Michael Don, a Ukrainian-American entrepreneur, can be called one of the pioneers of the domestic restaurant market. Together with his partner Beni Golani, in 1996 he founded the World Map network, which now has about a hundred restaurants. Some of them have become the standard of quality in the restaurant business.
Michael told Leadership Journey about how he has transformed from a successful construction engineer into a no less successful restaurateur, about the internal kitchen of the restaurant business and why tomfoolery is not always bad.
Leadership Journey (L.J.): The spirit of entrepreneurship is something special, inborn. You may say, this is a talent given from above. When did you reveal it in yourself?
Michael Don (M.D.): I started my first business at the age of 12, offering my friends and acquaintances chewing gum, which was in short supply at the time. I was buying a package of five chewing gums for 1 ruble. In a block, each gum cost 16 kopecks, not 20. But if you were buying 10 blocks, the price per gum plate was going down to 12 kopecks. With at start capital of 12 rubles, earned by collecting empty bottles, I became a wholesaler. I was buying chewing gum in blocks and even in boxes and then sold it at retail with a surcharge. In less than six months, I reached the level of sales of 20-30 blocks per month.
Probably, the spirit of entrepreneurship was passed to me with genes. My great-grandfather was a merchant, and my grandfather was a smuggler: he shipped gold from Ukraine (the town of Shepetivka) to Poland. So entrepreneurship is in my blood.
L.J.: What does distinguish an entrepreneur from an ordinary person?
M.D.: First of all, the way of thinking. In any restaurant, I first look at the prices on the menu and then turn a plate over to see who produced it. And I often understand that they are tricking me: if a dish costs, say, 40 euros, and it is served on a plate of a “God knows who the producer” brand, then something is wrong in this place. There are no small things in business. Every detail matters and can play to your plus, multiplying the number of clients, or to your minus, reducing profits and even leading to losses. You can deceive yourself, but you will never be able to deceive your customer: if you do things wrong, he will eventually go to your competitor.
Besides when looking at any business, I “try it on myself”. I figure out the approximate costs and expenses to understand profitability and my interest to have such a business. In other words, you must live by entrepreneurship, love it and, preferably, understand it.
L.J.: Is business just about money?
M.D.: Earnings are the driving force of any business, but you cannot think exclusively of money category. For me, business is primarily a pleasure. The pleasure to implement projects, which make me stronger and more experienced – and bring money.
FOR ME, BUSINESS IS PRIMARILY A PLEASURE
L.J.: Is business the energy of its founder?
M.D.: Definitely, yes! You must perceive your business by your heart and be as a whole with it. Of course, even this is not a guarantee of success, but without full immersion, it is impossible a priori. If somebody else is creating business for you and you are only a watcher, this business is doomed. You should not deceive yourself by an idea that you can buy a profitable enterprise and receive income sitting at home. No one but you will breathe the soul into the business and make it alive and successful.
L.J.: When did you start your first systemic business?
M.D.: The Soviet Union, the mid-1980s, the era of cooperatives. Together with a partner, we created a small construction company engaged in the renovation of residential premises and offices. We had eight employees; we paid taxes and wages. By all indications, this was a systemic business.
L.J.: To what extent had the company grown, and what did happen to it later?
M.D.: There was no much time to grow. In 1989, I immigrated to the USA and soon my business partner followed me.
L.J.: Why did you decide to leave?
M.D.: Because I reached the ceiling. For the USSR, I was earning a lot of money — up to 2500 rubles per month. In a short time, I was able to buy a three-room apartment in Kyiv and a Volga GAZ-24 car, which was the most prestigious car that an ordinary Soviet citizen could afford. But the creation of a truly systemic business in the country of «victorious» and at the same time «dying» socialism was impossible. The socialist leveling system with a «one-size-fits-all» approach, would not allow that.
L.J.: And is the USA a country of unlimited opportunities?
M.D.: Yes, for people, trying to achieve something and looking for any opportunity. In America, I also took up the construction business and quickly achieved the first success. In five years after my arrival, my annual income was $ 200,000. It was not much by local standards, but just fine for an immigrant who built his company from scratch.
The creation of a truly systemic business in the country of “victorious” and at the same time “dying” socialism was impossible.
L.J.: What was the starting point for moving into the restaurant business and returning to Ukraine?
M.D.: In Washington, I met the restaurateur Beni Golani. Our company won a tender for renovation in his house and along the way, we became friends and realized that we are thinking the same and want the same things from life. I simply made a gift of my share in the construction business to my partner, with no compensation. I decided to build a restaurant business in Ukraine together with Beni. The likeness of our views on business and life realities is more than friendship or partnership.
