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Client Horror Stories

Transcription of Irina Poddubnaia’s episode (That time when you thought you’d receive a whole box of fully functional goodies but get slapped with the reality that you aren’t part of their inner circle to deserve it)

Transcription of Irina Poddubnaia’s episode (That time when you thought you’d receive a whole box of fully functional goodies but get slapped with the reality that you aren’t part of their inner circle to deserve it)

This transcription belongs to Episode #42: Irina Poddubnaia’s craziest experience in the retail industry, which dazzled both Our Beloved Host, Morgan Friedman, and our whole beloved audience. Please watch the complete episode here!

Morgan Friedman (Host): Hey, everyone. Welcome back to the latest episode of Client Horror Stories, and do we have some fun stories in store for you today. I’m very excited to have with me, Irina Poddubnaia.

Oh no, I messed it up, Padubnaya. Is that right? Padubnaya?

Irina Poddubnaia (Interviewee): Yes, it is right. Yes, that’s correct.

Morgan Friedman (Host): You can pronounce it for all of our listeners so everyone knows how to pronounce your name correctly.

Like I literally, in all the emails that I send out, I usually write like Irina P dot, like, let’s leave it out. Like Poddubnaia, that’s my surname. Yeah.

Okay. I can just call you Irina P. So everyone, very excited to have Irina P. Here. Welcome to our show!

Irina Poddubnaia (Interviewee): Alright thank you very much for having me here, Morgan. And you’re… probably you get called Morgan Freeman a lot of times, right? Not Friedman.

Morgan Friedman (Host): Every time I call like an Uber or a Lyft to pick me up, and I go in and they’d say, “I expected the actor.” But my name, for Americans, my name is a little bit easier to pronounce than yours.

Irina Poddubnaia (Interviewee): Yeah.

Morgan Friedman (Host): So Irina, let’s jump right into the story. I’m very excited. I have my water in hand.

Irina Poddubnaia (Interviewee): Ooh, great. So, yeah, at some point in my life, I felt particularly adventurous, and I went to China and started a business that helped e-commerce entrepreneurs buy products from China. And, man, how horrible the quality sometimes was. And sometimes, we couldn’t even fathom what could go wrong in those simple orders. So, for example, yeah.

Morgan Friedman (Host): I just wanna pause and add to that. Before you even tell a story just on what you said, it’s funny how so many great initiatives begin out of ignorance. Like if you knew what a disaster would happen, there’s a big… a high chance that you probably wouldn’t have done it. But it’s often people don’t know what they’re getting into and they just jump into things.

Irina Poddubnaia (Interviewee): Yes. And specifically with that decision to move to China, I don’t remember if there was a really good reason to do that. It was literally just like the propaganda for social media where everyone was talking like, “Well, this is so great to start a business with China.” I just went one step further. I went to China. I moved there. So, right.

Morgan Friedman (Host): I appreciate how you did it, but did it all the way. If I’m going to do China, I’m going to do China.

Irina Poddubnaia (Interviewee): Yes, exactly. So, yeah, and I never spoke Chinese up to this day even after living in China, so I never communicated through, like… I never was able to understand, like, it was literally, like when I lost my ability to speak.

So I was living in the world with all those Chinese characters on the walls and people speaking some chirping sounds, and that’s what it used to be like. But thanks to technology, I was able to communicate with suppliers and even order the goods, and everything went smoothly and we were able to do business.

But the quality, the quality, my God. So one time we offer… like, we ordered the shoes that were a knockoff copy of Valentino shoes. Then we checked the brand, like it literally was spelled incorrectly, Vayevtilno. Okay, great. This is… I think it was expected because people get sued if we copy the actual brand.

So that’s just one thing. The other time…

Morgan Friedman (Host): Let’s talk about that because it’s interesting. So in other words, you ordered a product expecting the correct spelling of Valentino, but it unexpectedly had the incorrect spelling and you think he did that on purpose in order to legally protect themselves?

