رونوشت کامل Why Kogan CEO refuses to take MASSIVE $800k salary

Melbourne from the Soviet Union in 1989. Yep. They had $ 90 to their name, living in government housing. When you think about that immigrant experience, how has it impacted your mindset as a businessman and what memories about it stick out to you? 00:06:25 Speaker 2: I think it's had a massive impact. I had the privilege of growing up underprivileged. meaning that every single day it was an active struggle of how do we make ends meet? How do we save money? How do we afford things? How do we progress in life? I'm watching my parents go through that. Parents arrived here with $ 90 in their pocket, two kids, couldn't speak English at the time, were learning English, were working three to four jobs each and raising kids. And you know, always had a loving home and always food on the table and things like that, that, you know, sort of you take for granted as a kid, but you get to reflect on it later and go, that would not have been easy for my parents. And you start to appreciate it a lot more. And then I start to think about, well, what does it take to be an immigrant? And it usually means you've got to drop everything you've got, take a massive risk, travel into the unknown, work your butt off for a potential benefit that might not even be there. And then you go, well, what's it take to be an entrepreneur? It is identical. It's that risk-taking, hardworking mentality. And that's often why when you look at all those entrepreneur lists and business lists and things like that, there are a lot of immigrants on there because it's a very pre-selected cohort of people who are risk-takers and because they saw an issue in their current environment and they knew that they need to leave here and go there, then take massive risks around it and then work really hard to make it happen and overcoming adversity when they get there. All the same things you need in a business. So it's not surprising then that a lot of immigrants become very successful entrepreneurs. And, yeah, so I would say that that, you know, The privilege of growing up underprivileged has been a big part of my drive, a big part of how I think about things, a big part even of the core ethos of the Kogan.com business. We're all about price leadership. How do we make things cheaper than other businesses? How do we take a product and manage to get the same product for a better price point? That's what my family grew up doing. That was how we were assessing things. Like that decision-making of watching my parents' research purchases go, hey, we really need this, but what brand do we buy? Where do we buy it from? What products do we really need and what products can we go without? Like all of these decision-making processes are things that I grew up with and then have implemented them into our business. 00:09:19 Speaker 1: Wow. So they come over from the Soviet Union. They're learning English as they go. What kind of jobs are they working? 00:09:27 Speaker 2: So dad was a pizza delivery guy, a taxi driver, helped out at some stalls at Queen Victoria Market. He worked at some factories and manufacturing facilities in some pretty yucky environments, the, you know, work safe areas. processes at that time weren't the same. Some of the stories I hear from him are horrendous. Like, you know, WorkSafe wasn't the same as what it is now. So he grew up, he was doing that when we got here. Mum would be a waitress at one cafe, a cleaner at another, and, you know, learning English at the same time. And it's quite incredible now that I think about it that they were working many jobs each. And This is after, you know, mum had medical qualifications in the Soviet Union. Dad was an engineer. And you come here and you have to do those sort of jobs to make ends meet. While at the same time, I can't remember my parents ever being absent for anything important like, you know, if there was a graduation ceremony at school or a parent-teacher interview or Um, you know, my mum could still recite the name of every teacher I've ever had. So, um, and having a very loving home for my sister and I at the same time. So, um, it was quite incredible what they did. I'm, I'm, uh, forever indebted and grateful to them. 00:11:01 Speaker 1: It sounds like you started to emulate your parents' work ethic early on. As I understand it, you were walking home from tennis one day and you noticed golf balls outside a golf course and you started collecting them and selling them. You were nine years old at the time. So you begin wheeling and dealing and making money yourself. But was that something that your parents encouraged you to do or was it your own initiative? 00:11:29 Speaker 2: That was my own initiative. So all of this hard work from my parents, it's, you know, on one hand, they gave me that and they taught me a lot of these really important skills that are important in business, the hard work and perseverance. But making a product market fit or seeing opportunity or things like that isn't something they grew up with in the Soviet Union. Like communism doesn't teach you too much about supply demand or economies of scale or things like that. So there's a few silly decisions I've grown up seeing them make over time, like you know, they would drive from Elsternwick to the Dandenong markets to buy fruit and veg because Dandenong markets were cheaper. And I'd say, well, what about your opportunity cost of your time and the hour it takes to drive to Dandenong and the petrol that you'd spend driving to Dandenong and things like that. So communism doesn't really teach you too many business skills like that. So, you know, that was sort of me seeing an opportunity of, hey, I walked into the pro shop one time at Elster McPark golf course. And I saw that they were selling secondhand used golf balls for $ 2 each. And I'm like, these are the same things that I see lying along the fence line. They're just washed and polished a bit. And really like I walked past so many of these every single