L.J.: Just like that. You had left a well-established profitable business and headed into the unknown again to start from scratch.
M.D.: My age was the most suitable for this. When men are nearly 40, they want something new, big and “tasty”. I have no regrets about this decision, although at first, it was not easy. Beni and I opened the first restaurant in Ukraine in 1995 only during our second visit to the country. At first, I had to be a director, a manager, and a cashier. I even worked as a driver getting the restaurant staff home.
L.J.: Did you have any special concept when opening the first restaurants?
M.D.: In a country where a restaurant culture did not exist, it was not necessary. We relied on what worked in the USA: an American-style restaurant, Uncle Sam was first. Then a Mexican restaurant, Tequila House, a Georgian-cuisine restaurant, Mimino, and a classic Irish pub, Golden Gate were open. With the development of new restaurants, a network World Map (Mirovaya Karta) appeared.
At some stage, we began to popularize Japanese food and began to develop the national network of Sushiya.
Then we created and developed Italian pizzerias, Il MOLINO based on high quality the “real Italian pizza” product.
We have always created restaurants with an emphasis on national cuisine originality we liked ourselves. That is why our second restaurant was a Mexican cuisine, which is very popular in America. Mimino restaurant appeared thanks to the Georgian roots of Beni Golani.
We have always created restaurants with an emphasis on national cuisine originality
L.J.: By the way, why “World Map”?
M.D.: Because each of our restaurants specializes in the cuisine of a particular country, and together they formed a separate “restaurant world” in Ukraine.
L.J.: Every restaurant should have a soul. Who did put the soul in every your establishment?
M.D.: Beni and I equally. For example, having decided to open a restaurant Marrakesh, we went to Morocco for 10 days: we ate local food, breathed in the smells of spices in the local bazaars and communicated with sellers.
L.J.: Which of the restaurants you opened is your favorite?
M.D.: Maybe, the Lipsky Osobnyak restaurant was my favorite, close to my heart. It was open in the golden period of business growth and of a neck-breaking pace of investment repay in the country. It was the number 1 restaurant in Ukraine at that time in all categories. And all the presidents and prime ministers of Ukraine visited it with official visitors.
Many people always have their own dream restaurant. Most people like to open their own restaurant somewhere in an interesting place to spend time with the family, friends and distinguished guests. I’m not an exception. I also have a dream restaurant. Today I partially tried to implement my idea of it in a new project of the restaurant DOM No.10 in Podol district.
Many people always have their own dream restaurant
Well, in general, in every our restaurant I have a favorite dish. In the restaurant Tequila, for example, I always order a Rio Grande salad. I have been eating Caesar salad for 23 years at the Sam’s Steak House. I order a baked duck and honey cake with truffle cream in the new restaurant DOM No.10.
L.J.: Who is the chief in your business now – you or Beni?
M.D.: Our areas of responsibility are divided almost equally. He is mainly engaged in the Sushiya network, and I – in the separate restaurants and pizzerias Il MOLINO, which, from the first sketch of the interior to the last tile, was my brainchild.
Now in our company, there are many restaurants and networks, where experienced top managers and chefs become managing partners.
There are even new leaders who bring me ready-made restaurant business ideas and implement them for a share in the future profit. I am talking about our new network projects City-Zen and Tbiliso.
L.J.: Do you still have a restaurant business in the States?
M.D.: in the USA, our partner develops this direction. In the USA, we have a different business. We are engaged in the cultivation of medical cannabis and supply it to specialized retail chains. Our company is called Holistic Industries, and the product itself is Liberty. We have started the business four years ago when the first wave of cannabis legalization was just beginning in the States. This is a very peculiar and interesting business.
L.J.: If you would like to write a book about the restaurant business, which three main chapters would you choose?
M.D.: I would devote one large chapter to the chaos that reigned 15 years ago in the Ukrainian legislative field. At that time, in the country, laws were often taken retroactively. For example, on July 15, a company could receive a notice that on January 1 of the current year — that is, half a year ago — the tax regulation of your type of activities has changed. All reports for the past period were to be redone. Typically, according to the new rules, you had a tax underpayment.
The second chapter would contain stories about how my subordinates taught me business. When Beni and I were building a civilized business in Ukraine, we believed people around were open and honest, including our staff. Alas! They stole food in the kitchen; they cheated guests in their checks. This was the way we were growing and stuffing cones.
