Alexei Agratchev says he wasn’t passionate about the retail industry when he founded his now multi-million-dollar company, RetailNext, which tracks customer behavior for brick-and-mortar stores.
It takes an open-minded person to develop a career and livelihood around an unfamiliar industry. But just as Alexei was not always curious about retail, he was not especially curious in general. He picked up that trait from an important figure in his early life: former Disney CEO Michael Eisner.
When Alexei was a teenager, his home country, then the Soviet Union, was falling apart. In August 1991, he traveled to the U.S. to attend Middlesex, a Concord, Mass., boarding school, but he needed a family to watch over him in the States while his parents remained in Moscow.
That family eventually became Eisner and his wife, Jane. The connection came about after Dimitri Agratchev, Alexei’s father, served as a translator for the Disney czar. The Agratchev family, in turn, would subsequently enjoy Eisner’s sponsorship, as Dimitri, his wife Rita and their son Alexei became U.S. citizens with the Disney executive’s help.
Throughout his high school years, Alexei would visit the Eisners at their home and tag along with them to Disneyland -- and answer dozens of questions about his upbringing in Russia. “I don’t know if you fully appreciate all of those experiences when you’re young,” says Alexei, now 38. “Before, you think, people who run multi-billion-dollar companies, they’re completely different, they’re almost gods of sorts. But once you get to know people, I think it humanizes the whole experience, and it gives you a lot more confidence that you can actually do things that you didn’t think you could do before.”
One memory particularly stands out to Alexei. He spent Thanksgiving at Eisner’s mother’s apple farm in Vermont, just a few hours away from Middlesex. Alexei, then 15, recalls walking through the orchard with Eisner, who asked him about his childhood in the Soviet Union. He was surprised that Eisner was so interested in what he, a mere kid, had to say.
Eisner, who was Disney’s CEO from 1984 until 2005, remembers those talks, too. “I was, of course, fascinated with every inch of their life,” Eisner tells Entrepreneur. He says he asked Alexei about everything from his grandparents to what Russia’s theme parks were like. “I must have asked him a thousand questions. I’m sure he couldn’t wait to get back to school!” Eisner jokes.
He continues: “But I certainly understand the environment from which he came, and how many people were living in that apartment, and how many floors up you had to walk, and how dark and Stalinistic all of the architecture was, and how you could feel the convulsions happening politically, and how nothing had yet been renovated.”
Though Alexei and Eisner only speak occasionally these days, Eisner’s interest in his life as a teen has left a permanent impression on him. Today, Alexei credits Eisner with his personal drive to familiarize himself with new people and ideas. He is always mindful, he says, of what he can learn from chatting with others, be they kids or Uber drivers. “That really made a difference to my approach and how I look at life,” he says of his time with Eisner. “It’s not about striking up conversation to pass time, but more the fact that you can actually learn a lot from all kinds of people.”
Curiosity as a vital life and business skill
Alexei’s curiosity serves him well in the retail sector. Retailers increasingly want to know how exchanges between customers, store employees and products drive sales and improve the shopping experience. In this context, Alexei says he talks not only to CEOs of retail chains, but also sales associates and managers who encounter customers daily. He gets their perspectives and finds out what technologies they’re already using.
“We start with a question, then figure out how to use technology to address it,” Alexei says. He describes his strategy as one of listening to and understanding clients’ needs, rather than bringing one-size-fits-all products to the table and trying to sell them to legacy-minded, often tech-reluctant retailers.
Alexei first entered the industry back in 2007 when, on vacation with friends in the British Virgin Islands, the idea for RetailNext was born out of a casual conversation he had with a Target executive. Both saw big potential for analytics in the retail space.
Meanwhile, Alexei was ready to make a career move. He had attended Claremont McKenna College and studied international relations, inspired by his upbringing in Moscow, though he says he primarily viewed college as a way for him to bolster his writing and presentation skills. When he graduated in 1999, he moved forward with a singular goal: gain exposure to as many people and ideas as possible.
