"I make a point to hire people who are better than me at something" ... Ruslan Kogan. Photo: Craig Sillitoe
Earlier this week, online retailer Ruslan Kogan spoke to a packed event at the Sydney Town Hall for the Let's Talk Business seminar series. Well known for his controversial views on technology – like his recent stunt slapping on a "tax" to anyone wanting to use Internet Explorer 7, denouncing it as an "antique browser" – Kogan gave the crowd an honest account of his startup story. Here are some highlights.
1. How to conjure up money when you need it
Kogan needed cash. And it involved credit cards. Lots of them. It was an innovative way of paying for his first shipment of televisions from China, which he first sold on eBay. Both eBay and PayPal had frozen his accounts. They considered his accounts suspicious because he had sold $40,000 worth of televisions but received zero feedback. That's because his customers prepaid based on a 45-day delivery period. With his accounts frozen, Kogan didn't have the cash he needed for his first down payment. Then unemployed, he applied for multiple credits and soon amassed $40,000 worth of credit. He then asked his friends to do the same and garnered another $30,000. This was enough for his first instalment and the rest, as they say, is history.
2. At the coalface of quality control
Kogan was so paranoid about ensuring that his shipment arrived safely, he hopped on a plane to China, inspected every one of the 80 televisions in his first order, and watched them get loaded on to a container.
"Then I jumped in a taxi and made the driver follow the container all the way to the shipping yard," he says.
It illustrates that doing business in China where you don't know your suppliers and where you don't speak the language can have it's challenges. However, Kogan says that this can sometimes work to your advantage. He was once at the negotiation table with two men who spoke Chinese. They were making comments, laughing and Kogan felt completely in the dark about what they were talking about.
"I turned on the voice recording on my phone," he says, thus capturing the entire conversation. "When I got back to my hotel room, I uploaded the audio file to a freelancing site and soon got an entire transcript of what they were saying – including their cost price, tactics, everything."
Needless to say, he managed to negotiate a good deal with this supplier.
3. "Your Adwords budget is infinity"
Kogan emphasised that Google Adwords is one of the most vital tools for anyone selling online. However, he says it's vital to track, measure, test and tweak everything. This includes everything from the words and images used in various campaigns to the factors determining the open rates of direct email to targeting consumers by geography with advertisements - right down to targeting people browsing their mobile devices for electronics and tech good at specific shopping centres.
He tells his marketing manager that their budget is "infinity" when it comes to spending on Google Adwords as long as they can achieve a worthwhile return on investment.
4. Technology is an investment
Obviously a fan of technology, Kogan warns business owners who don't consider technology as an investment but rather a cost to the business. "If you're buying an iPad, you're making an investment that's going to save you $10,000 in productivity," he says.
It's an attitude that's becoming increasingly important as the digital divide increases. If you're not adopting this attitude to technology, you're going to be left behind. I believe that technology – used the right way – is the key to giving most businesses a competitive edge.
Kogan has already opened a UK version of his popular Kogan store, and has diversified into furniture with www.milandirect.com.au
Kogan says that his core business decisions are based on numbers and hard data. However, he also emphasises that it's vital to hire the right people. "I make a point to hire people who are better than me at something," he says.
If you're interested in what makes this 29-year-old entrepreneur tick, check out what he describes as "the three business books that changed my life".