Investments should not be guided by emotions

Arkadiy Pekarevskiy, co-owner of the Aztec confectionery factory and the founder of the Sela chain, told NP about what he learned from his mistakes:

Arkadiy Mikhailovich, it’s been  8 years since you left the business of a large retailer Sela (at that time its turnover was $ 200 million), you sold your part of the company to your cousin Boris Ostrobrod (the deal is valued at 40 million), and you started developing your own investment projects … But so far the success story has not been repeated. Why?

– Investor is a separate specialty that must be mastered by learning from your mistakes. I made a lot of mistakes and lost a lot of money. But it seems that no loss does not work in this life. Only with time I began to understand what was what, and even then not completely. There are two main mistakes. The first is that you cannot invest based on emotions. Second, you cannot invest when there is a massive psychosis and everyone is buying the same thing. Remember, in the 1990s, oil was in short supply, and many businessmen rushed to buy it abroad. The first ones took the cream off the market. And the rest did not know what to do with this oil. A similar situation was in the 2000s with the land. Until 2008, its prices were growing by leaps and bounds. And the people actively invested in land plots. And then I didn’t know how to get rid of them. Fortunately, this topic touched me only partially.

What about your development projects now?

One project, in Oliki, developed by a competent Italian specialist, is now packaged and put up for sale. And the second – “New Soikino” – at the finish line. More than 200 houses in the village have already been sold. There are only 50 left. If the sales are completed in a year, I will get the money invested in 2008 from there. Maybe even with some kind of ruble profit. And if it takes more time, there will be zero. There is no need to talk about the profit in the project, which will take 10 years. Especially in dollars. There is already a clear loss. But … it is impossible to do business in our country and think about dollars. We must forget about them. We go to the store with rubles, in which we pay the rent. And this is somehow calming.
Do you still use gas tanks at your cottage village New Soikino?
– There are no other options. When we opened sales, we promised people that there would be gas. We had in our hands the technical conditions signed by Gazprom for connecting the district to the networks in 2013. But in 2015 it turned out that for some unknown reason, the federal road leading the cottage village wasn’t built. We were forced to offer people gas tanks. Now this is already a standard package of options in the house.

Has the hype with cryptocurrency touched you somehow?

– There was one crazy deal. By the way, quite successful: I not only did not lose, but even made money. But, as far as I know, as soon as everyone started mining (every second one told me that he was engaged in cryptocurrency), big earnings were blown away. Remember, bitcoin reached $ 18 thousand, and for the last six months it has stood at $ 6.4 thousand. Honestly, I did not believe in this story from the very beginning, understanding how seriously banks control capital today. All over the world there is a fight against terrorism and money laundering, the rules of financial transactions are being tightened, and here is such a window – impersonal money. Gene burst out of the bottle. At least strange. Although I understand that blockchain is the future. It’s one thing to keep money in a bank that can go broke. And it is completely different – in a network of 1000 computers, in fact, in the cloud, from where they will not go anywhere. True, the question arises – what happens if the Internet is turned off on the planet? And there is such a risk.

Is your return to Sela business possible?

I, of course, follow the development of my brainchild, I concern what is happening now. But there is a good expression – they do not enter the same river twice. This is the case. I don’t know anyone in the company anymore and I don’t know the situation. In addition, over the years in business, in my opinion, there have been erroneous decisions. Some of them – the closure of the flagship store at 77 Nevsky Prospect, parting with a number of partners. You can’t fix it. So coming back seems unrealistic to me. Although we communicate very warmly with my brother and his family. But personal relationships and business are not the same thing.

Why are you worried about Sela?

– Well, I can see what’s going on in retail. The business of many clothing sellers is now in crisis. The retail business was greatly crippled by the strengthening of the dollar: the exchange rate difference eats up an already small margin (at the level of 10-12%), and tough competition in the industry does not allow raising prices. Many close stores, many stop development. Sela planned to open 40 stores across the country. They were opening something, but I don’t know how the work will proceed. I left Sela almost 8 years ago and, faced with this topic in other segments, I realized that I did not want to engage in retail. So if life doesn’t force me, I won’t return to retail. But I remember that there is an expression “never say never.”

