Eugene Tutunikov: Scaling SwissWatchExpo to $90M Without Funding | S2 Ep. 67

0:04Hey everyone, welcome back to Founder's Story. Today we have Eugene Tatekof who is the CEO of SwissWatchWatchExpo. and he has scaled this company to 90 million dollars without outside funding we have so many guests that talk about scaling with funding today we're going to focus on how do you get to that type of figures and revenue without funding that's incredible you are a former wall street executive turned small family business into an industry leader ugi we got to dive into how you did this what is the secret sauce? But first, I'd like to understand, how do you get even into entrepreneurship?

0:47Daniel, thank you so much for having me on the podcast. We have a great story, which I think your listeners will enjoy. We're a family of refugee immigrants. We came over in 1989 from the former Soviet Union. It's Ukraine now. It was still part of the Soviet Union. and we moved to the Philadelphia area, grew up on welfare, shopping with food stamps. I remember going to the grocery store with my grandmother and asking her why our money looks different than other people's money because if you don't know, back then the food stamps were these big colorful coupons that people actually used to bring in and use this money at the grocery stores.

1:27There was no card back then. but it was a it was a very motivating experience for me because whole community came over with the same background to the country without any language skills and and no money and I witnessed my family and all their friends within five to seven years go from nothing to living in the suburbs owning a house and having a Mercedes or a Lexus in the driveway so I'm very proud to be an American and I really think anything can be accomplished in this country with enough hard work. And I wanted to make sure my family took a risk and sacrificed a lot to come to this country.

2:07And I want to make sure I made something to thank them for that. So this is something that set me up on my journey. That's amazing. I guess that's the American dream, right? I'm kind of curious, do you think your personal perspective that maybe that people that are a few generations here, maybe current generations now that have had all the things they need growing up. I wonder if they're less motivated or inspired to get into business or entrepreneurship because they didn't come from that struggle time. What do you think about that? I think that's definitely very true. I think there's a certain personality trait of people that are willing to leave a country and deal with a lot of uncertainty to start their life over.

2:57At the time, my parents were there in their late 20s, and I was six years old, to start their life over and to take risks. And if you're within that group or you're a child witnessing that, it kind of teaches you that it's okay to take risks. It's okay to deal with a lot of uncertainty. It teaches you how to figure things out that you might not know anything about going into them. And those are all traits that are very important to building a successful business. If you're somebody that doesn't handle uncertainty well, you're a great entrepreneur. I'm glad you bring that up. Uncertainty, risk, fear.

3:38Those are the things that no matter what you do, you're going to go through. And I don't think people realize just how hard it can be. So what was the motivation for you, though, that you said, okay, I'm going to go into the watch business? Like, out of all the things that you could do, why did you choose that industry? So I kind of fell into it. I was a big math and finance nerd growing up. I got a full scholarship to NYU, and I studied math, finance, and economics. And I graduated in three and a half years without double major and a minor. And then I worked on Wall Street for about 10 years as a trader.

4:15my mother got together and my stepfather in 2008 and my stepfather is a master watch maker and he's trained at rolex uh she moved to atlanta where he was living and uh on the side he would fix up watches because he was running a rolex service center basically think of it as the mechanic for watches uh so he knew how to take a watch that wasn't working refurbish it and make it work perfectly uh on the side they would buy watches and sell them on ebay i was 25 years old when this started. I invested in the business to help them buy some inventory in the beginning. They didn't really have any plans to get them all, but as the business grew and they built a very nice local mom and pop shop and business through marketplaces, and they would tell me these stories of, you know, they shipped a watch to Texas.

5:03Somebody from Florida flew to Georgia to pick up a watch. I thought there was definitely something to it, and I always liked watches. already owned Soachos even before this. And I, you know, I'm a big student of history. And one of my favorite entrepreneurs is Jeff Bezos. And he was a hedge fund finance executive. And he left a very successful hedge fund career to go sell books online. When Amazon started, it was only books. It wasn't anything else. People think Amazon selling everything. He left, his first plan was just to sell books online. And the reason he chose books was because it's a very large catalog.

5:43There's a lot of variety. They're not extremely large. And it would be, he thought that would be the perfect product to start an e-commerce business. Well, watches are even better product because there's a large variety. They're much more expensive. So he could really build a scalable, profitable business much quicker. So he was kind of the motivation. If he could go leave finance and sell books online, I thought selling watches online would be even more fun. And why not give it a shot? So my parents, for a couple of years, asked me to join. I finally came on board eight years ago. They had a local business.

