had done on those earlier trips to Germany. We bought calculators, toner, photocopiers, computer parts, and even fax paper from Mr. Taya. If you could sell it in Russia, for a profit, we got it.
On the way back, I did not want to pay five dollars for every kilo in excess weight, so I would raise the scale from underneath with my foot. The important thing was to make sure that the needle remained stationary and did not jump around. One time, after I had held it up so carefully, the airline worker decided he was going to re-weigh the bag. I had no idea how hard I had been pushing up the first time. I cannot deny that, now and then, we would be asked to take a couple of steps back from the scale.
My approach to business was different from his. I always liked long cycles: because the prices there were much higher, I would sell my product in Kemerovo, Novokuznetsk, and Leninsk-Kuznetsky. For instance, I could get 2000 dollars in St. Petersburg for a computer that cost me 1000, while in Siberia the same computer cost 3000. Svetakov, however, liked fast cycles: he would pay 1000 for a computer in Singapore and sell it directly in Moscow for 1500. Each of us has our own approach. I do not like fast wholesale money, but try to squeeze every penny I can out of the process. Big markups are my weakness.
To be honest, it took some small kickbacks to get it done. The price depended on what you negotiated and on the amount of digits the calculators displayed (8, 10, 12 or 16). I did not like having to pay 14-25 percent just to get the money out. Plus, it was really risky business. I had to go to Moscow to get the rubles, in cash. Then, I would carry the bags with me on the train to St. Petersburg, on edge the whole way. Next, I would go to Vasilievsky Island and buy dollars from rich kids at the Gavan and Pribaltiyskaya Hotels. It was a ptty hodge-podge procedure! But I managed to find a way around it soon enough. I learned how to buy non-cash dollars for non-cash rubles, which I would then transfer directly to Singapore to pay for the hardware through joint ventures that were entitled to carry out wire transfers.
Before too much time had passed, I managed to close a very large calculator deal. Procurements at the yarn factory in Leninsk-Kuznetsky were done through a rather strange character. He contacted me himself and said he was looking to buy three thousand Aurora calculators. The record remains silent on the question why these yarn-spinning women needed such a massive number of calculators. But the enterprise was state-run, which meant that it did not really belong to anyone. This procurement worker was accountable to no one. I sold the calculators to him and earned a hundred grand in the process. I think it was purchases of this kind that led to the plant’s ultimate bankruptcy.
In those days, the sums I earned selling calculators were colossal. I was able to buy a two-bedroom apartment in a modern 137 series building on Korolyov Street, near Kommendant Airport. In order to establish my residency in St. Petersburg, I had to marry a local woman, Nina Iosifovna. Born in 1927, she was 40 years my senior. At the marriage office, everyone looked at us like we were crazy. When I gave a bouquet to the female marriage registrar, though, she smiled and said,
“I’ve got you guys pd out.”
Later I found a fake Leningrader husband for Rina as well. Here was another holdover from the Soviet system: even if you had money, you could not buy an apartment in a city unless you were registered there.
We bought a dog, a boxer, and started thinking about having kids. Every seven to ten days I would fly to Singapore. When possible, I would make two trips a week. It worked out, then, that I was in the air for fifty-six hours each week. And with every excursion, I doubled my capital.
My business grew by leaps and bounds. I could not fly to Singapore anymore, so I started shipping my merchandise on cargo planes. I would do the receiving and customs paperwork at Pulkovo Airport in St. Petersburg. Because of the immense pssure, my business methods became more civilized. In September 1992, Rina and I went to the Municipal Executive Committee to register a limited liability partnership, Petrosib. We chose a transparently honest name: I shipped electronics from St. Petersburg to Siberia. At the entrance to the building, which once housed the Kalininsky District Party Committee, we were told that, “You can register one of those businesses upstairs.”
After the failed coup, Yeltsin had outlawed the Soviet Communist Party and now big wax seals, labeled “sealed,” hung on the door. It was a criminal offense to tear off one of those seals. It is a real shame that, later on, Yeltsin betrayed himself by allowing the Communist Party to come into existence again. It would be better if those doors were still sealed and if people like Gennady Zyuganov, the current Communist Party leader, never had any say. Germany had forbidden Nazism; in consideration of its history, Russia should have made communism illegal as well. I am not really all that interested in politics, because it is irrational to bother about things that you have no control over. As a citizen, though, I am obliged to state my opinion.
* * *
Nikolai Nikitich Zhuravlev made a phone call from Kemerovo to Promstroibank in St. Petersburg and helped us to open both a US dollar and a rubles account for Petrosib. I hired an accountant, Nadezhda Ivanovna Turukhina. In this way, in the autumn of 1992, my operations became completely legal.
I had begun to get my bearings in Singapore and I switched suppliers, abandoning Future Systems Electronics for Cut Rate Electronics. This new company was headed up by an ethical Indian businessman, Ashok Vasmani, who everyone called Andy. Mister Andy. The stuff he sold may have been of slightly lower quality, but it was still cheaper.
One day, when I was buying yet another consignment of Record televisions, he asked me,
“Oleg, why don’t you get a container?”
“A container? How many TV’s is that?”
“Three hundred and twenty.”
“But that’s over sixteen thousand dollars. Plus you have to pay five thousand for the container. And then you have to wait forty days. I can’t take that much money out of circulation.”
“Correct, but when you send it by cargo, you’re paying five dollars per kilo. If you send them in a container, it’ll cost you almost half as much.”
I paid for half the container and convinced Andy to loan me the money for the other half. Forty days later, I was doing customs clearance at the St. Petersburg port. My partner, Andrei Surkov, and I unloaded the container and stored the 320 television sets at the Petrosib office at 10 Sadovaya Street. We put some on display in one of the rooms, set up some fake trees, and hung a digital clock on the wall.
We hung up a banner reading “Cheap Televisions” and instantly people started coming, asking questions and making purchases. The turnover was slow, of course, but our sales volumes increased and our profits grew with each TV that we sold.
The calculators made me tons of money and now, too, these TV sets. We got more of them, but it was getting harder and harder to sell them in St. Petersburg-even at a low price of $350. We started having them delivered to other regions. In Siberia, a TV cost 500 dollars. We registered more companies: Petrosib-Novosibirsk and Petrosib-Omsk. We used the Regional Supplier system for warehousing. This was highly profitable, as small-scale retailers from the district centers usually went to the Regional Suppliers-and our TV’s were right there. Two years later we did a count and were shocked: we had sold 300 containers of televisions!
Nikolai Nikitich Zhuravlev had given me my first money loan; Andy loaned me product worth much more. At one point, I owed him a million dollars. But he took the risk and trusted me and, in the end, both of us earned a good chunk of money in electronics sales.
Andy left the electronics business and is now the owner of one of Singapore’s biggest Indian restaurants. We remain close. My wife, some friends, and I flew to Indonesia recently via Singapore. We dropped by Andy’s place, tried his different dishes, and listened to eastern music.
Andy is a person who believed in me and helped me to build my career. He is another gift that fate bestowed upon my life. Everyone needs to meet someone along the way that believes in you. There is no other way to become a businessman. I sincerely hope that every person finds his or her own Andy.
* * *
1992 was a very difficult year for the country and a simply fantastic one for me. I was exhausted from the constant running around and now had the money to take a little break. Vyacheslav Butusov, a Russian singer, sings a song about America. Part of it goes like this: “It took a long time for us to learn to love your forbidden fruit.” As it turns out, he was absolutely right. As soon as I had the time to do it, I took off to the states.
I bought my first imported car, a Ford Orient, in 1992.
The Petrosib team next to the famous fake trees that I had purchased in Hong Kong.
Ashok Vasmani, nicknamed Andy, and Nikolai Nikitich Zhuravlev are people who helped me so much to do business in the early nineties. St. Pete’s speculators in Amsterdam: Igor Sukhanov, nicknamed Dushny, Igor Spiridonov, myself, and Oleg Korostelev. At first, San Francisco made no impssion on me. Valentina Vladimirovna, Oleg Tinkov’s mother:
When Oleg was training in the cycling team, he’d sometimes bring some stuff home with him, like scarves and arm warmers. I was worried, because I didn’t know where he was getting it. I got on his case. When he started doing business at the Institute, I didn’t get in his way. He was an adult now. He met Rina, studied, and made money on the side. One day he borrowed 150 rubles from me; he said he wanted to buy something. Later he made it back and sent me a wire transfer. But I sent him the money back. He needed it more because he was far from home. But in the end he dropped out of school after his third year and dedicated himself completely to business.
On fake trees
One of my clearest memories of my business in those days involved my trip to Hong Kong. Sankin introduced me to a former classmate, Max, who lived in Beijing. Max told me I should look into selling fake flowers and trees. I flew to Hong Kong to buy some. At that time it was still administered by Great Britain. All we did there was to buy a copy of the Yellow Pages, find a manufacturer, dial his number from a payphone, arrange an appointment, and go straight to the factory. It was not far from the airport. Leafing through the catalog, we called Moscow and found out that the same stuff cost five or six times as much there. My greed was my ruin. When I saw the potential for a huge net profit-sixfold!-I bought not one, but three containers. A fully loaded forty-foot container cost around twenty grand, so I paid sixty for the three.
On the one hand, I made the sixty back quickly, covering my investment. On the other hand, though, I had a lot to sell! So I started doing away with the plants in other ways. I took some to my house, sold some to my friends, and gave them to my employees as bonuses. Two years passed, but I just could not get rid of those trees and flowers!
So I called the head of our Kemerovo office, Svetlana Alexandrovna, and told her,
“Do something with these flowers!” A natural-borne salesperson, she had worked as commercial director at the Regional Supplier and she could sell just about anything. She is best described with a metaphor:
She will stop a horse in mid-gallop, enter a burning house, and convince someone inside to buy something!
She sold a bunch of the plants at a good price and then said,
“Oleg, I found a client that’s willing to buy everything we have.”
“How much?”
“They want a 60% discount.”
“Sold!” I did not want to have to deal with those stupid trees anymore. “Who’s buying, anyway?”
“The Kemerovo Funeral Home.”
There were so many flowers that, to this day, they are probably making wreaths from them for funerals in Kemerovo Province. On a side note, there is always good money to be made in the funeral business. A client who is under intense emotional pssure and on a very tight schedule will not try to talk you down. That is why funeral businesses drive their prices up.
Thus my business portfolio includes two strange deals in Kemerovo Oblast: the sale of three thousand calculators to a yarn factory and a truckload of fake flowers to a last-rites business. It is hard to know whether to laugh or cry.
Andrei Surkov, Oleg Tinkov’s partner at Tekhnoshok:
Our meeting was based on speculation. Oleg lived in a Mining Institute dorm on Shkipersky Stream, while my dorm was on Nalichnaya Street. We students would buy here, sell there. On this basis, some of us became business partners or even friends.
Later I got a job in a company, so I could understand what goes on when you don’t have to do all the running around the city with bags yourself. I wanted to see what it was like to run a more or less civilized business, in an office, with other people and some kind of organization. It was at that time that Oleg started actively pursuing business in Singapore. He would fly there to buy ink, toner, photocopiers, and calculators. He called me in 1991. We met up and went to the bathhouse, where he offered me a position as his junior partner, working with electronics. I agreed immediately, because I considered Oleg a good person and a competent businessman. At the beginning, our work at Petrosib consisted in the following: once a week Oleg would fly to Singapore for office supplies, calculators, and toner. Then he’d come back. A few days later, he would leave for Singapore again…
On selling liquor
For around a year Igor Spiridonov and I imported liquor into Russia. For around two years there was no extra fee for alcohol. One of the best products in those days was Royal, a type of hard liquor from Holland, but we did not know anyone there. There was, however, a small-scale plant in Hungary with which we knew how to do business. We ordered the liquor in Budapest and, once in Siberia, it sold well. Igor placed the orders and I was in charge of sales and payments. A half-liter bottle of liquor cost us between sixty and sixty-two cents, including delivery to Russia. A container held twenty-two thousand 500-mL bottles or seventeen 700-mL ones.
At first we got five thousand bottles, then ten thousand, then a container, then two, until we reached a maximum of ten containers. A funny thing happened with that last contract. We ordered five containers of 500-mL bottles of Dolce Vita and another five containing 700-mL bottles. The bottling plant mixed up the labels, but it did not matter. We sold the liquor with the wrong labels.
Chapter 13
Why Hello, America!
In the early nineties, in Russia, if you were a foreigner it was as if you had blue blood. It did not matter if you were a simple Italian plumber or an American mover. From our point of view, even foreigners coming to Russia on a tour package that cost them all they had seemed like billionaires. They wore Reebok or Nike sneakers and leather jackets, signs of great wealth during the breakup of the USSR. We called them businessmen. Now I understand that these were low-budget tourists, but in the midst of the rampant poverty, they seemed super rich. That is why everyone wanted to hang out with foreigners. Male university students chased after them, hoping to make a buck; women followed them around so that they could get into US-dollar bars like the ones at the Pribaltiyskaya or the Gavan Hotel. If they were really lucky, they might be taken to the Grand Hotel Yevropa. Better yet, they would get married and move away. Not that every story had a happy ending.
Every Wednesday at the Kirov Cultural Center there was a party for people over thirty. Those parties seemed really lame at the time and now, too, when I am over forty myself, they still seem like a silly idea. I do not know what possessed my classmate Sasha Sankin to go there. Maybe it seemed like it would be easier to meet a woman there and take her to a hotel-because people over thirty are more easy-going. What actually happened though was that he met an American woman over forty years old, they had sex at the dormitory-and she fell in love with him!
She was in love with a poor student twenty years her junior, who had moved to St. Petersburg from Tashkent! In the end she invited him to move to a small town called Santa Rosa, 30 miles from San Francisco, a typical Californian town with a population of about one hundred thousand. Not far away is the famous Wine Country, where there are thousands of wineries dotting the valleys of Napa, Sonoma, Alexander, Bennett, Dry Creek, and Russian River.
Santa Rosa lies along the Russian River; at its mouth, on the Pacific Ocean, stands the town of Fort Ross; it was the southernmost Russian colony during the early 19 th century. It was at Fort Ross that the Russian ships Yunona and Avos, made famous by Andrei Boznesensky’s and Alexei Rybnikov’s opera, made landfall. It is not a made-up story: in 1806, according to official records, the Russian aristocrat Nikolai Rezanov actually met and fell in love with Concepción Argüello, the daughter of the Spanish Governor.
The Russians left Fort Ross in 1841. From an economic point of view, there was no reason for them to stay there. In 1867, Alexander II sold Alaska to the Americans for 7.2 million dollars in gold, but the Russian colonies on the Pacific coast were not included in the transaction.
By a twist of fate, then, Sankin ended up in a place that had been historically Russian. He had been living there for a year already, but I had no idea; I was simply sitting in my Petrosib office, wearing a raspberry-red blazer. As soon as I found out he had moved there, I got hold of his telephone number. At that time, it was not easy to place a phone call to America. I went to the Central Post Office, waited in line, and got through to Sankin. It seemed miraculous-just as placing a phone call to Mars would now.
“Hi, Sasha! This is Oleg Tinkov. So you’re really in America? That’s awesome!”
“Hey, Oleg! Yeah, I’m slowly getting settled in here.”
“How’s your American wife?”
“We recently got porced…I got a Green Card and am official here now. I brought my dad here from Tashkent. I’m renting an apartment. I work a power lift at Friedman Brothers. We sell home hardware.”
“No way! Can I come visit you?”
“Fly on over. I’ll help you out when you first get here. You can stay at my place.”
Getting my visa was a headache and a half. I tried everything. For a small fee-or maybe out of the kindness of his heart (I don’t quite remember the details)-a friend from the Leningrad Army Sports Club hockey team set things up to appear as though I had been hired as support staff. My height, at six feet, four inches made me convincing. In December 1992, I came to the consulate for an interview.
“Okay, we’ll give you the visa, but how are you going to pay for living expenses?”
“I have a credit card.”
When I was in Singapore, I broke Russian law by opening an account at Citibank. I got a Visa Gold card. By then, my credit card history went back 18 years. This made an impssion on the consul: in St. Petersburg, out of a population of five million, there were perhaps a thousand people who had a card like that. How did someone who worked as part of a hockey team’s support staff end up with a Gold Visa? The consul refrained from asking and gave me another visa-in this case an American one.
I partied over New Year’s Eve. Then, in January 1993 I got into an Il-86 airplane on an Aeroflot flight from Sheremetyevo airport in Moscow to San Francisco via Anchorage. My surroundings shocked me: there were Jewish refugees, crying children, and a bunch of mesh bags. I was stunned by the smell of the San Francisco airport. Anyone who has flown in America knows that unique airport smell. There were a lot of iron doors and police shouting into megaphones:
“Go right!”
“Go left!”
The movie Gangs of New York with Leonardo Dicaprio reminds me of the imposing feeling I had then, at the beginning-the sense that America resembles a big prison. At the airport, if you are an outsider, they immediately make sure you know that everything is serious, that everything is under the government’s control. Big Brother is watching you! Sasha Sankin met me and drove me around San Francisco in an old Toyota. I was sleepy because of jetlag, but nevertheless we went to a bar to have a beer. At first glance, I did not like the city. It seemed strange, unintelligible, and unkempt. Today I think that it is the most European and the most beautiful city in the US. I spent close to 5 years there. If I ever decided to move to America permanently, I would settle in San Francisco.
We drove thirty miles to Sasha’s small house in Santa Rosa, past the famous Golden Gate Bridge, which I had often seen in Hollywood movies. The house really did look like it was made of cardboard, which is something people usually say about American houses. I was also surprised to note that Sasha’s father was very angry, aggressive, and bitter. Towards himself, towards Sasha, towards me-he resented everyone. They would get up at six in the morning and leave the house, making sure the heater was turned off, because they wanted to save money. The intense cold would wake me up. I realized I would not be able to sleep, so I got up right after they did. Welcome to capitalism!
When I arrived in America, I knew practically no English. I gawked at my surroundings, dumbfounded. It was hard to learn the language. Now, though, my speaking and writing skills are not all that bad. I make mistakes, but I doubt that my written Russian is much better.
Now, naturally, simply having a good time was not my only reason for being in America. I wanted to start something. That same January I went to a government office in Santa Rosa and registered a company, California Siberia Enterprise. Between the paperwork and getting a stamp made, the procedure took about an hour. Next I went to Kinko’s, where you can pay for office services. I leafed through the free templates and found an image of a Siberian Bear, which I decided to use as my company logo. Everything fell together: the bear symbolized Siberia and the yellow and green motif repsented California. I had a bunch of business cards printed, right away, which read:
California Siberia Enterprise Oleg Tinkov President
In 1993, for my part, I had a lot more than business on my mind. I was trying to find a way to stay in America. In order to get a Green Card (i.e. permanent residence), I had to go often to the INS (the United States Immigration and Naturalization Service), the authority that handled immigration.
* * *
In America, I became authentically Orthodox. I had already been baptized in Leningrad on December 25, my birthday, in 1988, but I seldom attended church. In Santa Rosa, a lot of local Russians gathered together at church. I found that I enjoyed going there as well. It was an outlet, the only place where I could speak Russian. The priest, congregants, and I would drink tea and eat crêpes after the service. I fell even deeper in love with Russian culture, the Orthodox religion, and the church. I was drawn to it.
Through the church I met a lot of “Old Russians,” descendents of White émigré families. Like me, most of them traced their roots to Siberia. Their ancestors had escaped the Bolsheviks by moving to Harbin, China. When China had its own revolution, they left by ship, traveling to Brazil and Venezuela, eventually settling in California. I hung out with these old timers who spoke three languages: Russian, Chinese, and English. I saw Russian ladies wearing veils. There, in the USA, in church, from the mouths of these old Russian immigrants, I heard the most articulate and beautiful Russian I had ever heard. In that atmosphere, I came to be even more convinced that Orthodoxy was my religion. Most importantly, however, I was able to meet a “different” kind of Russian, people that had not been affected by the Soviet system. They counseled me on how to adapt and took pity on me. One even gave me a mattress so that I could sleep better on Sankin’s floor. It was in America that I realized what Russia had lost.
In reality, the Russians had no relation whatsoever to the Russian Mafia-a popular topic of conversation in the States. There was a gang, for instance, active in San Francisco, that had been responsible for several murders. After they were caught, the newspaper printed a picture showing them with the Russian church in the background. The headline read, “Russian Mafia finally decapitated.” The article featured surnames such as Zimmerman and Lerner. This was offensive and insulting to the Old Russian intellectuals. Between the late eighties and early nineties, members of the noveau riche began immigrating to the US from the USSR, including Jews, Ukrainians and Moldovans, among others. Their Russian was grammatically incorrect and they hated the Russians, but the Americans still referred to them as Russians. The public automatically attributed all of their unsightly actions the “Russians” in general and the “Russian Mafia” in particular.