day, there's an, there's an opportunity here. So then yeah, as a nine-year-old started collecting them and putting them in egg cartons and going and selling them to golfers. So That was probably more of the skills I'd learned, you know, in Australia and seeing an environment where there's lots of businesses and lots of different offerings from different businesses and them trying to innovate and create things to win customers. So maybe that played a bit on my mindset. But yeah, my parents are more, they did a great job from a work ethic and risk-taking perspective, but some of the core business theories is never something that they really learned or got taught. in a communist environment. 00:13:33 Speaker 1: And then in your early twenties, you were on a conventional path. You, you had, you had day jobs, but then you decided to leave your nine to five to start selling the TVs out of your parents' garage. And I wonder, was there a moment you can remember where you, you decided you didn't want to be an employee anymore. You didn't want to work for someone else anymore. 00:14:02 Speaker 2: Um, yeah, there was a, a very clear moment. Um, I was working as a management consultant at Accenture. I'd always, you know, I'd self taught myself a lot of tech and IT skills and, um, I also did it at uni, but, um, it's an area that I really enjoyed. Um, and there was a project I was working on where I found an easier way for us to do things. And it was going to save us hundreds of hours of time of all of the grads working on the project. And I suggested it to the managers and I showed them what I had done and it worked and they saw it work and they just completely ignored it and weren't interested in it. In hindsight, when I think it through, because it's like, it's the bit that for me as someone who'd written the code and the system to show them how it could be done easy and them saying no, that was sort of the There was a lot of other stuff I wasn't enjoying there, but those sort of the final nail in the coffin and going like, this isn't for me. I'm not going to numb. I was a 23 year old grad. Like I'm not going to numb my brain for the next 50 or 60 years and work here. Um, I knew I had to get out and that's around the time that the idea for Kogan came along as well. So those two paths collided. I'm like, all right, I'm out of here. 00:15:29 Speaker 1: So you resigned. You go out on your own. How are your parents reacting at this point? 00:15:35 Speaker 2: Oh, mom cried. Mom was so upset because, um, up until that point I was on the perfect conventional path for her, you know, like I got, um, really good marks, uh, at high school, topped the state in some subjects. And she was really happy, got a scholarship into university. She was really happy, got good marks at university. She was really happy. Got a really good graduate job. She was really happy. So everything from her perspective, everything's gone to plan and she's, um, she's very happy. And then one day I'm like, yeah, mom, I'm going to quit this and do this. And she's crying saying, you know, you've got this great education and this great job and you're going to be a TV salesman. And I'm like, no, mom, not quite TV salesman. It's an idea for a direct to consumer, uh, online business model and all of this. And yeah, she, obviously no one had heard of online retail at that point. It was, yeah, she was really upset and thought that I'm throwing everything away. 00:16:40 Speaker 1: So it was kind of like the golf balls on the side of the road. You saw that opportunity and you went for it. But is it something you'd been considering for a while? Because I guess back then in the early 2000s, Nobody was buying electronics or appliances online. Nobody trusted it. But you believed that you could get people to do that. Why did you believe that? 00:17:08 Speaker 2: As part of my scholarship at Monash Uni, I got to do a semester abroad in Miami. And it was one of my, it was my final semester was actually abroad in Miami. And there I saw the rise of online retail where all the, you live on campus there, and all the international students, we went to Walmart to buy our mini bar fridges for our dorm rooms because that's everything we'd learnt about at uni. Walmart's got economies of scale and the best prices and all of that. So we spent a whole day going to Walmart to buy our mini bar fridges, then saw the local American students ordered theirs online. And then had FedEx drivers deliver them straight up to their dorm rooms. We had to carry ours on the bus and the train and bring them back to the dorm room. And then found out that the American students paid an even better price than we did. So I saw that, what would have that been, roughly a year prior. 