Daniel Mishin fell in love with the concept of the hostel at 11 years old. Soon he opened his own in his native Sevastopol, and a few years later he set up in the centre of Moscow. Is life a success? Not yet, says the young man who built the million-dollar business.
Daniel Mishin. Age: 20 years old. Education: Academy of Social and Labor Relations (did not graduate) Reasons to get to the club: for the development of the Russian hostel market
Daniel Mishin fell in love with the concept of the hostel at 11 years old. Soon he opened his own in his native Sevastopol, and a few years later he set up in the centre of Moscow. Is life a success? Not yet, says the young man who built the million-dollar business.
Daniel Mishin. Age: 20 years old. Education: Academy of Social and Labor Relations (did not graduate) Reasons to get to the club: for the development of the Russian hostel market
Just imagine it. You are 20 years old, and you seem to have everything already. Not everything, but nearly everything: your business and a reputation as a rising star. It’s hard not to succumb to the temptation to believe in your own hype at a certain age. Personally, I think I would go off the rails. But the creator of the hostel network in Russia and Ukraine, Daniel Mishin, makes it clear that he has achieved a lot. He does not hide the fact that he’s tired of repeating the story of his success to reporters: the first hostel opened in Sevastopol with $ 200 in his pocket at the age of 11 — he arrived in homeless Moscow — he saw a niche — he opened a hostel here — he went into overdrive and added a few more to it - as a result, the turnover is close to $ 2 million - wow!
At this stage of life, the entrepreneur clearly wants more than positive PR. “In a few years, age will cease to be my main competitive advantage,” says Mishin. “I hope that then what I do in my business will take its place.”
Gloomy morning
On Monday, Daniel Mishin was woken in his country house by a phone call - the last of fifty calls missed. It was 10 a.m. As soon as he got up, the entrepreneur began to walk around his house without taking his phone from his ear.
He slept for a maximum of five hours, as he lay there in the morning, he was thinking about projects. On the evening of the previous day, Mishin talked with consultants, but prior to that, he hosted a group of television crews. The shoot was required for tomorrow's broadcast on Channel One - for the talk show hosted by Andrey Malakhov, “Let Them Talk”. On Monday, Mishin was scheduled for ten one-hour meetings with contractors and partners. However, in reality, the discussions ended faster, so that by 18.00 Daniel was already in Ostankino, playing the familiar role of the entrepreneur prodigy, the “young millionaire”.
The working day continued after nine in the evening. According to the schedule, talks with Forbes (Russia) was next. After the interview, there was dinner with friends until half past one in the morning, after which Daniel returned to his house in his Mazda 3. When he got to the house, he was busy with documents for a couple of hours. He went to sleep at four.
“In my life, I’m most afraid of two things - to go crazy and missing out,” a person who was two hours late for a meeting tells me straight away. The pale face of Daniel Mishin expresses tension and fatigue. It's Thursday already. It is obvious it was a tough week. Or maybe it’s normal.
The charm of a shelter
Daniel learned the habit of working hard as a child. He had discovered a new world, which shaped his life for years to come. Hostel - 11-year-old Mishin had the opportunity to spend the night in this basic accommodation during a break with his parents. Most likely, it was a standard European-style coaching inn - with stucco moldings on the facade and a communal apartment inside, where rows of hairy legs hung from bunk beds. But young Daniel was fascinated. Students scurried around, dressed like tramps, chatting to each other in a multitude of languages. There certainly wasn’t such a thing in Sevastopol.
Soon, Daniel was enthusiastically putting things together in a three-room apartment left by his late Grandmother. The beds came from Black Sea Fleet sailors made from surplus wood. He bought sets if bedclothes from his mother’s friend’s business. It cost $200 in total, all the money he’d earned during the summer holidays. This was the first of four hostels subsequently launched by Mishin in his hometown.
A deeper understanding of how the hospitality industry works was made possible through an acquaintance with an enterprising Norwegian who settled in Kiev. He educated the teenager.
He taught him internet skills, the wisdom of a booking system, but most importantly, he gave him a sincere desire to listen to clients’ needs, to respond to their desires.
“He liked me because I was a 12-year-old bold kid who demanded “Teach me!”
Mishin recalls, “Of course, there was no sense of charity here”. It’s fair to say that the young trainee did not receive money for his child labour in a hostel, the name of which has already been forgotten. But the entrepreneur remembers the exact number of hostels in Moscow when he arrived here a few years later - six! There was opportunity in such a market.
Living in one room of six, or ten, or even more people, had nothing to do either with a hostel, or with apartments for migrant workers, or with more expensive apartments in the capital. The main feature of the hostel was a combination of low prices and basic hotel standard service, so important for the tourist. What did this service consist of? It’s wide reaching, from the possibility of booking on international sites like Booking.com, decent repairs, fresh linen, cleaning and guest computers, to friendly staff who speak English. Compared with a hotel, the hostel had a different kind of advantage - the free spirit of the youth fraternity, so beloved by Daniel in Berlin.