Let me talk a bit more about the so-called Russian Mafia. In 1993, shortly after I arrived, I went to the Russian restaurant StageCoach, which was a dance club on Saturdays. As usual, some of the local big-shots tried to pick a fight with me. They had watched a lot of post-Soviet movies were trying to look like the gangster characters in them. Really, they were trying to look like “brothers in arms” from their historical homeland, but in San Francisco they just looked cartoonish. There were some serious types there, mind you, like Pasha Ulder, whose brother was shot dead by the Chinese the night before I first met him.
When they started harassing me verbally at the bar, I was wearing black Versace from head to toe. I wore a diamond signet on my little finger and I had a scar on my face. In other words, by their standards I was a “dude” and maybe even a big-timer. I played along. I started talking like an ex-con. They decided I was one of them, befriended me and, in the end, they did not touch me.
And of course His Majesty Luck helped me out. A fellow Siberian, Nikolai Nikitich Zhuravlev, had come to visit me and, in accordance with Siberian tradition we decided that we wanted to visit a bathhouse. We found out that some Jewish immigrants ran a Sauna in downtown San Francisco, which was supposedly similar to a real Russian bathhouse. So off we went. The service was revolting, though, the place was a sanitary train-wreck, the temperature only reached 50 degrees, and so forth. It was a scandal. I started making demands and got into a battle of words with the owner’s wife. She turned out to be the sister of that same Pasha Ulder I mentioned above. On top of that, she was the girlfriend of my good friend from Odessa, the legendary Zorik. Zorik is an interesting specimen in that, even after having spent 25 years in the States, he still could not speak English at all. He is also well known for some interesting stories involving drunkenness and experimentation with drugs.
At the same time, however, Zorik is the most talented barber I have met in my entire life. He cuts hair without looking, very fast and with great confidence. I have known him for fifteen years and have never heard of him having an unsatisfied customer, man or woman. His shaving skills are to die for. If you are ever in San Francisco, make sure to visit him at the Backstage Salon on Green Street.
But let us get back to the sauna. After we left, the place burnt to the ground. The next morning, Pasha called me and said that, bro-to-bro, he realized that the proprietors had been in the wrong, but that he thought my reaction over the top. This was really and truly funny, but I did not try to set him straight. In the end I became a legend in San Francisco, and I never had any trouble with the local gangsters again.
* * *
In April, the long-awaited day arrived: I arrived at the airport in the ten-year-old red Ford that I had bought for four thousand, shaking with anticipation. I do not know how I drove her back to Santa Rosa. Can you imagine? Three months with no sex. We had a most authentic Parisian wedding and, 9 months later, on December 31, 1993, our first little miracle, Daria Tinkova, entered the world.
In the morning Sankin’s dad came into the room and told us with anger in his voice,
“We couldn’t sleep all night. Our walls are like cardboard. It’s over, get out of here.” He was also waiting for his wife. He was a very strong man somewhere between fifty and fifty-five years old, and his heart and other organs could not handle our sex-so he just kicked us out. There we were: Rina and I, the mattress, the fax machine, the Ford, and couple thousand dollars in our pocket. Where did we go? To the church of course. We only spent one night in the home of an acquaintance. Immediately, they helped us to rent a room for 300 dollars a month. Sankin and I stopped talking to each other because he had not stuck up for me when his dad kicked us out. Later he admitted that he had been in the wrong: sure we had kept everybody up, but that was not the right way to react… Without his help, I had been left with no interpter, in any case, and, as a result, my skill in English began to grow more quickly.
In the summer of 1993, I bought a house in Santa Rosa. An Armenian guy named Dzhavayan sold it to me. Like the Armenian he was, he just had to sell me something. So he sold me his house, which cost 120 thousand dollars. I paid 20 thousand up front and borrowed the rest from a bank. My monthly payment was 600 dollars. I bought a massive two-storey house that I really had no need for at all. I sold it later for less than I had paid for it and so lost money-but no matter. The important thing to notice is that this dark-skinned Armenian managed somehow to dump the place on me. I still cannot p out how he pulled it off.
* * *
While we were trying to get our bearings in America, things in Russia began to turn sour once again. President Yeltsin got into trouble with the Supme Soviet. The deputies were displeased with Yegor Gaidar’s reforms and blocked the initiatives attempted by the psident and government. The psident felt that, as guarantor of the Constitution, he did not have sufficient power to actually guarantee it. In the end, the banal power struggle stretched on for a year. On September 21, Yeltsin signed a decree Concerning Gradual Constitutional Reform in the Russian Federation, whereby parliament was dissolved and elections to the State Duma were set for December 11-12. The Supme Soviet, however, staged a protest, which ended with the White House being stormed on October 3-4. Soviet Chairman Ruslan Khasbulatov, Vice President Alexander Rutskoy, and some of Yeltsin’s other opponents were arrested.
We flew into Moscow on the very day that tanks were shooting at the White House. We watched the events live on CNN at the Olympic Penta Hotel where Andy, my partner from Singapore, had gotten a room. He got phone-call after phone-call from his friends that day, asking if he was okay. After a couple of days, Andy left, saying that he would never come to Russia again.
“It’s better if I send you containers. You guys have tanks shooting at houses there,” he explained.
The country was suffering true political and economic ruin. The quality of health care was on the decline and we just could not risk dealing with a Russian maternity clinic. An acquaintance recommended a clinic in downtown Prague. We took a train to Lviv, Ukraine, which turned out to be just as messed up as St. Petersburg. I was surprised to find that all of the restaurants there were closed, but that for a small bribe we were nevertheless allowed in for something to eat. We got back on the train, rode to Prague, and rented a small apartment, for pennies, not far from the maternity clinic.
Right before the New Year, on December 31 at 8 p.m. local time (10 p.m. in St. Petersburg), Rina gave birth to Daria Olegovna Tinkova. The end of yet another fortuitous year was marked by true happiness.
Zorik, from San Francisco, is the best hairdresser on the planet Earth. In this photograph, Daria Olegovna Tinkova is only 5 days old.
Chapter 14
This is not a Dream-this is Tekhnoshok!
At a certain point I realized that retail electronics sales had become more interesting. Selling televisions in bulk in Kemerovo, Novosibirsk, and Omsk brought in less and less money. Finally, I closed my branches in those cities. I simply had to have my own retail chain!
Around the same time, we opened a Sony store on Maly Prospect on Vasilievsky Island. Sony’s management was skeptical about the idea at first, but had no choice but to come to terms with it. First of all, at that time there were no legal grounds for complaints: after all, we would actually be selling Sony products. Secondly, we were buying the equipment from Sony’s official distribution network, but got it on the gray market, in Singapore. The Sony dealers were not happy about us opening the store: they felt that they were Sony, and we were not. In essence, we undermined the dealer system. Because Sony had no other choice, though, they actually helped us out in the end, providing design elements for the store, brochures, and slides.
On March 23, 1994 the newspaper Delovoy Peterburg (“St. Petersburg in Business”) published an article that ran as follows:
Andy came to the grand opening in spite of his fear over those shots fired at the White House.
“You are very ambitious,” he told me as we sat in a restaurant celebrating the store opening. At the time, the word “ambitious” had negative connotations in Russia. I asked,
“Andy, what do you mean?”
“You’ll go a long way.”
I liked this wording much better. Andy explained clarified his use of “ambition” and I realized that it actually denoted a really positive quality. Thank God, to be ambitious in Russia is no longer equivalent to being a scoundrel.
The Sony store sold twenty thousand dollars worth of product every day and the profit was phenomenal! Management’s main task was to sew money bags!
In Singapore, not only did I encounter delicious food, I also learned new ways of doing business. I discovered that many people could use a single phone number. This was incredibly apparent at Future Systems Electronics. I bought a Panasonic phone station. It had three lines for incoming calls as well as eight outgoing lines. We had grown used to Soviet calls, which all sounded exactly the same. Consequently, I particularly enjoyed changing my tone every day. And of course I made the secretary say “Hello, how may I be of service?” as secretaries did in Singapore where, for example, Future Systems ‘ secretary always answered the phone, saying “May I help you?” It is quite possible that we were the first company in St. Petersburg to offer assistance to our clients. In the chaotic nineties, people would be bowled over by this kind of treatment. Some just hung up the phone.
The office was up and running and I did not have to be psent constantly, so in the summer of 1994 we took little Dasha and flew to Santa Rosa, to our house on Little River Avenue. Soon afterwards, I met Alexander Koretsky, a descendent of the old-time Russian immigrants. Sasha helped me with my English and I gave him tips on Russian. Together we opened the Petrosib USA office. The office fulfilled the same function as Sankin’s home had done, back in 1993. We would find an interesting product and sent large shipments to my retail stores in St. Petersburg. We even hired a secretary and a couple of workers.
I liked America and did not rule out the possibility of settling there for good. I found an apartment in San Francisco, on famous Lombard Street, with an excellent view of the Golden Gate Bridge and of the whole city. Rina and I really felt at home in the flat and we decided to sell the house in Santa Rosa and buy the apartment.
But we did not end up being able to settle in the States. My retail business was growing and starting to bring in good profits. We had no choice but to work on it directly in Russia.
Realizing the prospects, in late 1994 (believe it or not) I decided to hire a lawyer and a marketing specialist. I had read someplace that the best way to go about recruiting this type of staff was through an agency, a head hunter, as such organizations were still know back then. I decided to give it a try.
My first experience exceeded my expectations. I got in contact with the company BusinessLink Personnel and put in a request for personnel to fill the two positions. This company had been founded right at the beginning of the nineties. When Procter and Gamble first entered the St. Petersburg market, staff at St. Petersburg University did a lot of the recruiting. The experience was a success and so the same people registered a business. They continue to achieve big things to this day. Working with the agency was unlike anything I had ever done before: I went to their office and they brought the candidates, one by one, into a special conference room where I interviewed each of them.
I was immediately impssed by a young guy who had just completed his law degree with honors at the university, in the same department where Putin and Medvedev had studied. The kid’s name was Sasha Kotin.
He turned out to be a diligent student. We began to restructure the company, borrowing money and doing up contracts according to correct protocol. This really helped me out in the end. If it had not been for Sasha and his astute legal moves, I really would have been screwed during the first crisis in 1998. It is likely that some very bad people would have taken our business away from us. Sasha fought for every penny, for every dollar, and for our company’s reputation. He was incredibly loyal, even though he did not have partner status. He was very conscientious, sharp, intelligent, intellectually astute, and an effective manager. Later, tragedy befell Sasha-but I will talk about that in a bit.
As with Sasha, I was incredibly lucky with the marketing specialist that I hired. BusinessLink secured the services of Samvel Avetisyan on our behalf. He had been working as a science consultant at the State Public Library on Fontanka River and was earning around 200 rubles per month. I believed he was the right person for the job and so offered him three hundred dollars a month-really good money at the time. Today, Samvel is a marketing hero. He has his own company, Arkhideya, which develops marketing concepts.
My first experience with hiring through the agency turned out to be a huge success. Prior to that, in accordance with Russian tradition, I had hired my friends, or acquaintances, or people that had been recommended to me. Both Samvel and Sasha demonstrated insane levels of efficiency, skill, and knowledge. This was especially clear when you compare their work with that of the managers I had hired on the strength of word of mouth endorsements. If you are serious about being a businessman, then sooner or later you are going to have to turn to a recruitment agency. This is because hiring strictly from among the people that you actually know is a surefire way of destroying your business. If you want to derail your work and lose your investment, do exactly that!
It all started on September 1, 1995. The city was drenched in Tekhnoshok. We booked as many billboards as well could and called all of the radio stations in order to secure as many spots as they would give us. We hung banners across Maly Prospect and Mayakovsky Street. Oleg Gusev filmed a commercial that was shown on the St. Petersburg TV station. This was around the time that Gusev was filming music videos for Pugachova and Kirkorov-most notably for the latter’s hit song, ” Zaika Moya ” (“My Baby”).
The song in our ad went like this:
There’s simply no need to bring a shopping bag when you come, Tekhnoshok will deliver anything you need, straight to your home.
It was utter nonsense, but within an hour everyone knew about us. There were line-ups outside the stores. We kept running out of product. The store’s daily revenue was 20 to 50 thousand dollars. It was as though we were printing money. Armored cars with men in bulletproof vests came and went, to and from the bank, picking up our cash. My thanks go out to Promstroibank and Vladimir Kogan, who believed in me and gave me a seven million dollar line of credit. This was serious money in Russia at the time: in 1995 our two stores achieved sales volume to the tune of 20 million dollars.
Business was going well and so we began to expand. We rented more space and opened a third store at Kommendantsky Airport, with a fourth on Moskovsky Prospect. By the beginning of 1996, we had a full-fledged chain: five stores in St. Petersburg, two each in Omsk and Kemerovo, and one in Novosibirsk.
* * *
It is not surprising that, at this point, I was not actually acquainted with all of the people who worked for me. In this respect, one interesting story concerns something that happened in October 1995, when I dialed an internal number and an unfamiliar voice answered the phone. Naturally I asked,
“Who is this?”
“Who are you?”
“I don’t quite get it. Come to my office, we should talk.”
It turns out I had been speaking to our new marketing manager, Vadim Stasovsky, who had been discovered and hired by Samvel. He had met everyone in the office, but did not know all that much about me. Vadim probably thought that this encounter would end badly for him. But we got acquainted and had a straightforward conversation.
As a marketing specialist, Vadim’s achievements were huge. We would send him to nearby stores and he would count the boxes our competitors were selling. He would stand for two hours in the freezing cold outside one store, then another two outside another, counting boxes and trying to get an idea of their price. Then he would ppare enormous analytical reports on their sales volume. We realized that Vadim was good with numbers, so we transferred him to finance. At that time corporate finance was a different world than it is today. For the most part there were two elementary types of calculation: addition and multiplication. Whoever was strongest in this regard would get into finance. Vadim has been on my team now for 15 years. He was involved in all my businesses and he has an enormous reservoir of experience. Today he works at Tinkoff Credit Systems.
* * *
In the meantime, business went well. At the end of 1995, Rina, Dasha, and I were able to move into a new apartment on Kamennostrovskoy Prospect. The apartment, which was located in that majestic building where the son of St. Petersburg Governor Yakovlev would later buy a flat, cost 250 thousand dollars. That was a giant leap for me at the time. When we started remodeling, we took our designer with us to San Francisco. We brought everything-from furniture and drywall to plates and spoons-from the USA. We filled three containers!
On December 31, we flew to Chamonix with Uniland ‘s Oleg Leonov. His wife came along too. Oleg was already a very adept skier. I, on the other hand, had only gotten started at 28 (do not think that 28 is too old). I simply fell in love with the mountains at that time and since then have made good progress. I also remember well a call that I received from Andrei Surkov on January 1, 1996. He wished us a happy New Year and told us the he had sold 100 thousand worth of product the day before-on New Year’s Eve. People bought psents and I grew richer.
From left to right: I, Igor Spiridonov, Andrei Surkov, and Alex Koretsky at the Hungarian stage of Formula 1 in 1995. That summer I decided to be a blonde.
My 28th birthday celebration with the Tekhnoshok team on December 25, 1995.
The first big publication on me was published on August 13, 1996 in the newspaper Delovoy Peterburg.
Vadim Stasovsky, member of the board of directors at Tinkoff Credit Systems:
I started working at Petrosib in early October 1995 as a marketing manager. I was hired by Samvel Avetisyan. At that time Oleg spent most of his time in America and only came to Russia for six months of the year.
The Oleg of 15 years ago was very different from the Oleg that we know today. Back then, you could see him coming to the office from a mile away: he’s here! Everyone started running around and panicking. The situation changed by leaps and bounds. Now people still react to him in a particular way (especially those who’ve only known him for 2 or 3 or 5 years). As compared to the Oleg I knew 10 or 15 years ago, however, the change is very significant.
It was like a whirlwind. He did not shout-he just had a certain way of talking. He had a natural manner of speaking.
The six-month periods when that he was in the office had a very different feel to them than the six when he was away. He managed to maintain pssure on everyone though, too, even when he was a thousand miles away.
Interacting with Oleg outside the office, on the one hand, and interacting with him at work, on the other, leaves the impssion that you are dealing with two completely different people. At the same time, though, you have to keep in mind (and I only realized this many years after I had met him), that much of the time he is just messing around. He can shout and stomp his feet, but afterwards you realize that the emotions he had been expssing were simply not there. Oleg was just a good actor.
Vladimir Malyshov, editor of Delovoy Peterburg (St. Petersburg Business) in the 1990’s:
Tinkov is an unusual and fascinating Russian business p. He wants to be unique, attractive, and creative. And, without a doubt, he succeeds in these respects.
We first met at his first official event-the opening of the Sony store in St. Petersburg. Petrosib, his company at the time, had been selling mostly wholesale electronics. Then his priorities changed and Oleg opened the first store in the city that repsented a Japanese corporation. That evening, in a basement store on Vasilievsky Island, around 20-30 guests gathered. Oleg was really nervous. He was running around the room with orders, scolding his employees as well as the caterers. He greeting the guests, smiled at the pss, and, now and again, hid in the back offices with important ladies and gentlemen from the district administration. It was clear that the man wanted to stand before his guests and before the assembled journalists, in all his fame and glory, as the “owner of the first brand name Sony store in St. Petersburg.” In order to get the material that I needed, all I had to do was to ask him a few typical questions about his business (investments, return, Sony’s terms, etc.). But I did not want him to experience the nervousness that interviewees usually feel and I did not want journalists from competing publications to eavesdrop on our conversation.
The situation was so stressful I almost got into an argument with him. I introduced myself in the normal manner, saying,
“I’m Vladimir Malyshov, business editor for the newspaper Delovoy Peterburg.” Then I asked him, “When can we talk quietly?” He replied gladly,
“Let’s talk right now.” And then he turned, suddenly, to greet another guest, who took him off to talk with some other characters. They chatted boisterously as they walked quickly into one of the back rooms.
I was tired of it: time was passing and I hadn’t gotten a single snippet of information.
He was 26 then and had only just begun his difficult journey into the business elite.
Chapter 15
Premonitions of the Crisis
In 1996, political instability returned. The communists’ prospects for returning to power looked very realistic, particularly in consideration of Boris Yeltsin’s extremely low popularity ratings. But the state’s machinery worked solely towards getting him reelected as psident. The idea was simple: the message was not so much in favor of Yeltsin, but rather against Zyuganov, who was associated with the return of the Soviet Union. The slogans that arose in this context are still well-known today-“Vote with your heart!” “Vote or lose!” The Kremlin needed to get younger voters out to the polling stations, voters that would not want the communists back in power. And the Kremlin achieved its objectives. Young people started to worry about a communist victory. Just prior to the 1996 election, Anatoly Sobchak, mayor of St. Petersburg, told me,
“Two locomotives are flying at full speed towards one another. If they hit head on it will be a tragedy for the country. We need to redirect them. We can’t give the communists their revenge. Everyone must vote!”
To tell the truth, however, Sobchak did not emerge victorious in the municipal elections. In the first round of voting, on May 19, he defeated his former deputy, Vladimir Yakovlev (garnering 29% versus 21.6% of votes). But prior to the second round, the losing candidates had came out and spoke strongly against Sobchak. On Monday, June 3, I woke up and heard on the radio that Yakovlev had won the election by 1.7% of the vote. I immediately imagined how crushed Sobchak, who was such a stately and aristocratic person, must have felt. What state must he have been in as he left his house, got in his car, and drove to the Smolny? He would have been crushed, not because he had to turn of his blinker, surrender the government-owned Volvo 740, and get into a private car; he would have been crushed by the defeat of his liberal ideals.
Anatoly Alexandrovich Sobchak: a great man; a true democrat; a true patriot of his country; a man with truly righteous convictions. Indeed, I do not understand how he became the person that he is-in the context of the Soviet Union. Only freethinking St. Petersburg could have produced such a person in those times. In 1989, when I was still a student at the Mining Institute, I voted for him in the elections for the Supme Soviet of the USSR and, on June 12, 1991, I voted for him as mayor.
I met Anatoly Alexandrovich for the first time in 1996, at an Alla Pugachova concert. Afterwards we went to the Pribaltiyskaya Hotel and sat at the same table. We met a few times after that, too, and probably conversed for a total of ten minutes. On one occasion he even held Dasha. A real politician should always take kids in his arms and hold them: for every kid he picks up, he gets two votes, one from the dad and one from the mom. For my part, I know Sobchak’s daughter Xenia quite well. This might not please her too much, but I have to say that everything that is good in her, everything that I like about her, she got from her father. I can say for certain that he is one of only a few people whose depiction in the media has been completely true to what they are in reality-as with Richard Branson, for example, or myself.
It is such a pity that Sobchak was hounded after his defeat, with his sudden death in 2000, under suspicious circumstances, being the inevitable conclusion. Otherwise, he might still be alive today, continuing to bring much good to the country.