Irina Poddubnaia (Interviewee): Of course. So that’s how the knockoff copies are distributed in China because they literally just misspell, like it’s not Adidas but Abibas or something. And when we were ordering… because the thing is, we were ordering the goods that the customers wanted. And the customers, they wanted Valentino, and they wanted to sell them as originals.

But the suppliers, they were providing what they had. And we were… we were not prepared for what we were ordering, and we were not prepared to tell the customers that. We just literally just… we receive the goods, we take pictures, we send it to the customer, and then they said like, “This isn’t correct.” Great.

But that’s not just like… That’s not even the extent of how bad it was. So, once we got an order to ship… how to say that… the electronic… It’s not electronic cigarettes per se. It was an electronic shisha. That device where you can just like…

Morgan Friedman (Host): A hookah.

Irina Poddubnaia (Interviewee): A hookah. So, these are really hard to verify because we cannot smoke all of them, right? Obviously. We cannot even unpack them because it’s not going to be sanitary. So we just tested one. It was switching off, the lights were going on, like everything was good. We put it in the like wooden box, shipped to the customer abroad, obviously, because otherwise they would have been broken.

So when the customer received them, what happens is that the entire batch was with a defect, and the entire batch contained those hookahs that were not switching on, or sometimes they were even blowing up. And how we were…

Morgan Friedman (Host): Blowing up?

Irina Poddubnaia (Interviewee): Yes. How we were supposed to tell that the product is going to be that bad? Like we were under the impression that if you order something from the company that produces them, they should kind of work.

We were not supposed to like… and the funniest moment in my life was that we asked the customer to actually record what is wrong with the product on video and we explained to the customer how to tell that the product doesn’t work. The product doesn’t work says, like in Chinese is, “Bù qǐ zuòyòng.” Bù qǐ zuòyòng means like “doesn’t work.”

But the customer said literally this “Xiàoguǒ bùcuò, Xiàoguǒ bùcuò.” Bùcuò means like “very badly.” Xiàoguǒ bùcuò. That’s one of those moments that stay with you for the rest of your life, because like once you watch what we do, you understand the frustration. Yeah. And well, yeah, we were able to…

Morgan Friedman (Host): So let’s dive into the hookah blowing up situation. I’m fascinated by this because usually in Client Horror Stories, the stories are like, “Oh, client didn’t pay me.”

But like, ship, like buying and then reselling a product that’s blowing up is pretty intense. So first, was it blowing up, like, as customers used it and like, was it like someone using the hookah and then while using it, it exploded in their face?

Irina Poddubnaia (Interviewee): Well, I don’t think it was that dramatic. I think it just, like, was a very small pop or something. But again, it was the entire batch. The entire batch was faulty. And when we were testing, how we were supposed to tell? Like without some specific equipment or without the industry experience, I believe it wasn’t possible. Even though the specifications were correct, everything was good, like it looked good, but then when it came to the actual, like the actual use of a product, that was a problem.

And like, it wasn’t even… yeah, it wasn’t even just this single occurrence. The quality, sometimes… like sometimes the suppliers, they were actively deceiving us. So there was this interesting situation where the customer ordered… How to say that… It was an industrial model for the printing press, and that industrial model had specific like figures on that, like the serial number, the specifications, and all of the things. And everything was matching. We took a lot of pictures, the customer approved, we shipped the model, and then what? It was the wrong module. We said, like, “how is that possible?” And then we just measured it with a, like, with a centimeter. Like, it literally… it was a different size.

Morgan Friedman (Host): A tape measure.

Irina Poddubnaia (Interviewee): Yes. Like in millimeters, it was a different size. And then we discovered that the actual supplier, they didn’t have the model that we requested, but they just put the sticker from the correct model to that one. Great, right? But then…

Morgan Friedman (Host): I see. They put a sticker with the wrong one on the right one to make people think it was the right one.

Irina Poddubnaia (Interviewee): Right. Yes, because we didn’t have experience in that. And that was the biggest problem with our business in China because we were shipping everything to everyone, and then you’re doing that. You’re bound to make mistakes. And that’s when we found like, “Okay, great. We’re just going to focus on some products where we cannot screw up,” something that’s not technically challenging. So that’s when we started shipping clothes, mainly.

