About Success Builder
How do you find your place in life? How do you find something to do that both comes naturally to you and makes you happy? The answer is that you have to apply the knowledge you’ve gained from university and from life itself correctly. The Success Builder Project features HSE University graduates who have discovered themselves through an interesting business or an unexpected profession. The protagonists share their experiences and lessons learnt and talk about how they’ve made the most of the opportunities they were given.
Business is fashionable, but how do you know what your calling is? The ‘chocolate baron’ from the International College of Economics and Finance (ICEF), Oleg Guskov, told Success Builder how to build a business around sweets, whether a luxurious lifestyle can motivate you to open your business, whether it’s possible to recoup investments in just a month, and why you should lure in workers from women’s magazines.
How were you able to turn your dream of opening up a chocolate boutique (and 90% of my friends dream of this) into a reality?
macaroons are produced at Mixville’s plant each day
Entrepreneurs look at ideas not in terms of dreams, but in terms of profit. We understood that the chocolate market in Russia is underdeveloped. Now we’re filling it with breakfast cereals, macaroons, tea, coffee, and of course, chocolate, which is where everything started. Stores simply didn’t sell any chocolate with interesting additives – I went to the store and saw that there was chocolate with hazelnut and chocolate with raisins, but none with passion fruit or strawberries, meaning we’ve got to make it! We didn’t have any money for a plant at that time. My classmate and I literally started under makeshift conditions, but now we have an entire 3,000 square meters of space. We didn’t even carry out any research. We just wanted to create unique chocolate with spices, fruits, and other interesting ingredients so that it can finally be offered on store shelves.
The scariest part is getting started. How did you overcome this barrier?
That's a myth. From the side, everything seems difficult. It’s scary to lose money, but my first investments totalled 100,000 rubles, and I wasn’t worried about this amount. You need a hundred times more to open up a factory, which is why I found a restaurant in the centre of Moscow and agreed on production. We just ordered packaging and ingredients. With these investments we put our business model to use and saw whether people needed this or not.
This model has its pluses. With minimal investments you can start producing a product, but the downside is that it’s impossible to control production. The confectioner has now made a mistake – we go to them and ask, why? We change the ingredients, proportions, etc., but you can’t fix anything with outsourcing production. There were instances when you go to get an order in the morning, but they tell you, ‘Sorry we had a lot of customers and didn’t have enough time.’ After three months of torturing ourselves, we moved to a 30-square-foot location and rent cost 30,000 rubles a month.
We cursed HSE in our first year for the very things we’re now thankful for.
About the business project in London. How did this happen?
This happened in our third year. Information was posted on the ICEF site about an internship at London Business School. We filled out a bunch of documents and sent a request. Our business was around a year old at the time. We even sent product samples – everyone had boring IT projects, but we had chocolate! They tried it, and three weeks later I was invited to study in London. But the sad thing was that I had to take academic leave. You know how strict HSE is with attendance. It’s not the type of university where you can catch up when you miss something. HSE gave a start to my business career, and after I just had to chose.
How did you conclude that business was the path for you?
I have to admit that I started in business because it was fashionable. There is more business training and trainers than there are real businesses. But you have to understand that business isn’t for everyone. It’s important to know what you’re better at than others and what you can be successful at. It might sound banal, but business is freedom, and this appealing lifestyle is often shown in the media: a life of luxury, women, helicopters, martinis… Only a hundredth of those who try get to this level, but everyone is brainwashed.
How did studying in London help you?
I had a ton of ideas and unbridled creativity. In London, they taught me how to give this creativity a certain structure and proceed step-by-step. I was really inspired by the atmosphere. There are a lot of interesting people there, including 17- and 30-year-old businessmen with strong motivation. This also really drew me in. I myself am from Ukraine, and came to Moscow to study. For a long time, I wasn’t earning anything and my parents had to give me money. I thought, maybe I’m doing something wrong. But I returned from London knowing there are a lot of restless people like me. This is a common trait among those who want to march to the beat of their own drum. And risks aren’t scary.
How did HSE help in advancing and supporting your business experiences – directly or indirectly?
When I was in Ukraine deciding on where to apply, I chose HSE in particular because it seemed like it offered the most prospects. I didn’t even apply anywhere else. Of course the finance faculty did not involve a business education, but as for the energy that a module-based system offers, this is a good school for people who seek success in everything they do. And from a business point of view, it’s an excellent school for time management. HSE taught me to focus on a huge number of things. When a shipment to a client is delayed or nut prices triple, you perform a marketing miracle and try not to panic. We cursed HSE in our first year for the very things we are now thankful for. HSE also offered a community for good connections and business partners, and there were marketing opportunities from the very start. One time, when we were shipping our products to the university’s cafeteria, we participated in ICEF charity auctions and hung announcements in the lobby.
How long was it before you understood that business is tenacious and will carry on?
