According to Chichvarkin, it was his childhood friend Timur Artyomov, then assembling phones with caller ID, who suggested he get into the cellular business. Becoming a dealer for one of the cellular operators was easy, and the equipment for a sales point required little investment. In the spring of 1997, the partners rented office space for a few hundred dollars, initially selling handsets and contracts to companies, and a little later invested $5,000—$2,000 of which they borrowed from acquaintances—in their first outlet: a trading space in the Elektronika store on Leninsky Prospekt.
“We had no clear idea of how to sell these services. The right decisions came more by intuition,” Chichvarkin recalled.
According to him, after studying the experience of Southeast Asian companies, Euroset emphasized accessories—still the company's most profitable line. The sign acquired its yellow color in 1998, to be closer to Mobile TeleSystems, which uses that color.
Lowering the markup and a slogan
Until 2000, the company differed from competitors perhaps only in the high price of its services. After observing how quickly the Mitino and Gorbushka markets grew on lower prices, the owners concluded that greed was harmful. On May 11, 2000, the opening day of the Svyaz-Expocomm exhibition, Euroset announced a markup reduction to a level unprecedented for that time—achieved by agreeing with manufacturers on direct supplies. At the same time, an advertising campaign began with Chichvarkin's slogan: “Euroset—prices are simply f***ing crazy.” The catchphrase prompted a flood of complaints to the authorities, but the company's market share quickly grew from 2 to 5%.
Roles were divided: Euroset president Timur Artyomov took charge of accounting, while Chichvarkin developed unconventional moves. On April 1 last year, the central salon on Tverskaya, the “Palace of Communications,” was decorated “like a brothel” with the sign “Eroseset,” with girls seated in the windows. This year the company promised to give away 20 Motorola C350 handsets to anyone willing to strip completely for them: the phones were gone in 15 minutes, and the stunt, according to Chichvarkin, cost $1,300.
“I don't think this is the most correct marketing policy. Experience shows that you can successfully promote yourself without using such blatantly primitive and not always effective methods,” said Mikhail Yakovlev, sales director at VimpelCom.
Discipline and conflicts with suppliers
At the same time, both colleagues and competitors called Chichvarkin a focused and tough businessman. “Since 2001, Euroset has been the leader of the Moscow market. Without energetic management, such results cannot be achieved,” said Vadim Zelenin, general director of Tekhmarket. The company fines employees for being absent from work at 10 a.m. without good reason, and for the past three years candidates have been screened with a lie detector.
In August last year, Samsung Electronics' Russian office stopped supplying phones to Euroset; the company declined official comment, and Euroset issued a press release accusing Samsung of shortfalls exceeding 100,000 euros. According to an anonymous Samsung employee who commented to, his company found it impossible to remain a vendor due to the dealer's unacceptable demands. A month later, VimpelCom terminated its contract—Euroset had been its dealer since June 2001—citing violations of clauses on salon locations; relations were restored in February 2003.
“The conflict with VimpelCom was commercially disadvantageous for neither them nor us. When we lived apart for a while and began to miss each other—and it was clearly worse for us without them than for them without us—we came to an agreement,” Chichvarkin said.
Yakovlev of VimpelCom, however, claimed: “I think at that moment Chichvarkin simply let the situation get out of control. In the end we made up, though Chichvarkin certainly has a tendency to believe that a stronger dealer should get better terms.”
Expansion plans
In early 2003, Euroset announced that its strategic direction would be the creation of an all-Russian dealer network: plans for the year were 160 salons in 60 cities. Asked when the large-scale “construction” would be completed, Chichvarkin replied: “When there's money.” With the start of regional expansion, the company began fighting costs, and the first victim was corporate parties. At the “Palace of Communications,” a new service was being tested: under an agreement with one operator, its clients could receive full service directly at the dealer's salon.
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