Yulmart game theory

Yulmart against investors, conflicts and debts

A man from Kolpino, slightly bent over his life, wearing glasses with thick lenses framed by an ancient Soviet horn rim, with a worn backpack over his shoulders, left the metro station on Lenin Square and walked towards Kondratyevsky Avenue. The old system unit was peeking out of the backpack. After a couple of kilometers, a strange man stopped next to the building number 15, on the doors of which hung a piece of paper with large letters "Closed forever." He stood for a couple of seconds, thought for a moment, then said something quietly. Like the phrase he dropped at the same place 9 years ago, becoming the unwitting emotional inspiration of the Yulmart team. This may well be true.

Sergey Fedorinov, ex-general director Yulmart:

I liked the man there alone. The day before the discovery, we are all in the soap, with an inverted consciousness. And now, as I remember it, in short, from Kolpino (Kolpino is such a castle, only in St. Petersburg) a man came, very interesting, so in large horn-rimmed glasses, slightly hurt, and behind him was a backpack from which a system block. This, probably, at that time was his smartphone. And he, therefore, is coming to the door, and we are beating something there, but the inscription is already hanging: “Opening soon.”
And he is: "It opens, darling." And left. Says: "I will come to the opening."
And it so shocked everyone, it really was a very large energy impulse, so this: “It opens, darling”.
')
Now, taking this opportunity, bow to him. Because at that moment, probably thanks to this man ... He made everyone understand that: a) we are doing the right thing; b) for the sake of such people and it is worth it all venturing.

Sometimes for deeds there is not enough smallest approval. You are standing at the starting point, fussing, blowing invisible specks of dust from a product, waiting for something. When the first Yulmart store on Kondratievsky opened, for the successful beginning of its existence, this very first approval was subconsciously necessary, and a person from Kolpino accidentally expressed it.

9 years later, there is no one to inspire. The second year, Yulmart quickly descends from the top. And if a person from Kolpino, “for whom it’s worth all this,” really appeared again on Kondratyevsky, he could say with full legitimate melancholy: “It closes, darling”. It is not this point that closes specifically - and a little more - and all of Yulmart.

Many know about game theory. The other day, my colleagues and I stumbled upon a game model , interestingly illustrating this theory in relation to the evolution of trust. Who does not mind, spend 30 minutes of life, and it may well be something to fall into place. This is also applicable to Yulmart. But first story.

Euclid-Kombrig-Ultra-Wallmart

If the man from Kolpino had not passed, Yulmart, of course, would have been. But without Sergei Fedorinov, things would have been different. Everything grand starts small. In 1997, Sergei Fedorinov, an unfinished aeronautical engineer with a wealth of army experience in leveling surfaces and the third level of plasterer, came to Alexei Nikitin at Euclid as a simple office worker. For seven years, he has grown to the general director of the newly formed Kombrig (“Computer brigantine”). Then they were engaged in the distribution of computer technology leading brands. Over the past 4 years, we have become one of the three leaders of the North-West District and have received into large customers, among others, Ultra Electronics ($ 800 million in revenue in 2007). In 2008, Ultra came across the sale of customs confiscated goods, and Kriebrig's debt of $ 1 million was carried to her grave, which in those times accounted for Nikitin’s profit over the entire period of its existence and meant quick death. The fault in the lost million, of course, lay on the general director, and Fedorinov felt it. In such a situation, it is possible (in most cases that is how it is done) to calm down and wait out the crisis. Or find out that the debtor Ultra has a cool warehouse management system and sales of goods through electronic catalogs. Then several times go to their founders with a proposal to buy this system and brand for the remaining funds (Yulmart = Ultra + Wallmart) and get a fair message to a “bright” future (“are you a million less, is this a casino, or what?”). Finally, make a final attempt and still get a blank check (“Sergey, it's easier for you to surrender than refuse”).

Yulmart originated from almost nothing. And in the global crisis. What is born in a crisis, it becomes strong if it does not die. Having received 14 million rubles of remnants from Nikitin, Fedorinov bought the Ultra system, the Yulmart brand and the premises on Kondratievsky. At the same time, there is a risk of losing these balances as well, since it actually concluded a deal with a bankrupt, whose actions could be blocked at any time.