00:18:09 Speaker 1: It was happening in the U.S. 00:18:10 Speaker 2: It was happening in the U.S. 00:18:11 Speaker 1: But not in Australia. 00:18:12 Speaker 2: Australia, it was non-existent. So I had that inspiration from my studies. 00:18:18 Speaker 1: In the U.S., When you start bringing stock into your parents' garage, how are you paying for it? 00:18:24 Speaker 2: It was pre-sold. So I went out to a few investors when I had the idea and said, look, here's what I'm planning to do. I'm going to sell TVs and they're going to be direct to consumer. And even though there's some big TV brands out there, the panels in the TV is only made by a few companies. They're all essentially the same panel. The technology is all very similar. And I can do it for much cheaper. No investor was interested, they said, online retailers for books and CDs. So then to make the business happen, it was essentially funded by the customer because I said, well, maybe if I give customers an incredible deal with a price they can't refuse, but say it'll be delivered in 45 days, customers will be willing to buy it. And I did that online and customers loved it. They were happy to wait 45 days for their TV. Because just prior to that, I

was helping my mum buy some furniture, and she went into a store and paid up front for furniture that wasn't going to be delivered for a few months. And I thought, all right, well, if people are willing to do that for their bigger purchases, not only is it a little bit of a way, I'm going to give these customers an incredible price like nothing else they've seen before. So didn't need any capital, didn't need any funding. And essentially, our first few containers were literally arriving labels put on them, sent straight out to customers. 00:19:51 Speaker 1: Is it true that you maxed out some credit cards as well? Yeah. How many? 00:19:57 Speaker 2: I had at the time, one or two credit cards. And then it was, I think I had a couple. And then It was during a time when credit cards were a lot easier to get. Banks were giving credit cards to every man and his dog and the credit checks were a lot easier back then. So even though I'm unemployed, I was able to just fill out some forms and then receive credit cards in the mail. So it was wonderful. And then I also even told my friends what I'd done and told them I'm onto this business idea. I think it's really going to work. And they went and got a few credit cards and maxed them out as well. So that also helped. a bit of the funding. 00:20:39 Speaker 1: So you had that huge first mover advantage. No other retailers in Australia are thinking about the internet. They're all writing it off. How do you keep that spirit going sort of into the present day? 00:20:53 Speaker 2: It's an interesting point. And I talk about it right now because I feel like day zero again because of AI. So if you look at the history of our business, yeah, the first 10 years, was sort of like we were shouting from rooftops about the benefits of online retail. All the traditional retailers weren't really paying attention. They were asleep at the wheel. We won huge market share and created a business that probably shouldn't exist because they weren't paying attention. So we had that huge first mover advantage. Our second 10 years became more about execution because every retailer woke up to the fact that the internet's real and here to stay. They all started building out websites. They all started to have an online offering. So it became about execution. Who knows how to run the website better? Who knows how to manage a customer database? Who knows how to communicate offers to customers better? Who knows digital marketing better? Who knows how to scale all of these things? So we did pretty well, but it wasn't as exciting 10 years as our first 10 years. Now, we're in our third decade. We're back to that first decade excitement because of AI The way we're doing things and the speed at which we're going is just absolutely incredible. Knowing that a lot of the bigger competitors and the incumbents and the traditional retailers we have are not doing anywhere near what we're doing right now. So the way that I liken it is sort of they've got

a heritage listed house next door to the council. And anything they want to do, they need to get permits and put it through committees and to votes and to this and that. And there's just, they're not taking advantage of this technology revolution we're going through right now. And we don't quite have an empty block where we get to build whatever we want because we've got a 20-year-old business, but we've got a modern house where we get to knock down whatever walls we want and we get to recable whatever rooms we want and we get to you know, be a lot more agile. So it's a very exciting time right now because of AI. 00:23:06 Speaker 1: How is Kogan deploying AI? 00:23:09 Speaker 2: It's in every area of our business. So everything from ensuring customers get quicker responses with customer service and ensuring our service is better and faster and Agents are helping there, or AI agents are helping, as well as human agents do it better than we've ever done it before, all the way through to our engineers who are writing code now better and faster than ever before, all the way through to the way marketing works or even my investor presentations that we do, the voice in it is completely AI. 00:23:56 Speaker 1: I guess it's exciting and there's opportunity there, but there's also disruption risk, right? Like Meta recently released this agent Muse that people can use to browse sites and compare prices and even make purchases on their behalf. So when you think about the rise of these AI agents, do they pose a threat to the traditional Kogan models? 