After a brief stint with Accenture, he decided consulting wasn’t for him because “at the end of the day you don’t own anything.” His last client at Accenture was Cisco Systems, a company he then joined in January 2000. Two months later, Cisco hit its peak, reaching a market capitalization of $555.4 billion.
In the midst of the dot-com bubble, Alexei quickly moved up the ranks despite his minimal experience. By the time he was 25, he had 80 engineers reporting to him.
After seven years at Cisco, however, he grew bored and got the itch to turn to entrepreneurship. His boss gave him the resources needed to launch an internal startup in an area of his choosing. He and five colleagues branched off, specializing in video analytics for casino security.
Eventually, Alexei says, the venture lost its independent, startup feel and seemed like just another group within the behemoth company. Then came the lightbulb moment during his vacation. He settled on retail analytics as his next big focus.
“It was a problem to solve, vs. a passion for retail,” Alexei says. “Every ecommerce website was capturing all of this data about how many people come, what they do, their clickthroughs, where they spend time; and they were constantly using that data to improve the experience and make it better. And then you walked through the door of any physical store, and nobody knew what was happening.”
He named the company he founded BVI Networks (after the British Virgin Islands, where he’d been vacationing when he had his big idea) and secured the website domain name before the trip was over. Then he headed back to his home in California and set up shop in San Jose. Two weeks later, he and two colleagues, Marlie Liu and Arun Nair, quit their jobs at Cisco to devote themselves to the new venture.
BVI Networks scored right from the start, snagging American Apparel as its first client.
Today, the company, renamed RetailNext, has more than 300 clients and is adding about 100 per year, according to Alexei. The solutions the company has developed to help retailers collect and use data are present in tens of thousands of stores in nearly 70 countries. And the company is still growing: In 2015, RetailNext raised $125 million.
From communism to capitalism
Alexei’s family back home had instilled independent thinking in him from an early age. His grandmother was a Stalin concentration camp survivor, and his mother was a first-generation college graduate.
That independent thinking got Alexei into trouble in first grade, in early 1980s Moscow. When a teacher asked him to list the most important holidays, he replied with New Year’s and his grandmother’s birthday, rather than Lenin’s birthday. He was kicked out of school for “exhibiting non-communist tendencies.” After this, Alexei became discouraged with the Russian educational system, which led him to America a month before his 14th birthday.
His adjustment, here alone in a new, radically different country, was understandably tough. His English was poor and he faced culture shock at Middlesex. The Eisners were not the first guardians he was assigned, either. Young Alexei had been awarded a scholarship, which extended to books, athletic equipment and even airfare to Russia to visit his family in the summer. But when his grades suffered due to the language barrier, so did his relationship with the first family.
Enter Michael Eisner into his life. His father Dimitri's fluency in English had won him work with the Soviet government as an interpreter. A few years earlier, he’d even assisted at a summit meeting between then-Soviet President Mikhail Gorbachev and U.S. President Ronald Reagan.
Dimitri came to translate for Eisner when he and a delegation from Disney were visiting Moscow for a tennis tournament and meetings with Russian officials. In a mirror experience to the one Alexei was having over in the United States at about the same time, Eisner didn’t click with his first assigned interpreter. So, the executive recalls, he walked up to another, random translator he saw standing in a hotel lobby and offered him a job. That translator was Dimitri Agratchev.
Throughout his stay in Moscow, Eisner got to know Dimitri, even visiting the Agratchevs’s tiny walk-up apartment. Dimitri happened to mention his son’s difficulties to Eisner, and Eisner immediately offered to take over as Alexei’s U.S. guardian.
When the visit ended, Eisner says, he offered the elder Agratchev a plum job for a Soviet-era functionary: the first-ever head of Disney’s Russian division. Disney did not yet have a presence in the new Russian Federation, and Dimitri would help the company dub videos into Russian and manage the sale of Disney television shows in the post-USSR world.
Eventually, Dmitri and Rita were allowed to emigrate. With his parents relocated in California for the latter part of his high school years, Alexei began to travel there regularly and spend time with the Eisners, playing hockey with their sons and going to Mighty Ducks and baseball games.
