At the university, I studied forest engineering – how to maintain and exploit forests, how to process wood, produce products such as paper, pulp, sheets and others, but to become an entrepreneur I needed to know other things – how to manage the company, promote products and marketing. In the USSR there were no educational programs for these subjects, nor teachers. Imagine, that throughout the Soviet era, trade was banned and punished even to the death penalty, worse than murder.
When they allowed it, almost nobody knew how to do it. In order to educate myself, I bought the books and studied all the time, I even took the books to the factory and used every moment to read them while my work days went by.
After the experience of working in my business, it seemed very easy and boring to work in the factory. I did not have to try, or undertake anything, just follow instructions and carry out ordinary tasks.
Life changed very quickly. The factory where I began to work as an employee was one of the largest in the world of paper and pulp production and had more than 12 thousand workers. Practically the whole city worked in this factory. The general manager of the factory directed the whole life of the city. He was appointed in the USSR era. With the new reforms, its power increased. He received permission from the government to establish his own private enterprises. Thus, in the factory were created new private companies directed by the people, who appointed the general manager.
The companies belonged to the same manager and his colleagues. Its functions were the same, that the workers of the factory did before, but the profits were distributed only between the general manager and his companions. Through these companies they practically distributed the money from the factory to their private exchanges. Meanwhile, the factory where I worked was getting worse each month. The most serious problem was the supply of raw materials, mainly wood. The factory paid very bad salaries to us as employees and timber suppliers suspended shipments because of the debts.
At the same time the production of the factory as paper, pulp and cardboard was accumulated in the warehouses and the factory had difficulties to sell everything. Salaries for workers were paid irregularly, the debt of salaries that the factory wasn’t able to pay to its employees was getting accumulated. The same situation was suffered by many other factories in Russia. It was a crisis that was growing. The “red directors”, as they called the directors appointed in the USSR era, were unable to adapt quickly for the new conditions of free market. They needed the specialists who knew how to operate in a new economy.
I felt that it could be useful to overcome the crisis. I was trying to get an appointment with the factory’s deputy director to offer my service. Finally, he received me and listened.
I proposed him to hire me as specialist responsible for supplying the timber factory. I was about to graduate as a forestry engineer and had experience running my own business.
He listened to me with a smile. He told me that the factory needed five million cubic meters of wood per year!! The best specialists who dedicate their lives to do that job were not able to achieve this goal at that time.
He asked me: What chance do you have if you do not have experience and being so young?
I did not want to give up and asked him to give me a chance, try me, perhaps, in his private company, without any salary. My future boss was surprised and looked at me with interest. He accepted this proposal with one condition, that the period of the test is going to be short – only one month, after which, he can fire me without giving any explanations. This was my chance.
Now I am a month away, the test period that the boss gave me, of not missing my great opportunity to demonstrate my ability and I have to put in practice everything I have learned in life and college, to not get unemployed!
It was 1992, I was 24 years old and had a huge hope to realize my business dream. It was my chance to get into a really big business. My plan was to thoroughly investigate the situation of timber suppliers and find ways to solve the crisis. On the first day of my new job I communicate with several larger suppliers and I went to visit them.
They were located hundreds and thousands of miles away from the factory. It was a long trip, for several weeks I was moving by trains and ships from one supplier to the other. With most of them there were no land routes, just rail or river. For them it was a surprise that someone from the factory visited and was interested in their problems.
They were used to be ignored by the representatives of the factory where I worked, and take no responsibility for the huge debts that the factory had. My job now with this opportunity of only one month was to open fields and explained all the difficulties that the factory suffered and they confessed to me their own problems that were even more serious.
In addition to its problems, the factory did not have the money to pay the workers, who were without salary for several months and their families were suffering from hunger. They rightly refused to work. The machinery and technique ran out of fuel and repairs.
As a result, they all cursed the new government and the recent reforms, blaming them for all. Analyzing everything, I realized, that solving this situation was possible only by giving them food, fuel, machinery, spare parts and other urgent things. The factory had no money, but it had many debtors and they also had their debtors. In these chains of debtors were the producers of everything, what our suppliers of wood needed.
Urgently I negotiated with these producers and managed to sign agreements to convert the debt into the necessary products for our suppliers. At times, supplier chains included many different producers. For example, in order to obtain the forestry tractors, it was necessary to supply the tractor factory with metals, engines and many other spare parts. In these chains were involved industrial firms.