Even then, even then, we were running into problems. For example, the supplier provided the entire batch and there were multiple sizes and multiple colors. We were checking everything. We, like, calculated all the sizes, like the number of pieces in each size and in each color, yada, yada, shipped it to the customer. Everything was good. And then, then we discovered that the entire color, like all the sizes and the entire color was missing. The supplier didn’t say a word to us, but they didn’t supply that. And they just like looked at us and said, like, “Are we going to approve?” Because in China, when we were ordering, we were using Alibaba as this intermediary system, and once you approve the order, everything is settled in stone. But then, like, the entire color was missing, so we lost around, like, I think we lost the entire commission from the order just because of a mistake where we didn’t notice the entire color being missing.

Morgan Friedman (Host): I’m fascinated by the quantity of like really serious mistakes and also by your observation that sometimes it’s on purpose because often we just attribute it to people being incompetent or lazy but maliciousness.

Like purposely ripping people off takes it to another level. So, my first question is when this would happen, what was your usual way of dealing with it?

Irina Poddubnaia (Interviewee): Oh, that’s the best and the worst part about our service. So, the customers were enjoying this safety net of us covering all the costs or fixing all the mistakes. With those hookahs, they were shipped back to China and we returned it to the supplier and we got the money back.

With the industrial model, the customer actually flew to Guangzhou and just handed over that model to us, and then we returned it to the supplier. That was the best part because when we worked with Chinese suppliers directly without Alibaba, it was not possible to return the goods after they were shipped.

But on the Alibaba, we got the protection, window of 90 days to return the order or open a dispute if something went wrong. But the customers still, since they have suffered the consequences of all those things, they were not loyal to us. Even though we fixed the mistake, it wasn’t enough.

The customers, they lost trust in the service, even though it wasn’t even our mistake. That was. Yeah, that was like the worst part of that business because I was literally risking my reputation because of some Chinese suppliers that provided the wrong goods and all that. And that’s when I realized like, it’s not that good of a business model.

Morgan Friedman (Host): That makes sense. So, okay. So Alibaba gave you the 90-day protection window and you would be able to return it. So my question building on that is, let’s try to model the minds of the people or the companies that are doing this. It’s hard for me to understand. Let’s say it’s not obvious why people would do it.

 Is there thinking that, oh, it’s cheaper to do it this way and only a small portion of the people will realize it and return it. So they think that they still come out net ahead financially if they… Like if you do something that works and only half the people complain, like for half of the time, you make more money.

Irina Poddubnaia (Interviewee): So you’re… you’re trying to dig into the head of the Chinese supplier that provides the faulty goods and then just expects everything to go well. I don’t know their reasons, like I don’t do business this way. I don’t… But I understand that Chinese suppliers, for example, they never answer no to any request.

You’re going to ask them to like, “Can you make it cheaper?” They say like, “Of course.” And then you get… like we literally asked something like that for the supplier of wristbands. I don’t remember what they were, but they didn’t… they were not electronic. It was just literally some silicone wristband with some logo.

So the thing was, we asked the supplier, like, “Can you give us a discount because we are ordering this amount of like 500 wristbands?” They said like, “Yeah, of course, 50%.” Whoa, whoa, so much commission. Great. This is the best thing ever. When we received the batch and 50% of the badge was with defects. A defective 50%!

Yes! Great! They gave us a discount! Let’s say. I don’t know what the thinking behind it is. They just literally complied to our wishes to get a discount but at what cost? We were expecting the same quality level, not 50% of faulty goods! So, I don’t know why that happens. I just… maybe I don’t allow myself to understand that because once I do understand that, my business is over.

Morgan Friedman (Host): I think it might be interesting to dig in for a few minutes to this. Here’s the first thought that comes to my mind. Some people do business with a long-term orientation. Some people do business with a short-term orientation. And I think if your mindset is short-term, and let’s take it extremely, extremely short term. Someone’s going to give me some money and after they pay me, I’m never going to speak to them for the rest of my life, and we’ll never care about each other again as this super, super strong short-term focus, like, lets you convince yourself, okay, I’m never going to see them again.