What about your project to create a network of children’s toys trade Pic’nMix?

– As a retail, this project did not go. We opened to stories in Moscow and St. Petersburg. But they could not pay for themselves, and we had to close them. As a production and wholesale – the business is alive and doing well. The retail idea was also good. But not all good ideas can succeed. And the presence of successful projects in your portfolio is not at all a guarantee of success in new endeavors. How many successful serial business stories do you know? Oleg Tinkov is the most striking, and perhaps the only example. But here is the paradox of this story. After Oleg sold his successful businesses dearly, they usually fell apart. This fate befell the production of dumplings, and beer, and the restaurant. What does this mean? That an idea is good, but not enough. It should be filled with the energy that a person brings. And when a person is removed from the brackets, everything falls apart.

How is the first marzipan production in Russia that you created in St. Petersburg developing?

– Three years ago, this business had tremendous growth – profits tripled in a year. And then, for a number of reasons, the fall began. First, we made couple of mistakes. Relatively speaking, the product was not brought to the ideal, we went to the wrong network, there was waste of time, we made some personnel errors, etc. Secondly, the industry began to feel the effects of the 2014 crisis with a delay. Consumer demand fell sharply, raw materials rose in price. The situation was aggravated by “retaliatory sanctions”. It turned out, as in that expression: “In spite of my mother-in-law I will frostbite ears.” And I will be surprised if someone now tells that his business is booming. But you can benefit from any crisis. Crisis makes it possible to devote time to quality and assortment. And also the search for new technologies to reduce prices: you find analogues of expensive ingredients, invent new fillings, pack the goods in bags instead of beautiful boxes, etc. After the New Year, we will launch a new product on the market with a taste very similar to German marzipan, which is considered the best in the world. We are spinning. You can’t survive without it. Look what is happening now with the market, with the networks. I don’t know how manufacturers live, because the last 5 years have been the time for retail promotions. When my mother says that she bought a box of chocolates for 57 rubles in a store for a promotion, I understand that this is impossible. Because it costs only 70 rubles to make it, and taking into account the profit of the enterprise and all the extra charges, the box should cost 150 rubles. But if you want to be in a retail network, you must participate in promotions that apply to the entire range. This, of course, is good for networks – turnovers are growing. And people too. And the manufacturers are suffering.

But in spite of everything, your production volumes are growing for the second year in a row

– Yes, last year, after the failure, production increased by 15%. And this year the dynamics are similar. In general, Aztec is a business that does not require an investment of money. Which I am very happy about. We even distribute dividends every year. But we still save as much as we can, and live with the hope that sooner or later the economic and political nightmare in our country will end, that Western countries will stop playing the delusional games of sanctions, which I consider a crime against humanity. They specifically and deliberately hit right in the heart of the country – in its people, who have already lost many jobs, their businesses and confidence in the future. There is, if not impoverishment, then a significant deterioration in the material situation of people.

Has your business also suffered from the sanctions?

– It suffered, of course. We even discussed this with the business ombudsman Boris Titov. The fact is that Russia, in response to American sanctions, introduced its own – on the import of almonds from the United States. Great. But we don’t produce almonds. It turned out that we hit ourselves in the gut. But somehow we managed to survive. In general, this is an amazing paradox of our country. For as long as I can remember, my foreign businessmen fellows always ask me: “How can you do business in Russia, where there are always some crises and conflicts?” But the answer is simple. When you start thinking about a crisis, you give up and don’t want to do anything. But instead of thinking about crises, you just work, everything falls into place. I really like the phrase: “Do what you have to, and сome what may!” That’s how we live. And then, a person cannot live in depression and crisis all the time. You begin to get used to this state, it becomes the norm, you straighten your shoulders and move on.

Is the Azteca brand alive?