And spun. A month after the collapse of Ultras, the first office on Kondratievsky was opened. The crisis contributed to the fact that we had to abandon shelves, windows, sales assistants and much more, which would make Ulmart look like competitors. As a result, lost many expenses. There are only a warehouse, terminals with product catalogs and the Internet. For 4 months at the expense of profits from the first store they opened the second one already - Moscow. Over the year, Yulmart's turnover rose to 3.3 billion rubles. And this is despite the fact that the market for computer equipment fell by 26% over the year. Competing then with Yulmart Sunrise (which, according to rumors, and knocked out Ultra Electronics) could not resist. And all the initial achievements were obtained at the expense of, of course, the investments of the owner Nikitin, but mainly due to the energy of the “world champion in wide jumps” Fedorinov and his team.

Meanwhile, revenue grew, but development stopped. For 3 years, no new cybermarket. And the upcoming Citylink (opened half a year later - in December 2008), which had a similar model and pace of development quickly. In 2010, it became clear to Nikitin that they were losing in pace to Citylink. Since the market in Russia is quite a shark, and the blue ocean strategy is far from retail (debatable, of course), Nikitin decided that additional investments were needed. He pondered: either take loans from banks and risk a possible bankruptcy, like Ultra Electronics. Or look for investors.

At the same time, Nikitin (physicist) met Mikhail Vasinkevich (a fan of cryomedicine) at a yoga competition with himself. Without much hesitation, Nikitin suggested investing in Yulmart. Vasinkevich, after “acquaintance with the Internet,” saw the promise and not only invested himself, but also pulled up his acquaintance Dmitry Kostygin , who in turn without a partner August Meyer did not step on his head. As a result, Kostygin and Meyer received a controlling stake in Yulmarth for two (30% each), although they did not pursue control, as they were acknowledged (“Fedorinov manages, we support”). Nikitin and Vasinkevich became minority shareholders (20% each).

For three years, Kostygin, Meyer and Vasinkevich invested $ 150 million. Revenues increased from $ 100 million to $ 1 billion. And the number of new cybermarkets reached 30. Plus, a unique logistic system, a personal brand of MicroXperts computers, appeared, and many more effective trivia.

And the crown of all - in 2013 - Yulmart occupies the first line in the Forbes list among the largest Internet companies in Russia. As well as leading positions in the rest of various ratings (including the sixth place in the Online Only section of the top 500 Internet retailers in Europe (according to the edition of Internet Retailer).


Infographics from kompromat1.info

For 2016, the Yulmart infrastructure included the following objects:

• 46 urban centers order fulfillment;
• 365 points issuing orders Yulmart Outpost;
• 2 suburban centers of order execution of a new format;
• 1 distribution center;
• 240 cities with representation in Russia;
• Vehicle fleet for 300 multi-tonnage vehicles;
• The range of 120 thousand goods;
• And the cumulative range of more than 12 million goods ("everything that is plugged into the outlet").

Data from the site dp.ru

In January 2016, Kostigin, in an interview with Tinkov, said that “it will be something else this year,” certainly implying the desired way to an IPO ...

Anything that plugs into a power outlet ... can burn

Two facts.

1. In parallel with the negotiations with Nikitin and Vasinkevich in 2010, Kostygin and Meyer cleared the corporate conflict in the Lenta chain of stores that they themselves had generated, without consulting with partners from the Luna foundation, dismissing the general director Jan Dunning. Then everything ended with the sale of all shares to outside funds of TPG Capital, VTB Capital and the EBRD.
2. In 2012, when Yulmart under Kostygin-Meyer's investments already reaped the first laurels of the Internet retail leader, Kostygin had another conflict in the Dream Industries company, in which he invested $ 25 million in the same year. The conflict scenario repeats the previous one. The displacement of an inefficient CEO (he is co-owner of the company Alexey Ostroukhov) and a “mask show” with the seizure of the office. Until representatives of the investment company A1 (Alfa-groups) intervened, who were attracted by Ostroukhov, the conflict was not settled. Ultimately, the share of Ostroukhova was bought by Yulmart, but only two years later. Two years of stagnation ...

In January 2016, Kostygin hinted about an IPO, and in February, Vasinkevich and Nikitin decided that the crisis had hit Yulmart seriously, 2015 was very difficult - 25% of revenues were missing (5 billion rubles), numerous loans put pressure, therefore cut costs. Kostygin also stood for the continuation of expansion into the regions and the additional capitalization of assets by another 2 billion rubles. After that, Nikitin withdrew himself, saying that he was selling his share to Vasinkevich. According to some reports, he sold it at the end of 2015. However, Kostygin believes that Vasinkevich has not paid for it so far.