Like, it doesn’t matter if it’s over as opposed to people who say, “Wow, I want to do business. I like Irina. She’s so competent and good. I want to work with her again, then again, then again, then again. And over the next 30 years, I want to hire her a million times.” If I’m thinking in a long-term way, then it makes less sense for me to give you the 50% of faulty wristbands because then, you won’t come back to me a second time.

Irina Poddubnaia (Interviewee): Well, actually, that makes sense. And also it’s culturally ingrained in the guanxi culture. So in China, there is this interesting phenomenon called guanxi. Literally it says like the inner circle. If a person is not inside of your… yeah.

Morgan Friedman (Host): I never heard of that phrase.

Irina Poddubnaia (Interviewee): Yeah. So, it means that if a person is not inside of your inner circle, they are not considered your relative or a friend, then you can do whatever. You can deceive them. You can even… it’s even considered noble to deceive a person because you take advantage of the person who is not inside of your guanxi.

I don’t want to offend anyone. Like, I just say that these things, they happened to us. I’m not saying that it was just like… it’s not the nation in general or the culture in general, race, like, it’s not that. I’m just saying that some people…

Morgan Friedman (Host): Every individual is different, and there are good and bad people everywhere. Yes.

Irina Poddubnaia (Interviewee): Yes. And I have heard even personally from some Chinese people that if the picture of your customer with his family is not standing on your desk, they are not a customer. They’re just a transaction. So if you don’t drink tea with them from time to time, they’re not a customer. They’re just a transaction.

But like… so we value the personal connection and very close relationship between the supplier and the buyer. In that case, they consider you real and legit. But in our case, it’s just like, “ah, transaction.” That’s probably another thing.

Morgan Friedman (Host): Yeah, this is interesting. Now we kind of have two different but related theories to explain it. One is a short-term versus a long-term focus, and another is this guanxi notion of concentric circles of deepness of relationships, and the deeper and the closer your relationships are, the better you’ll treat them. Something that’s interesting about this guanxi culture, is in a way, it’s kind of natural or like there’s something unnatural about it. Like if your mom is your client, you’re going to give special treatment to your mom and make sure it goes well in any business, assuming you like your mom.

Irina Poddubnaia (Interviewee): That’s a necessary marker, like assuming you like your mom.

Morgan Friedman (Host): That’s right. If you want a restaurant and your best friend comes to your restaurant, you’re going to give him a bigger extra portion. So, in some way that’s natural, but what also happens is the guanxi carries it to an extreme where it’s kind of like an F you if you’re not in my inner circle, and that’s where a lot of these problems happen.

Irina Poddubnaia (Interviewee): Well, yeah. And again, it’s not just that because every person is different and everyone has a choice. It’s like… the culture doesn’t dictate that, but people do like to make money. They do like to deceive customers because they make like extra profit out of that and like all these things that happened.

Still, most of our customers, which they’ve been sticking around for like for over two years, we’ve been there because even though those things happen, they’ve happened in like standalone cases. Sometimes, we’ve received from Chinese suppliers… we’ve received not only like the beautifully packaged blouse or something but also some additional gifts and like those small trinkets from the store where everything was branded into like… it was the fabulous experience.

But the thing is that from time to time, we also encountered those like, “Oh, 50% discount.” Okay. Like 50% of all the goods. Good. Yeah. We did what you asked for. Yeah.

Morgan Friedman (Host): Yeah, it’s… so definitely in any business, there’s going to be good people to work with or good companies to work with and bad ones, and the good ones are easy and they’re fun and the point of Client Horror Stories is to dig into these problematic ones and try to understand it.

And in a few minutes, we’ll talk about strategies for dealing with and in avoiding them. Question. You began our recording by saying that you don’t speak Chinese. Do you think that was a factor? For example, if you spoke Chinese, do you think you could have entered their guanxi and actually become friends with them so they would treat you better or no way?