Dimitri continued to work for Disney in Burbank, Calif. “The only way to get Dimitri out of Russia, because he wanted desperately to get out of Russia, was to bring him to Disney as an executive,” Eisner recalls. “He worked with us on the Mighty Ducks hockey team, because we had so many Russian hockey players. At one point, he instructed the hockey players to watch television to learn English.” Today, Dimitri and Rita live in Vienna, where Dimitri is chief English interpreter at the United Nations office.
Eisner modestly says he thinks the smart, driven family would have gotten to the U.S. without him. “Dimitri was coming. There was no question,” Eisner says. “He was going to get out of there. And so was Alexei.”
Once teenage Alexei’s English improved, so did his social life and grades. He made friends at school and got invited to their wealthy families’ estates and five-story apartments in New York. Meeting his friends’ parents, many of whom were also business executives, Alexei says, gave him his first major exposure to people running companies -- in turn inspiring him to think about running his own one day.
The company that Alexei built
Today, RetailNext has moved beyond its video analytics roots to technologies that can more accurately distinguish customers from sales associates. One of its successful solutions has involved placing bluetooth-powered “beacons,” a common form of retail tech, onto sales associates’ badges. When combined with detection devices positioned on store ceilings, the beacons can figure out, say, whether an associate’s time spent in the shoe department is hurting sales in other areas.
As RetailNext works to help the struggling, bankruptcy-riddled retail industry meet the rapidly evolving expectations of consumers, Alexei says he’s still drawing from those early lessons from Eisner: He encourages employees to have conversations to share their varied expertise.
Chitra Balasubramanian, head of finance at RetailNext, has spent five years at the company in three roles. She says that the opportunities she’s had for learning haven’t ended with her and her colleagues’ official titles. “If you’re interested in learning more about other areas, if you’re interested in helping, there’s always enough to go around, a welcoming of cross-department learning,” Balasubramanian says. “It’s almost like a business school, if you will, because you’re really able to see how a company works overall.”
Alexei credits his former bosses at Cisco for this brand of thinking, because he himself was trusted with responsibilities before he was ready. That helped him realize the value of putting employees into positions that don’t traditionally align with their credentials. At Cisco, he held his first management position by age 23.
Bridget Johns, head of marketing and customer experience at RetailNext, echoes this philosophy. “We have young people who are in their first or second job out of college who have had tremendous opportunities to grow their careers with us,” she says. “I have a guy on my team who started as an auditor and moved into operations through my team, and now he basically runs our website and all of our digital assets.”
Alexei boils down this philosophy with numbers: “If you hire somebody who’s done something for 10 years, and you have them do the same thing they can do in their sleep, you’ll at best get 80 percent of what they’re capable of,” he says. “If you put a person in a position where they’re kind of overwhelmed, they’re in the biggest job they’ve ever had and they have to learn, you’ll get 150 percent of what they’re capable of.”
In a manifestation of Alexei’s emphasis on both curiosity and trust, RetailNext doesn’t have periodic performance reviews. Alexei doesn’t believe the formal process is necessary to determine where he and his employees stand with one another. “It’s something that should happen on a daily basis,” he says, “as part of your regular conversations.”
Interestingly, Johns, who has been with RetailNext since 2009, says she didn’t even have a background in technology when a RetailNext recruiter reached out to her via LinkedIn. She had spent her career in retail, working internationally with companies such as Ralph Lauren and Tiffany and Co., she says. Though skeptical, she took a meeting with Alexei. Afterward, they scheduled another conversation. And another.
“I said, ‘I’ve never done marketing for a technology company, and my background is really in retail operations, so I don’t think that I’m quite right for you,’” Johns remembers. But Alexei was insistent. “One of the things that I have since learned about Alexei,” she says, “is, when he has an idea, and somebody is talking about something that he finds to be interesting, he just keeps talking to them.”
Kind of like how, more than 20 years ago, Michael Eisner just kept talking to a young, impressionable and driven Russian boy in an apple orchard in Vermont.