14 mln rubles
were invested in Mixville equipment
We got back the small amount that we invested after just a month. Everyone came to class with laptops and backpacks, while we brought packages of chocolate. We sat through the most interesting lectures and then left to deliver orders. We did everything ourselves; we didn’t want to spend money on a courier. But we understood right away that the model works. There were times, though, when you would open the admin section of the site and it wouldn’t have any orders. It was hard to figure out that it’s not the product that’s crappy; it’s just that fame hadn’t come yet. We started developing several sales areas, and when the first wave of purchases through friends ended, the time came to invest in marketing and internet sales. But we didn’t have the skills or money for this. We started developing in corporate directions – we offered large orders for the 8th of March and things like that. This helped us tremendously. As for what to spend most of our efforts on, marketing or PR, we chose the first. We held workshops and degustation events at magazine publishing houses like Cosmopolitan. We went there, set up small stands, and let people try our product. Press publications helped, as did social networks, particularly Instagram. When your product looks good, it sells itself.
Do you have an experimental taste laboratory? Who thinks up the different taste combinations in the chocolate, and how does this process take place?
We of course don't have a lab with a bunch of tubes and extracts, but we are currently making our eighth new product, for example – cupcakes. And our confectioners create cupcakes using their own recipes, and each submits his or her cupcake to a board. We try the cupcakes with tea and issue a verdict. After that, we turn to our special clients who have loyalty cards and we ship them our experimental products for free and get their reviews. It’s a mutually beneficial focus group.
One executive from a large bank ordered a huge bar of chocolate from us with the message 'Happy Birthday, Yulia!' The confectioners made a mistake and wrote 'Happy Birthday, Olesya!' The girl was pretty cranky.
On your website you have an order form for different fillings. Can I order chocolate with bacon?
Only if it’s a large batch. We won’t run to the store to buy bacon for just one chocolate bar. We’re not going to cook it carefully, chop it up and cover it in chocolate. It’s simply not profitable. You have to find a balance between being client oriented and being efficient. For the 8th of March, we did make 1,200 chocolate bars with marmalade and liquorice. We’ll break a sweat for those kinds of amounts.
What have been some of your craziest orders?
Our nerves were tried by our first corporate order – 42,000 tiny chocolates. At our 30 square meters of production space we were up day and night wrapping chocolates and pouring more, wrapping and pouring. Almost all of our friends helped us. There was also a crazy misunderstanding once. One executive from a large bank ordered a huge bar of chocolate from us with the message 'Happy Birthday, Yulia!' The confectioners somehow made a mistake and wrote 'Happy Birthday, Olesya!' Imagine, the girl opens it up and sees that a huge piece of chocolate isn’t actually meant for her. It was a mess and the girl was pretty cranky. I called her myself and sorted out the conflict.
How did you organise offline sales?
We sell our products to partners, the first of which was Coffee House. We shipped them up to 2,000 macaroons per day. We received our first large order two weeks after opening. It was for Red Espresso Bar, which is next to HSE. We went to the café, made an offer, and held a degustation. We were sending out 150 proposals a day, and then we would go to businesses and bring our products with us. Couriers were there and established a common language at the location. While one out of 30 responds to a mailed proposal, one out of five gives a definite ‘yes’ when contact takes place face-to-face.
Understanding your audience is the main thing in business.
At the same time, we sought out investors. We had a fun slide for this that we would show investors: ‘Believe it or not, this 30-square-meter office can make 10,000 chocolates a month thanks to the efforts of two people and investments of 150,000 rubles. Imagine how much could be made on 100 square meters of space.’ And it worked. We began opening up our own sales locations in autumn 2014. We now have four of them.
What psychological factors exist when purchasing sweets? Do you take advantage of these factors?
There are three main factors that always work for us. Your store’s appearance is one – bright pink, cream, and chocolate colours are associated with taste and happiness. After colours draw you in, the packaging begins working. Beautiful, appetising, gold embossed packaging really impacts people. I was recently in Morocco with a girl and we went to Laduree, which has the best macaroons in the world. As soon as we walked in, she started taking pictures because it was all incredibly beautiful. But this made me angry even because I realised that we don’t have the type of product that you want to take pictures of, meaning it’s necessary to rework the design for the audience.
Understanding your audience is the main thing in business. I recently saw an interview with Chichvarkin, and they asked him how his former business (Euroset) differs from his new one (Hedonism Wines), which opened in London. He said he has absolutely no understanding of his new customer. He didn’t study with them, didn’t drink or live on the same street as they did, didn’t watch football with them, whereas Chichvarkin knew Euroset’s customers like the back of his hand and understood what to offer them.
We also use smells. At two of our locations we have a machine that sprays confectionery scents. These small tricks help a lot with sales.
Does your team have a lot of people from HSE?
Our first investors were from HSE. At first you think that a business should be only your own, even if it develops at a snail’s pace. But then something clicks and you understand that it’s better to sacrifice a portion of revenue so that business can grow. This is much more interesting and a completely different experience. This is exactly what I wanted, and after a week, Misha from HSE called me (Mikhail Lobanov from Target Ventures, now a good friend). He and his friend (also from HSE) created a venture fund that was the first to invest in us. The university helped us indirectly yet again.