A few years ago, after the 1998 crisis, things were hard for businessmen in Russia. But, some stuck it out and even managed to turn those hard times to their advantage. Oleg Tinkov is one such person.

Oleg Tinkov was one of the first small entrepreneurs in Russia to invest in production during the 1998 crisis, becoming one of the only businessmen in the country to make profits during Russia’s darkest financial period. This "tough" Siberian, as he says he considers himself, came out of a business that "wasn’t retail or wholesale, but sold everything you could put a price on, from cosmetics to copy machines."

Today, he has begun a new branch in the lucrative Russian beer business, a premium-quality beer named after him. While running the business, what he says he considered just a hobby, he made the food-production company Daria famous nationwide. He says there are no secrets to his success other than the love of money, he said. "If you love money, you can make it," he told The Leader.

You had a successful home-appliances chain in St. Petersburg, but sold everything to get into a new market right before the 1998 crisis. Did you anticipate it, or was it luck?

I couldn’t know about the crisis in advance, but I had some indications that showed me that I wasn’t going the right way. About 1997, the home-appliances market was saturated, and we were starting to suffer losses. At the same time, I followed the advice of an American specialist who was observing the Russian market and forecast that the production business, I mean any kind of production, would be successful in Russia. When I made up my mind as to where to invest later, the production market, I sold my partner my share in the chain. But only afterwards did I realize that it was a good idea: I learned that the crisis posed serious difficulties to my ex-partner.

Didn’t you find it difficult to successfully administer a new business like Daria at during that harsh period? What convinced you that the production would be more promising?

At the beginning of the ‘90s, it was practically impossible to produce anything in Russia: the market was dominated by imported products that were much better than local ones. Not only did we not have good enough technology to compete with them, but also had to deal with high taxes and many other bad circumstances that rendered any kind of production in Russia unprofitable. Only in 1997 did this picture start to change: Prices of raw materials and taxes were becoming more attractive, and local labor was becoming cheaper, especially after the crisis. Actually, I must say that [the crisis] actually helped investments in this area, because labor became even more affordable, as well as local resources.
That is why I moved to the production market: While the home-appliances market had a growth rate of 5 to 8 percent, production’s rate of growth jumped from 100 percent in 1998 to 300 percent at the end of the same year — an extremely good margin. In 1999, production was already profitable.

Did Daria, in particular, prove that your predictions were correct?

Yes, and very well. The initial investment was around 2 million dollars in 1998. At the beginning of the year, we produced one-and-a-half tons of frozen products per day, and, at the end, we were producing five tons a day. Now, Daria produces over 2.000 tons per month, which means 65 tons a day. We invested a total of up to $10 million until last year to reach these figures, which I consider to be the proof of a small, compact and very profitable business. Our turnover in 2001 reached $35 million.

You opened the Tinkoff brewery at the same time, what resembles a retail restaurant chain more than a production business. Did the crisis also help this business?

Well, to be honest, I opened the first brewery 17 days before the crisis. In this case, it didn’t help… people didn’t have the money to go there. I considered it more a hobby than a business. But, because beer was becoming very popular, I decided to stick to it. We created our own bottles, inspired by an American version that has a silkscreen logo instead of paper stamped on 0.3-liter bottles.
The watershed was the idea of building the restaurant in Moscow, a city five times as large St. Petersburg, which had 10 times more money and 100 more foreigners. Last year we opened the first Moscow branch in the downtown area.

Why it is so difficult to find your beer in shops?

Because we are having distribution problems. We weren’t really controlling distribution of the 200,000 bottles [we produce] monthly, which is very little for this market — all our production is immediately sold-out. That is why we are building a brewery near St. Petersburg, in the city of Pushkin, which will have the capacity to produce 250 million liters (or 60 million bottles) per year. Also, new brewery-restaurants in Novosibirsk and Samara, which costing $1.5 million each, will complete our chain’s plan for this year.
Our company will certainly grow, and we will capitalize its share to inject more money into it soon. We are still a microbrewery: Our annual turnover is not more than $1 million now but that might reach $100 million in 2004. Otherwise, I wouldn’t see a reason for working up to 18 hours a day…

Isn’t an elite public like yours a very restricted target for such a growth?

On the contrary. That is why I sold Daria and basically jumped into the business. If we were focusing on middle-class customers, I wouldn’t care so much about quality, because these people buy based mostly on price, and quality is only secondary consideration. I like the ultra-premium-quality segment, and people who have money will buy our quality no matter how much it costs.
Because of this, we have no competitors. Having a brewery-restaurant is unique. Also, we produce one of the only non-pasteurized beers in the market.

Quality and marketing seem to be the guidelines of your work. What are the other requirements for being successful?

A good team with good people is mandatory. I myself select people who seem to be smart, loyal, productive and tough. Currently, I am interviewing candidates for the position of sales director.
I have a quite experienced team that has been working for me for five years in advertising and communications management. These people don’t have to be very [formally] educated, because I don’t consider education in Russia to be good. Middle managers are very poorly prepared here: Good professionals either go abroad or they teach themselves. I am a particular case of this; all my experience came from [working in] Siberia and not from universities.

But you studied marketing in from the United States...

I do, but, to be frank, education doesn’t necessarily define your professional profile, and I studied only six months only. This is the only certificate that I have. I like the idea of Henry Ford, who said: "Whatever I want to know, I just have to press the button of my telephone, and I get the answer right from my staff. That is why I pay them." I also prefer it this way — I have enough money to hire people to keep me informed.
I succeeded because I was born in a tiny town in the middle of nowhere in Siberia. I have been struggling through life since then: In order to stay alive there, I had to be strong, smart and different. I visited a week ago for the first time in six years, and a lot of bad memories came to mind.
After my life in Siberia, Petersburg was easy. Later, Moscow became even easier!
People were afraid of the mafia in the early ‘90s, but I wasn’t afraid of anybody because that was my environment in Siberia. I did what I had to do during those hard times. Before the home-appliances chain, I was going back and forward between Singa-pore, Poland, Germany looking for cosmetics, computers and anything you could sell. My trip record was in 1991, when I was flying to Singapore twice a week for copy machines — it is a 12 hours flight one-way, which meant 48 hours of flying every week. I started this without any money, straight from Siberia.
After all this, when started to invest in Moscow around five years ago, the experience I had developed was enough: I was mature and prepared. I was in love with money, and it came.

That would be your advice for beginners: to love money?

Yes: Love money. You have to love money more than your girlfriend. Anything that I did was successful because I crave money — I love money, and I go after it. If you love money, you just make it… I never really cared about figures — I prefer to act instead of making forecasts.