In 1996 Sobchak campaigned convincingly, so we voted for Yeltsin. On June 16, during the first round of votes, Yeltsin took 35.3% of the vote-3.3% more than Zyuganov. General Alexander Lebed came in third at 14.5%. In view of this achievement he was immediately granted the position of Secretary of Defense. Thus, in the second round of voting, the votes he would have received went to Yeltsin instead. That is how it worked out. On July 3, Zyuganov took 40.3%, while 53.8% voted for Yeltsin. Later on, it came out that Yeltsin had survived a heart attack in June, but they managed to keep this fact a secret until the elections were over.
Of course, I voted for Yeltsin, not just because of what Sobchak had to say about him, but also because of my hatred for communists and my respect towards Russia’s first psident. My feelings about him are deeply positive because he gave us the opportunity to at least try a taste of freedom. What Gorbachev started, Yeltsin deepened.
I recall the feelings I experienced between 1993 and 1998. Some might say that it was a time of anarchy and chaos. In my opinion, however, it was a time of freedom. My complaint against Yeltsin concerns a different matter entirely: he came under the influence of his daughter, as a result of which he went too far, distributing state property among people close to his family.
I, on the other hand, privatized nothing, but rather strived to develop my own businesses. By August 1996, I had garnered a lengthy article in the “My Business” column of Delovoy Peterburg. The article was written by journalist Volodya Malyshov. A number of quotes from it are still current today.
One example pertains to structuring a business:
It is impossible to operate successfully over the long term without structure-without people sitting in offices, filling out paperwork, holding meetings, working in the warehouse, working at the counter. That is why we build our structure-we hire the best specialists, we equip them with everything they need to work, and we open new stores. Right now people do not get us, but in 10 years, we will see what has become of the “two friends selling cordless phones” and what has become of us. They are moving fast, but who knows where they are going.
Another quote concerns professionalism:
If you can find the people, you will find the money. Unfortunately there are not very many genuine people out there. Now we only look for professionals. We need people with healthy ambitions, people whose goal is not simply to make a thousand dollars or more a month, but who really want to grow their career. When we manage to find people of that sort, then we see them grow up within a year… Often we have to say good-bye to friends-if they are not professional.
Or on business objectives:
Our original business philosophy was to work for profit. I am more impssed, not by the amount of product we sold, but by the amount that the company earned from these sales. For me, the indicator of a business’ success is net profit.
It was not for nothing that Volodya Malyshov wrote about Tekhnoshok and me. Between 1995 and 1996 our revenue had grown from 20 million to 40 million dollars. The competition, however, had grown fiercer. The chain Eldorado had come to St. Petersburg and commenced some severe low-balling. They offered incomphensible prices. How did they manage to survive? On the basis of which profit? On some driving-force items, the profit margin fell to 5-7%. This is next to nothing in retail, where the overhead-everything from salaries to rent-is so high.
In 1997, I felt the slowdown and began looking for opportunities to sell the chain. The company’s annual revenue had reached 60 million dollars and we were always hiring. At the end of the year, I threw a corporate party at the Olympia Club on Liteiny Prospect. I did not know half the people there and this made me afraid. I felt really big, but it was a scary feeling. Now I have my fifth business and I can say for certain that if I am in my office and find that I am faced with a bunch of people that I do not know, that I cannot feel, as it were, then that means it is about time to sell the business. In any case, I had already made up my mind to leave the electronics retail business and to start a pelmeni, where Isayev speaks German with no accent whatsoever. That is why we always speak Russian at home, even though we could speak English or Italian. Dasha is also strong in French.
Let me get back to my studies at Berkeley. They were incredibly difficult for me. Kostya, who knew English better than I, helped me to get the gist of a few assignments, but I completed them myself. My studies-and maybe even my life-however, were nearly cut short due to an accident that happened about a month after I started.
I had driven from Berkeley, riding my new Ducati Monster motorcycle, and I went to Kostya’s place for his birthday. We hung out and I had a couple drinks. I wanted to park the bike, but later decided that I would drive back carefully. In fact, I almost made it back, but on the second to last turn, coming along the winding road, I lost track of my speed and wiped out. The bike’s footrest hit the pavement at an enormous speed and I flew, spad like a butterfly, towards the ocean. I got to my feet and saw my pinky dangling in my glove. Full of adrenaline, I drove home and woke Rina. She was in shock. I myself dialed 911 and found out first-hand how terrifically well that system works.
They asked me to stay on the line, talked to me, and kept me psychologically stable. The ambulance, fire truck, and police car came flying in a mere five minutes later. They loaded me in and took me away. The police officer could smell the alcohol on my breath and tried to do some analyses for his report, but the young paramedic insisted that that should not be done: I was in critical condition and had to be taken to the operating room. The officer asked me how much I had had to drink and I replied with my usual answer,
“Two beers.”
Back home, they would have chopped off my finger, but in America two doctors spent the whole day restoring it. Today my fingers are all crooked and I am missing a knuckle on my left pinky. Thanks are due to the doctors and the young paramedic though. Once again, I was saved by my guardian angel. If it were not for him, a 36-hour jail sentence would have been waiting for me upon my exit from the hospital, for driving under the influence. I would have lost my insurance, my license, and so forth. Welcome to American democracy!
Please, never drive if you have been drinking alcohol!
* * *
So guys, go to the States to go to school. It is of the essence that you do so. Go for a few months, at least, like I did-but for intensive study-because business education is better there. For Americans business is like mother’s milk. It is a nation of salespeople, a country of entrepneurs. Americans understand business better than anyone else. So do not think twice about it: go to Berkeley or someplace else, but make sure it is in America. And, too, your education will enhance your knowledge of the English language immensely-another reason to chose the States.
In total, between January 1993 and June 2006, I lived in America for six years. And I realized that Americans and Russians are two of the closest nations around. If two poles are the same, they repel each other; consequently, we love and hate one another. It really is true that Russians are very similar to Americans!-even more so than they are to the British or Germans who live closer to us, in Europe.
Of course America never became my second home country, but it has had more influence on me than any other country, apart from Russia. It was there that I learned how to understand business, entrepneurship, and liberty-each of which is so lacking in Russia. In June 2009, I wrote in my blog that “I don’t like Americans, I don’t like America, but at the same time I love Americans. I don’t like Russia, I don’t like Russians, but at the same time I love Russians and I love Russia. These are two countries that have melded together, in me, in a contradictory way.”
If we do not study business, how can we become effective in it? On the one hand, it is a bad thing that there are so few professional businesspeople in our country. But on the other hand, you always have to look for opportunities where things are negative. If someone is not doing their job correctly, do it better and win out over him! Russia still has a lot of niches where you can develop a business. If Russian businesses were only 20 twenty percent as effective and smart as American businesses, then, considering our natural resources and our talented people ( Yes! Russians are a lot smarter and more talented than Americans), ours would be the number one country in the world instead of theirs.
* * *
While I was living in America, I attempted to get into forestry. Andrei Surkov became my minority partner. He was to work in Russia and I in the States.
What was the idea? I found out by chance that a cubic meter of our round timber cost ten dollars if you bought it directly from a forestry agency, while the Finns would pay thirty dollars for the same amount. Later I found out how much timber cost in America. It turned out that you could not import round timber, only sawn, dry lumber. Americans are very concerned about the environment and their country’s wild places and so they are worried about the introduction of beetles and other bugs.
In America the price for hard lumber-the oak and elm grown in the south of Russia, for example, in Krasnodar Krai-ranged from 1500 to 2000 dollars per cubic meter. In Russia, taking into account the procurement, transport from the south, milling and drying, shipping, fees, and delivery to America, the cost was 200 dollars per cubic meter. Wow!
We created a partnership with Nikolai Vladimirovich Kozlovsky, the owner of the St. Petersburg bank Finansovy Kapital, with a 50/50 split of ownership. He allotted us some land in Tosno and gave us a bank loan; we bought three American drying machines. Andrei’s job was to fly to Krasnodar and buy choice timber. It was cut at the factory and then he had it loaded into containers and sent to San Francisco.
It seemed like the perfect scheme, but we miscalculated with one thing-the Wild West, which bared its ugly teeth.
The lumber market in the States is very structured and has evolved in the course of many decades. As a rule, hardwood is used for kitchens in America. In California, for example there are around twenty manufacturers that use it. There are wholesale suppliers that import sawn lumber from the northern States or from Canada. At the same time, too, it is hard to tell where the Canadian company ends and the American one begins. They have an Anglo-Saxon friendship.
I immediately sold my first consignment of lumber for something close to twelve hundred dollars per cubic meter. Percentage-wise, the profit was colossal. But because the container did not hold very much, the profit was not so high in monetary terms. In order make a lot, you had to sell a lot. Naturally, being your run-of-the-mill greedy capitalist, I called Andrei and said: “Come on! Let’s see some normal volume!” But Andrei let me down a bit. He stopped controlling the quality-and Americans count the number of knots in a cubic meter very meticulously. As a result, the value can fall by ninety percent, from fifteen hundred to a hundred and fifty. At first he was sending top-grade lumber, which sold well. But then everyone realized that there was this new player on the market who was offering huge quantities at far lower prices. This made people very nervous. These distributors were just like the mafia. They came to an agreement with the kitchen-cabinet makers, who in turn stopped buying lumber from me directly. They said they did not need so much and that it would be better for us to go to the wholesalers. Now, when I went to the wholesalers, they complained about the quality, which really was not the best. They really got me down when they said they would not be buying my lumber anymore. Now I was really upset! In the end they offered to buy the wood, but at a price that was basically equal to cost. They made a rough estimate of what I had paid and started offering me two hundred dollars per cubic meter. Now I had fifty containers sitting in the port. At some point I realized that the cost of storing the containers was about the same as what they were offering me. In the end I managed to sell around ten containers. The other forty I just had to abandon. It was easier to simply leave them than to pay for their storage, reloading, and warehousing. I made a note of the loss. Nothing worked out in the States and we could not find any other market to sell in.
I still wonder if Russia exports sawn lumber overseas. But no: we have always exported round timber and we go on doing it. The European markets are under the protection of the state and the traders keep doing it against the wishes of foreigners, even though the governments of the importing countries continue to insist that the wood needs to be processed and not transported as timber. In Sweden and Finland the infrastructure already exists, the forestry business has been around for centuries, and the last thing they need is for the Russians to import product that would cost two to three times less. They are ready to buy the raw material and make things themselves. They will not even import our half-finished goods or products; thus completely finished products are absolutely out of the question-unless of course we built our own furniture stores there, as IKEA has done in Russia.
Neither the governments, nor the businessmen themselves want the Russians to come onto the scene because this puts pssure on prices and they lose their margin, income, and jobs. Even now there are no countries where it is possible to export any substantially processed wood product.
I have run businesses of varying degrees of success, but I always made money on them. Even in my restaurant business, which I do not consider to be particularly successful, I made good money. But probably every businessman has to live through one failure. This episode involving the lumber was probably my biggest failure. Taking into account the drying costs and the abandoned product, I lost somewhere in the range of one and a half to two million. Ten years ago that was a huge sum and even today it would be a lot.
It turned out to be hard to do business in America. I know that our oligarchs, like Mordashov, Deripaska, and Alekperov do not find it easy to work there either. Even Branson complained that America was the most difficult country for him. I was once again reminded of this in a far more personal way when I was selling my Tinkov beer in the U.S.A. For the American market, I changed the double “ff” to “v,” because surnames ending in two f’s look German, rather than Russian, to Americans. We bottled the beer behind our store in St. Petersburg and sold it in retail stores in California. I really understood then that the market was very difficult.
From that point on, Andrei Surkov and I stopped doing business together. We decided we would just stay friends and, thank goodness, we still are. If we had kept doing business together, we would have probably killed one other by now.
I was the only Russian in my Berkeley marketing class. My American friend, Jack Smith. This is the Ducati motorcycle that I crashed in 1999. In America they make a business out of everything, even when it comes to pictures of your kid in the maternity ward. These photos show Pasha, who was born on December 31, 1998.
This diploma lists all nine courses that I completed at Berkeley.
Konstantin Aristarkhov, member of the board of directors of Tinkov Credit Systems:
I first met Oleg in 1999 when we went skiing with a group of people near Lake Tahoe in Squaw Valley. There weren’t many recently arrived Russians, so we got to talking and it turned out that we had a lot of the same interests. We were both born in Siberia, I in Krasnoyarsk and Oleg in Kemerovo Province. We both skied. Oleg had served in Primorskoi Krai and I had served in Vlapostok.
I had come to the States to study, sponsored by Primorsklesprom, a forestry company where I had already worked for a while. So I helped Oleg a bit when he was involved in wood sales, when he and Andrei Surkov bought the saw and started processing lumber.
One day I ended up staying late at his house. He lived across the bay, while I lived downtown.
“Oleg, the boats aren’t running anymore. Let me borrow a car,” I asked him. He let me take his Porsche, which he had first taken to Russia, then brought back to America to sell. I drove home in it, parked it, and fell asleep. I live in a good neighborhood, but someone slashed the convertible roof during the night. It was probably a drunk or one of the bums that live under bridges in cardboard boxes. The car was empty; there was nothing in it. They just cut a hole in the roof, the morons. I was supposed to pay Oleg for the damage, but he acted nobly, saying,
“I see that you came and you’re trying to fix things yourself. I’m not taking money from you.”
Chapter 19
Abramovich’s First Daria
In 2001, a day came when Andrei Beskhmelnitsky, who managed Roman Abramovich’s food assets, along with Andrei Blokh (one of Abramovich’s first and main partners from back in his toy co-op days), were busy creating a holding company called Planet Management. The highly profitable but small business with the ptty name, Daria, sounded appealing to the oligarch.
Andrei Beskhmelnitsky is a unique inpidual. He is one of the most hardworking and meticulous managers that I have ever met. They hounded me for nearly six months, but in the end they gave me no other choice-there is no other way to put it-I simply had to sell this fast growing and high quality business.
On the one hand, the business brought in hundreds of thousands of dollars every day and so I was fine with it. On the other hand, though, the pelmeni market was worth a couple of million dollars a year and our share in it was already high. After I finished studying at Berkeley, I realized what market volume and share really are. If a market is large, then you can make good money even if your share is only three percent. But if the market is small, you have to be a powerful player. Now, naturally, it is really hard to grow your share if you are already the biggest player-the competition will always try to pinch a little piece of the pie. And here they were, in this case, talking me into selling my business for a couple tens of millions of dollars…
Abramovich came out to meet us and personally led us into his beautiful guest room. I could not help but stare at a massive black and white portrait hanging behind him in which Putin was wearing a kimono. The picture had obviously been retouched. On the table there was another photo of Putin, which was also quite strange. It seemed to me that this was some kind of sign or signal. Why did he have a picture of Putin in a kimono at work? Was it an expssion of respect for the psident or an implication that he, the 35-year-old Roman Arkadyevich Abramovich, was on joking terms with Putin? After all, it has been said that Abramovich is among the people who selected Yeltsin’s successor. At the same time, though, there was a certain degree of provocation in the photos. I still have not pd out the answer to this riddle.
I am a businessman and, as such, I have to have good intuition. There are a lot of incredibly unpleasant types among the oligarchy, but Abramovich made a very decent impssion on me. He is certainly no tool, as some are. But I cannot say that he is smart and scholarly. The saying, “be quiet and you’ll pass for smart,” describes him. In the half hour that we were there he said about four phrases: “Alright, okay. So what are you gonna do with the money once you’ve sold?” And his last words were, “All right guys, get him paid up.” That was it! Ellochka Lyudoyedka was involved in the socio-economic crisis in Pikalyova) told me about an empty property on Kazanskaya Street, in building 7, where there used to be a Zarya factory. The property was perfect for a fancy restaurant. It was 200 meters from Kazan Cathedral and 250 meters from Nevsky Prospect. It was on a quiet side street where it would be easy to park your car. Long ago it had been a Nobility Hall, but on January 1, 1842, the first savings bank in Russia was established there by Nicholas I, “with the goal of providing low income people of all professions with a means of saving in a reliable and profitable way.” If I had been in German Gref’s shoes, I would have bought the building for Sberbank. He is quite aware of it, as he helped me to rent it for use as a restaurant when he was chairman of the CPMC.
At the same time, the company Stanley, owned by Stanislav Bushnev, was also looking to get into the place. This kid is way behind the times. We all remember the turbid nineties. That is when he was born. Unfortunately, the mindset in the regions has changed at a much slower rate than in Moscow. I saw Bushnev in St. Petersburg recently, and he still walks around all grim and surrounded by bodyguards.
When I was trying to secure the property, Stas proclaimed,
“That place is mine.”
“But the papers show that it’s mine,” I replied.
It developed into a conflict and I told my friend Emma Vasilyevna Lavrinovich about the situation. She is still the director of Oktyabrsky Big Concert Hall. She knows all the politicians and businessmen in St. Petersburg. If she charged them a commission for everyone she knows, she would be one of the richest people in Russia. In 1996, she had introduced me to Alla Borisovna Pugachova. Now, however, she told me to get in touch with German Gref and to explain the situation to him.
Andrei Surkov attended the meeting. Gref finished listening to our story about how we wanted to build a restaurant, with a microbrewery attached, and signed a ten-year lease agreement, with far better terms than one usually sees in the city. We offered several times more than Stanley had offered. It is not enough to offer the government more money. You have to talk to a high-ranking official as well if you want to see the issue resolved.
I will tell you more: even today, the building’s fate has not been sealed. People are still arguing about it. I created and sold four businesses and fought to keep the restaurant in the same building the whole time. For the most part, however, the conflict does not concern the part of the building where the restaurant is located, but rather the Zarya Defense Plant. On March 17, 2004, Anatoly Ivanov, the plant’s director, was shot dead, along with his bodyguard. Ivanov had had lunch in my restaurant. Then, in the courtyard of his building, a contract killer opened fire on him with a Kalashnikov.
In downtown St. Petersburg the most fantastic things can occur within a few thousand square meters of real estate. In St. Petersburg, unfortunately, in contrast to Moscow, the legal mechanics of regulating real estate are very complicated. In the end it is still difficult to establish who the landlord of the building on Kazanskaya Street actually is. Currently a trust management institute is used for real estate objects, along with some other complex bureaucracies. Every building should have an owner though-either the city or a private owner. You cannot reinvent the wheel.
* * *
By spring the Germans had finished making the equipment and in May it arrived in St. Petersburg. Installation began. The question now arose of what kind of beer we would be making. Joost suggested a line-up of six standard varieties, along with four seasonal beers. This is a widespad scheme in German beer restaurants. I suggested that we name the beers according to color, however, as Russians have little sense of what terms like “pilsner,” “lager,” “porter,” and so forth actually mean.
– Platinum non-filtered (original gravity: 13%, alcohol content: 4.7%; light and caramel malt, hops, yeast, and water). I expssly asked Wachsmann to begin with pilsner, as it is my favorite kind of beer. Given a choice, I always buy either German or Czech pilsner (Budweiser, Pilsner Urquell, or the identical Plzensky Prazdroj).
– Platinum filtered (original gravity: 13%, alcohol content: 4.7%; light and caramel malt, hops, yeast, and water). We did not have much in the way of filtered beer-because I do not understand why anyone would want to drink filtered beer when non-filtered is available.
– White unfiltered (original gravity: 13%, alcohol content: 4.7%; light and wheat malt, hops, yeast, and water). I like wheat beer as well.
– Light unfiltered (original gravity: 11%, alcohol content: 4.0%; light, caramel and dark malt, hops, yeast, and water). This is a lager.
– Dark unfiltered (original gravity: 14%, alcohol content: 4.7%; light, melanoidin, dark and caramel malt). Porter.
– Non-alcoholic filtered (original gravity: 6%, alcohol content: 0.5%). It should be clear what we did here. We made a beer for people who like the taste, but cannot drink because they are behind the wheel, or for some other reason. The beer turned out to have pleasant bready notes and a hoppy aroma.
In order to offer more variety, we introduced a few seasonal beers. Two of them were:
– White Nights. I like this wheat beer even more than our usual “White”. We brewed it for the first time in St. Petersburg, which is famous for its long summer days with short “white nights” when the sun barely dips below the horizon. The beer was created especially for the summer: it is really light and, unlike traditional wheat beer, it is brewed using a top fermentation process, where the yeast is put on top instead of at the bottom.
– Winter Bock or Red (original gravity: 18%, alcohol content: 5.9 %). A beer with a wine-like flavor. For the strong at heart!
I set the opening for August 1, 1998. To promote the restaurant we gave away free food and drink for an entire day and night to all of our guests-something that was audacious for St. Petersburg at the time. A large number of the city’s restaurateurs came and were surprised to hear that I was anticipating daily revenue of ten to twenty thousand dollars. They thought that this would be impossible, given that their highly sophisticated restaurants only managed to pull in three or four grand. Supposedly, the record for the highest one-day sales volume, eight thousand dollars, was set by the Senate-Bar on Galernaya Street, where groups of foreigners were often taken and which U.S. President Bill Clinton himself visited in 1996.