00:24:26 Speaker 2: To our model, it's a huge opportunity. Like, I can't wait for more and more customers to use it. So over our 20-year journey, I've been saying all along that, you know, usually retailers don't encourage their customers to go and check other retailers. We, for 20 years, have been encouraging our customers to go shop around. We've been saying, hey, we would love an environment where every time somebody needs to make a purchase... They open a browser, open a few tabs, load lots of products, different options, compare specifications, compare pricing, do deep research on every product decision. And if every customer shopped like that, we'd be a 10 times bigger business right now. We would absolutely love that environment. And AI is about to make that easier. 00:25:20 Speaker 1: For customers. 00:25:21 Speaker 2: So if people are going to be rational and objective in their decision making, we are going to win more customers because our business model is manufacture the specifications needed and deliver that direct to the customer. No middleman as efficient and direct as can be. So when it comes to people making rational decisions and comparing specifications and choosing the best product for them, we're going to win that all the time. So if there's going to be agents that help customers make rational, objective decisions rather than emotional decisions based on brand or other factors, we're going to

win. 00:26:06 Speaker 1: There's a real scrappiness about Kogan, isn't there? And you seem to relish uncertainty, challenges, as far as the current macro environment, we've got high inflation, we've got interest rates going up, there's concerns, at least from people who invest in retail companies, there's concern that spending is diving. But you've said that Kogan actually thrives in that kind of environment. Why is that? 00:26:36 Speaker 2: Yeah, look, we've learned over the years that if we're going to try and predict the macro environment, we're going to get it wrong 50% of the time. So our job as a business is to run a business that's going to do well, no matter what the macro is doing. And that makes you focus on things that stand the test of time. So in my 20 years in business, I'd never seen a customer say, I love your price points. I just wish I could pay more or, um, that service was too good. I don't want you to reply to me that quickly. Or that delivery was too seamless. Can you slow it down a bit? No customers have ever said that. So we focus on the core fundamentals that are going to do well no matter what the macroeconomic environment is doing. 00:27:31 Speaker 1: Yeah, you reported strong earnings last month. Sales were over a billion dollars. The market sold off and Kogan, after it had that tremendous surge, the share price had a tremendous surge during COVID, it's been in broad decline since then. How do you psychologically as a CEO deal with seeing that when you see a share price go down and it doesn't reflect what you believe the company is worth? 00:28:04 Speaker 2: I haven't checked the share price since we IPO'd, so I don't know what you're talking about. 00:28:10 Speaker 1: I've got to ask. 00:28:11 Speaker 2: Yeah. Um, I wish what I just said is true, you know, because it is from a running a business perspective, a fairly irrelevant number. Um, and very often it doesn't reflect how the business is performing. And we've seen that along our journey. You know, we IPO'd the share price was a dollar 80 at the time. And I remember ringing the bell at the ASX and giving a speech. And the share price is behind me. And I just see all these concerned faces of all our team members and stakeholders in front of me. So while I'm giving the speech, I could tell by their faces that what's happening behind me is not pretty. 00:28:59 Speaker 1: So a classic IPO. Yeah. 00:29:00 Speaker 2: So like the share price went down on the bell ringing while the business was performing brilliantly. We smashed through all of our prospectors forecasts and the business kept performing well while the share price kept going down. And then just one day just started a massive ascent. So it doesn't always reflect how the business is going. And that's a big challenge for me as a CEO of a publicly listed company. And probably one of the things I dislike the most about being publicly listed. I love the scrutiny. I love the fact that lots of people are looking at

