My collection includes stories of businesses and businessmen that are told in many different genres: horrors and detectives, noire and sitcoms, even romantic thrillers. But there are especially rare stories. For example, “senen” – a genre of Japanese manga. These are teenage stories for 12+ boys – about friendship, hard path to success, building of character. They are very kind and always have a happy ending. You don’t often see a person that lived his life in this genre but now I know that it is quite possible.
Three boys from the Saratov physical school were good friends: Yefim Katz, Andrei Serebryannik, Aleksei Sukhorukov. Their parents moved to the USA and Israel, the boys were left alone in the motherland and started their own business. In 1998 everything collapsed and they had to start everything over. That is how the company “Maria kitchens” was born.
Later – a story of success in business. Reaching regions, clear positioning, a solid marketing strategy and a recognizable advertising campaign (Do you remember Gerard Depardieu in a kitchen even before he had a Russian passport in the pocket of his track pants?). After that – a culmination of the story – new investors. Now the friends have a tough conversation to decide who is going to be the head of the business. The conversation ends not with hard feelings but with a stronger friendship and a new stage of adulthood. The friends still live and work in Saratov because they are patriots of their city and yes, their country too. I really thought that such things could happen only in teenage comic books. I guess not.
All of this made my conversation with Yefim Katz unavoidable. I just had to understand how to turn a small business from a faraway town into the leader of the market – and not lose the clear life goals. But I couldn’t ask all that directly, I had to start easier.
Three in the kitchen.
Scientists argue, and millions of people try to guess: why some people are able of creating a successful business and others are not. What qualities in your opinion are the most valuable for success in business?
It is hard to say. There are many badly educated people, who had bad grades in school but became very successful entrepreneurs. I think one of the factors are leader qualities, a man has to be ready to take on the responsibility for the fates of other people and their decisions. The second factor is a skill of gathering a team of smart people and motivating them. Success of a business is rarely built by one man – it always depends on the team. It is important to understand people, feel, hear and attract them somehow.
Ok, so someone came to you. How can you understand whether he is able of providing a good result?
I do not know that. It is not even intuition, it is about some internal feelings. What is love? We cannot explain that with words.
So you can look at a person and quickly say in what industry he can be useful?
Unfortunately, not always quickly. We all make mistakes. But after all, if you take out the minus, you are left with a plus.
As far as I know, you founded the factory with two partners, your classmates from the 13th physics and math school in Saratov, one of the best schools in the city, if I am not mistaken. They are Aleksei Sukhorukov and Andrei Serebryannik. How did that happen?
Andrei Serebryannik and me studied in a different school together and moved to the 13th school together, and Aleksei came from a different school. We ended up in the same class, did homework together and became friends.
Did you continue to be friends or is it just business relationships now? I am sorry but it is rare to see people who have no conflicts over business. Partners usually stop being friends. They stay in good relationships but their friendship is over.
Many things change, you are right, but there are fundamental ones – trust and respect that are crucial for both friendship and business have remained.
It is always easier to perform in a duo, but if there are three of you, someone is always going to be left out by the other two, that is just the human nature. How can you struggle with it?
That constantly happens, but it is easier to work when there is three of you. Often you do not have any options in a duo, when the votes split 50 to 50, and for three partners it is just perfect. If two decided, the third one has to agree. We seem to be reasonable people, idiotic decisions probably won’t take place.
Do you have a closer connection to one of your partners than to the other one?
Approximately the same.
Does your group of partners have anyone who has a special opinion more often than the others? Who is it?
Somehow, that is usually me.
So you listen to your partners and follow their opinions in these cases?
No, the situation has changed. We have managed the company together until 2012 and really had three mini CEOs. And then a small investment company “Aton” that belongs to Evgeni Yuriev knocked on our door. And they told us: “Guys, you have got way too many CEOs and all of them make decisions”. So the three of us went to Tbilisi to decide who will be the real CEO. Why Georgia? It just happened this way. We got on a plane, landed in Tbilisi to get away from the routine. That is our hard story.
But it all ended in a good way?
Yes, we are all reasonable people, but it was a stress that I will remember for a long time.