From among the city’s administration came first vice governor Ilya Klebanov along with German Gref. German Oskarovich drank some beer, congratulated me, and said that he was moving to Moscow for work. On August 12, I heard on the news that he had been appointed first deputy to the Minister of State Property. When Vladimir Putin became acting psident, following the historic voluntary resignation of Boris Yeltsin on December 31, 1999, Gref was appointed head of the Center for Strategic Development, a body that was to come up with economic ideas for the new psident. As it turned out, Vladimir Putin must have felt that these ideas worked very well, considering that he appointed Gref Minister of Economic Development and Trade immediately following his election. He worked in that post for over seven years, until he managed to convince the psident that he would be better off working at Sberbank. The only minister to maintain his position longer was Alexei Kudrin, who had also started out in the St. Petersburg mayor’s office.
On one occasion, Vladimir Putin himself visited my restaurant, along with Vladimir Yakovlev. We drank some beer with them and they liked it. Putin said that he had had some beer in Germany and that Tinkoff was crap. But really, Tinkoff is a person and the beer is delicious! Thank goodness, Putin considers me a person. Bureaucrats, listen! Write this down! He drank my beer and he liked it. So you had better not cut me off on the road! This applies to law enforcement in particular. Think about it!
This is simply not true!
You can always find a niche. And you can do this yourself. After all, an entrepneur is a person who sees opportunities, a person who can ascertain what others cannot, who can perceive the positive in what seems at first glance to be a negative situation.
An entrepneur is an optimist by nature! Of course luck plays a significant role and, without a doubt, I am a lucky man. I always have been. But in order to make your luck work for you, you have to do something. Bear in mind that merely finding a good niche is not sufficient. You also need to choose the right people and motivate them in the right ways-materially and emotionally.
In St. Petersburg, in 1998, to have an in-house microbrewery attached to a restaurant was revolutionary.
The slogan “It’s one of a kind ” was not yet on the drawing board, but Tinkoff bottled beer was already my brainchild.
Valentina Vladimirovna, my mother, visiting in 1999 after Pasha was born.
Here I am in San Francisco with Dan Gordon, one of the co-founders of the Gordon Biersch chain of restaurants and microbreweries.
On Sushi
I saw it done in San Francisco and I just copied the practice. For Arkady Novikov, however, the idea did not work in St. Petersburg. And it did not work in the Moscow restaurant Sushi Vyosla, either. The assembly line approach is an option only for business lunches and for restaurants with a large output capacity.
Chapter 21
Moscow Sausage
Originally, I had not intended to create a restaurant chain. I had opened the St. Petersburg restaurant, in part to promote my beer brand, while dreaming of opening a full-fledged factory later on, and in part for myself -so that I would have someplace to go with my colleagues and friends after work. Randomly enough, I soon realized that this was not such a bad business after all. I started meeting lots of Muscovites who had fallen in love with the Restaurant on Kazanskaya Street in St. Petersburg. Of course, opening a restaurant in Moscow would be scary and expensive. The business world of St. Petersburg was not accustomed to paying forty thousand dollars a month for a property, when you could get the same place for eight thousand back home. I had my doubts, but the more praise I heard from Muscovites, the more I thought about opening a restaurant in Moscow. In 2000, then, when the crisis had eased slightly, I decided to enter this new territory.
Immediately, I felt the contrast between Moscow and St. Petersburg. There was extortion everywhere. Gimme, gimme, gimme! I can only imagine what goes on in big investment projects. Moscow is structured completely differently from St. Petersburg. Every step you take costs money; you have to pay tribute on everything. That is what you call the Byzantine Empire, my friends-Moscow, the capital of our homeland. Nothing of the sort ever happened in any of the other cities where we opened restaurants. But what can you expect from a city where the blood has already curdled? It is a city that has been ruled by the same man for 20 years now, a man whose wife, one of the richest people in Russia, is the only female billionaire (in dollars) in the country. This scenario would be impossible in any other civilized nation. An office-holder in a position like that would have stepped down from his post, at least. At most, he would have put a bullet in his own forehead.
Let me get back to the restaurant. We opened in Moscow in late 2001. All together the restaurant cost me two million dollars. In addition, we bought the property a year into our lease, which, as you can understand, ended up a very good investment, considering the growth in real estate prices.
People came to Protochny Alley, drank beer, and liked it. Everyone from Vladimir Zhirinovsky to Vagita Alekperova came to check it out.
I started coming to Moscow more often. You might say that I moved to the city, if you could say such a thing about a person who tries to spend no more than a few days at a time in any given country.
After all these years, though, I still do not feel like I love the city. Consequently, I agree with Bogdan Titomir’s song about Moscow: “Moscow is shit”.
I do not like the city at all. For me Moscow is one big office: huge, comfortable in places-an office, but not a home. When I fly into Sheremetyevo or Vnukovo airport, an interior switch flips to “work” position. When I am leaving Moscow, as soon as I get into the plane, it flips back to “rest.”
The city is not designed for family life; it is not pro-children. I realized this in 2001, when I took Rina and the kids to a restaurant, aptly called Hole in the Wall. Everyone looked at us as though we were enemies of the people. A hooker sat there with her legs crossed. Her facial expssion seemed to say: “Why in the world did you show up here with your kids?” It is not just that, though. The city, in general, was simply not built for living in.
There is always an issue about where to go for a stroll on the weekends. Do you leave town? It takes hours to get out of the city and the same amount of time to get back. The suburbs? Everything has been overhauled. They have not kept any of the old buildings and estates. The only decent place to go for a walk, perhaps, is Pokrovskoye-Streshnevo Park and only in winter. Overall, though, there is nowhere in Moscow that you can do it. You can do a lap around the Patriarch’s or Clear ponds, but no more.
Moscow is a city with completely bizarre architecture. Look at Khodynskoye Field. It is eclectic: round, square, tacky buildings (built, by the way, by Russia’s richest woman). It is totally absurd-it was an empty field. Why could they not have done what people do everywhere else in the world, constructing perpendicular and parallel streets, nice humane housing, and parks where you can go for a walk?
I went there to visit someone and it took me forever to find my way. All of the new Khodynskoye buildings, which were built five years ago, look as though they have been standing there for fifty. Alexander Kuzmin, the Chief Architect behind the project, is quite the character. Why does he not simply resign? What he has done is totally out of line, to put it mildly.
In St. Petersburg people are asking whether the Gazprom Tower might disturb the city’s harmony. Compare this with Moscow. The city has been snapped down the middle, trampled, and spat on.
Sure, Moscow reminds one of New York and, sure, it is a dynamic city. It is a good place to make some money too-I agree. But to live there is simply unbearable. That is why a lot of people send their children overseas to study, including the Moscow bureaucrats who do not believe in the city themselves. It is a dying city. Bulgakov wrote that Muscovites are good folk, but the apartment issue ruined them. After all, Woland (the Satan-p in Bulgakov’s The Master and Margarita) came to neither St. Petersburg, nor to Novosibirsk, but to Moscow-City of the Devil.
Why am I being so mean? It is because, when I wrote the foregoing, I had already been in Moscow for four weeks. Luckily I flew to Dubai the following day. A normal person has a home and an office. All of Moscow is my office. Unfortunately Luzhkov and his associates have made it so that you cannot stay in Moscow for long. How can you blame businesspeople, or the bureaucrats themselves, for sending their kids to other countries, if normal living conditions are completely lacking here? Sure, a big-time bureaucrat may be able to make himself a little Singapore in the suburbs, a gated 100-hectare estate with fields, woods, and animals. But what of the common man?
I love St. Pete’s; I dislike Moscow. And on the whole I feel okay about other major Russian cities. Novosibirsk, for example, is a very cozy city, even if it is big. There are problems with the infrastructure there, of course, but the city is interesting and suitable for living. I like it there, even though attempts were made to pvent me from opening a restaurant there in January 2003.
My restaurant in Samara, seating 275, opened in November 2002, a little earlier than the one in Novosibirsk. I created it in partnership with a local restaurateur, Alexander Terentyev, offering him a twenty-five percent share in exchange for his help in finding my way around the city and introducing me to the upper class.
It quickly became one of our most successful locations. Apparently this was because, although the city’s infrastructure is a complete wreck, its people are good.
For some reason the people of Samara and St. Petersburg are similar, like brothers. They have the exact same mindset. People befriend one another and entertain in their homes. In Moscow it is not common for people to go to one another’s houses. If you are invited, it means that there is going to be some kind of business-related standoff. A Muscovite is consequently a special kind of person, a severe type.
And the best, the most beautiful girls in the country live in Samara too. I do not know what caused it, but there appears to have been some kind of explosion there-environmental or demographic-and now every one of them is gorgeous. There are so many! It is a case where quantity and quality are not mutually exclusive.
By early 2003, we already had four restaurants. I went around to other cities, looking at how their markets were developing, trying to discern whether they were ready for us to come open a restaurant.
My memories of Nizhny Novgorod are very warm. The city is interesting and so are the people. I always enjoy my time there.
Kazan is a distinctive city. I can say a lot of nice things about its management. Despite a few Eastern frills, when it comes to attracting investment, everything is done there rationally and at a high quality. Dubai was taken as a reference point for Kazan. Even though there are some financial problems in Dubai, it would be stupid to deny that what they have done with their infrastructure is revolutionary-even if they did go a bit overboard.
Both Rustam Minnikhanov, the prime minister of Tatarstan, and the people at the mayor’s office in Kazan are on the right track. They have created an investor-friendly environment. Everything is understandable and pdictable, two critically important factors for investors. It is a good thing that Minnikhanov was appointed psident of Tatarstan in early 2010, rather than Mintimer Shaimiev.
The feelings I associate with the neighboring city of Ufa, where we also opened a restaurant, are less positive. There is more of a mess there. At least, that is how it was in 2003. Perhaps now, in 2010, Murtaza Rakhimov, the psident of Bashkiria, has done something to improve the investment climate.
I have bright memories of Yekaterinburg. Opening our restaurant there was a lot of fun. The governor of Sverdlovsk Province, Eduard Rossel, introduced me to his deputy and we assumed that we would not have any problems with the local authorities. But wait! Welcome to modern Russia! Who could have pdicted that relations between the municipal and regional administrations would be so tense? Our manager made a mistake by failing to hold any talks with the mayor at all. We brought in a bunch of musicians-Mikhail Boyarsky, Leonid Yarmolnik, Igor Kornelyuk, Mumiy Troll, De Phazz. Right at the climax of the performances there was a power failure and, in the meantime, the director of the power network was off at his summer cottage.
We could not simply disperse the crowd. At first we lit a bunch of candles. Then we worked things out with some military men, who pulled two generators up to the building. Everything worked out well end. The moral of this story is: never give up, always look for a solution and build a good team that will help you in the battle. People still remember the opening of our restaurant well, which is better promotion than we could have hoped for. It is not for nothing that the restaurant in Yekaterinburg is one of the best in our chain.
I have fond memories of Chuvashia as well. In 2003, I wanted to buy a brewery in Chebosary (which I will discuss in more detail in the next chapter). As Nikolai Fyodorov, the brewery’s psident, and I rode in the car, I experienced something that I had never experienced before and would never feel again. As we drove by some traffic cops, they saluted us.
By developing this most beautiful of cities, it can be made into a Mecca, both for Asian and Russian tourists.
With typical frankness, I declare that Kamchatka is the best place in Russia, if not in the whole world. I have never seen anything like it: volcanoes, geysers, bald mountains, snow, sudden weather changes. I went with a group of French, Germans, and Americans on a freeride skiing trip. Everyone was pleasantly surprised by the Jacuzzi-like hot springs that winter. It is a completely one-of-a-kind place. Thank God we did not sell it when we sold Alaska.
I like spending time in Sochi at Krasnaya Polyana. I do not recommend taking the chairlift, but as far as freeride skiing goes, it is one of the best places in the world, both in terms of snow quality the steep inclines. No wonder one of the stages of the freeride world cup is held there; even the best athletes are dumbstruck by it.
“Yes this really is an awesome place.” It is probable that Sochi will be the infrastructure capital of Russia now. After all, it is simply mandatory that we do everything really well in pparation for the 2014 Olympics.
There are a lot of beautiful, scenic places in Russia, inhabited by beautiful people. But our economy is upside-down. Everything flows to the center, to Moscow. This is very unfair and it is not right. So I am not in the least bit surprised that Muscovites are some of the least liked people in Russia. What does it mean that even St. Petersburg is more critically short of money than Moscow? This is especially apparent in the ambitions of Muscovite managers: they want salaries running to ps that their counterparts in St. Petersburg would never dream of demanding.
At the same time, managers in St. Petersburg are often more effective than those in Moscow. People from St. Petersburg are better workers. We are more effective, less narrow-minded. You can find examples in the business world, the political landscape, and in show business. We can see how St. Pete’s is at the top of its game in every category. The reasons are straightforward ones: on the one hand, it is the northern capital; on the other hand, there is less money there and consequently one has to put in more effort to make it. There is a parallel here with how boxers train: some use weights and others do not. That is why we are more effective managers than those one might find in other cities.
The same can be said with respect to artists. Shnur used to sing for a hundred dollars. He has seen it all. Or there is Mumiy Troll from Vlapostok who came, saw, and conquered. In my opinion, regional ambitions are always good. In Moscow, though, you can sing one song, or sell a mediocre product for 20 years straight, and still be successful. The market is like that; it is like a spoiled kid.
The competition in Moscow is very specific and in some areas there is none at all. Here I am judging from my own restaurant: at one point we had barely any competition and the restaurant made really good money. After a few years, though, our profits began to fall off and, by the time the most recent crisis rolled around, the restaurant was suffering. First of all, people started going out to eat less often. Second, there were now many similar restaurants all around Moscow. The Moscow public is easier to sway and tends to be less loyal than in a lot of places. The people love novelty. They are always looking for something better and so it can be quite hard to find and keep loyal customers. Whereas Muscovites are all about the new and the better, people in St. Petersburg visit the same restaurants decade after decade. That’s small-town Europe mentality for you! My favorite place is the best that there is, period!
Furthermore, the restaurant economy in Moscow is not market-based at all. A lot of restaurants were opened, but guest numbers did not grow, especially given the crisis. At the same time, millions of dollars were invested in these ventures. In America or Europe, eateries with such large investment volumes are doomed. In short, there, the market works.
Every day in San Francisco one restaurant opens and another closes. In other words, it would be impossible to eat at every restaurant that there is, even if you went to a new one every day. And if you see a restaurant at eighty percent capacity, in the evening, it means that it is going to shut down soon. Overhead is so high that you simply cannot keep a restaurant running unless it is packed all the time.
But in Russia, you see restaurants that remain virtually empty year after year. Why? Because the owner does not regard the place as a business. Rather, it is a status symbol. Or it is a way of keeping his wife busy. Or it is a place where he can sit in peace and quiet. Restaurants are designed with flaws built into them. And when a lot of the players do not play by the rules of the market, it is easy to see why a normal businessman, wanting to make some money, will have a hard time. That is why I do not recommend opening restaurants in Moscow at this time.
In the autumn of 2009, Aras and Emin Alagorov opened a restaurant called Nobu (the original Nobu was opened way back when by Nobu Matsuhisa and Robert De Niro) in Moscow. My family and I came there one day for lunch and we were the only guests in the whole place. It seems like that ought to have been a wake-up call, but this happened in the gorged Moscow of today. Back in the late nineties and in the early years of the new century, my restaurants were met with cheers across nearly all of Russia.
In 2001, I set up a Tinkoff restaurant in Moscow, investing unsparingly, because I wanted to keep the satiated public happy. I opened a 1300 square meter restaurant in Nizhny Novgorod on September 26, 2003. To the left is Joost Wachsmann, who sold me beer-making equipment for my restaurants. Sergei Kirienko, the psident’s authorized repsentative, came, along with his wife, to the opening of the restaurant in Nizhny Novgorod.
Chapter 22
Like No Other
The equipment at the St. Petersburg restaurant turned out to produce in such high volume that it was impossible to sell all of the beer that we had on tap. Thus Igor Sukhanov and I decided to buy a beer bottling line. I flew to Italy and ordered it, at a cost of a few hundred thousand dollars. A little later I bought out the twenty-five percent held by Igor and so became the restaurant’s sole owner. He left to work as a big boss then, as the deputy general director at Mezhregiongas.
The demand for bottled beer exceeded the supply. We could make a couple thousand bottles a day, but we needed ten times that. A bottle cost us thirty cents to produce and we sold them at wholesale for a dollar apiece. The price reflected a stock factor: if there was none left in the warehouse, we would raise the price, but if we had some, we would leave it alone. That is marketing in a nutshell.
We had insufficient product and so I started thinking about constructing a factory. I had some extra money at that point since I had recently sold my Daria pelmeni business. But I did not want to invest all of the proceeds in a factory, having decided to leave some for my family. So I approached Anton Bolshakov with the idea of building a factory. We had met back in 1999 and it still brings a smile to my face to remember how that came about.
When I was studying at Berkeley Igor Pastukhov called me and said,
In the evening, I got on an overnight train to St. Petersburg, saw how things were going at the Daria factory, and, immediately after that, went on to Pulkovo airport. When you are flying to America, it is as though you are going back in time. So I landed in San Francisco on Sunday evening, and on Monday morning went to school.
Every Monday we would talk about what we had done on the weekend. One of the students related how he had bought the Saturday edition of The Wall Street Journal and read it while sitting in a Starbucks. Someone else talked about skiing in Squaw Valley. The professor asked me,
“Oleg, where did you go?”
“I took a trip to Russia-to Moscow and St. Petersburg.”
“Are you kidding?”
“No, I had a business meeting in Moscow and then I checked in on my factory in St. Petersburg.”
It was ptty funny. The students and the professor were shocked by this Russian weirdo. But it was a good thing that I took that plane trip to Moscow and St. Petersburg. The fact that I knew Anton Bolshakov served me well in 2002.
He was the one I came to when I decided to build the beer factory.
“Anton, I have a beer restaurant in St. Petersburg, with a small bottling line. The beer is really taking off! We get several times more orders than our plant can fill-even though I have invested hardly anything so far in promoting the brand!”
“Interesting. Now what did you want?”
“I want to build a small brewery for twenty million dollars. I need a four million dollar loan. A factory of the size I envision would be able to brew twelve and a half million liters of beer per year. That’s three million bottles a month. It’s an intermediate option between a big plant and a microbrewery. I’ve got the blueprints.”
Anton believed in the idea and opened a line of credit for us. I have to give him credit: the man was able to distinguish between trash and treasure, grain and grass. And I am not the only one he has helped. On his initiative the bank started working with other capable businessmen.
Such considerations did not make me feel too much better though. I was doing the construction with borrowed money and every month the bill kept growing. I was really nervous. For the first time in my life I suffered from insomnia. It took me forever to fall asleep and I would wake up after two or three hours. If you do not sleep well, then during the day you feel like a piece of shit. In January 2003, just before the opening of the restaurant in Novosibirsk, I did not sleep for a night and a day. I felt so terrible that I left while the party was in full swing, right when Leningrad were starting their set. After I left, I wandered around the hotel. I could not sleep. I tried everything from hot milk to a warm bath. The birth of our third son Roma, on February 23, 2003, did not make matters any better. The only thing that worked was vodka. I could sleep normally after having some. I ended up having to go to a doctor specializing in sleep problems.
“What’s bothering you? What’s putting you on edge?”
“I’ll never finish building the brewery. I am afraid I’ll break the bank.”
“Once you’ve built it, then you’ll be able to sleep.”
The delay might have been even longer, if the construction had not been conducted at Stakhanovite. We’re already seeing this in the defaults that are just beginning to pile up.
Sergei answered me indirectly at a meeting with some journalists,
“I don’t know this man and I don’t want to know him, to tell you the truth. He makes strange claims and tells people to go places. Look at the clip. He told all developers to go someplace far away. For me that’s a strange position. There’s no one like him on the map. What has he done with his life? He has made Tinkoff Beer and that’s it.”
I could not resist the urge to respond to him-because it was a lie: I had done a lot more than just produce beer. We shot another video column in which I explained to Sergei that he was mistaken. After that, we did not attack one another again-particularly given Sergei’s problems with paying back his loans.
I’ve known Sergei for a long time and, no matter what’s gone between us, I think of him as a good guy. He is talented. Sometimes he goes a little too far, but on the whole he deserves credit. There was a huge pit in the middle of Moscow for years and years and monsters like Abramovich, Kerimov, and Luzhkov could not build anything there. When Sergei came to St. Petersburg as a young man, though, even if he was rude and obnoxious and not quite like everyone else, he just did what needed to be done.
From the point of view of business logic and common sense he did the wrong thing. He took out too many loans. And yet this is a problem that all developers face. They do not understand that sometimes we have stability, but that there are other times when we are faced with collapse. They simply follow the same formula, assuming that the price of a square meter will keep going up and up. If you build your business on such a formula, then sooner our later you’ll reap lamentable results.