our business and questioning various elements of it and the transparency of the operation, but I really dislike the fact that there's this number out there that can often demoralise or demotivate team members because our team has... you know, we make mistakes. Sometimes we mess up, but more often than not, they're doing an incredible job and hitting through metrics and targets. And when that doesn't correlate with the share price and think like, what's going on here? Like, because a lot of them are rewarded through equity and so on. So it does cause this unnecessary noise. And, you know, I've just got to reaffirm to the team that, you know, in the short term, the market can be a voting machine. In the long term, it's a weighing machine. Just keep keep doing what's right by our customers and keep growing and keep delivering value. And in the long term, the noise goes away and everything will be rational. But in the short term, it's sometimes not. So yeah, that's our general approach to it. But it's a lot easier said than done. 00:30:47 Speaker 1: That weighing machine quote is a great piece of wisdom there. You're very online as a CEO. You fire your takes out there. They're unfiltered. Is that a conscious choice? 00:31:00 Speaker 2: Yeah, I started doing a bit more of it recently. Our CMO has sort of been saying like, hey, we discuss a lot of this stuff internally. People want to hear more from you. You've got people who love listening to you online. Why don't you have more of a voice? And yeah, so I started doing a bit more of it. 00:31:21 Speaker 1: As far as wanking from home, So you put out one take recently where you were talking about how the loudest advocates for working from home are people who you wouldn't necessarily want working at your company. And I should just clarify, in case we catch our listeners by surprise, it was a post that Ruslan shared on social media where he referred to working from home as wanking from home. Talk us through that. Do you not think that for some employees that there is a case for working from home? 00:31:53 Speaker 2: Definitely a case for some employees. The biggest problem with it is that those who really care about how much they get to work from home are probably the people you don't want working from home. Probably the people you might not want at your organisation as well. But the issue is that flexibility is great and you want to, you know, treat all your team members as adults and give them whatever flexibility they need. And that's sort of what we do at Kogan. But When I think back to my experiences in the workplace and the corporate world, and then some of the young talent in the early years that we had at Kogan.com, the amount you learn through just being in the room where it happened, through being there in front of the whiteboard and chatting things through and debating ideas and body language, like body language is 80% of communication. So it's like, seeing that is very different to shooting a

few emails back and forth or scheduling a video call with someone and things like that. So a lot of that is missing. And I think that if the younger generation is doing more and more work from home, it's not good for the future. 00:33:11 Speaker 1: Of our nation. 00:33:12 Speaker 2: I think that they're missing out of a lot of the learning and character development and learning the lay of the land in the organisation and getting a good read on all the people and their managers and different working styles and being there to share ideas, debate ideas and things like that, or discussing things when you go for lunch or you go for a coffee. And so it's I think there is a place for some flexibility and it's great that we've got these productivity tools like video calls and things like that. But I think we need to look at it more wholesomely. We've got to look at the whole picture and say, well, yes, what are the benefits? What are the downsides? And how do we structure our workday to make sure that we enable people the next generation to learn as much as possible, as quickly as possible, because they're going to be the stewards of the business world in years to come. 00:34:16 Speaker 1: And tell us about your proposed pay package, because it's really interesting. So if this goes ahead, you'll forego your salary of over $ 800, 000. Right. You'll take minimum wage, $ 50, 000, which you plan to donate to charity, and you'll receive these performance rights, these shares, these Kogan shares, which will unlock if shareholder returns double within five years. Have I got that right? Yeah. So that's a remarkable bet on the future success of the company, a high-stakes bet. 00:34:54 Speaker 2: Oh, yeah. I think we've got incredible prospects as a business. I think we're working on some incredible things. We're delivering a lot of value to customers. Our customers are loving it. Our team is doing an incredible job. I think the business is stronger than ever. And yeah, so I essentially, when discussing the future with the board, I said, hey, I'd love to be on $ 1 a year. and just make a package where if shareholders get an incredible outcome and there's an incredible growth in the business, I get rewarded. And if there isn't, that I don't like just pure alignment with shareholders. 00:35:39 Speaker 1: What is the plan to double shareholder returns in five years? How will you make it happen? 00:35:45 Speaker 2: Well, a lot of it is doing exactly what we're doing right now. Our business has done pretty well, but where if you look at any of our high performing areas, we're at one or 2% market share and, you know, customers are loving what we're doing. So it's just keep the growth going, have consistent growth in performance of the business, consistently delivering customer value. Our membership program is very important for Kogan First and, you know, growing that. So, A lot of the, you know, there's nothing revolutionary there, but doing a lot of the things I believe that we are doing and then add on top of that a lot of the efficiencies and productivity gains from AI. And I think that, you know, the business will continue to grow in value. 