RUBEN VARDANIAN, PRESIDENT, TROIKA DIALOG
Ruben Vardanian was still a student of economics at Moscow State University when he became head of fledgling investment bank Troika Dialog at the grand age of 24. Fifteen years on, Troika is Russia's leading indigenous investment bank, employing 800 people across Russia and in four other countries. Last year was eventful: Troika more than doubled its trade turnover to $160 billion and was wooed by several global banks, including Credit Suisse and JP Morgan Chase. Vardanian has announced plans to establish a business school in Moscow to educate a new generation of business talent.
HOW DID YOU COME TO HEAD AN INVESTMENT BANK AT 24?
The situation in Russia in the early 1990s was one with no rules. Inflation was high; everyone was very short-term oriented; people were confused. There was no system of success measurement and it was difficult to keep your head clear. Many people just wanted to make money. I wanted to do something I could be proud of and look the man in the street in the eye.
At that time I had two offers. One was from a big commercial bank, the other from a small investor, an American guy [Peter Derby], who wanted to start a bank and had $35,000 to invest. I chose the riskier option. I thought: I'm 24, I'm not a bad manager and industry will be very important in this country. This was an opportunity to build something.
WHAT KEPT YOU GOING DURING THE 1998 ECONOMIC CRISIS?
Part of the vision of building something meant that we never paid dividends. We always invested in the company. We were also very conservative investors, so we didn't lose much money. But 80% of our clients disappeared because they were foreigners. For me at the time, it was important not to leave the finance industry. Lots of colleagues went into industry and particularly into oil and gas because it offered a more stable future.
WHY DID YOU DECIDE NOT TO SELL TO A GLOBAL BANK?
I have a strong belief in Russia and that it should have a locally developed element in its financial system. We want to make Troika Dialog into the first global Russian investment bank. If you don't try, you will always regret it; if you try and fail, at least you tried. So it was in part an emotional decision.
HOW DO YOU ENSURE YOU SPEND TIME ON THE RIGHT THINGS?
I spend a lot of time on HR issues. Some people criticise me for not spending enough time with clients. I do a lot of interviewing. I interview everyone we hire in the HR department, even the secretary. I also take part in the 360-degree reviews for 10%-15% of our employees - that's 70-80 people.
Every Monday morning, I make a speech to all employees. It has become a tradition. I update them on important developments. I also welcome new employees and congratulate people who have birthdays that week. It's part of our culture at Troika to encourage people's dreams. It's almost a mission. We always ask new employees what their dream is.
DO YOU EVER GET YOUR TIME MANAGEMENT WRONG?
We once lost a big deal because I didn't spend enough time on it personally. I was focused on finalising our internal strategy.
HOW WILL YOU AVOID MAKING THE SAME MISTAKE AGAIN?
I'm not sure I will.
WHAT DO YOU LOOK FOR WHEN YOU INTERVIEW PEOPLE?
The key criterion is what their motivation is. Why do they believe their goals can be reached at Troika? I want to know that their value system matches ours. We service clients and in Soviet times clients were not well respected. I want to know how much someone is ready to control their ego and service clients as part of a team.
IS CORPORATE GOVERNANCE IN RUSSIA IMPROVING?
In 1999 we did our first report on corporate governance and blacklisted 44 out of 50 companies because they didn't treat minority shareholders properly. These were major publicly traded companies. Our clients were worried for our security, although I wasn't afraid, because no one in Russia cared about minority shareholders at the time.
We do a quarterly report now and companies call us up because they care about what we say. Russians are realising how important corporate governance is. Major shareholders are moving away from management to board level and want to organise things more professionally. It's a good start, but still far away from the right level. The process of the redistribution of assets is not yet finished and there's a learning process that goes with that. But whereas in the '90s cashflow and profits for your own pocket were the priority, now capital gains are becoming more important. There's a real trend towards wanting more professional managers as a result.
Leadership lessons is sponsored by DDI.