That’s why, Sergei, I hope you return from Elba one day. For now, though, I’m afraid I have to say that your card is trumped. It’s as though you’re out in the ocean somewhere: if a shark swims past you, you’re safe, but once it’s circled you once, it’s all over. Freedman made his circle and this shark’s teeth are very sharp. You’ve fallen into his circle of interests. I can only sympathize. And I am not looking to dance on Sergei’s grave here. I really do feel bad for him. The more talented entrepneurs there are, the faster the economy will grow, which means that things will get a little better and life will become more pleasant. That’s why, Sergei, I wish you a triumphant return from Elba.
Of course, you’re going through tough times now, but hold tight. We business people are all waiting for you; we love you and we forgive all your foolish mistakes. We know that nobody’s perfect. At the end of the day everyone has his or her minuses and each of us has a skeleton in our closet.
And so, Seryoga, I wish you the best of luck!
Miracles never happen: you have to start with something small and push, push, pushLike me, Andrei Korkunov, got into the banking business after spending time in the food industry. . Andrei Rogachov, entrepneur:
With Leonid Shutov, who opened Bob Bob Ricard -one of the best restaurants in London.
Oleg is without a doubt one of the brightest entrepneurs in contemporary Russia. Entire generations of young risk-takers follow his example. Oleg Tinkov is our Richard Branson. He’s had a lot of successful projects. He knows how to choose one good idea from among a thousand. And then, too, he is able to bring the project to serious capitalization. He exhibits a rare combination of traits: he’s a charismatic leader, but at the same time he’s capable of bringing together team with technological savvy. I’m sure that we will see him undertaking more interesting projects in the future.
Around 1994, I went to visit Oleg on Sadovaya Street and was greeted by an unexpected scene. Oleg was scolding a foreigner. He was explaining to the man-I think he was American-that he had no idea how to run a business in Russia. “Stupid” was one of the milder epithets that he used. I asked Oleg whether he mightn’t be offending the American, but he optimistically replied that the American didn’t understand Russian and so it didn’t matter. I pd that Oleg had the American there as a stress reliever.
Why don’t Oleg and I take up joint-partnership on a project? Partners should supplement each other so that their team has stability. Maybe when I’m a little older-Oleg remains eternally young-we’ll start something together. He’d be the motor and I’d be the brakes.
Chapter 28
Once a Miner, Now a Banker
I started this book with a story about how our banking business was born. Recall that the final decision was made on November 18, 2005, on Necker Island. Little did I know the difficulties that awaited me after that.
On January 1, 2006, while I was spending the holidays with my family in New York before returning to San Francisco, Alex Koretsky flew from San Francisco to Moscow for the bank’s opening. Alex proved unable to work at anything like the miraculous rate that was required and, in the end, I had to go to Moscow myself to give the business a shove.
I hired old friends from Coruna (a company that I mentioned earlier), including general director Sergei Kim, to do the branding for the bank. Their price/idea/quality ratio is unparalleled in Russia. I gave them a few tasks: to develop a credit card and logo, to make a brand book, and so forth. Things progressed slowly but surely. We met sometime in June. On that occasion Sergei said,
At first I was surprised by this name, but then I realized that “Tinkoff” is a recognizable name, while “Credit Systems” sounds solid and would leave open the possibility of our offering services in addition to credit cards.
“Rustam, you know Camal very well. He’s going to head up my credit card business.” Rustam’s eyes nearly popped out of their sockets.
“I’ve invited Camal to work for me in Russia more than a couple times and he’s always refused. I can’t believe that he’ll come.”
For the next two weeks I waited for Camal Bouchie to develop and send me a business plan, but ultimately he called and declined our partnership. Rustam, who had realized that Camal was now willing to work in Russia, made him an offer that he could not refuse. According to my information, Rustam offered him more than twice as much as I had. But everything has worked out well in the end. I am glad that Rustam intercepted him and I understand why they ended up working together so effectively: they both love Eastern luxuries.
In the summer of 2006 I met with Maxim Chernushchenko, the deputy chairman of the board of Investsberbank, as well as with some other bank managers. Alexander Ponomarenko was already pparing the bank for sale to the Hungarian OTP Bank and the managers kept surveying the room. I suppose that is a normal reaction to outside threats because acquisitions always put management at risk.
In August, Alex Koretsky met with Georgy at Egon Zehnder ‘s offices. Alex liked him:
“The guy knows the trade. He’s into the idea of a model similar to Capital One. He said that we’d best not even think of buying IT-systems until we’ve hired either him or someone else with knowledge of the field.”
“That guy has pride issues, which is just what we need. How about I fly in to meet with him immediately?”
On September 18, 2006, Alex and I came to Egon Zehnder ‘s offices. Artyom Avdeyev said,
“Damn, Artyom, didn’t I ask you not to bring in people from Russian Standard? What are you, dumb?”
“Oleg, apart from people who’ve worked at Russian Standard, I couldn’t find anyone who met the requirements.”
“Why the hell have you brought me another person from Russian Standard? Is there really no one else available?”
“Georgy wasn’t a top manager at Russian Standard, so I think there’s nothing personal between him and Rustam, as there was with Chernushchenko.”
“Okay, I’ll call Rustam to talk about it.”
“Oleg, let’s not waste time,” said Georgy. “If I don’t fit into your plans because of my connection to Russian Standard, that’s no problem. If you need to talk to Rustam first, then let’s reschedule this meeting.”
“But why did you leave Investsberbank?”
“I got into an argument with a shareholder and he made the decision.”
“So you think it’s okay to fight with shareholders? A shareholder is God and King!”
“I learned my lesson.”
At the end of the meeting, I invited Georgy to come to our offices the following evening. We met in the conference room with Alex Koretsky, Kostya Aristarkhov, Ulyana Antonova, and Vadim Stasovsky, head of the legal department and the only person to work with me on running four of my businesses, beginning with Tekhnoshok. A consultant from MasterCard Advisors stood at the flip chart and talked about how payment systems are structured and how the cards work. I invited Georgy to sit at the table and, at the end of the psentation, all the managers started asking him questions. It was the same grilling that all of our key personnel had to submit to subsequently as well.
I hired him to work at the bank, which shared its offices-located on 1 st Street in Yamskoye Polye, directly across from where Golden Palace Casino now stands-with the Tinkoff Restaurant chain. We had just bought the license, so all we had was a desk, a chair, and an idea. That was it. We hired people to work exclusively on that idea. I am very grateful to our first ten employees. They had it harder than anyone else. Of course they worked to maintain my good name and they believed in me, but they still took a risk. Some had to give up old positions that they could not have back if their new jobs fell through. Others risked their own reputations.
The autumn of 2006 saw the most overheated labor market ever. People came, I would offer them a salary, they would call back two weeks later and tell me that they had been offered a better deal elsewhere. Nevertheless, in order to work with us, Artyom Yamanov and Stas Bliznyuk left the successful Raffeisenbank, which is one of the best run and most fortunate foreign banks in Russia. Kostya Aristarkhov was the head of a difficult department-debt collection. I had brought him with me from America. I have already mentioned that I am not keen on doing business with friends. I believe in friendships based on business, though, even if things do not work the other way around. But I would have to say that Kostya is the exception that proves the rule. We have been friends for many years-since 1999. In America, Russians hold each other close. In the States, we had spent some great times together and Kostya had shown his best qualities. Over the ten years of our friendship he has never once let me down. I hope that he can say the same thing about me.
He had gone through Far East University and has an American education. He is a fast learner and, most importantly, he has an enterprising spirit. He owned a construction company in the States, which sold and installed windows. He has everything we needed-loyalty, understanding of the market, and experience with the American business system. Moreover, he picks up new skills quickly. In the course of the three years that he has worked at the bank, he has built a good reputation for himself. He has built an incredibly effective, high quality, and technologically sophisticated debt collection department (one whose work draws on statistics, information volumes, and IT). The numbers speak for themselves. We know how difficult the market is at psent. There are more and more overdue payments, people are losing their jobs, or are simply inept at making their payments on time. At our bank, these indicators have remained relatively stable. In fact, they are the best in the industry.
Georgy Chesakov got to work on the IT platform immediately, building the network and guiding principles, and later got to work on the products. The rest of our staff began learning the ropes. We hired some high-end technicians, including Anatoly Makeshina from Zenit Bank. In this way we began to assemble the company-in our laps, essentially. I remember Georgy coming to me and saying,
He does not ask me that question any more.
Georgy Chesakov, chairman of the board of Tinkoff Credit Systems Bank:
We issued the first Tinkoff Platinum test cards in May 2007. That fall we began distributing them en masse.
Oleg is tough-skinned, explosive, and exuberant. But at the same time, he’s a lot more tolerant of resistance and complaints than my pvious employers, Rustam Tariko ( Russian Standard) and Alexander Ponomarenko ( Investsberbank)-even if, at first glance, it might seem like the opposite would be true.
I got a good impssion of Oleg back at the beginning of the banking project, in 2006, when he gathered the whole team together in his office. He pointed at the glass desk and said,
“I put my own money into this project and I’m ready to chew on this glass to ensure its success.” Later I quoted these words to candidates who asked if Oleg might shut down the project if it wasn’t working out. Another quote: “You need to have balls of steel to put 50 million dollars of your own money into a project like this.” I’m in awe of Oleg’s ability to think about what seem like completely unrelated things in business and in life and to make nontrivial, deep conclusions based on subtle observations. In those moments, you can’t help but think that you’d never thought about it before, but that his observation really was true. Oleg always remembers the basic economics of the industry and the project, quickly and correctly, and he is able to distinguish between important details and unimportant ones-and to disregard the latter. He’s not bound by ruling assumptions concerning the market. He’s able to attract and hold on to good people. He also knows how choose business ventures that have high margins of profit.
Konstantin Aristarkhov, member of the board of directors at Tinkoff Credit Systems Bank:
I learned from him how to be tougher, how to count pennies, and how to focus on and think about what’s actually important at a given moment in time.
I continued living my life, while Oleg returned to Russia to build a brewery. I felt a little awkward calling him: he’s always busy. But Oleg called me himself to find out how I was doing. Later he came back to America for a year. By that time I had my own businesses and I’d become more free and independent. We even had the time to take a trip together to Russia when he was closing a deal.
One day, when September was in full swing, we went to the Sanduny Bathhouse in Moscow. This was after Oleg had sold his beer company. Oleg said,
“Let’s go to Yalta right now. So we left straight away from the sauna and, wearing what we had on, flew to Yalta to swim in the Black Sea. We were back in Moscow two days later. In 2005 and 2006 we took quite a few trips together-around America as well as throughout Europe. Later Oleg offered me a job at the bank and I came. I had wanted him to hire me and had been waiting for it when he invited me. I sold my real estate and business before I left.
Chapter 29
Non-Standard Bankers
In early 2007 I began to realize that we needed someone to take responsibility for the bank’s management overall. I started looking and, as usual, I hired a recruitment agency, interviewing the candidates that they sent me. I probably met with ten hopefuls, which was not very many people and expensive. A lot of them were fairly strange. For instance, one particular nut job showed up-from Binbank I think-and asked for a salary of 1.5 million dollars.
In March I sat in the office and thought,
“Man-who will it be? Who will it be?” Suddenly I remembered an Englishman who worked at Visa. What was his name? John? Richard? Oliver? Yes: Oliver. Oliver Hughes. But he is a serious guy, I thought, the head of Visa. He’ll be a tough sell. Would he come to work at a bank that’s still taking losses? I started recalling the history of our relationship-which was not a simple one.”
As I have already written, I had approached Visa for the first time in the autumn of 2005, when I talked with Lou Naumovsky, the lead vice psident of Visa for Russia and the CIS. He is a Canadian of Russian heritage.
“Guys, I want to get into the credit card business.”
“What do you mean?” Lou glared at me.
“I’m totally serious. I want to distribute plastic cards and offer people credit.”
“Have you ever been in the business before?”
“No, but if you take Rustam Tariko as an example, he wasn’t in the business a few years ago and now he controls eighty percent of the market,” I replied.
“Oleg, why do you want to meet?”
“I want to offer you a job.”
“You know what? That sounds interesting. Let’s meet.”
I nearly fell off my chair. I thought he was joking. But another thought flashed through my mind: this Oliver Hughes is going to ask for ten million dollars a year.
We met at my office and came to an agreement really quickly. Maybe he was already planning on leaving Visa, which would explain why he was so quick to make a decision. He had worked there for nine years at that point, which is quite a long time. Or maybe there was something about me that he liked. Doubtless, he was attracted to the project itself and the people involved in it. He agreed immediately, in any case, at our first meeting. He said that he would be ready to start working in two months and he named his price. Oddly enough, I did not negotiate with him. Twenty minutes later we had our top manager.
On April 27, Oliver left his post as Visa repsentative for Russia and in June he started working at the bank. Prior obligations to his pvious employer entailed that he was not able to start working for us right away.
The news caused a storm in the market: people did not understand and are still unable to comphend why he left Visa and came to work with us. People often ask about it. In all honesty, though, people question it less, now that three years have gone by. Our results speak for themselves. At the time, however, everyone was shocked. A man who had worked for eight years as the head of Visa switched jobs to work at a small bank under the management of some sort of crazy person.
I agree with Marx’s assertion in Das Kapital that English managers are in charge in Russia. They were already in charge back in the nineteenth century. And it is true that if you see a good manager, he is usually an Englishman. The Russian people need Englishmen. There is still so much to do before our own managers reach maturity. I do not know what Skolkovo and other schools are up to but, objectively speaking, our achievements in the area of management are still mediocre. In the twenty years that I have been in business, I have seen a lot of managers and entrepneurs and I can make comparisons and discuss the issue. Anglo-Saxons-the British, Americans, and Canadians-are the best of the best. I like everything to have its own place on the shelf. In my cabinet, the vodka must be Russian, the cars German, the businessmen American, and the managers British.
Oliver’s wife is named Valmay. She was born in Wales. They have an interesting daughter, Maggie. Oliver used to be a punk. I even have a picture of him with a mullet. As I got to know him better, I realized that I had made the right decision: he is my kind of person. Just imagine: here was a foreigner who had spent 10 years in Russia with his British wife. I do not know very many foreigners who have spent that much time in Moscow without trading their foreign wife for a Russian one. I do not want to give a detailed account of why this happens. I am just stating a fact. I once told New Zealander Steven Jennings, head of Renaissance Capital (and I do not mean to jinx Oliver here) that he was the only foreigner living in Russia who lacked a Russian wife. Three months later he had porced his Canadian wife, Tina. I respect Oliver though. It is easy to come to Russia and find a Russian girl, aged twenty years, say, with long legs-a blonde or a brunette-who is simpler, more compliant, and easier to control than women back home. Oliver never took the easy path, however. He is a very conscientious, principled person. I liked him for his punk convictions and the fact that he is alive and real and not some kind of British bourgeois with a golden spoon in his mouth. I had been a nonconformist in my own youth, too-back when I had strange haircuts and wore badges with pictures of Viktor Tsoi on them and hung around the meeting place near the Kazan Cathedral in St. Petersburg. Oliver had traveled the world. He had lived in cheap motels, been to Vietnam, Uzbekistan, Azerbaijan, and Afghanistan. When I went to Morocco, he recommended a number of sights that I simply had to see. It seems like he has been everywhere. He does not choose the Malpes or Hawaii, either, but pfers places that are somewhat dangerous. He is interested in artifacts and has been on archeological digs in search of sphinxes in the Crimea. He is a very interesting inpidual. I am very happy and grateful to God that he has brought such good people into my life.
Oliver and I still work and grow together. There have been a couple of difficult moments over the past two years, but on the whole everything has run smoothly. I am pleased with him and think he is also pleased with our cooperation. Oliver is my partner, just like the other upper management at our bank. One of the conditions for growth in a company consists in having your top management as partners and so keeping them interested in growing capitalization and profits. Our top ten people are all shareholders in the company and this makes our model more sustainable. It is one of our strong points.
The Human Resources Department at Ernst & Young helped us develop this approach. In particular, Tim Carthy is a very talented HR specialist. I recommend him. We are very pleased with the results of our cooperation.
On May 15, 2007, all the bank’s systems were up and running. In terms of technology, we were ready to seize the credit card market. In May, we did a test mailing of 75,000 invitations to potential clients, most of whom were from Volgograd. The first response consisted in 1,500 card applications, some of which we approved. In the summer, we started mass mailings, sending out about 200,000 letters per month.
* * *
For some reason, their managing director, Julian Salisbury (who is now in charge of all of Europe and Asia), believed in me from the start. We met for the first time in February 2007 and in April we were already signing the Term Sheet, which consisted of pliminary agreements for the transaction. Next, they had lawyers review the document and, in September, just as the mortgage crisis was starting in the States, we closed the deal.
Goldman Sachs made a proposal for the purchase of a stake in a bank that had not yet issued a single card. That is to say, we were essentially nonexistent. They invested in our technology, in the team, and in our own faith. Indeed, ours is the only bank in Russia in which Goldman Sachs, the largest and most successful investment bank in the world, holds a stake. Julian said,
On September 1, 2007, I ended my vacation in Forte dei Marmi, boarded a plane, and flew to London. I attended a very brief meeting at Julian Salisbury’s office. He was very busy and Ion Dyagtoglu was the main person in charge of the transaction. We sat in the conference room and looked out the window. Ion said,
“The crisis has started.” When people talk about the crisis in Russia, for some reason they take 2008 as the starting point. For me, though, it is absolutely clear that it all began in the summer of 2007.
Ion said, “What’s going on in the States is a nightmare. Everyone’s defaulting on securities. The markets are falling. And so we can’t buy the stake for the amount we discussed before. You’ll have to lower the price.” I was furious. We fought intensely. But rage is useless in negotiations. Then Julian came in. I had brought Valentin Morozov, our financial director, with me. Six months later he ran away and joined the staff at Sberbank (he literally ran away-there is no other way to describe it). Valentin tried to bring the conversation around to a more rational tone, but I grew even more infuriated. What a waste of time!
While Nick and I ate lunch, he said,
“Listen, you have a good proposal, but I think that we’ll give you a little more and we’ll close this deal. We cannot do so, however, until closer to the New Year. If you want to move faster, you’ll have to accept their offer.” I appciated Nicholas’ honesty. It was the professional approach to take.
Two hours later I returned to the Goldman Sachs office. I said to Ion,
“Let’s make the deal-at the price you’re offering-but let’s break it into two payments. Ten percent now and five percent next June. If all the indicators line up with the business plan, then you’ll buy the rest and the price will compensate for the discount that I’m giving you today.”
He agreed.
Dear ladies and gentlemen! My fellow businesspeople! Remember that there is no such thing as a dead-end situation. There is always a way out. You have to offer an original proposal and usually you will find the approval you need. Of course you cannot disregard the role played by my meeting with Lehman Brothers. You must understand that I orchestrated a leak of that information. I still made a compromise though.
Why did the others not believe in us? Well, it is probably because the people at Goldman Sachs are smarter than most. Or maybe it was in the stars. I am very thankful to them and I know that they will earn huge money on their investment. Their stake is already worth much more than it was at the outset, in spite of the crisis. I am simply angry that the other companies I approached did not even want to talk to me.
In September, immediately following the closing of the deal, we began to send out mass invitations in earnest-in the millions. The response to our mail-outs was meager. People returned their applications incomplete or completed the forms incorrectly. Some included profanities, directed at me personally, in their applications. People tried to insert the cardboard mock-ups of the cards into bank machines; bankers from all across Russia called us and asked that we not send out any more of these “cards,” as they were getting stuck in ABM’s. Some clients, after getting the card, would go to the bank machine, withdraw the entire credit limit, and then throw the card in the nearest trashcan. It appeared that our direct marketing approach was connecting us with the most financially irresponsible people in the country.
Gradually, we began to acquire more clients. It was obvious that the money we had would not last long. The bank’s business consists of buying money, cheaply, and then selling it for more. Where could we borrow more though? We do not have offices. Consequently, we could not serve clients like a full-service bank. The capital markets left us with no options. We had to issue bonds. In the fall, though, it became clear that people with money pferred to keep it to themselves and that the Western markets had closed their doors to Russian borrowers entirely. The last few months of 2007 became a waking nightmare for us.
We set a date for October 23. Prior to the crisis, every time bonds were issued there was always a high level of oversubscription. It just looked bad if a company was unable to place an issue. We were able to sell only eighteen percent of the issue, in spite of a really attractive interest rate at eighteen percent annually. Objectively, the market situation was poor and it is unlikely that someone else could have sold bonds with greater success than we did. Nevertheless, our reputation took a hard blow. It was as if the investors did not believe in Tinkov.
We decided to complete the circulation at a later date. I called all of the financial workers that I knew and tried to convince them to take part in the circulation, but this achieved little. All together, we placed four hundred million rubles worth of bonds. The remaining six hundred million had to be placed on our own books, that is, we had to buy them out. The investors simply scattered.
This was a serious blow. I sat in the office at my round table, just crushed, and I cried. Of course, I am Siberian, a strong man, but I had tears running down my face. Why the hell were these bitches willing to buy shit? I did not understand it. A year later we saw all these shit retail and shit construction companies, which had been built on debt defaults.