Irina Poddubnaia (Interviewee): Bùshì wàiguó rén, bùshì wàiguó rén. That’s like “no foreigners” really. I don’t believe that it was possible to enter into some guanxi unless we were speaking English or we were living to like next to one another. We did have some close relationships with logistics companies just because we were going there in person, always shipping the like, it…

Like we were not containers per se. They were smaller, but still the boxes were quite big, like 100 kilograms or so. So that was the only time when we established some kind of guanxi per se with those cargo companies. But outside of those relationships, I don’t believe it was possible to establish that connection unless we spoke Chinese, unless we were abiding all the traditions, even just giving the… I mean, like your business card with two hands because that’s considered respectful. You cannot hand it over with one hand. You need to always give it to them with two hands and even bow a little. So that’s considered respectful, and giving them presents and congratulating them with all the holidays.

And another thing, in China, everyone is tied to their phone even more than we Western people because the thing is, they consider it normal to respond immediately. Once you see a message from your friend, you respond immediately. That’s why we ran into some issues with some suppliers when we were messaging them whenever it was convenient for us, maybe at 11 p. m. And then again, people were even, like, responding at that time and saying, like, “Why are you not sleeping?” Like, “Sorry, we didn’t know that you should respond immediately. Like, we will not send you any messages after the normal working hours.” But they consider that normal.

Morgan Friedman (Host): That’s fascinating. I’ve never known that there is a cultural expectation to respond upon reading something. That would drive me insane.

Irina Poddubnaia (Interviewee): Yeah, well, I guess ghosting is not in their culture at all. The only thing that you’re going to get if you’re messaging at inconvenient times multiple times, you’re probably going to get blocked altogether because they are not going to, like, they’re not going to change their habits. They’re just going to be like, okay, like this person doesn’t know how to communicate. They are not going to be right anymore.

Morgan Friedman (Host): This is fascinating because a lot of working with people professionally is do I like that person? How do they treat me? And sometimes cultural norms are so different. If you messaged me at 11 PM and I don’t respond until 11 AM tomorrow…

Irina Poddubnaia (Interviewee): That’s normal for us.

Morgan Friedman (Host): For me, that’s normal. Like 11 PM, I’m laying in bed watching Netflix or something. And tomorrow when I’m working, unless the world is exploding, I’ll think about it tomorrow when I’m working. So I would have never even thought that someone else could be offended by my late texting.

Irina Poddubnaia (Interviewee): Yes. So like, yeah. And that was one of those like unseen walls that we ran into, because we were not aware of those cultural norms and expectations from everybody.

Morgan Friedman (Host): Also super interesting about this point is It’s implying opposite or counterpoint to one of the common themes of Client Horror Stories, which is I’ve done, I don’t know, 60 of these episodes so far, maybe, to add to estimate and a very common theme is you need good communication practices, including not ghosting and responding quickly, and often client relationships break down because one of the sides just ghost or respond slowly. And I know to be professional, you need to respond quickly.

So that’s a very common piece of advice. But what’s interesting here is learning that in China, that’s taken to an extreme where you’re not just to respond quickly; respond upon reading it.

Irina Poddubnaia (Interviewee): Well, it is. And that was one of the most fascinating things. Another great thing about China is their delivery practices.

So, their delivery is so cheap that you can deliver a package from like one part of the country to the other part of the country maybe for $3 or $4 or even cheaper than that, just because they deliver with electrical bikes. So everyone is riding electrical bikes in China, and all the drivers on, like, on the cars, they are considered elite because everyone else is driving those, like those electric vehicles, sometimes even self-made.

They don’t even buy them, like, they just make them out of some pipes plus wheels and like, there you have it. It’s just, it’s so fascinating.

Morgan Friedman (Host): This is fascinating as well. I want to make a parenthetical comment, which is a lot of people like traveling and say, “Oh, I want to go live in Thailand to learn the culture and see it.” and then what happens in real life is people go to Thailand, stay in some expensive Airbnb, go to expensive nice restaurants, and they kind of have like a very elite nice life, and they go back, and they really haven’t learned or seen a thing.