Well, the third chapter would be about love for business. Whatever happened, we loved to do the restaurant business in Ukraine. You know, this is a sensational feeling when your restaurant is filled to capacity, and in the hall, there is a lively hubbub of satisfied guests. At such moments, I would come up to the bar and make the music louder, so that people would also speak louder.
L.J.: Would you have a chapter on people and their role in business? This is my favorite question: do you think people are a resource or a capital?
M.D.: If you think about it, both views are equally important. Well, almost. If we rank, people are primarily capital. There will be no philosophical considerations. Only solid math calculations. People who earn money for you cannot be considered a resource. The resource is impersonal: today there is one manager, tomorrow – another and you change them, like gloves, as soon as they cease to function properly.
Of course, staff rotation and renewal are necessary things, but if a person has become your like-minded person and has thereby become a valuable asset, he must be kept in the company by all means.
If a person has become your like-minded person and has thereby become a valuable asset, he must be kept in the company by all means
L.J: A person from your company, what is he like?
M.D.: The one who shares our values, who understands what we are doing and why. The one who in ten words can describe the portrait of our visitor whom we want to feed and serve beautifully.
L.J.: How many employees are there in the company currently?
M.D.: Over 3,000 people.
L.J.: Business partnership is a painful topic for many Ukrainian entrepreneurs. Many fail to maintain good human relations with the partner and at the same time develop business and correctly distribute areas of responsibility. You have many years of experience in business partnerships. What are the main rules for effective and successful cooperation?
M.D.: You can speak long and hard on partnership in business. Actually, all recommendations come down to two key rules: to hear a partner and be honest with him in any situation.
L.J.: If there is a feeling that you are being used?
M.D.: This is not fair, which automatically sends us to the second rule.
L.J.: Does it make sense to turn a blind eye to such things in the hope that the situation will normalize?
M.D.: No and no again. When people start to «play with you», sooner or later they will betray you on a grand scale.
L.J.: In your multi-profile business, do you manage investments on your own or invite consultants?
M.D.: I am in charge of my money myself. So no assistants. Not because they are more stupid than I am. On the contrary, professional investment consultants often know much more than I do, even in spite of my rich entrepreneurial experience. But here’s a paradox: they do not help, but rather interfere. I do not believe and never will believe that someone is ready to work hard to multiply other people’s investments. You yourself are the only person who can do it.
L.J.: As you rightly said, business is love, energy, and interest. These are valuable and limited resources. How to distribute them properly in a multi-profile business?
M.D.: You need to identify areas that do not require your constant presence and complete immersion in the process. And there is nothing better than a trusted partner who can take responsibility for making strategic decisions and share areas of responsibility with you. And then, as an owner, you no longer need to crush your soul and distribute its parts in different business areas.
For example, this is how I run the hotel business. This is our joint offspring with a partner who has been successfully managing the hotel for 15 years since its purchase in 2004.
L.J.: Currently, what is your focus on in your restaurant business?
M.D.: Our company (USG Holding) is several network-based restaurant projects, some unique restaurants, (about 80 establishments in different directions in total). In addition, our holding has several medical clinics and a hotel.
In the restaurant business, we have professionals who every day devote themselves to their business, live and breathe it. I love this business very much and I try to infect with my energy the people who manage each restaurant chain in our structure, and they, in turn, transfer this enthusiasm at the level of their subordinates. Briefly, our company is a cohesive group of like-minded people.
L.J.: Is it an effective management model to have a separate manager at the head of each restaurant chain? Did you consider creating a holding that would unite all the areas of your business?
M.D.: Restaurants, medicine, a hotel, and cannabis as well — it would be difficult to combine all this under the roof of the managing holding company, and the management efficiency would reduce. I do not like artificial add-ins in business with single management from a Holding level. I always try to be closer to the process.
Now I can communicate directly with mid-managers. As far as a holding, my mid-level communication would narrow down to top managers, and I would not know what was going on at the grass-roots level.
It would be another matter if we were a public company, placing shares on the stock exchange – with such an extensive business, a holding would be necessary. But even in the case of an IPO, creating an effective working structure would take a year and a half.
OUR COMPANY IS A COHERENT GROUP OF LIKE-MINDED PEOPLE
L.J.: What are your plans for the future?
M.D.: Everything is simple: systematically develop every line of business. This autumn we launch a completely new project: the establishment will be called “Balagan”, and its main feature will be … However, I will not reveal the cards in advance, let the intrigue remain.