An acquaintance of mine bought one hundred million dollars in bonds from each of ten companies, including mine. Out of the billion he invested, nine hundred million ended up in default. We were the only ones to return his money. Why were they buying from others, but not from us? What was with this attitude towards me? Why does everyone hate me? Why do people think that Tinkov is worthless? I did not understand and so I sat there and cried. The only person from the office who came in to see me was Oliver Hughes and I saw that his eyes were wet too. We just embraced and I said,
“Fuck it, we’ll win this war!” From that moment on I have always felt Oliver’s support and I hope that he feels mine as well-and we will continue this goddamn fight. We will prove to everyone out there that we are not in this business for nothing.
That fall I lost some friends. One of these was Alexander Vinokurov. Not only had he organized the bonds for me, he was also my friend and we had spent a lot of good times together. In London I had introduced him to Natalya Sindeyeva, co-owner of the radio station Seryebranaya Dozhd. I was at their wedding. They have a good family and I am happy for them, but my personal relationship with Sasha is unlikely to become friendly.
He called me once at one o’clock in the afternoon, when the trading day was wrapping up at 4 p.m., so I asked him:
“Sasha, buy a hundred million from us, or at least fifty. The investors are calling the brokers and telling them that KIT Finance, who organized the circulation, is not looking to buy, so they certainly do not want to buy any.”
“Oleg, I have a mortgage, you know that we put all our money into it.”
“Please, can’t you at least support us from a PR viewpoint. You can sell the bonds later.”
“Listen, I don’t believe in your idea. Credit cards are shit. You’re lying. You love to lie, but in reality things are not going well with you. And Goldman Sachs isn’t your partner, they’re just fronting you.”
When I heard this complete bullshit I hung up the phone. So I would like to say something here to Sasha: You were unable to buy fifty million rubles in bonds, but now you are broke and you owe the bank tens of billions. The problem was not that you failed to help out a friend. The problem is that you did not buy those bonds, when they were being sold by your bank.
During that circulation I lost another two or three people that had been friends, but I am thankful to the people that helped me. Anton Bolshakov bought one hundred million in bonds. Troika Dialog approached the issue professionally and Boris Jordan did as well. They believed in us, earned their annual eighteen percent, and received their money back exactly one year later. We were one of very few companies that borrowed money in 2006-2007 and then perfectly fulfilled our obligations on the one-year offer.
The idea behind entrepneurship is a simple one: if you do not take risks, you will never drink champagne. Here I am at the wedding of Alexander Vinokurov and Natalya Sindeyeva, whom I had introduced to one another in London. To my left are St. Petersburg entrepneur Alexander Aladushkin and actress Alla Dovlatova. Oliver Hughes, psident of Tinkoff Credit Systems Bank:
I was worried. The surname Vinokurov had become a red flag for me. A year later, in September 2008, justice was served. I opened the newspaper and read that he had lost it all. Did I gloat? To be honest, I did. At that moment it was really happy news for me.
The fact that Oleg approached this project as though it was normal, non-financial business was really the right thing to do. What difference does it make if your business is a bank or not? A bank is very much like any other business. The international and universal principles underlying the creation of businesses are the same: common sense, strategy, tactics, organizational structure, recruitment, and execution.
Konstantin Aristarkhov, member of the board of directors of Tinkoff Credit Systems Bank:
The original concept was to attract money from the debt markets and put that into our portfolio. It’s a totally normal task. But it became our Achilles’ heel, because the debt markets had died. This was a global problem. Even so, our very small startup attracted over two hundred million dollars during the deepest crisis since the Great Depssion. Huge sharks and small fish crashed and burned during the crisis, but we’re alive. We are an absolutely unique project. There are similar banks in the world, but the specifics of the countries, the legal requirements, the quality of the consumers, and the level of development of the banking sector, all play very important roles. Other projects may bear some superficial resemblance to ours, but they still differ. In my view, we are a bit like Capital One in its early stages, both in our approach and with respect to the technologies we use.
The fact that Oleg is able to organize, establish, fine tune, and give a burst of energy is indisputable. What’s unique about him is his meticulousness. If he enters into any sort of relationship, in any business, he’s always at the crest of the wave; he knows everything about it, he pays close attention to detail and he’s always aware of what’s going on. This is so, not just in his own work, but in everything that’s involved with the business he’s trying to build. It takes him only a moment to perceive every facet of a situation. I’ve never seen these one-of-a-kind qualities in anyone else. Plus, his mindset is undoubtedly Western, an awe-inspiring trait in a guy from Leninsk-Kuznetsky- notwithstanding the fact that he lived in St. Petersburg and worked the black market there. He picks up on everything in the blink of an eye and he correctly and appropriately evaluates and understands what is going on in the world-and why. A lot Russians that have spent time with foreigners have a habit of sucking up to them. Not so with Oleg. He’s straightforward and simple and has never sucked up to anyone in his life. He always judges people fairly, regardless of their gender, race, or ethnicity. He sees them through to the core. This quality also helps him in business. And if you look closely at him, you’ll see he doesn’t offend people. Sometimes he says things that may seem offensive, but on the whole, if he doesn’t have anything else against a person and sees his good qualities, he’ll never say an unkind word. If he does, in any case, instead of being offended, you need to listen to what he’s said and think about it and you’ll find there’s truth to his words.
For instance, he might say something sharply to his wife Rina, but she doesn’t even notice it any more. And even if he says something hurtful, you try, as you might with anyone, to imagine yourself in his shoes; you analyze what he said and realize that there was no offence in it at all. Usually it’s deserved. But if it wasn’t and you answer him constructively, staying on topic, and he agrees and admits he was wrong, then he might even apologize-if discreetly-ten times over. Because he knows his own personality and knows that he can flare up. He won’t keep fighting with you. He’s too classy to go on and on about something. If he’s at odds with you on some point of substance, all you can do is ask for an explanation. But if he himself is wrong, he backs down and doesn’t seem to find it difficult to admit that he’s made a mistake.
Chapter 30
How to Grow in a Crisis
We were barely able to place the bonds and things were still very bad. Late 2007 was the most difficult period that we have gone through to date. I had very little money left in the bank. We did not have money for operating costs or for expanding our portfolio. Through all kinds of craftiness and careful liquidity management, we got through that stage. But for a while the management were not getting their salaries.
In late December, Julian Salisbury of Goldman Sachs sent us a famous letter that is still kept in our office.
“We’re giving you more money. Use it as you have the other money we’ve given you. We believe in you, but it’s quite possible that this is the last money the bank will be able to attract. A serious crisis is coming.” That was the gist of the letter.
A lot of people ask me what it was that made TCS ready for the crisis. It is because we have partners who send us letters like that one. We never lived for today, but always lived for tomorrow. We saved money, penny by penny.
At the end of a nerve-wracking 2007, things eased up. The bank received money to feed into our credit card portfolio. Having skied through the holidays, we returned to the office at 1 Volokolamsky Proyezd, close to Pokrovskoye-Streshnevo Park. What did the year have in store for us? First of all, we needed to fulfill our obligations so that Goldman Sachs would buy the remaining five percent of the bank-at the highest option possible. Secondly, we needed to find more money and keep growing.
We could talk to Western partners with confidence, but the Russian market did not understand us. “Tinkov’s got a Bank? Ha ha ha! You’ll see what happens to them in a year.” “They don’t understand the banking business. You’re not stuffing pelmeni anymore!” “Sending cards in the mail is so last century. People don’t want to activate cards that they didn’t order.”
In one sense, we did not even try to prove the skeptics wrong. There are a lot of bankers out there that are still convinced that we hand out our cards to anyone and everyone. In reality we have never done anything of the kind. We have always sent out proposals, inviting people to become a client and then, only when the person has filled out and sent in the application, will he receive a card-and only if he is approved for it by the bank.
According to data registered in the turnover balance sheet of the bookkeeping accounts (form 101) of Tinkoff Credit Systems Bank, as of February 1, 2008, the bank’s total corporate credit portfolio amounted to 339 million rubles, while overdue debt on credits to legal entities amounted to 94.95 million rubles. These data are available on the Bank of Russia’s website. The percentage of corporate credits overdue as of February 1 was 28%, while overdue retail credits made up 1.58% of the total loans given out to inpiduals (886 million rubles).
Analysts note that these results are doubly surprising, given that Oleg Tinkov’s bank still psents itself as an exclusively retail-level institution. Now, however, it has been revealed that a third of TCS ‘s credit portfolio is made up of loans to legal entities. On top of this, the value of their overdue loans has beaten all records set in the consumer loan segment, where the levels of return have traditionally been high.
Hogwash! The story was not worth the paper it was printed on. In reality we had bought Khimmashbank, which had offered credit to companies and had begun expanding our portfolio with physical entities. Accordingly, the share of corporate credit in our portfolio had begun to shrink and, as a result, we were left with three bad loans, amounting to around one hundred million rubles-and so they remained unpaid. But when we bought the bank we knew that there were some problem loans and that legally speaking they were on the balance sheet. As far as the bank’s actual business went, this was not a problem at all. You must understand, however, that people read things diagonally; the see a negative headline and the words “30% of loans overdue” and think that things are not going well for the bank. In reality, though, the amount of overdue loans relative to the value of our entire portfolio was insignificant.
It is a good thing that foreigners do not read Russian newspapers. In the spring we held talks with a number of creditors. The money we had received from the syndicated loan was put into our credit portfolio. We wanted to keep growing. The proposals that we received from a few of the investment banks were quite ludicrous. They wanted a lot of shares at a low valuation of the bank and enormous interest rates on the debt instruments.
Vedomosti features a column entitled “Company of the Week.” In late June 2008, my bank was profiled as one such a company. Vasily Kudinov wrote in the column:
Of course, credit should not go to the Swedes alone, but to Oliver as well. All of the capital-attracting deals came about by way of a kind of road show. Oliver and I toured America extensively and then he traveled all around Europe on his own. Imagine telling the same story for two weeks, five or six times a day! You might wonder what the big deal is. Believe me, though, by the third day, even I, sitting beside him, was shocked. I did not speak much. Oliver gave the psentation in English, but even I got sick of listening to it. It is an exhausting and very serious job.
Having successfully placed the Eurobonds, we faced the crisis fully armed. In September 2008, when the banks were collapsing like houses of cards, we had around 130 million dollars in our accounts! Everyone was whining and complaining, but we tightened our belts as effectively as we could and kept on working. What had we done? Because we have no branches and therefore none of the associated costs, we simply scaled back our overhead for the mailings and cut other costs.
We started placing the money we made into our portfolio. On July 1, 2008 our credit portfolio was worth 2.5 billion rubles; by the first of October it had grown to 3.9 billion; and, as of January first, it had reached 4.8 billion rubles. In other words, we nearly doubled our portfolio at the peak of the crisis, thanks to the Eurobonds we had circulated.
Tinkoff Credit Systems expanded its credit portfolio in 2009 and earned nearly twenty million dollars in net profit. In addition to our usual credit cards, we have also begun issuing co-branded cards and debit cards. My lifelong dream has come true. I am a banker now. Sicily trip 2008: the Bank Tinkoff Credit Systems watched Team Tinkoff Credit Systems race live. On Corporate Culture
Beginning in November 2008, the bank became profitable, which the market did not expect. Between the purchase of the bank and our first profit, exactly two years had passed, which can be considered a good result. That is how life goes for us: we keep fighting and a few more people believe in us-but even more have yet to start believing. Their unbelief has filled me with anger, strength, and a desire to fight to prove them wrong. People do not believe in me? Well good for them. Now let me keep doing what I think needs to be done.
Once a year, I take our key team members on a trip abroad. We started the tradition back in the days of Daria, when we took trips to Bali and Hawaii. Usually we rent a huge villa so that we do not have to stay in a hotel. We rub elbows and feel the camaraderie. We take our wives and sometimes-less often-our children. The company pays for everything. In 2004 we took a memorable trip to Jamaica. We rented the villa where Ian Fleming lived and wrote James Bond. It’s a massive villa. (By the way, it’s not too expensive, and I’d recommend it; it was a lot cheaper than getting ten hotel rooms; there are housekeeping and food services.) Our wives spend time together and see who it is that their husbands spend time at work with, why they spend long nights away from home, and who they spend those nights with. Nothing brings a team closer together than company trips like these. We all have a rest and let our brains air out-although in the evenings we do sometimes do some business brainstorming. In all five of my businesses we’ve come up with good ideas while smoking cigars at villas or on our trip to Necker Island, after we sold the beer business in 2005.
In 2008 we went to Sicily and in 2009-2010 we went skiing in Verbier, where we rented out Richard Branson’s chalet. The last three trips have been with Tinkoff Credit Systems.
I like the expssions “There’s time for business and an hour for pleasure” and “He who rests well, works well.”
But company holidays should not be abused. There are companies that organize trips like these two or three times a year, trying to develop staff loyalty. When I was running Petrosib I did the same thing, taking my top managers and their wives all over the place. When I was skiing, so were they; when I was sailing, they were there with me. That’s not right, though. People need their personal space.
Chapter 31
Get out of the Restaurant!
After I sold my brewing business, I lost nearly all interest in my restaurant chain. In fact, I had wanted to sell the chain to the Belgians, but InBev, huge company that they are, had no need for it. In 2005, the restaurants reached their seventh year-which is quite old when you considered that I am typically interested in a business for between four and six years before I tire of it.
I began studying the market to see if it would be possible to sell the restaurants. I wanted to get twenty-five million dollars for them. In my opinion, this was a fair asking price. In 2004, the chain’s turnover was twenty million dollars. In the same year the chain had grown by fifty-four percent. It is clear that some of this growth was connected with two new restaurants that we had opened in Yekaterinburg and Sochi. Nevertheless, though, I sincerely believed that the chain’s revenue would reach one hundred million dollars within a few years, which is a significant number no matter what business you are running.
By early 2005, my chain consisted of eight restaurants: one each in Moscow, St. Petersburg, Samara, Novosibirsk, Ufa, Nizhniy Novgorod, Yekaterinburg, and Sochi. Two more locations were in development.
On March 21, 2005, we became an international chain when we sold a franchise in Almaty. The restaurant covered two thousand square meters and the brewery’s output capacity was 50,000 liters per month. Taken together, the three main floors and the summer veranda on the roof could seat three hundred guests at once! There were only 150 staff in this huge restaurant.
On June 11, Tinkoff Kazan opened. We rented a 1000-square-meter space in the former home of merchant Leonty Kekin, a significant historical site that was built in the early twentieth century. It took us five months and 1.7 million dollars to remodel the pmises and install equipment capable of producing 120,000 liters of beer per year.
Essentially, by selling the properties, I was pumping money out of the business. As a rule, I was selling for three times as much as I had paid in 2001-2004. I put all the money into pidends. Some people might say that it is not good policy to drain money like this, but I disagree. It is bad if it hurts the other shareholders, or if the company is carrying debt. I was the chain’s sole owner, however, and so I acted as I saw fit. The company leased back these same buildings, immediately. Our customers felt no change at all. At the same time, though, I was pulling cash out of the business.
In 2006, we expanded the chain by a mere two restaurants. These were different in that, instead of my being the investor, someone else was involved. Thus, for instance, the owner of the Tolyatti Restaurant in Rostov-on-Don was Restoria, which belongs to Samar businessman Alexander Terentyev.
Jumping ahead a bit, I will say that later on both franchises had to be closed. Franchising does not work in Russia-not for now at least-and we did not prove to be an exception in this regard. Moreover, these restaurants’ owners failed to fulfill their contracts. In short: the whole thing was a nightmare. This was so with Terentyev in particular: although our work together had always gone well at the Samara location, the Tolyatti Restaurant did not function well at all. He got some politicians involved and ended up in a difficult financial situation.
From the viewpoint of financial indicators, 2007 turned out to be the best in the chain’s history. Turnover amounted to 800 million rubles. The restaurants in Kazan, Sochi, Moscow, Samara, and Yekaterinburg were doing well.
Since then, only one new Tinkoff restaurant has been opened-at 23 Varshavsksaya Street in St. Petersburg. We invested close to forty million rubles in the project: a 1000-square-meter space seating 300. Of course, the idea was to have it designed in such a way as give it a different look and feel from the restaurant on Kazanskaya Street. The walls were finished in Cumaru wood, the bar in aged natural marble with brass ceramic fixtures. Tabletops were made of oak, and we hung projectors from the ceiling. We used crimped wire mesh, semi-transparent material, beer kegs, and faux gold. The restaurant ended up being beautiful and modern, but the financial indicators connected with it did not make us happy.
* * *
In 2007, Oliver Hughes, the psident of our bank, introduced me to his friend Gleb Davidyuk, a partner at the Mint Capital fund. Funds like this one deal in private equity; that is, they buy shares from non-public companies, help the companies to grow, and then sell their stake in an initial public offering or to a strategic investor.
At this point, Mint Capital had already invested in a number of Russian companies. These included, for example, UCMS, Fruzhé, Moné, A-Dept, Verysell, Maratex, Eleksnet, Gameland, ABBYY, Studio 2B, Advakom, ParallelGraphics, and jNetX. Mint Capital chooses companies that are undergoing active development, companies with annual revenue of ten to one hundred million dollars. Tinkoff met their criteria and they began to consider a partnership.
In August 2008, after having reviewed the idea, Mint Capital invested ten million dollars in the restaurant chain, buying twenty-six percent of the company’s shares for regional expansion. Maxim Sokov, who worked for Oleg Deripaska, became a minor partner. Valentin Morozov, the bank’s financial director, had introduced me to Maxim. What happened next, however, resembles a Great Septembrist Revolution affecting the consumer sphere as a whole and the restaurant industry in particular. In autumn 2008, the financial crisis began in the country. Companies began firing people and people began spending less-as a result of which other companies had to fire people as well. Of course, it is not as though everything got underway all at once: the crisis had been developing for a long time in the global economy. Already in 2007, we saw that it was becoming more and more difficult to borrow money from banks, both overseas and in Russia. The sector itself only began to feel the effects of the crisis domestically closer to the end of 2008.
The crisis put pssure on the company’s weak points. All of the management’s mistakes began coming to light. In the pceding years, I had stopped active involvement in the company and, in my absence, the managers did not do their jobs well. They began to get wrapped up in new construction projects, which remained at a standstill for long periods and which were undertaken in locales where restaurants were not supposed to have been built in the first place. They ppaid suppliers when they should not have done so. The quality of the food did not always meet Tinkoff ‘s standards. Servers began treating guests poorly.
Gleb and I decided to replace Alexei Yatsenko, the general director. The first candidate for the position was a guy from McDonald’s, while the second, Yevgeny Shalaginov, was already in the beer industry. After the interviews, I was more inclined towards the first candidate, while Gleb felt that, because his entrepneurial qualities were more highly developed, the second would be a better choice. In the end I gave in and we hired Shalaginov.
Later, we perceived that the company was in no state to rent properties at the old rates, so Gleb and I went to Troika Dialog to talk with Pavel Teplukhin.
“Pavel, you must understand that we won’t be able to continue suffering losses for long. Look at what’s happening in the world and in the country. It’s had a big impact on the restaurants. We’re losing money. If we close the chain, you’ll lose out on the rent we’re paying entirely. Let’s lower the rates.”
The negotiations ended with Troika agreeing to a substantial reduction in rent beginning on January 1, 2009. This enabled us to save money for the whole year, which is as it should be: in a crisis, property owners should be able to come to a compromise with their clients.
In February 2009, we were forced to close the restaurant in Rostov-on-Don. Why? After I had sold the beer business you could not find me in Russia. Consequently, it was not until much later that I learned of Alexei Yatsenko’s bad decision to open the restaurant in June 2006. The service industry has three rules: location, location, and location. Where a restaurant is located is of primary concern. The Don River’s north bank is the traditional recreational area for Rostovites, but we were renting 1500 square meters on the south bank. To make matters worse, the property was located in the commercial and office complex on Buyonovsky Prospect, in a district where the man in charge does not know how to do his job. Financial results there were mediocre at the best of times. They were even worse now that we were in the midst of a crisis.
In March 2009, we sold the Novosibirsk restaurant franchise, with all related equipment, to the investment company Blok, which is headed up by Voldemar Basalayev, the same man I had worked with in 1991, bringing cars to St. Petersburg from Siberia. The restaurant owed money to the landlord. Hence, we came out of the deal, basically, with nothing apart from income amounting to five or six percent of turnover, being the price paid by the franchisee for the use of the brand.
At various meetings of our board of directors we took these unpopular decisions: to close restaurants, to move our central offices from St. Petersburg to Moscow, and to cancel the construction of new restaurants in Moscow and Samara.
The company was in crisis mode. This was apparent, not only from the falling numbers, but from the flavor of our steaks, the smiles of our waitresses, and other small details. Russian consumers are extremely spoiled and so they immediately let us know what they thought of all this-by taking their rubles elsewhere.