6:21It was doing pretty well. And we decided I wanted to scale it and build a name for ourselves online. so I really focused on e-commerce streamlining the operations and we've since then become one of the leaders in the whole world in our space, the business has grown 10x in that 8 year period, we're going to do 90 million in sales this year and should break through 100 million next year and like you mentioned in the beginning, we bootstrapped the whole thing, so the whole business was started with less than a couple million in capital that we pulled together as a family and right now our profits are well north of that.

7:03So it's been a wildly fun and successful ride. And now I'm trying to figure out what do I need to do to go from 100 to 200 million. I have my ideas. I just brought on another executive and we're putting all the pieces of the puzzle together to get to 200 million over the next handful of years. It's been a fun ride. What else can I tell you about it? Well, I got to say, there you go. Former Wall Street, which it is a common theme. we've talked to a few people that have gone through that process like you said jeff bezos uh going from that to that so there must be a lot of correlations there uh but i i appreciate the fact that it wasn't it wasn't that you wanted to do a hundred million in year two that it was a slow process that you you worked your way up to a certain place and then you came in and then you're taking to the business to the next level i think a lot of people want to hit a hundred million overnight not realizing like this is a marathon and business requires time uh look at jeff bezos it took them like decades to really get you know it took them quite some time and a lot of funding to get to a certain place i know my favorite story was uh we were meeting with some executives from toys r us and they talked about how toys r us basically gave them funding got them out of their bankruptcy in like late 90s and then look what happened to Toys R Us but I'm curious on on the as you were scaling up though like when you go from a million to 10 million 10 million to 50 million what are some of the things that you had to change well for first of all I want to touch on the point that you mentioned I think entrepreneurs right away think of where they want to get to whether it's 100 million or a billion where in my experience you know figuring out where you want to get to every three six and twelve months uh is very very valuable and if you can grow every year and you could compound you're gonna outpace those entrepreneurs that are going for the big swings and are trying to double and triple every year because most of those you know Now, if you grow too fast, things fall apart just as fast.

9:14Or if you could do steady growth over 10, 20 years, you'll have an enormous business. But the things that need to change as you grow, when I joined the business, we didn't have data. So it was very rudimentary. What did we sell the week before was a receipt to the shoebox. So being a finance guy, the first thing I wanted was data. So we built, I hired a coder in Argentina. He helped me build a lot of internal proprietary data analytics. I could see what we're buying, what we're selling, where we're selling it, where we're making money. I really studied the business. And that led us to a bit of a pivot there because my parents at the time were doing both watches and jewelry.

10:02and knows very clearly where our strength was, both from an SEO and marketing perspective and the inventory that our clients were looking for is all watches. So we got rid of watches. Secondly, we realized right away when I started looking at the data that majority of our online visitors are coming through mobile. And our mobile site was just, this was 2016, and the site was just not mobile friendly. So the limited resources that we had at the time, I put all into redesigning the mobile site and making it very mobile friendly. And then also just putting a lot of more process around the whole business, how we're selling, what we're buying, how we're deciding what to buy.

10:48Just really getting our hands on every aspect of the business, knowing everything that's going on. So as you grow, then you have much more information and that information makes you more effective in your next stage of growth. So I know from your background that you didn't already know how to do these things. Like you didn't already know about the data side. You didn't know about e-commerce, web design, digital marketing. What did you do to learn these things? Or how did you even know that, like, for example, the mobile side or your digital marketing that you had to do with SEO or any other things?

11:27How did you know how to even do these things? or what did you, or if you hire somebody, how did you know who to hire and even if they're doing a good job? So I think one of the traits that I had for my Wall Street days is the ability to work extremely long hours and not, you know, not feel like it's work. So I got used to that being on Wall Street. So 60, 80 hour work weeks, the first few years were the norm. And I have a high degree of curiosity. You know, my experience never bet against an entrepreneur that can work really long and is highly curious. So I just, you know, I see business as a game and a puzzle and I'm highly curious and I could put in hours to try to figure things out.

12:12And to me, it's all just like solving pieces of a puzzle. So how did I do it? I read online every blog I could find about anything I wanted to learn about, any aspect of the business I wanted to tackle. I would then try to go interview companies that provide that service, usually companies that I would never pay nor I could afford. And then I would go and reconstruct that service for a tenth or a twentieth of the cost by either doing it in house or hiring freelancers around the world. So that is the trick. You just learn, you interview people, you ask a lot of questions, you figure out what you try to think about what makes sense, what doesn't make sense.

12:54And then you go and you figure out how to do it in the least expensive way possible, especially in the beginning. That's basically been the process and it's the process. Yeah. I don't think a lot of people understand the power of being curious. I think it's one of the most powerful traits of a lot of successful people is listening and being curious. Because Like you said, you could talk to someone and they can give you the answers. And then you just have to go do the implementation, which there's so many people, freelancers, outsourced. There's so many ways around the world. If somebody doesn't have a specific budget, they can find some way or they can watch YouTube.