Mishin persuaded his brother, who lived in the capital, to invest equally in the business. Soon, Olympia the first hostel with 28 beds, opened on Tverskaya-Yamskaya, requiring a million rubles. A second hostel with the same name appeared three months later near the first. Accommodation in both cost 450 rubles per day, which was fantastic, given it was within walking distance of Red Square. As soon as Mishin came on the scene, he had no end of customers.
After a year and a half, the owners received an offer that they could not refuse - the business was sold profitably to buyers from Sochi.
Everything was always simple for me.
Daniel Mishin invested the money from the sale in a new network of cheap mini-hotels, presumptuously promising "the quality of a five-star hotel at the price of a hostel". In the centre, three hostels opened under the banner of Bear Hostels with a total of 240 beds. There, customers were offered all sorts of nice, but not too expensive perks: free wi-fi, satellite TV in the common area, a kitchen and personal kits, which included ear plugs, toothbrushes and slippers.
The cost, if you agreed to spend the night in the same room with the other fifteen guests, as before, started from 450 rubles per day. At the same time, Mishin worked with pricing, making it more flexible – dependent on early or late reservations and the current number of available beds. He also increased sales by providing additional services; renting a car, buying tickets, transfers, excursions etc. He also expanded his target audience by reaching out to those corporate clients sending employees to Moscow for “conferences, meetings, political congresses and sporting events”.
With an average payback period of Moscow hostels from 2 to 5 years, Bear Hostels achieved this much faster. Over the past year, the network has earned $ 1 million, and Mishin predicts it double. Earlier, he estimated the profitability of sales at 50%, but, by his own admission, he got excited. Rather, it is closer to 30%, which in any case is very, very attractive.
The successes of Mishin and the low threshold for entering the business (after all, if you wish, you can turn anything into a hostel, not excluding a 2-bedroom apartment in khrushchevka), sparked competitor interest. Now there are about 80 hostels in Moscow, although Daniel is not ready to vouch for their viability: "30 hostels are opening, 20 are closing." Why? “High costs - people do not consider the economics,” says Mishin.
He himself, however, had only recently behaved in the same way. “I never just considered my business as an economy,” the entrepreneur said bluntly on air of Finam FM radio. - Everything has always been simple for me: if you buy, then you have to sell. If you buy a lot, you can increase the price, a little, then lower." Daniel poured out phrases about how important it is to not get hung up on costs. Against the background of hotels that counted every inch of toilet paper and a gram of liquid soap, they sounded fresh. Indeed, unlike most competitors, Bear Hostels did not sell a bed, but a happy atmosphere of an international party. The right idea, it seemed, would in itself attract money.
Mom, I'm the boss!
Over the past year, and in Daniel's understanding, from now on, romance has given way to sober calculation. The value of costs has risen sharply, as has his understanding of the practical benefits of their systematic reduction. “I'm growing,” Mishin remarks thoughtfully. A young man who graduated from school as an external student (so as not to distract from work) now reads a lot. “This is a thing that nothing will force me to change - neither a woman in bed, nor a nightclub,” he says firmly. Mishin reads books on marketing, strategy, time management. However, not one of them turned Daniel’s mind in the same way as “Atlas Shrugged” by Ayn Rand.
The focus shifts toward self-development for Mishin. He follows inner goals more and seeks less to conquer all around. The entrepreneur dismisses the vain aspects of his youth like an “official page” on the Internet with links to numerous interviews and a detailed first-person biography crowned with plans for the future - “create the largest holding of hostels in the world”.
At one time, Daniel actively consulted, shared the secrets of mastery. According to him, "Medvezhiy Consult" managed to serve three dozen customers and open several turnkey facilities. But such activity is no longer a driver. “Now this is the least priority work,” he cuts off. He doesn’t care about the Union of Hostels Association, which he created. Mishin left it a week after foundation: "I am not a social activist, just not my way." It’s more interesting for Daniel to move not the industry, but the idea of entrepreneurship. He launched the show “Mom, I am the boss!” on the satellite television channel “Success”, in which he hosts young businessmen.
Mishin himself identifies with serial entrepreneurs - these people, rare for Russia, come up with and implement businesses non-stop. At the same time, he dreams of becoming an outstanding manager, a true master of business administration. Both paths coexist in Daniel's head in a bizarre alliance.
Thought process
For some time now, Mishin spends no more than five hours a week on hostels. The Assistant, the Head of the Sales Department and the Egyptian manager with whom the entrepreneur once met in a resort, run the business. “The Egyptians know how to do hotel business,” Mishin explains.
Free time has opened the space for new business endeavours. In the evenings - which is often thinking time for Daniel - he turns on classical music in his office and thinks, hoping to find some breakthrough idea. The most successful thoughts come to him when he "consciously engages in the process of thinking."
Now Mishin is immersed in the development of a product concept about which he prefers to speak in riddles: “Something that is most lacking in the Russian HoReCa”. Whatever it is, its launch will not be the same as before. First, meticulous calculations, development of technology, and only then replication. Mishin expects that intensive work on the issues before multiplying them on a federal scale by 2018 will make the company one of the largest and most successful players in the core and a number of related markets.
“There used to be many questions about the future that you should ask yourself when starting a business. But I didn’t ask them, I just closed my eyes,” says Daniel. Perhaps he acted like a child. At twenty years old this is no longer the case.