00:36:43 Speaker 1: So you're someone who's been building PCs from a young age. You're a tech connoisseur. When you look at the way AI is going, are you optimistic about the future? What do you make of this constant, it seems almost like a hype cycle we have now with these AI labs coming out talking about how AI agents are going to kill a billion people? What do you make of it? Are you skeptical about that? 00:37:16 Speaker 2: Are they. 00:37:17 Speaker 1: Are they trying to pump their stocks before the IPO? Do they want regulation to stamp out competition? Is there validity to what they're saying? Do you have a thought on that? 00:37:28 Speaker 2: Yeah, look, it's hard to judge with very limited information, but I'm a very free market person, and I know that a lot of the AI corporations are, calling for certain regulations and things like that in the market, which does smell of regulatory capture and things like that. But who knows what's going on there? I personally think that the benefits of AI just by far outweigh the risks, but there are risks involved. Like The risks that I'm more concerned about is none of this like, oh, yeah, AI robots are going to kill us all in 10 years or any of that. Like, yeah, nearly all technology when it was being developed, there was, you know, the doomsday sort of hypothesis and stuff. I'm more worried about the risks like, you know, like I'm using AI at the moment. I reckon I'm learning technology. at a 10 times faster rate than I've ever learned in my life. Every bit of information I want to know, I'm always challenging it, opening it up, connecting it into the various data sources I have, interrogating things. The amount I'm learning at the moment in information I'm consuming is incredible. And so the value it's adding to me is great. there's a lot of people who are using AI to not have to learn again. You know, so taking the lazy approach of like, oh, I'll just get AI to do my stuff for me or whether it be plagiarism or redo certain things. So rather than using it as a tool to increase how quickly they learn, they use it to never learn again. And that is very scary, I'd say. So like thinking that if there's going to be students or young people who are just going to use AI without questioning it, without debating with it, without interrogating it, without taking multiple opinions into account. That becomes scary. And then it becomes even scarier if you go, well, if there's only going to be a few corporations out there who control AI, which basically gives mind control to a few corporations. So what's the next generation of people in the world going to think? Well, it's whatever this AI corporation thinks or that AI corporation thinks. They're the scary things about it, but the value that it's delivering and the possibilities are just incredible. I think back to schooling, for instance, and I excelled in math all the time, but I had this one teacher who was able to get more out of me than any other math teacher I had in my journey to the point where it's like, Even after I finished high school, I would go back and visit him every year or so. I felt so indebted to him after finishing school. And he taught me very differently to how he taught other students in the class because he obviously detected that I respond differently to different methods. I take that thinking into account and I go, imagine an environment where AI can alter the education or the learning pathway for young students and know that this person's more of an audio learner. This person's a visual, this person needs a, um, a real life example of things. This person works really well in this way. And rather than taking the current approach where every student in the classroom has the same curriculum, the same path, the same method of teaching that every single student is able to have a fully custom uniquely designed, um, module for them where AI will teach that student using the exact ways that they learn better with and resonate better with and things like that. Just that one thing alone is incredible, makes the future with AI so bright. 00:41:59 Speaker 1: Yeah, there is a big difference between getting AI to do something for you and saying to an AI, explain this to me. And personally, I find myself getting ai to give me simple analogies give me a simple analogy for this no make it simpler no make it simpler keep making us yeah yeah. 00:42:19 Speaker 2: And over time it'll learn that for you specifically you like consuming information this way or if i explain it to you this way you're more likely to get it so i'm very excited about things like that. 00:42:31 Speaker 1: Ruslan it's been great chatting with you thanks for coming on. 00:42:34 Speaker 2: The show Lovely to be here. Thank you. 00:42:36 Speaker 1: Before you go, a reminder to please subscribe to Stress Tested on YouTube or your podcast platform of choice. It keeps new episodes front and center for you and helps us bring even bigger founders and CEOs onto the show.