13:34I mean, there's so many ways that they can get it done. AI tools, all these things we have now, which you didn't have then. But I'm glad you bring that up. So now watches fascinate me. I've always been a huge fan of Swiss watches, watches. I feel like, and I could be wrong because I don't have any data, but I feel like as watches have become more digital options, like more digital options for watches, that the physical non-digital watch has continued to be even bigger or more popular. What are you seeing in terms of the rise of the digital watch side with the rise of the traditional Swiss watch side?

14:18Yeah, people always ask me if digital watches and Apple watches are hurting our business. And it's quite the opposite. I think they're great. I call the gateway drug to luxury watches. Because people will get an Apple watch or a digital watch potentially first. Now they got used to wearing a watch on their wrist. It's way better if they never did that. they only got used to checking their phone. And then when they, you know, progress a little bit in their career, hit a milestone, maybe get a big bonus, they'll typically go and then buy a luxury watch. A lot of our clients have both digital watches and luxury watches in the evening to catch them wearing their luxury watch when they're out to dinner or out with friends and so forth.

14:58So we're about 60 % of our website visitors right now are under 40 years old. So it's definitely not a product for an older clientele What's really interesting is the younger generation has a different purchase behavior. So they're not necessarily buying a watch to have for the rest of them. The consumers in their 20s and 30s have a much higher velocity in their watch collections. so a 50 or 60 year old watch collector will typically buy a watch and they'll either hold it for their life or for you know many many years where the young consumer is much more comfortable buying a watch and then trading it in for something else six or twelve months later but we're not we're seeing a lot of young people and they're even in their teens coming in looking for watches because they're you know they're following their favorite celebrities athletes on social media and they're looking how they're dressing what they're wearing and they want to replicate that in their life so they're seeing them wearing luxury watches and they're gonna they they appreciate the fact that they want to mimic them but also that luxury watches are an asset and they hold their value and there's you know they get really into it because there's so much variety there's so much information they they'll buy a watch and they'll and for something else and so forth.

16:26And, you know, they'll meet up with their friends and there's a lot of watch collecting groups from all over the world. So the demand for luxury watches is by no means going down. Yeah, I mean, I hate to say it, but I will look at somebody's watch when I meet them and you can't help but judge them on their watch. Like it's, I can imagine you, that's next level, right? I don't know much about it. I just really like watches, but I always look at everyone's watch. I was even thinking about this last night. I was sitting next to somebody and I was staring at his watch. I was trying to figure out what kind of watch it was.

17:00I think he probably thought it was weird. I was literally like, I have never seen that watch before. I really wanted to ask him what kind of watch that was. But when you get into it, you really, really start to get into it. It becomes a thing. So what are some of the brands that are really popular that you're seeing? And I'm fascinated by this age demographic that is really into luxury watches. So what are some of the popular brands now that you have? Yeah, to your point about judging somebody for their watch, I don't judge them. But it's definitely, for most men, it's the only type of accessory they wear.

17:39And automatically, if you enter a group, a room full of people, it's so funny to me. because you'll see two guys that are clearly very shy, and they won't talk to anybody else. They see it. They're both wearing nice watches, and as soon as they see each other, they walk up to each other and strike up a conversation. So it becomes this conversation piece among crowds between watch collectors where you can walk into a party and you see somebody else wearing an interesting, unique luxury watch, and it becomes an instant connection between two people. And oftentimes, what's funny to me is when I could tell these people won't talk to anybody else in the night because they're very shy, but they're talking to each other because instantly they felt comfortable because they're both wearing luxury watches.

18:26So it's interesting how that works. But the beauty of the luxury watch industry, these brands have been around for hundreds of years, and they have a long history. You know, these watches are made by hand, and this is why a limited quantity, so this is why they hold their value so well. So the brands that were popular 50 years ago are popular now, and they'll be popular 50 years from now. Unlike your Apple Watch, which, you know, needs to be replaced every two, three years to keep up with technology, the styling and design of these brands is classic and iconic, and it does not go away. and oftentimes a 30 or 40 year old watch is even more impressive than the newer models.

19:15So the brands we typically deal a lot of businesses is Rolex, AP, Cartier, Omega, Patek Philippe. And every day we have a 35 person staff. We're buying between 30 and 50 watches a day and we're selling between 30 and 50 watches a day. So you're looking at between 60 and 100 transactions. where we've become such a destination. The last month, we had about 600 ,000 unique visitors a month on our website, which is awesome. Last year, for my 40th birthday, I went to Mexico City and I stopped by the Patek Philippe store, and there were two guys shopping there, and the store didn't really have much inventory.