We took a test beforehand. Hired consultants. There is a test, created by an American psychologist Hogan: you answer questions for 30-40 minutes and the computer gives you a view on your personality and then you talk to a psychologist. It is a way to understand who is a businessmen, who is an engineer, who is a better for physics or math. So all three of us were tested. We didn’t like to learn new information about ourselves so that really became a moment of thruth.
So what did you find out?
I have the test results in a safe. It turned out that businessmen are not businessmen.
You became the CEO after a psychological test?
Yes. The results showed us what qualities we possess.
What are your strongest qualities according to the test?
I can’t really remember, all of this took place back in the summer of 2012. Let’s put it this way: we talked about leadership and making decisions. It is hard for me to evaluate because if my partners will read this – and I am sure that they will – it will cause a delicate situation. It is personal. We sat down, talked and wrote it down: who is better at what.
Were your partners nervous?
No, we trust each other.
What was the conclusion for your partners?
Well they remained to be the shareholders of the company and their work is in the board of directors. They are in the top of the company’s hierarchy.
What about the day-to-day decisions?
Operational management of the company is done by me. But all of it is done in agreement with the board.
I see Magen David on your neck, so I want to ask: do you agree that Jewish people are a nation of businessmen?
There are many businessmen among Jews, that is a fact.
My husband is Jewish so I got hopes. Can you say that business is a Jewish talent?
I may say something peculiar things but people tried to destroy our nation for about 5000 years. So everyone, not only businessmen had to adapt and survive.
Do you feel your religious affiliation?
I am not religious
“I am more of a Russian man”?
Of course. But I have a lot of Jewish friends.
I, personally, found out about “Maria” kitchens after a large advertising campaign with Gerrard Depardieu. You chose him to be the face of the company before he received a Russian passport. That is of course a great intuition. But why Gerrard Depardieu?
It took place in 2010-2011 we were growing very fast. We decided to work with celebrities. Our specialists did research, looked at customer’s attitude towards different media persons. The short list included Julia Vysotskaya, Bruce Willis, Monica Belucci. I remember that Belucci was just too expensive for us. We gathered a group of people and asked them who do they prefer: Depardieu or Belucci? Depardieu had the biggest rating among our audience.
What is his connection to kitchens? Is it the fact that he likes to eat?
No matter what he likes – people love him.
Than I have a question: Monica Belucci in a kitchen is one thing. It is a nice picture. Every woman wants to be her.
There is a problem. A picture of a woman in the kitchen creates jealousy.
So a fat Depardieu in a kitchen, eating your food from the fridge – is supposed to be a nice kitchen?
Depardieu came back to a good shape, he was closer to people.
Well, you achieved your goal – I memorized your brand.
The result is the main thing you have to agree.
I guess Depardieu was not too expensive. 50 000 euros as far as I know, right?
No, he was more expensive than that. We signed a non-disclosure agreement so I cannot tell you. But look: we had an agreement for two and a half years. We filmed him before he moved to Russia.
More than 150?! Come on! Do you know him personally?
Yes, of course. A great guy. I was in his home for a couple of times, we talked. He has a great house with an amazing atmosphere, he is a wealthy man. He is peculiar. Depardieu is a tragedy of course.
Do you understand why he decided to become a Russian citizen?
He was not asked anything. It is Vladimir Vladimirovich. He is driven around. Payed for. He is being filmed.
Well anyone can drive him around. Maybe some cannibal tribe in Africa would do that… Of course everything can be sold but there has to be some kind of a limit.
Yes, you are right. I do not know his personal opinion, but I doubt that a great French actor on one side and Chechnya and Russia on the other side is compatible. Imagine that we are in Indonesia for example.
What is your biggest advantage in your opinion?
We have a slogan “Kitchens that bring joy”. Probably, that is really our biggest advantage – the joy that we try to create.
A purchase of a kitchen is a serious stress. I do not know if you ever went through that.
You buy a house or an apartment, work on the interior, and spend a lot of time on it, money, nerves. This story takes up from six months to a year. And then the final step – kitchen and furniture. By this moment, everyone is extremely tired. He comes to our store and that is a kind of a decisive moment, the culmination.
