Ruslan Kogan
Millionaire and Individualist
When Ruslan Kogan was at University, he use to solve his campus parking problem by offering people a lift to their car and promptly taking their parking spot. “It’s all about creating win-win situations” the founder of Kogan Technologies tells me. Valued at $145m, he’s worth listening to. Kogan has become well known across Australia after a series of highly successful publicity stunts. Kogan once charged a 6.8% tax for users of Internet Explorer 7 on top of their purchase price. He also gave free HDMI cables to JB Hi-Fi shoppers who had been ‘tricked’ at the register. Not to mention his hilarious jabs at Gerry Harvey every time the Harvey Norman founder says something stupid in public.
After realising the ludicrous mark-ups on television sold at ‘bricks and mortar retailers’, Ruslan brokered his first deal with a Chinese manufacturer by helping them present their quotes more professionally to Western buyers. Kogan technologies was born with an order of 80 TV’s by a young guy who quit his well paying job to become a TV salesman. Starting with no cash, Ruslan pre-sold TV’s on eBay so he could pay the manufacturer before they were shipped to Australia. When eBay suspended his account for suspicious behaviour, Ruslan used a form-prefill tool to apply for a credit card from every lender he could find. All of a sudden, an unemployed 23 year old had $50,000 in unsecured credit. The risk has paid off. Kogan.com recently sold over $1m worth of goods in a single day.
Smoking a cigarette as he chats to us, Ruslan talks about his new mobile phone provider koganmobile.com.au. In just a couple of months, Kogan had grown the telco to be larger than Dodo, without spending any money on advertising. Before its recent legal strife, koganmobile.com was just a ridiculously cheap way to access the Telstra network. From what I can tell, Ruslan is a big believer in free markets and doesn’t believe too much in marketing spin.
“My mother once came home and said she saved $100 on a dress marked down from $150 to $50. I replied by asking if she saved $100 or wasted $50” Ruslan quips.
His no-nonsense style became apparent to me when I bought a Kogan branded phone for $149 from the retailer. At the checkout, a $20 case was presented asking if I’d like to buy an ‘up-sell’. The no-nonsense style is very telling of Kogan’s philosophy. Kogan’s style puts emphasis on the individual. His business model of no-bullshit low prices puts faith in people to make smart choices.
From what I can tell, Kogan’s business model is actually relatively simple. He spends a lot of money on Google Adwords to drive traffic to his site and sells those visitors products at a price which covers all of his costs as well as a small percentage profit. He focuses on getting his website to convert visitors into sales and encourages repeat traffic by continually offering value to his customers. He creates this value by cutting every conceivable corner that doesn’t reduce the quality of the end product.
It’s a simple idea, but the real genius of Ruslan Kogan is the vision he had for online retailer long before anyone else.
“I thought that if you gave a consumer all of the specs about your product, they would be able to make a decision and buy a heavily discounted television online without seeing it”.
Well before this was common practice, Ruslan had faith in people to make rational purchases.
The small television retailer has grown to be a fully integrated household electronics brand that sells everything. The Kogan branded phone I recently bought to tide me over while my Vodafone contract expires so I can switch to Koganmobile isn’t the best phone in the world. But it’s good. And because I was smart enough to read the specs and buy the phone before seeing it, I only paid $149.
It leaves Ruslan’s arch nemesis Gerald Harvey in a pickle of a situation. Ruslan realises that for established bricks and mortar retailers to compete with him, they will have to sell goods online cheaper than they do in store ... but then why have the store? Ruslan has established an online customer base before anyone else and at such tremendous scale that he is now able to get serious volume discounts. He’s done extraordinarily well for a TV salesman.
But for Ruslan Kogan, I don’t believe it’s all about the money (although I don’t think he’s exactly stingy). When I met him I realised he’s just a normal guy with a lot of ambition and skepticism for politicians.
“Politicians don’t create wealth, people create wealth” he tells us.
Both of his parents escaped communism in Russia and had to work hard to see their child grow up with any comfort. Surely this has something to do with Ruslan’s continued commitment to business and the products he brings to the world. Perhaps growing up in the shadow of communism made him realise how important it is that individuals can make their own rational decisions. His business wouldn’t be possible without such a belief.
Along the way to becoming a multi-millionaire, Ruslan has in a not-so-obvious way made the world a better place. It’s funny to think that the large flat screen televisions which many uni students can now afford are only in reach because of Ruslan. His disruptive approach to the electronics retail market in Australia put a lot of luxuries within reach of middle and low income earners.
But by far the biggest lesson I learned from meeting Ruslan Kogan, it’s the wealth doesn’t really change who you are. A recent article quoted him saying one of his favourite food is still Maccas at 4am after night on the piss. What a legend.
This article was first published in Universe Magazine, the Queensland University of Technology campus magazine. As founders of our very own start up www.tanda.co we used our editorship to chat with Ruslan Kogan, even though he sells consumer goods and we provide businesses with employee time clocks.