Something powerful about moving to a very different culture and starting a business there is starting a business in the culture you don’t know is one of the few ways to get to the heart of the culture and like really learn about it in a very deep way. So it’s admirable what you did

Irina Poddubnaia (Interviewee): Actually the thing that we did, on the second week, once we moved to China, we bought a scooter. That’s what we did because we couldn’t get around without it. And it was one of those interesting stories where we went to a region called Bayan Nur, and when we were trying to ask for directions, everyone was misunderstanding. We were asking for Bayan Nur, and they said like, “We don’t know what it is.” And then, we try to communicate to them and then at some point, the person would say like, “Oh, Bayan Nur!”

So where is the difference? Where is the difference? Bayan Nur and Bayan Nur. And they’re like, “Ah, Bayan Nur. That’s there.” And we’re like, “Come on!” Like, come on. The same happened at the pharmacy when we were asking for the cough drops. And it was called poo dee lahn. It wasn’t poo dee lahn, it was “poo dee lahn.” Come on!

Morgan Friedman (Host): By the way, I spent a lot of my adult life living in different countries in Latin America. And what’s happened to me often is, while I can pronounce Spanish in a way that everyone, or Portuguese in a way everyone can understand it, what happens is when I have to pronounce American words or names or places in Spanish, I just can’t say it in Spanish. So, like, I used to live near an avenue called Roosevelt, but, like, taxi drivers would never understand the street. Roosevelt had named after the US president, but they would never understand it because there’s some weird Spanish pronunciation of it, and I just couldn’t bring myself to say an English name in a Spanish sort of way.

Irina Poddubnaia (Interviewee): Well, it is a real struggle because even if you understand the language or if you understand how to spell it, it doesn’t help when people are speaking. And regardless of proficiency, that always happens.

Morgan Friedman (Host): Before we return to this story and then start getting some lessons from here, I want to push back on the browser button for a second, the virtual metaphorical browser for a second and wrap up by saying about how it’s interesting to have so many client horror stories are about good communication practice, but trying to take it to an extreme. It’s interesting to me how for the stories you’re saying and sharing, and we know about Chinese factories, it tends to be less of an emphasis on quality, but more of an emphasis on communication. So it’s interesting that there could be some sort of trade-off where like, hey, if they’re eight hours in a workday, if you spend more time communicating about what you do, you’ll have less time to actually do the work itself.

So it seems like there’s a trade-off to some degree between quality of work and how well you communicate, and it feels like China is an extreme version of that, of just lower-than-average quality than you expect but even faster, more, more, more intense communication. So it feels like this is a warning to say good communication is good, but don’t over communicate.

Irina Poddubnaia (Interviewee): I would say that there’s probably some correlation between the two, but it’s very faint because if we just like… we were distilling this entire experience to just those horror stories, but that was a portion, like maybe like 30% of goods, they were faulty and we ran into some issues with those suppliers, and some of them were completely dishonest, like that’s like 5% when they were deceiving us on purpose.

But then, when it comes to our entire experience in China, I can tell you that Chinese employees, they work better with surveillance. So the best…

Morgan Friedman (Host): They work better with what?

Irina Poddubnaia (Interviewee): Surveillance, with surveillance, like with literally a camera looking at them.

Morgan Friedman (Host): Surveillance.

Irina Poddubnaia (Interviewee): Surveillance. I’m sorry. I thought that was how this was spelled, like, okay, got it.

Morgan Friedman (Host): Try to pronounce Pungwe or whatever the name of that town is.

Irina Poddubnaia (Interviewee): I know, yeah. Right. The thing was that the best operating companies were the banks and the post offices, just because everything was with the cameras and everything was standardized and everyone was following the rules.

But when it comes to those smaller factories, they get completely chaotic. It could be just a mom-and-pop factory where they assemble it by hand and some nephew is coming and like taking something from a conveyor or something. It’s very disorganized, and like the lower-level companies, they can produce the cheapest goods just because they don’t spend a lot on the equipment or on standard quality procedures or anything like that. That’s why they can produce the goods at that cheap level.

