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The story of Russian Entrepreneur Sergey Galitsky is one of dramatic rises and amazing sustained success (like most successful entrepreneurs). However, this story of the Russian Entrepreneurship’s Golden-Boy is unlike those of other billionaires, because of its ending.
Most successful business moguls tend to continue to hunt for growing success well into their older years (take Warren Buffet for example; who just recently turned 90).
Not Galitsky though, as in 2018 he sold off the rest of his 29.1% stake in his multi-billion-dollar retail enterprise Magnit to fellow Russian retail giants VTB due to stalling growth and numerous other factors.
While some may consider selling your stake and place as CEO in a company you’ve owned for 20 years as a failure, in Galitsky’s case is seems to be all about principle and personal values.
This isn’t surprising, as throughout Galitsky’s entrepreneurial journey, it’s evident that these two ideals were always at the forefront of his mind.
Galitsky began his rise in 1994 when he worked as a mover and bank employee. He and a couple of partners formed Transasia; a Wholesale perfume and cosmetics business that thrived by being Proctor and Gamble’s sole distributor in Southern Russia.
Eventually, Galitsky spun off from his partners into creating retail brand Tander, which later became Magnit. From its conception, Magnit was hailed to be run with the utmost passion and discipline, and according to The Moscow Times it “resembled an army from a managerial point of view”.
Galitsky formed a dynamic partnership with Magnit Vice-President Vladimir Gordeichuk, and both led the company to have non-stop growth because of their non-stop work ethic. As Galitsky put it;
“We could work until 11 pm, then get up at 4 am … It was an unbelievable time, when you go to bed only in order to make the morning come sooner”.
This effort paid off. As Magnit quickly turned its work-ethic into innovative systems such as IT-systems that automatically create orders for distribution centers and extremely efficient establishment of brick-and-mortar storefronts.
This caused Magnit to be one of two Russian companies in Forbes Top 100 most innovative companies 3 times, and widely attributed to their growth through the early 2000s to a peak of 30 billion US dollars valuation, become the world’s second-largest retailer in terms of market capitalization.
People trusted Galitsky because of his ruthless diligence and remarkable principles. His ability to acquire consistent appropriate financing for Magnits growth led to an extremely successful IPO in 2006. In response to advice from investors, Galitsky would often say:
“Guys, if you want to decide — sit in this chair and manage it yourselves. If not, then we will do what I say.”
In 2006, the company did an IPO, and in 2008 and 2009, issued secondary share offerings. In just three years, Magnit had raised $1.2 billion, securing a firm position in Russia’s retail business.
Galitsky wasn’t a man who wanted to have this fast-pace be his life indefinitely, and that was evident when he took up different ventures in the 2010s. He formed the football team Krasnodar, its subsequent academy, invested 500 million rubles in the club for player acquisitions, and built a world-class stadium.
“I know this stadium will never pay off but it’s more than just a stadium: This is one of the points of attraction in the city. I want our children and grandchildren to be proud of it.”
Galitsky knew his principle meant that he wanted to do something important with his money. He decided to invest in his personal passions, and while he knew that it would drastically different from the pace that was held at Magnit.
Galitsky continued with Magnit through the early-mid 2010s, but as he got older and other retail companies such as X5 and Pyaterochka started to innovate their business models, he knew he wouldn’t be able to keep up and continue to maintain the pace that was needed to keep Magnit successful.
Galitsky took his leave from the company in 2018 and has since dedicated his time to Krasnodar and the community in Southern Russia. He’s allowed his success to having its own path as he now impacts that Russian community as much as he impacted the global retail business for over 20 years.
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THE BUSINESS CARD:
- Made his first million with: Magnit, Retail.
- Educational Experience: Bachelor in Economics from Kuban State University.
- Name Change: Sergey Arutyunyan – his father’s Armenian surname which he later changed for his wife’s.
- Thoughts on Business: “Business is a game of intellect, and you have to admit that what you can do at 35 or 40 you simply can’t do at 50. It’s really difficult to face. In ancient Rome, they believed that every gladiator should die at the right time and with dignity.”
- Wildest Business Experience: “Someone fired a grenade at our office. Some people came to one of our stores with automatic weapons”
- Advice to Business Owners: “Work hard on details.”
- Advice for Managers: “You can never turn your back on the company.”
- Life Motto: “If I achieved success in this city and with these people, I should spend that money responsibly, and this requires no small part of my life. Otherwise, there would have been no point in making the money”.