Gleb, Marala, and I went to the Moscow restaurant on Protochny Alley to introduce them to their new director. Basically, what I said to them was,
“So you’re dissatisfied. Some people are on strike, but look at you. Where will the money come from to pay you guys if no one is eating in the restaurant? And why aren’t they coming? Because our food is shit. It used to be delicious, but now it’s shit. You’re the only ones who can earn a living for yourselves; I am not going to invest any more in the company; if it goes under, it goes under. Whoever is unwilling or unable to work can get the hell out.”
The food really had started to taste bad. On top of that, we were faced with delivery interruptions, as a result of which certain menu items were unavailable. Unhappy customers began tipping their servers less. The servers, in turn, stopped smiling and no longer made an effort to create a pleasant atmosphere in the restaurant. Basically, a crisis had descended upon the company.
In order to get out of it, the first thing we had to do was to pay all outstanding salaries, which we did. We also brought Andrei Shinkarenko of Deloitte on board as financial director. It was clear that our staff was back on track, but it was uncertain whether the business would survive. For my part, I grew more and more weary of the restaurants. They were taking up a lot of time and effort and that was taking a toll on my main business, Tinkoff Credit Systems. It sapped my strength and wore down my nerve-endings. Several times, Gleb Davidyuk and I came close to fighting in a manner from which there would have been no recovery.
But I have always had a fondness for acting irrationally. I think that I will feel more calm and balanced emotionally now, though, which is a lot more important than money to me. I’m tired of this business and, in reality, it never really belonged to me. The restaurants were supplementary to my factory and beer project-part of my marketing strategy.
I sold the brewery business long ago. I made a mistake by not selling it to the Makhmudov-Bokarev team two years ago, when its value was significantly higher. But we all make mistakes and I am no exception. I never considered myself a restaurateur and I couldn’t stand how detailed and procedural the business was. It wasn’t for me. So now I’ll feel good; I will not have to think about it anymore. I can concentrate on new things. Nevertheless, though, we really built one of the best chains in all of Russia. And this chain, headquartered in Moscow, had eleven locations, each of which adhered to the standards set in St. Petersburg back in 1998, and all of which were owned in their entirety by a single person! We covered four time zones and eleven provinces. I do not know of any other examples like that; but nothing is unique. The industry essentially consists of franchising and local partnerships. Times have changed now; there has been a paradigm shift, so to speak. The chain needs a new strategy, new strength, and new ideas. The new guys have all of these things.
I’d like to thank everyone who worked with me in building this chain! I remember you all and love you and I hate those who stole from me. I remember you too!
I still believe, in all sincerity, that the Tinkoff beer brewed in the restaurants-especially the unfiltered and unpasteurized varieties-is the best Russian beer there is.
I will continue to eat at my (?) restaurants. I wish all the best of luck to Gleb and Maxim. Guys, support them with your rubles.
Having sold the restaurants, I was finally able to breathe easy and focus all of my attention on the bank. The second St. Petersburg restaurant was closed after I had already left. As things turned out, its location was all wrong; the company was forced to write off its investment there. There was no electricity in the neighborhood and when a restaurant runs off a diesel generator its operational costs are huge.
My history in the restaurant industry taught me a great deal. I am convinced now that, in accordance with the laws of marketing, every business has its own life cycle. Perhaps you you’ve hear of “morning star,” “milking cow,” and “sunset.” Now the life cycle of my restaurant business was winding down. Of course, that does not mean that the new owners will not manage to breathe new life into it. They might well go on to introduce new ideas and marketing approaches, to freshen things up-as they say in the West.
I came to be convinced that the restaurant business was simply not for me. The business is a pain in the ass, consisting of a bunch of tiny details. Restaurateurs are a breed of their own, too. I respect them, but I feel sorry for them as well. Look at how famous and not-so-famous restaurateurs act and talk when they are in their own restaurants. Look at how they are constantly observing everything that is going on, how they do not really see you when they are talking to you, but rather see the kitchen, the service, and the tables being filled. These are sick people…
Second, the restaurants played a foundational role in the creation of the Tinkoff and Oleg Tinkov brands. People came to my restaurants, ate and drank beer, and so found out about me. Some people liked me and some did not; few were completely indifferent. This really helped us to grow. This was also key for our successful sale of the bottled beer business. I hope that this heightened profile will enable me to earn more in the future too.
The restaurant business demands attention to countless small details. This was not my thing, even though I made good money off the restaurants in the end. In 2009, I decided to “turn off the tap” and put an end to my involvement in the restaurant industry. With the girls at the opening of the restaurant in Sochi in 2004. With Konstantin Aristarkhov and Otar Kushanashvili at the opening of the restaurant in Tolyatti. Gleb Davidyuk, partner at Mint Capital:
If I want to drink some lively beer, then I go to Tinkoff, buy some “unfiltered platinum,” and order one of my three favorite dishes: dried smelt, calamari rings, or a meter of sausage.
This man has made a name for himself. He has created and sold a number of businesses. This is a man whose story is worthy of a book. He’s a living being with a head, two arms, and two legs that personifies a certain lifestyle. Does he fit in with Russian society’s social model? Not always, in my view. When society fails to see the behavior from you that it expects, then it becomes volatile in relation to you. So you have to learn how to control society’s attitude towards you, how to make it work for you and not against you. Oleg has recently spent a lot of time working to influence society’s feelings towards him-to render these favorable rather than harmful. Tinkov is a public businessman, which is a very rare thing in our country. When there is very little of some particular commodity in the market, then people’s interest in it is always great. There’s a deficit, to speak in Soviet terms. And you always want that thing of which there’s a deficit.
Our businessmen are outsiders in the western world. They are misunderstood as though they are aliens. But people try to understand Oleg and he does a lot to enable them to do so. I’m sure that Abramovich has not been completely understood, although he has recently come much closer to that. Abramovich just bought England, but he has not proven able to completely integrate into Western society-regardless of how much money he has. Oleg has a sportsman-like approach to business. On the one hand, it is a matter of constant forward movement until the end, until victory is achieved. On the other hand, if things are not working out it is better to leave the track. He’s a tall, strong athletic person. He’s always confident in himself. It is always easier to do business with assets like these. Oleg tries to mold circumstances to his favor, rather than depending on them.
We had the best possible dialog when, just as the crisis was starting in 2008, we went to Troika Dialog to talk about the lease agreement. Pavel Teplukhin probably remembers the conversation to this day. Oleg shone. A normal twenty-first century businessman would have slacked off and not known what to say. But Oleg explained the trends in the restaurant industry in a clear and straightforward manner, in layman’s terms, showing Pavel the prospects for his real estate trust if we came to an agreement.
Chapter 32
Patriarchy Forever!
Rina, Dasha, Pasha, and Roma are my family. They are a big motivator for me, as they would be for any normal person. Indeed, sometimes, they are my reason for getting up in the morning. But it would be false and stupid to claim that concern for my family is my only incentive. A normal man should be motivated by three things: sex, family, and ambition. If a person does not have these three motives, then he is not a man.
My kids are growing up to be good people. Anyone who knows them personally can attest to this. Of course, it is still hard to say what they will become. When your kids are little, their problems are little, but when they are big, their problems are big-this I know for a fact. Dasha is 16 and, from time to time, she does things that make our challenges with Pasha and Roma pale in comparison. Nevertheless, I am proud of my children. And I am very happy that I live with Rina, in particular, because she is the perfect mother.
They say sometimes that if a woman stays at home she does nothing and does not develop. This is a complete lie. Xenia Sobchak once told me that she does not like children. I think that this is the most horrible thing that a woman can say. Now, Xenia is still young, of course, and silly (in the good sense of the word), so it is forgivable.
A woman must love children. It is not a must that she remain at home. To force her to do so would also be extreme. In our case, though, that is just how things turned out: I have always been the one to earn the money and bring it home. Rina was pgnant once, a second time, and a third. We lived in America for a while and then in Italy, so that she simply never had an opportunity to work. But it would be silly to do as some of my friends have done, who purchased businesses for their wives and imagined that, in this way, they were taking care of them. There are so many examples of this sort of thing. She might be an architect-wife or PR-director-wife. We know all of these companies where people’s wives and lovers work.
Our whole family rides ordinary bicycles. We ride them along the seashore and make our way, like that, to crazy, phenomenal restaurants. We study Italian and horse around in the pool and on the beach. It is basically a normal family vacation. Sometimes, when we go to dinner, though, I run into acquaintances from Moscow.
“Oh, Oleg. We haven’t seen you for the whole month,” they say. But I think to myself,
“I’d go another month without seeing you. I was already sick of you in Moscow. I’m here with my family. I’m resting and I feel good.”
A businessman’s wife is of the utmost importance to him. Things have not changed since ancient times: the mother is the keeper of the hearth and must always keep the fire burning. In the beginning, we brought mammoth meat home and now it is cash-that is the only difference. I am very grateful to fate and God for having set me on the path to meeting Rina and for the fact that I live with her. Our example shows that Russians can get along with Estonians, even though relations between the two nations following the USSR’s collapse suggest the contrary. Not only has Rina always maintained the hearth, she has allowed me the freedom to take care of my businesses. She has never been burdensome. A man is free to act decisively when his home front is secure. When he knows that everything is well at home and that his family is there, waiting for him, he can leave and head out to the battlefield.
A lot of businessmen trade their old wives and lovers for new ones. Some of the oligarchs from Forbes magazine were never married at all. From my point of view, this is unhealthy. You have to have a wife. There has to be a hearth and a woman/mother guarding it. A woman is your home front. She is your salvation. She makes you what you are. I do not believe in doing big business without the support of a wife. Mikhail Prokhorov is an exception, but he is a talented and unique person.
Some may say that this emphasis on family is old-fashioned, but I could not care less about what is in fashion I associate the cave and the fire with women and the man with hunting and patriarchy. If things are not like that, then you have nothing. I believe in eternal values.
When I start cooperating with someone in business, I always look at what kind of wife he has. If he does not have a wife, then he has no base, no roots. I try to avoid doing business with such people. They are half-wits, as far as I am concerned. But if there is a woman in the picture, someone for whom everything is being done, then I see the person as reliable and orderly. There must be a clear, balanced structure.
I am a person with many positive and many negative traits.
A man’s family must love him and forgive his shortcomings. I am not a perfect person. But since I have no intention of getting into politics, I do not need to be perfect.
The latter entail various inconveniences and problems, but without them I would not be Oleg Tinkov. I am not superhuman. You only see superhuman people on television. If I were a lot richer, I would have a big villa with guards, a hundred-meter yacht, and a big airplane. I have all of that, though-only on a smaller scale. I pfer to be free and to live as I please. I do not want to watch my every step and bend to the strong of this world in order to increase my financial standing by a percentage point.
It is more important to me to spend time with my kids, to race up and down the passes of the Apuan Alps, and to ski down the wild slopes of the Savoy Alps. I do not enjoy thinking about what I ought to be saying to whom, or to worry about whether or not I am acquiring enemies. That would be too rational a life. And that is not my thing. I would go completely nuts if I thought like that. As it is, though, I sleep as soundly as can be. I do not owe anyone anything. I do not need to lie, nor to keep track of what my last lie consisted in. I live by my emotions. We only live once, after all. You do not get a second chance.
My problem is that I am a perfectionist. Some might say that by 42 years of age I should have calmed down and stopped seeing the world in black and white. But I have not calmed down. It might be because I am not as rich as I would like. I remain a maximalist. I do not like compromises and gray areas. My easily triggered temper does not make my life any easier either. If it was not for these demons, if I were more thoughtful, calm, and rational, I would have become a billionaire, in dollars, long ago-and I would have left Vladimir Lisin in the dust. But these things have always hindered me. I repent, I repent, I repent, but I am still this way.
It is not easy to say this, but I need to make another difficult statement: I have no friends in the literal sense of the word. If you have friends like that, then I envy you. Of course, in reality I do have somewhere between ten and fifteen friends, but these are not the sorts of friendship that you read about in books. Friendship is first and foremost a matter of self-sacrifice. I, however, am not ready to make sacrifices, nor would I accept the sacrifices of other people. Friendship requires time. But I am an entrepneur whose business is his life and so I only have enough time remaining for my family and for sports. Friendships are formed in the course of a lifetime and my constant movement around the world is not conducive to that.
But maybe having “friends at all costs” is not a necessity after all. In Russia, friendship has taken on an absolute value, thanks to our classics. In the Anglo-Saxon model, friendship is something more rational. I do not know which model is better. But I know that one only allows another into his or her inner world if that accords with the person’s own desire. If you do not let someone into your soul, then that person will not let you into his or hers either. This is a process of mutual exchange. In the same way, friendship that is one-sided ends quickly.
I probably only have one real friend-my wife Rina. It is a friendship that has been tested by time. We have been together since 1989-over twenty years. Our relationship is so honest that for a long time the thought of signing a marriage contract and having a wedding did not even cross our minds. But in order to protect the family economically, I decided it was time to get married and legalize our relationship.
The idea of having a wedding entered my mind in the winter of 2009, while I was turning the pedals of my Colnago Ferrari bicycle at the gym (I turned it into an exercise bike by attaching a cylinder under the back wheel). As I pedaled, I thought,
“In June, it will have been twenty years since I met Rina. We need to celebrate! Rina always wanted a white dress, but we never ended up having a wedding. If we wait much longer, we’ll actually be old before it happens. While the kids are little and while we’re young, we’ll look good in the photos. It’s time to get married!”
Instantly, other thoughts began popping up madly in my mind: Where? How? I have a lot of Italian friends, including Francesco and Patricia Gioffred, who own the huge castle Castello Di Tornano. I thought about the castle and about America. I thought about France, where we have a small flat with a view of the Eiffel Tower. No, it would not work. Forget it!
I kept pushing the pedals and the solution came all by itself. Why not make it Lake Baikal? I had never been there myself, but had heard a lot about it. I started talking with my friends. None of them had been there.
A lot of people ask where ideas come from. I was at the gym, riding an exercise bike; I got to thinking and then-Baikal.
All right, great!
The next morning I was already worried. I looked online. I called my friend Mikhail Slipenchuk (head of Metropol group). I had been introduced to him in 2008 by Oleg Anisimov, who then worked for Finance magazine, at a forum in Dubai. Now Oleg works in my bank as vice psident for marketing. Mikhail had mentioned that he had a few mining operations in Eastern Siberia, so I called him and he recommended Baikal’s Buryat shore.
The wedding was organized by Lena Surkova and Sveta Podolskaya. They own a party planning organization in St. Petersburg called Amusement City. (By the way, they are the best event organizers in the country!) Sveta Podolskaya’s husband, Stas, worked in my beer business and Lena’s husband, Andrei Surkov, worked with me to build the Tekhnoshok chain and also on our (unsuccessful) wood business. I called Sveta and Lena and said, “No one will do a better job. We’re old buddies.”
Ulan-Ude, the capital of Buryatia, lies 5500 kilometers from Moscow, a six-hour flight away.
The most important thing, friends, is to not grow old in heart,
To sing the song we wrote until we reach its end.
We have started on a long road, to a part of the taiga
You can only reach by plane.
Dear airplane, as you fly away,
Protect what is in your heart…
And under the airplane’s wings you can hear a song
Being sung by the green sea of the taiga.
On our way to Ulan Ude we stopped in Kemerovo, in my homeland. Aman Tuleyev gave us a cordial reception at the gubernatorial residence. My friend Alexei Prilepsky organized the reception. At one time I had encouraged Alexei to move to St. Petersburg. Now he is one of the major suppliers of mining equipment in the Kuznetsk Basin, constantly flying back and forth between Kemerovo and St. Petersburg.
While the guests were resting, I took Oliver Hughes and Stefano Feltrin, along with some other Italians, to my hometown of Leninsk-Kuznetsky. After this outing they came to understand me a lot better.
For five days, I was missing from the face of the earth. For Rina and I it was a true fairy tale. The wedding itself took place on June 12, 2009 and conformed to the usual Russian traditions-the matchmakers, the dowry, the guises, and all kinds of amusements. Rina’s dream came true: our children carried the train of her huge white dress down the aisle. We walked, holding hands, over the sand and rocks, since the wedding was in a marquee only a few meters from the Holy Baikal. We threw quite the party!
I was simply happy. My guests created a truly warm and sincere atmosphere. I would like to expss particular thanks to Valera Syutkin for hosting the event (for free!) and to my favorite Englishman, Bryan Ferry (I am happy that I invited him, rather than Valery Miladze, as I had originally wanted to do). I remembered-just in time-that his song, “Slave to Love,” from the movie 9 1/2 Weeks with Mickey Rourke and Kim Basinger, was a hit back when Rina and I first met. So twenty years later I decided that it would be our wedding tango.
I did everything I could (and I thank Richard Branson for his help too) to book Bryan Ferry. He came, sang “Slave to Love,” the love anthem, and Rina and I, wearing white, danced a beautiful dance on the shore of Lake Baikal. Yes, the dream came true.
It was unbelievably fun. And yet, even so, we were sad at times. It was a bona fide May 32 nd. Smile, gentlemen, smile! And think up holidays for yourselves, especially now, during this crisis!
A wedding, twenty years later, is awesome, I think. It is for real.
The lyrics to Yury Antonov’s song, “Twenty Year’s Later,” composed by Leonid Fadeyev, reflect my emotions perfectly:
I am thankful to fate
For the love that is given us.
I know I’ll need you,
Always you alone,
Just you alone.
I want us to be close,
In spite of all the years.
I want us to be close
Dasha, Pasha, and Roma: my children and my hope. Gucci spent 10 years with us before dying in March 2010. In 2001 I introduced my father and mother to America, a country that my father had respected during the Soviet era. I will not leave a fortune to them. I will pay for whatever level of education they choose to pursue. Beyond that, they should develop on their own. My children and I love our Villa Le Palme in Forte Dei Marmi. Rina has mixed feelings about it, however, since when we are there she has to do more housework than usual. About my Favorite Cities
Twenty years from now…
Of course, I am a rootless cosmopolitan. Where else would you find such a weirdo: born in Leninsk-Kuznetsky; lived there for eighteen years; spent two years in the Far East (a year in Nakohdka, in Primorsky Krai, plus another in Nikolayevsk-on-Amur in Khabarovsk Krai); thirteen years in St. Petersburg; six in the U.S.A.; a year in Italy; and now I reside mainly in Moscow. No wonder, then, that I am a man without roots. No wonder that the idea of a fatherland is foreign to me. I have a spot of homeland in Leninsk-Kuznetsky; my father’s grave is there on its ten-meter plot. But I am a man of the world. I like Americans, Italians, Frenchmen, and Russians. I like ordinary, good, capable people. I chose Forte Dei Marmi for one simple reason-the people there are pleasant and they feed us well.
Rina Vosman, Oleg Tinkov’s wife:
I do not understand why people go to France-where you pay people to be rude to you, offend you, and spit in your oysters. Only gluttons for punishment go there. There are two types of Russian people: those who like France and those who like Italy. I have noticed that I am usually friends with people of the second kind. And I do not really understand people who pfer France. My Italian friends are Patricia and Francesco who own the Castello di Tornano. I first met Patricia in the early nineties when she was head of Whirlpool and Petrosib was their dealer. We are still friends after all these years. She suggested that I get a home in Forte dei Marmi. It was important that an Italian make this suggestion and not a Russian. I love the place. It has come to be one of the most important places in my life. St. Petersburg, Forte dei Marmi, Leninsk-Kuznetsky, and San Francisco-I can draw a box around these four.
Oleg’s business successes are his achievements alone, but I played the part of guiding star, so to speak, his guiding force. I guess I have to say I motivated him. Or, to put it differently, he’d use me sometimes. I only found out after the fact that I was one of the stakeholders in Petrosib. He kept business information from me. Of course I was aware of what he was working on. For instance, when the factory was under construction, we drove to the site every Sunday to keep track of the progress. But he didn’t inform me of any problems. I think he did the right thing.
As the years passed he became calmer- much more so. In the nineties he was a total firework. There are still little bursts, now and then, but it is not a firework show. He’s always overflowing with energy; he did everything-and then some. Like Karlsson-on-the-Roof with his little motor! He was completely uncontrollable. I always tried to keep him in check. Maybe ours is the perfect marriage: opposites attract. He’s reliable and I didn’t make the wrong choice. He manages to keep his eye on me, on the children, and on his work. I never had to adapt to his needs. If there’s something that we don’t like, we always speak to each other frankly. Maybe that’s why we’ve been able to live together for twenty years. The first ten were really difficult, though; we’re completely different, after all. We celebrated our wedding in June 2009. By that time our other married friends had long since porced.
One Italian lady asked me,
Yevgeny Brekhov, friend of Oleg Tinkov:
“How did you live with someone you weren’t married to for twenty years?” But I felt completely comfortable. I didn’t need anyone’s stamp of approval.