And that’s how we end up with poor quality, but good people. They are good people. They just don’t have the equipment. They don’t have the standards. They don’t have the procedures. And that’s when you have a trade-off. If you want to order a very small quantity, you will have to deal with those small factories because if you want to order something from the, I mean, like, industrial factory that is renowned across the whole China, they will force you into minimum order quantity of 10,000 units. And that’s the only way we work. But the trade-off would be that you will get good quality goods, at least.

Morgan Friedman (Host): I think what often happens is there are good people and well-intentioned people that are trapped in bad systems or trapped in complex systems that they can’t handle, or good people are sometimes incentivized to do less-than-ideal things where often it’s very hard to say no to the shiny dollar signs at the end of the tunnel,

Irina Poddubnaia (Interviewee): Yeah, the temptation of extra Yuan because in China, it’s Yuan, Yuan.

Morgan Friedman (Host): Right,

Irina Poddubnaia (Interviewee): Yuan, right. So then, they look like Ys with the two crosses. So, that’s the thing. Every person has to make a choice. Are they going to be ethical? Are they going to think long term and think prosperity for everyone, including their customers, or are they just going to think selfishly and make decisions based on their own good standing and like this win-lose mentality, like, “Okay, I took advantage of that customer like I’ve been.”

No, you don’t. No, you don’t because long term, that’s a bad strategy because customers, they leave reviews, they talk to one another, like the reputation just gathers. But then some of those companies, they don’t value the reputation. They will change the name. They will change the name and do it again.

Morgan Friedman (Host): By the way, it’s happened to me where people have told… a younger version of myself, where I work with people who would tell me stories about how they, like, took advantage of someone else. And every single time someone told me that story, eventually, it always turned to me and they tried to take advantage of me, and I think that there’s a powerful lesson in there that if someone is the sort of person that will try to pull a fast one and take advantage of everyone else that they’re going to do it to you, possibly unless you’re in your either guanxi, however you pronounce it. But guess what? You’re not going to be their guanxi. Therefore, they will do it to you.

Irina Poddubnaia (Interviewee): Yeah, so the inner circle mentality is we definitely… so another fascinating thing about Chinese language is that the friend… I don’t remember how it was pronounced, but uh… I don’t remember. I’m not going to even try, but it translates like fruitful person, the person who is useful basically, who is fruitful, who is going to produce prosperity for our person. So that’s a friend in Chinese.

Morgan Friedman (Host): So the word for friend is literally a fruitful person?

Irina Poddubnaia (Interviewee): Yes. Yes, exactly that.

Morgan Friedman (Host): Wow. I didn’t know. This is so much learning for me. That’s pretty powerful.

Irina Poddubnaia (Interviewee): Yes. And when we just look into perceptive and we understand how Chinese people think, I remember when even we were having those interesting situations where we talked to our Chinese tutor and she was telling us that even Chinese people from different regions, we don’t consider themselves, I guess, the same nation. Like this mentality is not only propagated to foreigners, so like take advantage of foreigners and like just… The same happens between Chinese people as well.

So this guanxi, it’s literally just the inner circle of a person, but that usually includes maybe like 40, 50 people, not more than that.

Morgan Friedman (Host): I think it would be useful to think about that as a series of concentric circles.

Irina Poddubnaia (Interviewee): Right.

Morgan Friedman (Host): Like you care most about your close friends and your close family, then your acquaintances and your distant family, then people in your town and people in your city, then people in your state then in your country, then the people on the other side of the planet.

Irina Poddubnaia (Interviewee): Yeah, and it usually doesn’t get bigger than the planet Earth. I mean, before Elon Musk just takes us to Mars, like, yeah. Then we’ll have two different, like, okay, this is for Martians, these are Earthians, like, yeah. Something like that.

Morgan Friedman (Host): There might be some people that prioritize the aliens that are coming to take over more than the humans.