Yo he establecido las buenas relaciones personales con casi todos los dirigentes de estas empresas. I have established good personal relations with almost all the leaders of these companies. They told me, that what they appreciate the most, is a person that always keeps its word. Between us we created a true trust. At that time when the old USSR system was ruined by its rules and customs, what most people needed was trust. The result was impressive. Through me, the factory started receiving most of the wood and the management problem was solved.
The general manager saw my results and in a few months I was appointed as director of commerce of his private company TECH – Servís, who handled the supply and sales of the factory. Apart from the salary he promised to pay me, as a price, 15% of the profits that I produced. I started directing all the business operations of the company. In a short period, I managed to create my work team with young people and it was able to work hard and be productive.
Our work time was not limited. Usually we work 12-14 hours a day. I promised everyone to share the promised bonus according to the participation of each one. It was a strong motivation, because in the time of USSR the people received a miserable salary and which very little depended on their effort and results. My team and I managed to exceed what our bosses expected, earning millions of dollars for the company each month in our commercial operations that were expanded across the country. For me it was a good school, where I learned the main things to run your own company. Despite being so busy with my new job, I never forgot about university and I graduated as a forest engineer in 1993.
While I was stranded at work, my wife Irina took care of our beloved baby “Anastasia” and began her studies at the University of Saint Petersburg in audit and finance, also working as an accountant in the factory. Irina had an idea, that someday we could create our own company and work for ourselves. At the moment we were not ready. She, like me, was busy every day for many hours without vacations. But we always found some days for our trips to the woods to fish, something we both loved. We camped on the shore of some lakes that abound in our land and sometimes spent several days fishing and enjoying the unspoiled nature.
Now the problem of the factory, where I worked and that I raised from bankruptcy, was no longer liquidity … it was security.
The gangs tried to extort the bosses. One day they attacked the director, they beat him so hard that he was a week in intensive care with threat of death. Then they threw grenades at his house. In that way, the bandits pressed the owners of the companies to fulfill their demands. The owner of this company, as I told you before, was the general manager of the factory.
I noticed the impunity of the extortions from the gangs. The response of the manager had to be forceful, so:
The manager of the company formed his own security service, that was directed by the KGB colonel. He was called Kuzmich. Before being the leader of the company security service, I found that he was head of the KGB in our city.
This colonel knew very well all the city’s criminality and knew how to protect the company. He hired FSB, police and military officers for his service. He managed to obtain the licenses of the arms, which is very difficult in Russia. The guns were handed over to the guards and company leaders, including me. We were always armed.
Kuzmich trained us in self-defense using guns and without them. Doing all this was worth it, because the city was becoming a battlefield. Gangs were fighting for the control of businesses, killing businessmen and their rivals from other gangs. Our city was very attractive for gangs because the factory was a great source of money. As I said before, it was one of the largest factories in the world with more than 12, 000 employees. That attracted criminals from other regions with the hope of winning a fortune.
I, as director of commerce, managed to multiply the income of the company during a year. Earnings were estimated to be around ten million dollars.
My team was hoping to receive and distribute the 15% of the profits, promised to us. But the CEO was not keeping his promise. I could wait a lot longer because money was never my main motivation. I loved doing business, creating new business contacts to overcome the crisis that the country was suffering. But my team was pushing me and I felt the responsibility. Several times I tried to demand the payment of the bonus from the general manager, but he always found some excuse. Finally, it came a moment of a serious conversation. The manager told me, he was not going to pay for it because it was too much money for us, that he needed the money and that it was his mistake to promised me that 15%. He told me that my salary has exceeded the salaries of any factory engineer and that should be enough for me. At that moment he was so angry that told me he could fire me. While he was speaking to me, I thought I would never make his mistake in my life. One should always keep its promises.
At this point I finally decided, that I will create my own company, along with my wife, my brother and my dad. I immediately wrote my farewell request and left.
When I returned to the office to pick up my things, Kuzmich was waiting for me. He told me that he called the manager and asked me to stay, that he did not accept my farewell and he will pay me some of my bonus. Kuzmich, really liked me. I think he was smarter than my boss, but the decision was made and I had other plans for my life.
My boss showed me his real face and I was disappointed. I replied to Kuzmich, that I will not change my decision. We met with my team and told them everything that happened. I apologized for our boss, but I told them that I was going to start my own company and I invited them all to work with me in the new company.
….To be continued
The Roller Coasters – Chapter III