People buy a kitchen once in ten years on average. After 10 years, they do not remember brands or prices – nothing. No skills, no experience. They understand that it is a lifetime investment. You can change the couch, wardrobe but you cannot change a kitchen. It is important to reduce this kind of stress as much as you can. That is our purpose – we work a lot on decreasing this stress.
You have large, bright studios on the main streets of large cities. How many kitchens do you have to sell every day to afford all this?
We sell about 100 kitchens a day in more than 300 studios all over the country. We counted: one studio returns investments with 3-4 kitchens a month. Everything above four – is an income.
I was surprised to find out that you have studios in cities with a population of less than 30 000 people. Urus-Martan or Bashkiria for example. Bashkiria is oil, but what is Chechnya?
I have personally never been there. I think that Chechnya is just a large government investment. Urus-Martan sells 3-5 kitchens a month, they complete their plan and make profits.
Does some kind of regional specifics exist?
Yes, a little bit. South of Russia prefers solid wood kitchens. Moscow and Saint-Petersburg is more about modern kitchens in a European style. Other cities are very mixed.
You have a specific detail – your own transportation company. You move assembled furniture yourself. That is quiet unusual. Everyone knows that moving everything in pieces as “IKEA” is much cheaper.
Probably it really is cheaper, but you still have to assemble all of the pieces. Our kitchens are assembled at the factory and transported to the client. Yes, the transportation is a bit more expensive. But the assembled kitchen is delivered to the client’s house and the installation takes just a half of a day. When all of the moving elements and mechanisms are assembled at the factory – it is a guarantee of quality. If people who learned it five years ago will be assembling it at your house there is a chance that something will not work, as it should. If something breaks during assembly in Vladivostok – it will take at least two weeks to deliver a new part there. If it happens at the factory – it is fixed in just 15 minutes and leaves the factory in perfect conditions.
I found out a strange thing about your company: you tried to sue people that leave bad reviews in the internet.
No, we sued a website “Consumer Rights Protection Society”. They made money on a problem. Look: a person has a problem - we solve it. Whoever makes a mistake in a process of production or sale, no matter who is right – we solve the problem. But it cannot be a source of income for anyone. This organization, as far as I understand, is not related to the real Consumer Rights Protection Society and it turned problems into a business.
They created a fake forum where they left negative reviews, deleted the positive ones and took money from the company for it. We were blackmailed and we did not agree to that. But they earned money on this, many companies payed them. It costed around 400 thousand rubles a year. And you could see who wasn’t paying. The factory “8 Marta” never payed and there were thousands bad reviews about them.
Is it true that the crisis forced you to produce cheaper kitchens? Are you going to create a new brand?
I will try to explain it in a short way. We have a brand “Maria” – “Good kitchens that bring joy”, a “middle-plus” price segment. Some time ago, we decided to work in a “middle-minus” segment – created a line of kitchens that we sell in Hoff and OBI stores. We started cooperating with the company “Eldorado” and created a line MIA. It is some kind of a younger sister of “Maria”. We agreed with Julia Vysotskaya about creating a new network of 150 shops of kitchen furniture design with a brand “Kitchen furniture workshops “Edim Doma!””. By the way, we already opened 90 of them. The concept remained the same: cheap kitchens in a “middle-minus” segment with an average check around 150 thousand rubles. It has the same foundation, but in “Eldorado” it will be an “Eldorado” face, in Hoff – a Hoff face, in OBI – an OBI face and in “Edim Doma!” – a “Edim Doma!” one. It is something like Seat and Skoda that are based on Volkswagen.
Will you start to produce kitchens for IKEA soon?
IKEA is our competitor.
You have already survived one crisis in 1998 after which you have changed your field of work. Why did you think that kitchens would be more successful than appliances then? I understand that you became bankrupt, but why did you decide to start selling kitchens?
I have a silly answer: randomly. It was absolutely random. Before the crisis, we sold appliances, including extractor hoods. We received an offer from people we knew from Italy to become distributors of Italian kitchens. Everything that was imported was very successful in 1997-1998. We opened a small studio of Italian kitchens in Saratov. The factory was called Gatto – “a cat” in Italian. We sold 50 or 100 kitchens in a year. We brought them from Italy, gained experience in sales of kitchen equipment, logistics, visited the factory, saw how everything works. So that was the first factor: we had some experience. The second factor: In the crisis of 1999, a different Italian factory offered us to distribute furniture materials for kitchen companies: countertops, fronts and so on. We bought a lot of materials but we could not sell anything, so we made kitchens with what we had. It was a great decision. Experience, some skills, dynamics.