After that meeting, a series of reciprocal injections began. Vasinkevich offered Kostigin to buy his share, but they did not agree on the company's valuation ($ 150 million. Vasinkevich versus $ 50 million. Kostygin, and this is when estimating a year ago at $ 6-7 billion, when no one was supposed to sell anything to anyone). Kostygin bought the right to claim the debt on the loan to Gazprombank, the surety of which was Vasinkevich, and arrested his property in support of the claim. Vasinkevich included in the conflict that A1, the winner from the confrontation with which Kostygin seemed to be released in 2014.

Seeing such heat and fearing bankruptcy, all Yulmart's creditor banks joined the struggle for capital: Sberbank, VTB, Uralsib, Gazprombank (and others), they, as well as the company’s suppliers, demanded to repay loans ahead of schedule. There was something to be afraid of, because on the one hand, A1 often in corporate conflicts uses a bankruptcy scenario, on the other, Kostygin transferred his personal loan to a certain Oleg Morozov, as well as to another company, who jointly initiated the first Yulmart bankruptcy lawsuit. This was done (now even established by the court) in the interests of Kostygin, in order to bankrupt the company as early as possible, to appoint, using the right of the first creditor, his manager and take possession of the whole company. However, in October 2017, the transfer of the claim to Morozov was found to be fictitious, the bankruptcy procedure was suspended. No attempt was made to bankruptcy and abroad in relation to the main company Yulmart (Maltese Ulmart Holding). And on the initiative of Sberbank, a criminal case was initiated against Dmitry Kostygin under art. 159.1 of the Criminal Code of the Russian Federation, on the fact of fraud in obtaining a loan from Sberbank at the beginning of 2016. Kostygin was detained and placed under house arrest; he was charged.

Yulmart and the evolution of trust

The consequences of the conflict now look disastrous. The total debt on loans, which urgently need to be repaid, is more than 2 billion rubles, there is also a debt to suppliers of more than 10 billion rubles. Only one of the main (Russian) society - YAO “Yulmart” has 47 enforcement proceedings totaling about 500 million rubles. That is, those loans that must be repaid yesterday.


Data from the site dp.ru

Valuable frames go. One of the founders of Yulmart Fedorinov is already a year away.
From the estimated value of the company at $ 1 billion at the beginning of 2016, a couple of hundred million remained. The first store on Kondratyevsky is symbolically closed under the conditions of planned anti-crisis “optimization” (up to 20% of facilities in Russia are closed).

Attendance site ulmart.ru over the past six months has decreased from 21 million to 16 million users. Although the company now occupies a rather impressive 23rd place among the world's Internet-retailers of electronics (Russian companies are higher than Yandex.Market, DNS, M-Video and Eldorado), but a couple of years ago there were only tops everywhere.




Data from the site similarweb.com

For 2016, Yulmart lost 3 positions in the ranking of the most expensive Fornet companies on the Runet (from 4th to 7th), passing Ozone, Lamoda and Wildberries ahead. In 2017, this figure is probably even worse.

Kostygin, however, says that everything is quite bearable, and if the conflict ends, Yulmart will restore its position within a month. Wait, in fact, not long. Since the law enforcement agencies intervened. There are three options: either the case will suddenly cease, or we will get another retreating Chichvarkin. Or a light version of Khodorkovsky, since so far the weight of the articles pulls only on the conditional. But with a high probability - Ulmart in any of the options will receive new major investors. If by that time the company continues.

In the end there are some very necessary lyrics. In the theory of the evolution of trust, which we mentioned at the beginning, the most adapted type in a game with a nonzero sum was an imitator. That is, a person who can forgive an opponent more than once and gives a chance to correct mistakes. In most cases, this pattern of behavior won out. The model of the cheater (acting only from the position of his own ego) succeeded only in isolated, short-term cases.

In the case of Yulmart, we see several “deceivers” (the term is taken from the game model), which, tearing the company, think only of personal gain and do not worry much for the general benefit (“don't you get to anyone!”). And the recipe of a strong and stable company is, in fact, simple. But how simple it is just as impossible in the conditions of Russian ecommerce and in general:

You just need to learn to forgive mistakes and give in for the common good. And think about the "man from Kolpino."