We went over to Seryozha Ufimtsev’s house and I saw a man just back from the army sitting there. How did I know this about him? His dress was peculiar. I invited him to the movies and he began by turning me down, saying there’d be a fight there. I insisted that if he came with me there wouldn’t be any. That’s how I met Oleg Tinkov-a good, kind, unusual guy. Since then he’s told me two stories. One was about his girlfriend who was killed. He told me the second story, about Rina Vosman, his second total love, when he was in university. He really is completely lucky in life. If Oleg had stayed with his first girlfriend and the tragedy hadn’t happened, he would be working and living today in Leninsk-Kuznetsky. He would still be a miner in love. And he would never have met Rina-his true other half. Rina is the most important part of his life. She has helped Oleg to take a completely different stance on life and she has helped him to build it. She gave him his family. With Oleg, everything that happens, happens for Rina Vosman, the best woman in the world. I’m lucky that I can bear witness to the happiness of two people at once. They are a beautiful and very good couple.
Chapter 33
The Call Online
I believe that our future lies on the Internet. Consequently, I am interested in development in this area and in deeper integration with it. I want to prove that online business can be profitable. For the moment, few people earn decent money on the Internet. At our bank we have gambled on the possibility of attracting clients that are looking to open an account via the Internet. It is possible, however, that I will eventually have some other kind of business on the Web. For now, though, the Internet has more entertainment value for me than it does anything else. I enjoy maintaining my blog, tweeting, and experimenting with social networks. Let me tell you about how my blog came to be one of the most popular in Russia.
Hi!
Today I’m officially letting everyone know that I’ve started a blog. How do I see it?
- I’m not afraid of mistakes. I’m from a small provincial town and I didn’t finish university.
- I don’t want to do as my colleagues have done (you know who I mean), who brag about themselves in their blogs-in spite of the fact that their blogs are actually written by their assistant or a hired PR agency (respect, Yulia!).
- This won’t be a blog; it will be my diary.
I’m not aiming for pulp fiction. Instead I’ll just write a couple lines here and there. A little of something good is best. 🙂
I hope you’ll forgive me if I don’t write all my silent letters, or if I leave them out entirely-it’s not that important.
Oleg
I wrote regularly and about everything: business, sex, music, politics, food, architecture, and so on. A year later, in spite of the odd errors in my writing, I had 15,000 friends and I was ranked in the top thirty in Yandex ‘s blog ratings, which is typically a very difficult thing for new bloggers to achieve.
In the course of the year I had been caught up in a number of Internet scandals. For instance, on September 29, 2009, I wrote a post in support of the construction of the Gazprom skyscraper in St. Petersburg. I had never had so much shit dumped on me before! People accused me of anything and everything: of stupidity, of poor taste, of brown-nosing… I will repeat my position though: I just like the tower. Both of my apartments in St. Petersburg have nice views. The first looks out on the Admiralteystvo, the second looks over the whole city. Once it is built, one will be able to see Okhta Center from there as well. I did not speak out in favor of the tower because I had been asked to by Matvienko, whom I had not seen since 2005, or by Miller, whom I have never seen in my life. I spoke out because I sincerely feel and-I am not afraid to say it-hold, from an aesthetic point of view, that building is beautiful. The project contributes to the development of a depssed part of the city, too, and will create jobs for local residents.
St. Petersburg is an excellent city, but it does have its weaknesses-that pseudo-intellectual arrogance that says: we will live in shit and we will not allow anyone to do anything about it.
Why not let them clean up the Okhta neighborhood, free the place from the rats and dirt? Why not let them build a ptty glass building, run the utilities and make a beautiful spire that I will be able to see from my building. Once upon a time a White Russian General who had immigrated to New York was asked why he was renting an apartment rather than buying one. His answer was that he already had an apartment-in St. Petersburg. I say the exact same thing. From my St. Petersburg apartment I can see everything from the mosque to St. Isaac’s Cathedral. I will look upon the tower at Okhta Center with pleasure too.
Some people felt that I had spoken out in favor of the tower because my business was not going well and because I therefore wanted to pay my respects to the city’s politicians. What a load of crap! I have never sucked up to politicians. Judge for yourselves: all those people you see on TV are accessible to me-all it would take would be a phone call. I know all of them and I feel no need to prove anything to them. I expss my own opinion on matters civil and aesthetic. I have never used political connections; I do not need to.
I cannot abide being wrongfully accused: I react sharply. Oleg Anisimov scolds me for this: why reply to an anonymous online user who has only five friends? And sometimes it fails to help at all. I lose my temper and write nasty things. I cannot stand to read bullshit.
People addressed a lot of crap to me after I invited Xenia Sobchak to the first episode of my Internet show, Business Secrets with Oleg Tinkov. They accused me of reducing the whole discussion to a conversation about sex. They complained that the program turned out to be mere sensationalism. They said that I was stupid. Few understood, however, that we opened the series with a scandal on purpose in order to make ourselves known. The people who were most offended were the first to watch subsequent episodes, which were devoted to business.
Our show has featured numerous guests: Mikhail Slipenchuk ( Metropol), Igor Ponomaryov ( Genser which did not lead to anything good. I am a little afraid because of these things.
Will I fight it? I never tried to twist myself into a Khodorkovsky caricature. I have great respect for the man, given what he did. I do not know whether he is guilty or not. Did the company he kept kill anyone? Possibly. Up until the moment he got on the plane he said that he didn’t care about anything and that he would fight. That’s why I consider him a great man and a hero. I admit that, like all the oligarchs, he did some shady things. But really, he suffered for what he did. And he acts nobly; he even spent six years in jail. And you should hear the interviews he gives! He never gets mad at anyone!
I would like to know for myself how you make decisions and take risks. It would be really interesting to see a discussion in the book concerning Russia’s business situation, its problems and ways of solving them. This won’t just be a biography, I hope, but a book that looks forward to the future.
When people tell me that I will never be like Khodorkovsky, I reply that, of course, I won’t be. He’s a monster of a man, a boulder with a big personality. I could never do what he has done. There are strong people and weak ones. Unfortunately, I am weak in this respect. That doesn’t mean that I am integrated into the system. To the contrary, I’m fighting it. I am a businessman and an entrepneur. I do my thing; I feed my family. Russia is my fatherland. Everyone knows that you do not chose where you come from. I am certainly not planning on getting involved in politics, creating a party and fighting-just as I do not plan on joining the United Russia political party.
It’s a tough question. We are talking about metaphysics here, so we have no material. It’s impossible after all to know why you fell in love with a particular girl. Something happened to you on a chemical or physical level and suddenly you were in love.
In order to make a decision, you have to make a quick analysis. Our brains are not fit with Pentiums but with much more awesome processors. We analyze quickly and make decisions quickly. I took a Socionics test and ended up in the Huxley category for intuition, my tendency to make fast choices and to find the right people.
When a person comes to an interview, how do you assess him or her?
I’m not ready to speculate on Russia’s future, as I am not a politician. To me the future looks fairly clear and steady. But I don’t expect there will be any major shifts to either side. Unfortunately, we will remain the earth’s source for natural resources. But at the same time our citizens’ prosperity will grow and maybe in the foreseeable future we will catch up to Eastern Europe. Realistically, though, there will be no breakthrough. Why? Because we just don’t have the education. More importantly, we don’t have any business education. We need to make substantive changes to our system for training personnel. The Soviet educational system has outlived its usefulness. The switch to innovative technologies is also important, but that’s not fundamental. The key is education.
Have you made mistakes?
I look the candidate in the eye. Of course I am not the Lord God and I can make mistakes, but I’m right most of the time. I choose people. If he’s a good person and, in addition to that, a good worker and manager (like Oliver Hughes, Georgy Chesakov, and Artyom Yamanov), you’ve achieved a success. All of our guys are supermen. On average I select three out of every ten. I evaluate people based on their human qualities. The most important thing is that they share my values-rebelliousness and joy in business.
Of course I have-though not very often. As a rule, I’ve made mistakes when I thought bad things about people and they turned out to be good. I’ve never had that happen to me the other way around. I don’t know if it’s a matter of stereotyping or what.
A lot of stereotypes are circulating in connection with me. “Now Tinkov, he’s a-” and the list starts. Damn! You guys don’t know me. Maybe when you finish reading this book you will have finally learned something about me. Guys, we don’t need stereotypes. Chichvarkin is a clown. Abramovich is a billionaire. All of these are stereotypes.
How do you feel about criticism?
Forgive me Lord. I repent. I was mistaken!
Just like any normal person: negatively. It is normal for a person to be averse to criticism. He may recognize that the criticism is fair, but on a subconscious level he will not like it. Nevertheless, criticism is a good thing and I like constructive criticism.
For example, if people tell me, “Oleg you’re such and such” and they back up their claim, then whether I reply or not, I give it some thought. But if they straight out insult me, then I just block them. I do not like it either when people write that I’m looking to win Matvienko’s favor just because I am in favor of the tower. It drives me up the wall because it is not true. I just like the tower project and I want to be able to see it out my window.
I welcome criticism. Please criticize me. I am a living person and not the God Almighty. I have so many shortcomings. …
Would you want to buy an island?
But I’m 42 years old and it would be impossible to reform me. I don’t have a media strategy. If I could be reformed, then I would long ago have become like Roman Abramovich or Xenia Sobchak. I might even have outdone them. I have always followed my gut, so things will turn out as they might. I’m a simple, Siberian felt boot. Oleg Anisimov-and my intuition-suggested I start a blog and so I did. My intuition, Oleg Anisimov, and Richard Branson suggested that I write a book and so I’m writing it. Sometimes I turn down offers to appear on TV, but there are other times when I agree. There is no strategy in any of this though.
Do you want your children to be in business?
To tell you the truth, yes. I have thought about it for a while. Branson influenced me in this regard as well. As with this book, Branson simply hammered the last nail in the coffin. I have always dreamt of acquiring my own island and creating a micro-state there with its own rules. Elsewhere people are always loading me down with all kinds of futility, a constitution and a passport. On the island, however, there would be 500, or better 200, of my citizens living there and I would create the Republic of Liberty. We would do as we pleased. Communism. I would be an emperor with no crown. I would buy the island only in order to make these people the happiest people ever.
What quality has hampered your life and your business?
Probably yes, but not necessarily. I would want my kids to be people, first and foremost. I like my sixteen-year-old daughter Dasha’s grasp of business. She’s very sensible. When it comes to Pasha it’s hard to say and the answer for Roma is no. The boys are doing their own thing. If they end up in business that would be great, but I won’t be discouraged if they don’t.
What do you like to do in your free time?
Life and business are one and the same thing for me. The only thing that has hampered me has been my short temper. Unfortunately my mother, Valentina Vladimirovna, passed this trait along to me. She was a poorly educated woman, hot tempered, provocative, and high strung. But I love her nonetheless, obviously…
You want to become really rich. Why?
I consider time “free” if I’m not spending it on business or on family. That said, my favorite pastime is sleep-or watching television. I feel that these are excellent hobbies. Sleep is a healthy thing to do. I don’t understand people who sleep three hours a night.
That is the hardest question you can ask a person. It involves higher philosophy. Do I want to become rich? Well, don’t you want to? Every normal person wants to be rich, healthy, and young.
Mezentsev, our great physics professor from the Mining Institute, asked one of my classmates to get up and he asked him,
“And how much money do you want?”
“Lots.” The professor replied,
“For some people a lot is not enough.” What a great answer. For some, having a villa and a pool in Tuscany would be their wildest dream come true. But for someone it would be jack squat-even if they had a villa on eight hectares with five pools and another ten villas scattered around the world. What does it mean to be rich? Who knows? Consider Bill Gates, Warren Buffet, and Abramovich. There is Polonsky. There is Tinkov. Each is rich in a different way. But the term is the same, “rich!” I became rich during my second year at the Mining Institute, after I moved from the dormitory into a room in a co-op flat for fifty rubles on the corner of Shkipersky Stream and Shevchenko Street. There were eight people in the apartment. Our drunken flat mates were constantly coming into our room. Once, our neighbor Auntie Masha stumbled and fell right into Rina’s and my bed. I got up and dragged her carefully back to her room. I was rich because all my friends lived in the dormitory, but I had my own room with my beloved girl. It is so important to have your own space. I got tired of living with-and banging my girlfriend in close proximity to-three other friends in our fifteen-meter room.
I do not want to do anything for free. It would not be right. It is White Anglo-Saxon Protestant logic-experience has shown that doing everything for money is the right thing to do. If people do something for free, based on friendship, then nothing will come of it. Or it will turn out poorly. But if it is done for money, then the result is different. I can do something for friendship’s sake once or twice, but then it does not work anymore. If a person spends more than an hour of his or her free time on something each day then it has to be paid for. Now, money is a tool. I need it in order to pay for my countless apartments all over the world and for my children’s clothing and education. My daughter’s education alone costs several tens of thousands of dollars a year and I have two more children growing up. My mission is to raise all three of them and send them on their way.
There are bankers who do not wear a suit. Here is an example.
Perhaps I will disappoint someone by saying this, but I will not leave my fortune to my children. The most that I will do will be to fund whatever level of education they want to achieve-and then I will allow them to continue developing in whatever way they see fit.
Oleg Anisimov, editor and founder of Finance magazine:
Sergei Galitsky, founder of the Magnit store chain, is an entrepneur whom I respect for the fact that he created a truly major business from scratch.
I suggested that Oleg Tinkov start a blog on Livejournal with a self-serving goal in mind: I wanted him to promote my magazine by publishing his columns and putting links on the site. I even told him we could post material on his behalf. But Oleg immediately rejected the offer and started writing himself.
He hasn’t always stepped too carefully, like any inexperienced blogger, but his sincerity has won people over: Oleg’s is one of the most popular blogs on the Internet. People see how he writes and communicates on his own, without the help of a blog secretary, so they’re willing to forgive his imperfections.
The bank’s blog has been a great help in 2010, when we started the deposit program at Tinkoff Credit Systems. At that time I already worked as the bank’s vice psident for marketing.
Chapter 34
A Revolution is our Prerogative
Let me get back to the bank. Due to funding problems, growth in the bank’s credit portfolio slowed in 2009: we had 5.2 billion as of April 1, 5.4 billion as of July 1, and 5.1 billion as of October 1. There was nothing we could do but to work better with the portfolio we had, increasing the quality of our risk analysis and improving our interactions with people who were failing to make payments.
In the bank we used a test and learn approach, based on the experience of Capital One, testing all kinds of different approaches to getting through to the client. Our method is somewhat like Japanese kaizen: we are constantly looking for the smallest improvements that we can make, which taken together yield big results. Here is a banal example: originally my signature was at the bottom of the letters that we sent. Later we started testing other signatures-Oliver Hughes’, Georgy Chesakov’s, and so forth. Some people might say that it makes no difference whose signature is at the bottom of the form, but we had to do this test to see which one of them worked better in practice.
We strove to improve our offer package (which goes in the envelope that is sent to the client), to find an optimum balance between being under the weight limit and achieving maximum effect with the mailing. The package has to interest the client, as does the text of offer. A client might stop reading at any moment, so it was important to maintain her interest and-assuming that she was in was in need of credit-to get her to fill out the form. Since March 2007, we have sent out close to thirty million letters. As a result, we have one of the best databases in Russia.
The largest bank in Russia, Sberbank, had absolutely nothing on the credit card market until only recently, and I looked for areas where we could cooperate.
German Gref is one of only a few Russian politicians towards whom my feelings have not grown cold. He went through fire and water when he worked for the St. Petersburg administration and in the Ministry of Economic Development. Sberbank was one of his less momentous jobs. Will he be able to remain an ordinary person and not lose track of his liberal values? He has the same Siberian-Petersburger values that I do. The next few years will tell. It’s difficult. The bank is big and it is no simple matter to cross a hedgehog with a water snake-no more so than teaching an elephant to dance.
Gref and I met, and I made a proposal aimed at securing his cooperation. In 2008, our credit card portfolio was bigger than Sberbank ‘s and the technology that we used was a generation ahead of theirs. More importantly, though, we knew how to attract customers and they didn’t. I said to him,
“Let’s cooperate. You know that magic word, ‘outsourcing’? We’ll candy-coat it for you. With our technology, if you don’t see the elephant dancing, at least it’ll be bouncing up and down.”
Gref understands that he is a big boy who can do anything. The Royal Bank of Scotland acts more competently, however-they gave Branson the right to accept deposits under his brand and they do not pide the additional earnings. As far as I know, Virgin Money ‘s net profit amounts to 60 million pounds sterling a year, half of which goes to the partner banks and half of which remains with Richard.
In order to succeed at Sberbank, Gref and his people need to change their mindset. They need to accept the ideas of partnerships and outsourcing. Alexander Lifshits, former Finance Minister, told us that sharing is important. The approach that begins with the attitude that “I’m big and don’t need anyone else” is behind the times. If we keep thinking like this, then it is unlikely that the elephant will dance in the near future.
My personal relationship with Gref is a good one. He stood up for businessmen more than a few times when he worked in the ministry. For instance, he defended Yevgeny Chichvarkin when the cops were attacking him. He was always a spokesman for liberal values in the government. My wish for him is that he remain the man that he is today and that he not be spoiled by the enormous power he now has.
Our banks may cooperate yet, but as of the spring of 2010, none of the required conditions is in place. In one way or another, Sberbank is not the only fish in the sea. Without a doubt, my bank is a project that I plan to sell someday and there will be other interested players when that time comes. As I said in Kommersant magazine in March 2010:
There is a possibility, then, that you will join forces with one of the existing players?
I understand, as do my minor stakeholders, that we are in this project whole-heartedly and that in the end it will become part of a large, global bank in which we will simply be the credit card department.
Are there any potential buyers? Who has expssed an interest in acquiring your bank? But have there been any concrete purchase proposals?
Of course not; it will be a sale. We will sell it and then they can integrate it with their bank.
There have been. I’ve listed a bunch of banks; we have received proposals from some of them.
My bank currently controls close to five percent of Russia’s credit card market. I am often asked, “Where are your cards? I’ve never seen any.” In all probability, this means that you are not supposed to see them, pcisely because you are not one of our target customers. Or you will see them soon: let us not forget that there are 140 million people living in Russia. I never saw Russian Standard cards either, when they were leading the market. Bear in mind, too, that Rustam and I work in the pmium consumer market, which is not always the most successful platform when it comes to building a profitable large-scale business.
So the model that my bank is following has been successfully implemented in a market as competitive as the States. In Russia, however, competition for customers is in its embryonic stage. How did our bank achieve serious success in the credit card market? This was thanks to our service. No one in our country, though, can imagine-or wants to imagine-providing customer service. Customers ought to find it convenient to use your services. If they do, then you will sell more-and for more money. People are always willing to pay for timesaving measures and for convenience. With these things in place, the bank’s profitability will line up with customer satisfaction.
It just so happens, I think, that my investors are smarter than those skeptics who bought up a bunch of securities before the crisis-securities, that is, which later defaulted. Why, then, am I the one that people write shit about online? These guys said, “I’d be better off buying securities from Yevrokommerts. They have a smart young psident, Grigory Karpovsky. He’s a financier. Tinkov, on the other hand, is a brewer.” But the next thing you know, Yevrokommerts defaulted and these investors’ balance had a gaping hole in it. I use this factoring company as an example because we were in direct competition with them when we were looking for investors in the debt market.
Give me even a single instance where I did not fulfill my obligations on a loan. All of my partners and investors are more than happy-everyone from Promstroibank to Goldman Sachs. Even the bondholders, who were really worried during the ruble’s devaluation period, got two warrants each at eighteen percent annually. They too are happy. It is always the more reliable, higher quality companies that end up having to restructure their obligations.
In cases like these, we need to consider the person standing behind the company and have a look at the company’s credit history. Someone that has been in business since 1989, someone that has built and sold four companies-such a person is trustworthy. Those who are afraid to lend to him are idiots-and that is all there is to it. They do not know how to pursue treasure. They do not know how to separate the wheat from the chaff. They continue to lend money to phony companies. Let them have their defaults; let them restructure their debt for years afterward. Smart investors will work with people who have been proving their worth for the last twenty years-and they will earn their eighteen percent. Building a business, like living a life, is not equivalent to crossing a field.
An entrepneur must always be read to plunge into battle. In March 2010, our company took a trip to Verbier. We did not merely ski, though. We also had business brainstorming sessions In the Steps of David Bowie?
As a banker I can confirm that one can invest confidently in someone that had his first business in 1989-1993. One can boldly loan money to such a person as well. People like this have gone through the toughest schooling out there-and their achievements speak for themselves. They survived in a time when a lot of businessmen dropped out of the race. They are the best of the best.
I have been thinking lately about issuing my own Ruble bonds @ Moscow. At one point, David Bowie set a very good example of the kind of thing that I have in mind (see http://en.wikipedia.org/wiki/Bowie_Bonds).
On November 7, 2009, I wrote all of the bank managers a letter. I give it in the original so that you can get in some English practice.
I think my name has more fame and credibility in Russia than even TCS Bank. According to some studies, the name Oleg Tinkov is in the top five inpiduals who come to mind when people think of Russian businessmen, beating Abramovich, Khodorkovsky and Deripaska.
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