March 30, 2015

The Kogan Laws of Success

Kogan Technology

How does someone start out in their parent’s garage selling TVs on eBay and turn that into a business with sales of $350 million in only seven years? This is the story of Australian entrepreneur Ruslan Kogan.

Today, Kogan Technology is one of Australia’s fastest growing companies. Its Australia’s Amazon. They’ve just delivered their one millionth product, become the biggest online retailer in Australia and are cheered on by more than 500,000 likes on Facebook.

And, they’re just getting started. Kogan is gunning for a global venture with over $2 billion of sales by 2017. You’d bet on him to make that dream come true.

Ruslan is the richest person in Australia under the age of 40. His personal wealth is valued at $315 million. That’s a far cry from the son of Belarussian immigrants to Australia who became king of his local Elsternwick milk bar by selling found golf balls back to local players.

[Tweet “How Kogan became Australia’s biggest online retailer #kogan”]

Image of Ruslan: from Twitter @RuslanKogan – The t-shirt reads: “The question isn’t who will let me – it’s who is going to stop me – Howard Roark”

1 There is always a better way

Kogan Technology was born when Ruslan began looking for a new television. After doing his usual thorough research he came up with the novel idea to produce his own TVs. With a big dream and a distinct lack of money, Ruslan had to be inventive to make things happen.

Famously, he began courting large Chinese TV manufacturers. They were used to orders in the hundreds of thousands. Kogan wanted a mere eighty. Initially, the Chinese rejected his advances. And, in response Ruslan set about finding a win/win solution. After a couple of sleepless nights he rewrote the marketing materials of the Chinese company he wanted to work with. He translated their ‘Chinglish’ into proper English.

Shortly after, Ruslan’s order was accepted and Kogan Technology became the first company in Australia to sell TVs online. Today this spirit is captured by the company mantra:

’There is always a better way’.

Qn: What’s your clear, simple defining mantra that shapes everything you do?

[Tweet “The @ruslankogan Mantra: There is always a better way What’s your mantra? #kogan #mantra”]

2 Merit Trumps Everything

Having a mantra and living it everyday are two very different things. Ruslan Kogan believes your culture is defined by who you ‘hire, fire and promote’. Hire well, put people in the right jobs and promote them for producing results. The Kogan culture is based on merit where actions speak louder than words. Currently, each Kogan employee generates an average revenue of $1.9 million. That’s three times Amazon’s current score.

To stimulate results like these Kogan promotes and rewards all employees based on their contribution to the business. Individuals can apply to receive a pay rise by putting forward a business case for the value they’ve added. In one case, a 19-year-old received six pay raises in six months and moved from a customer service agent to the senior management team.

TIP: How do you promote and reward your team? Is it based on merit, seniority or potential?

Image: Kogan Technology Logo from Wikimedia

3 Obsess over Process

This focus on merit is based on Ruslan’s personal obsession with process. Many people think that all you need to sell online is a good website. Ruslan Kogan suggests this is misses the point. Instead, he jokes that Kogan.com is a ‘statistics business masquerading as a retailer’. To offer the ‘cheapest prices’ requires a business model based on efficiency. And, you can only achieve this through a scientific approach to process.

This obsession includes:

Monitoring over 100,000 keywords everyday;
Tracking every move a website customer makes through online analytics;
Using A/B or Split testing to tell you what really works with real customers in real situations and;
Using tools such as Google Trends to monitor potential demand for new products before customers begin asking for them.

Qn: What are you fanatical and obsessive about? You’ll need it to succeed.

4 Swim Upstream

Whilst process and a scientific approach is critical, it’s not enough. Kogan also empowers their team to step outside the script, swim upstream and use their intuition.

Ruslan suggests, ‘Don’t let a great process ruin your business.’ Frontline staff are empowered to act and encouraged to make tough decisions. This is demonstrated by their job advertisements that invite ‘independent thinkers and doers’ to apply.

Further, once you do score your dream job at Kogan don’t expect to receive any any formal training. You’ll simply be told to ‘Google Everything’ and ‘Question Everything’. This follows Ruslan’s personal investment strategy: use your brain, do your own research and make up your own mind. He suggests, “If I’d listened to other people I wouldn’t be where I am today.”

Qn: How much autonomy do you give your team members? Rate it out of ten.

5 Fight the Fight

This fierce reliance on thinking for yourself and a willingness to voice a direct opinion is not always appreciated. Critics point to Ruslan’s Wikipedia profile which lists seven different controversies. The most infamous is his ongoing verbal stoush with Harvey Norman CEO Gerry Harvey. Ruslan appears to enjoy provoking the giants in the marketplace. He’s up for the fight.

However, his focus is clear. He compares Kogan Technologies with Apple and suggests neither is interested in PR for it’s own sake. Instead his real fight is directed at making the latest technology available at the world’s best price. This is enough to have people talk about you. And, it’s a fight worth fighting.

Qn: Are you willing to fight to change things and make things happen?

The Future for Kogan Technologies

Instead of comparing Kogan Technologies to the other Australian retail giants such as Myers, David Jones or Harvey Norman, a better comparison is with the likes of Amazon, Zappos and Ebay. I predict they will become a true global superstar on the online stage and one of Australia’s most successful companies.