What happened next? All of the forecasts about the future of the Russian economy are pessimistic. You probably discussed this with your board. How are you planning to live in the next 10 years with your kitchens?
We do that every month. The brand “Maria kitchens” that everyone sees turned 16 on November 18. The brand is quiet popular and it is demanded. We sell kitchens but they are not cheap.
Nowadays the economic situation mainly influences the middle class. The construction market decreased by 40% in the middle segment, car sales, tourism went down too. How are you planning to survive this situation?
Well, the middle class exists anyway. The demand went down, but it still exists and our popularity ensures that “Maria” kitchens will be sold. We may not continue to grow in numbers but I hope that we keep the current ones.
But your sales have decreased during this time, right?
Our revenue even increased. The average check increased.
Is your production located in Russia?
Yes, in Saratov. We are from Saratov ourselves, we live here. Lately we learned how to produce kitchens cheaper. A bit simpler, a bit more standard, with less models. So we are moving towards the “middle-minus” segment. On our way we reached an agreement with an incredible woman Julia Vysotskaya and her brand “Edim Doma!”. We presented a new brand recently at the exhibition “Furniture-2015”. These kitchens are a bit cheaper, simpler. That is our response to the crisis.
Problems caused by ourselves
I have a question about the “Edim Doma!” brand. I interviewed Aleksandr Fedotov, who basically received business from Axel Springer because of the law of limiting foreign media. He said himself: “I understand that it is an unfair situation. But of course I would by it – I am a businessman”. I always thought that a person with a business-oriented mind is different from average people in an understanding that if something like this law can bring a profit in a short period – it is harmful in a long perspective. Do you think that even if it is profitable for you to cooperate with “Edim Doma!”, the story about a request for government money for opening of a new network, similar to “Mcdonalds” – is just shameful for our country? How do you evaluate Mikhalkov’s request as a businessman?
I will say this: We work with the brand “Edim Doma!” that is owned by the producer Andrei Konchalovsky. Julia hosts a TV show, she as an actress and his wife. But the brand is managed by professionals. It is hard for me to comment the situation that you are talking about.
But did this meeting happen? It did. Was the conversation officially confirmed? It was.
As far as I know, the money was not provided. I guess some conversation took place and it turned into a comment online. We talked to these people and they said it’s fake: there was no money.
So there won’t be a network like that?
If it is going to happen, the government won’t be a part of it.
Okay, we will not discuss gossip, but there is a fact that was confirmed by Mikhalkov himself and people who attended the meeting: there was a request for this money. What is your attitude towards these kinds of requests?
I think that it is just a speculation. But anyways, I am against the government, taking part in any kind of business. Whether it is a fast food network, media or import substitution. I am for an open competition on a market. When the government starts doing business it is ugly and it turns into corruption very often. How can a government be a beneficiary in a business?
Considering that it became an obvious government policy in the recent years, did you think about moving your business to a different country?
It is a hard question. I was born and here and I grew up here, I feel this market. The question of a place to live is more open. It is possible to move abroad. I do not know how to build business abroad. I grew up in this country. We are people, social creatures. We know that business is built on connections and people that you know.
Do you have an explanation of why the government makes life so hard for small business? I understand why large government-owned business pressures large privately owned business: government business is always less effective and some member of the “Ozero” cooperative does not gain profit when he builds a road for 100 rubles and then some private businessman builds a road nearby for 50 rubles. He does not need it because he will not be able to explain what happened to the 50 rubles and why the road is still destroyed. I understand that. But I cannot understand why small business is being strangled. I do not see a logic in that. Some Rotenberg does not have any claims for production of kitchens, needles or small retail.
It is hard to explain this. It is an ideology of the government.
What is it based on?
No matter what business – large or small. The ideology makes government workers feel like they are the owners and beneficiaries of any business in the country.