19:58So on the way out, I was being an entrepreneur, slipped one of the guys in my car, and he's like, wait, you're still a store of Texas? he's like i haven't bought for me yet but i'm on your site like every week you guys are amazing and i this was in mexico city which six years ago barely anybody in outside of atlanta would have known about us for me to go to mexico city and people were like oh yeah we were on your site every week felt really really good man you've taken the company global right you've created a global brand that is the leader in the industry um and that's always i'm sure you know one of the greatest feelings is when somebody out there knows your product and brand from hundreds or thousands of miles away.

20:40And, you know, 10 years ago, no one knew who you were at all. I'm really interested in like the value that these watches hold, because I've heard that many of these watches, I know, obviously, there's many brands and stuff, but I've heard that many of these watches can hold significant value. So you're not just buying something that you're going to wear, but it's something that over time may even increase in value or remain the same value. So you could possibly resell it. Obviously, conditions and there's things that are involved, but how do you look at in terms of these as almost like an investment?

21:21Maybe it's the wrong word, but something that might continue holding value in the future. Yeah, it's certainly an asset. And we have a lot of clients come back to us and, you know, they bought a watch from us four years ago and they come back and sell it to us and we're paying them a lot more than they bought it from us for. Not every watch will appreciate, so there's, you know, you need to really look for more unique and rare pieces for significant appreciation. but it's not unusual especially on vintage watches where a lot of the models are appreciated by 10 times over the last 15 years so a watch you were buying for 10 ,000 15 years ago you could easily sell for 100 ,000 now it's not unusual but they all hold their value and the reason we pick the brands that we deal in are those that we know that if a customer of ours comes back to us to sell the watch back to us in the future they'll be able to either get most of their investment back that they used to purchase from us or maybe even get more.

22:26What is the most expensive watch that you either sold or maybe did some repair on? Yeah, we've sold quite a few pieces, over 100 ,000. Usually, they're AP or Patek Philippe's. But we don't... You know, there's people that try to post to their Instagram and they sell, you know, 200 ,000 or 300 ,000-hour watches, but, you know, they sell one watch a month. Like I mentioned, we're selling 30 to 50 watches a day. Our average sale is around$10 ,000. But I really like to be in the volume business and not concentrate our inventory in the ultra, ultra premium. You know that saying, sell to the masses, live with the classes?

23:10I wouldn't say necessarily I'm selling to the masses because it is$10 ,000 watches. But within a luxury watch state, we would probably have the most accessible selection of any major competitor. Well, Eugene, I've been very fascinated today. I want to go to your website. I need a new watch. So I'm going to go to your website and I want to check it out. But if other people also, they want to learn more information about you, they want to check out the site, how can they do so? Yeah, go to SwissWatchExpo.com or follow our social media at SwissWatchExpo. we shipped all over the world last year we had a couple that was local for their 25th wedding anniversary they went to Switzerland to buy each other watches and she was able to find the Cartier there that she wanted and they told us the story because they came by and they went to a bunch of shops in Switzerland you know they went there to tour Switzerland and buy each other watches because this is where all the luxury brands are coming from and they finally went to like the 4th or 5th place looking for the Rolex that he wanted.

24:16And they didn't have it, but the guy's like, where are you from? And they're like Atlanta, Georgia in the US. Have you ever heard of Atlanta? And he's like, yeah, I have, but why don't you just go to SwissWatchExpo? I'm sure they have the watch. So they came into our local showroom and they're like, I don't know what you guys are doing, but there's a shop in Swiss. What the hell made it come back and shop with you guys? That felt pretty good. Well, they could have saved a lot of money on travel, I guess, by just going to SwissWatchExpo. You don't have to go to Switzerland. So if anyone's in the US, don't go to Switzerland.

24:46Just go to Atlanta if you need a showroom or just go to your website. So SwissWatchExpo, UG, this has been great. Really inspiring. I always love a story of the bootstrap, bootstrap to millions in revenue and the journey that goes along. Obviously, you're only able to scratch the surface today of the actual journey because how much can you fit into a 30-minute time period? I know entrepreneurship is super hard. It's challenging. 60, 80 hours a week that you had to work to get to this point. So it's been a lot, but I really appreciate it. I think a lot of people are going to learn something. They're going to be inspired.

25:26But I hope if you are going to be buying your next watch, go and check out Swiss Watch Expo. Eugene, thank you so much for joining us today on Founder's Story. Thank you, Daniel. This was awesome.