-We have closed many retail outlets. We left literally a few islands that are needed more for marketing and communication with the buyer than for sales. Brand trade in its previous form was ineffective. There was not enough assortment to recoup the costs. Its weakness was especially obvious in comparison with the networks, each chain store can sell 20-30 times more goods than you yourself on your shelves. But we do not give up the idea of ​​developing our retail. We are just looking for a new format that will allow us to make it profitable. And, it seems, they found it. Nobody needs a shelf with low prices today. People need a soul, an emotion. I spied the idea of ​​such a soulful retail abroad. I hope to implement it next year.
How is your insurance business – the company “Capital Policy” developing?
– I fit comfortably into the investor team. There is a good composition of participants – competent guys who give a lot of energy to the business. They are all are friends of mine. And the business itself is stable, yielding dividends. It grows. It is not yet clear how to develop it further. Now we are making a network of medical centers in St. Petersburg. We have already bought several premises. So everything is positive. In general, the medical business is like food – it will always be in demand.

And how is the Anyships ship rental aggregator doing?

– It’s developing. This year we have started selling tickets for river trams in St. Petersburg. We sold 30-40 tickets a day. Plus we rented boats. So the operating income has already appeared. It, of course, has not yet covered my investments, but I am pleased the way it’s developing. In general, everyone who gets involved in startups hopes for capitalization – that someone big and rich will come and buy the business. But you can wait forever. And we are not waiting. We are just developing.

You recently signed a contract with Venice’s main urban carrier to sell public transport tickets for the Italian city. Are there any plans to develop any other foreign markets?

– Yes. For the next six months between navigations, we decided to focus on the promotion of other markets in Egypt, Turkey, UAE, Israel. The task is to fill our base with ships as much as possible. So far there are more than 2 thousand of them, and there should be more than 20 thousand around the world. Then the process of promoting the platform will begin. It’s very expensive. But maybe by that time some partner will come up who will be able to promote this service and give the business a new impetus.

You have a lot of businesses. Which one is the main one?

-Here’s the thing: there was only one passion, which I gave myself completely. Sela was my only passion. And now I have a set of businesses, in each of which I have business partners to reduce the risks.
This year, you, along with other well-known businessmen of the city, took exams from students of St. Petersburg State University. What impressions did you get?

This was the second experience (I got the first one a year before). And the second time turned out to be better than the first, since the commission included not only businessmen, but also university professors. I was an examiner at the Faculty of Marketing and Management. There were more star defenses, less sorrow. But I realized one thing – students graduate from university as theoreticians, not practitioners. Life, of course, will quickly teach them. But I want them to immediately fall into the right business.

Last year you started to install sculptures “Dandelion” – a symbol of peace and kindness at the airports of the world. They said that you want to plant 100 of these dandelions in 10 years. How many are there at the moment?

– At the moment there are more than 40 of Dandelions in 20 countries of the world. We are preparing a map of the Earth with our Symbols of Kindness. They are all over the world. But we managed to install only 4 at the airports. A few days ago, we placed the Symbol of Kindness in Moscow International airport Vnukovo. Then, I hope, there will be Sheremetevo. The action was started by the Russian sculptor Grigory Pototsky. He everywhere promotes the ideas of the basic laws of humanity – kindness and gratitude, saying that where there is kindness, there are no boundaries. I agree with that. Although for me kindness is a complex substance. It is difficult to describe. But the idea of peace making is close to me. Maybe gene memory is working. Even at the level of communication with fellow businessmen from other countries, I always emphasize that it is necessary to build a foundation of friendship and interaction, because we are brothers (both Americans, and Europeans, and Russians, and Ukrainians, etc.). Dandelions also help me promote the idea of peace. If at least a few people pass by Symbols and think about goodness and peace, my mission will be fulfilled.

Do you manage to rest somehow?

– I fly a lot to different cities and countries. And I love it very much. For me, flying is life. And I cannot stay in one place for a long time. Changing pictures, climate, languages ​​is a thrill!

Author of the article: Natalya Kovtun, source “New Prospect” https://newprospect.ru/nelzya-sovershat-investicii-rukovodstvuyas-emociyami?fbclid=IwAR2kwwUny0RE9ZpTem7H97PHHJHOygTkTeLbSeC0utqOB4g4iURofrmeu0A