Why isn’t it profitable for them to support small and medium business? Remember the Great depression in America or the last financial crisis there – the economy was pushed forward by small and medium business. Why aren’t they given this opportunity here?
Nothing is really profitable for them. Look at their work – every day is like the last one. Government as services supplier: police, courts etc. do not work, as they should. In addition, it does not matter whether business is small or large. When you come to us, we want to sell you a kitchen and do it in the best possible way, better than others. When “Rosreestr” registers a deal, it does not want to serve you, it does not need it and you feel that.
Why did this become a system? We understand that if our leaders wanted to change this – they could do it. Why won’t they change it?
It is a question of political competition. The government works badly in the whole world. But all of the politicians feel the competition whether they want it or not – in France, Germany. And when they feel that someone can replace them, they work better and try harder.
Why doesn’t it work like that here?
You have to change the political environment for this. Basically, small and medium business is not Moscow, it is Saratov, Tolyatti. Competition of politicians has to form in these cities. It happens only when people feel motivation in the form of changeable power and competition. A governor of any city has to feel that if he is not going to do something he can be fired and replaced. Even from Kremlin.
Putin has to come out and say: “Guys, we have government capitalism in this country, but taxes are paid by entrepreneurs and they are a class of respected and protected people”.
Why won’t he do that?
It is a surprise for me too. It is strange, but I think that it is an ideology. I think that you understand what I am talking about. Putin is a nice and smart guy. But there are some logical misconnections. It is surprising, it is strange and it is not very good in the end because we see what we see.
As the head of a large business, do you feel that we lack active young people that really want to build their career?
I think that there is a problem but it is also artificially created. We lived through two crisis periods: 1998 and the last couple of years. There are many bankrupt entrepreneurs. We feel that. We sell kitchens all over the country through small entrepreneurs, that are our dealers in Vladivostok, Irkutsk, Khabarovsk. Small companies: a person has 1-3 studios, he orders kitchens in “Maria” brings them to his city through our roads. We talk to these people every day and their eyes have less shine with every day. It is very hard for them. It is our reality.
Does corruption exist? Have you met it?
Not directly. Luckily, we work on an open market and have real competition. In the 90-s we went through an unsteady period even paid some small amounts. Of course, I saw something, heard and felt something.
I know that you buy many mechanisms abroad. Has the complicated geopolitical situation influenced you in any way? Maybe someone stopped working with you?
No, of course, no one stopped cooperation. Now, the situation with Turkey might influence us but we do not have many suppliers there, only some small ones. We were influenced by the devaluation: all of the imported goods became more expensive.
Do you have a personal desire to stop working with Turkish companies or will you be forced to do that?
Well the situation is unpleasant. I have not thought much about it but I will.
So it is not an obvious decision for you?
It is unpleasant for me. That kind of things should not happen. In this case, I do not justify the Russian government. I am probably not ready for some kind of actions, but I feel a discomfort inside.
Will you go on vacation to Turkey again?
I have never been there on vacation. Only Europe, America, Asia.
Continuing this logic, you cannot go to America anymore, our relationships are not good either. All of the problems are caused by the USA, Obama organizes revolutions.
America is a different story. We are the reason of our problem, not America. It has nothing to do with it.
Three most talented businessmen in Russia.
Galitskiy, Tinkov, and probably Mikhail Kuchment, former top manager of “M.Video” who created the Hoff Company in Russia.
If you had a million dollars, what new business would you invest it in?
I think I would not invest now. Only a bank deposit.
Imagine that you have a magic stick that allows you to change three Russian laws. Any ones – economic, customs.
Judicial system. Election… I don’t know, hard to say. Social laws. The ones that concern the elderly, healthcare – this field. I am not very strong in jurisdiction but I think that people have to be really protected.
What kind of a person are you. You could have said about the customs that directly influence your business.
Well, the first ones directly influence us.
Well, our arbitration is more or less normal.
Have we talked about corruption? It is all true, sadly.
So, arbitration too?
Yes, it is all about money. Unfortunately, the criminal legislation is very strict. But it is not about money, it is about people.
If you had a chance to be able to lose a competing brand like it had never existed before, what brand would that be? IKEA?
I think, yes
Is it your main competitor?
It is the strongest competitor.