Ruslan Kogan’s Unconventional Path To A $315 Million Fortune
Ruslan Kogan is the founder of Kogan Technologies and was ranked number four on the BRW Young Rich List 2013 with a $315 million fortune. Here, he writes for news.com.au about what it takes to be an entrepreneur and how he got his idea off the ground.
I believe an entrepreneur is an inventor and athlete in one.
They are an inventor because they need to see the marketplace like nobody before them has seen it and invent a product or service that enhances people’s lives.
They are also an athlete, because once they have come up with the invention, they need to work their arse off in order to turn it into reality, no matter what obstacles the business environment throws at them.
Ever since the The Social Network came out, I have seen ‘entrepreneurs’ pop up everywhere with one simple goal — to find a venture capitalist to back them.
I even get people emailing me and adding me on LinkedIn with the self proclaimed title ‘entrepreneur’ — seriously?
It’s great that the movie has promoted entrepreneurship, but many people need to realise that things are much tougher in real life than in movies. I didn’t watch Spiderman and decide to try become a superhero.
Too many ‘entrepreneurs’ believe the end game is to find a VC to back them. They throw hundreds of business ideas around at any given time without giving true conviction to any one idea.
Find the right idea
I had an ‘entrepreneur’ approach me at a bar once and asked if he could pitch an idea to me. I didn’t like the idea so he reeled off 10 other ideas he was “working on” and asked me which one he should enter into the pitching competition he was participating in at an entrepreneurs’ convention. You can guess what my response was.
Being an inventor, an entrepreneur needs to have conviction in their own idea, and know that it would work as a real business.
They should not be out there seeking the approval of others, whether it’s friends, family, or even VCs.
Before starting Kogan, I had to ignore the advice of my mum (“Why are you quitting this great paying job to become a TV salesman?”), supposed business experts (“No-one will ever buy TVs online without seeing it first!”), and friends (“This is not going to work! People won’t buy anything other than books or CDs online”).
Entrepreneurship isn’t a storytelling competition, it’s about inventing something, believing in it, and having the passion and conviction to prove that your invention works no matter what anyone else thinks.
Think outside the box
I know what you’re thinking. What good is an idea if you don’t have the funding to execute your plan? Good question.
I had $0 in the bank and no investment in 2006 when Kogan was getting off the ground in my parents’ garage.
I quit my full time job to start the business, and I taught a few IT classes part-time at Monash University to help pay a few bills. If you follow textbooks, I would have needed at least $10 million to start a consumer electronics brand.
Obviously $10 million would have been nice, but it wasn’t an option. I knew the idea I had for a fully vertically integrated consumer electronics brand that sold exclusively through an online channel was a winner, and I was very passionate about making it happen. I just needed to overcome the barrier of not having any capital to start the business.
I started selling stock at discounts which meant shoppers would make extra savings, but would have to wait a little longer. It was a clear win/win scenario: customers save more money and I can start the business with no capital.
The second major challenge was getting factories to want to cooperate.
When I first approached the factories I had chosen to work with, they declined to work with me because my orders were too small. I wanted to order a single container, whereas they typically deal with massive brands around the world who would order 100+ containers at a time.
The textbook step here would be to try find an investor to give me lots of capital so that I could place a large initial order. But I wasn’t interested in spending time and energy convincing someone that I had a good idea worth investing in. I thought of a better plan.
In an attempt to convince the factory to accept my small order, I revamped their marketing materials for them — I fixed the language, images, standardised all the fonts, made diagrams for the user manuals, and annotated them. They responded within a few hours and thanked me for everything I did, and accepted my order (they even gave me a better price than we had previously negotiated).
Where there’s a will, there’s a way. If you are truly passionate about your invention, you won’t let anything get in the way. You don’t need to convince any venture capitalists that your idea will work — you just need to think outside the box and find ways to get the business started without huge initial funding. If you look at some of the greatest companies out there, they all started in garages with no cash.
So stop trying to come up with 30 business ideas. You only need one. You need that one idea that you are passionate about, and can put your hand on your heart and say that you will do whatever it takes to make it happen.
It’s your baby. It’s your invention. You don’t need any approval from any external investor. You need approval just from one person in the world — yourself!
Then, let the athlete part of entrepreneurship kick in and as Nike would say. JUST DO IT!