Irina Poddubnaia (Interviewee): Well, yeah. I think, like, very interesting thing is that once the smartphones were invented, aliens stopped visiting. I don’t know. I’m a camera shy. It’s just the cameras are getting way better. That’s why we cannot no longer say like, “Oh, it was a blurry thing in there.”

Morgan Friedman (Host): Today, if you claimed you saw a flying saucer, everyone would be like, “How come you didn’t record it?

Irina Poddubnaia (Interviewee): Yes, that’s exactly the point. So I don’t understand how that was possible that people were seeing aliens before and now we’re no longer seeing them.

Morgan Friedman (Host): It could be that the US government has defunded the fake alien operation. Or maybe the US government has moved the funds for the fake aliens to instead use that money to fund AI. Maybe the AI will turn into the aliens.

Irina Poddubnaia (Interviewee): Yeah, well, AI is going to turn into the matrix. Just imagine that future. Not like very distantly. We are going to be plugged into the computer and just imagine the worlds of whatever kind of quality that’s going to be.

Morgan Friedman (Host): Sounds good. Okay, so, so many , great stories that we shared. Before and before we wrap up, I’d love to spend a few minutes to step back and extract from your stories any general lessons or advice or, for example, based on your experience dealing with these various horror stories, have you changed how you work with suppliers or different groups or people? And I’d love for you to share some lessons to everyone listening.

Irina Poddubnaia (Interviewee): Yeah, my rose-tinted glasses were shattered, just like, to the finest, like, to the sand even, like, it’s just like, it never… I’m never going to be the same. So the first…

Morgan Friedman (Host): By the way, Irina, your English is great. Like, rose-tinted glasses is not a phrase that many foreigners know, so congratulations.

Irina Poddubnaia (Interviewee): Thank you very much. I’m still working on my accent and trying to pronounce it correctly. And I always mentally slap myself when I butcher something up, but still the thing is when you are working with Chinese suppliers or any suppliers for that matter, don’t work with prepayment, unless you want some problems. Like don’t work with 100% prepayment. Always…

Morgan Friedman (Host): Wait, hold on a second. I’m super ignorant here. What do you mean by repayment?

Irina Poddubnaia (Interviewee): Prepayment.

Morgan Friedman (Host): Oh, prepayment. Ah, don’t pay in advance.

Irina Poddubnaia (Interviewee): Don’t pay in advance, like, don’t pay 100% in advance because what might happen is that the other party is not going to be that motivated to provide the goods. If you are going to work with a 100% advance payment, use an intermediary system. Use some kind of bank.

Morgan Friedman (Host): Like an escrow.

Irina Poddubnaia (Interviewee): Yeah, like escrow. Use some system like eBay or whatever, just to make sure that you are going to get some kind of verification of that purchase, and you are going to be able to return the money back. So that would be another piece of advice that you have to take into consideration.

And then be very specific, like provide specifications. If you want to order something that is not available on sale and you are not following the actual supplier specifications, you have to be very, very detailed. You can never be too detailed. There was this interesting situation. We were talking with another buyer, and she was a professional buyer, and she was dealing in LED, like those LED lights. And she said that the Chinese supplier talked to her and said, “Well, you are such an insufferable person. You check everything. You check every little thing. The other guys, they just came here and said give me a container of LED. That’s it. And then they didn’t check anything.” A container of LED. I can imagine, but that container was like… the entire thing was faulty goods, everything that other buyers didn’t take. So…

Morgan Friedman (Host): By the way, for me personally, sometimes when I reflect on my own magic powers and how does the Morgan magic happen, I think one part of the Morgan magic is I actually read what’s on the page. Like, just reading the things right in front of your face goes really far. And it goes to the heart of what you’re saying, where a lot of people won’t even think or read about what are they asking you? What does it mean? What are the requirements?

I’ll just say, okay. Give me some LEDs. Okay. And here’s a box of LEDs and just writing it out and reading it. “Oh, this size in this way, in this shape with this tint of color like this.”

Irina Poddubnaia (Interviewee): yeah.

Morgan Friedman (Host): Like goes, goes a very long way towards avoiding problems.

Irina Poddubnaia (Interviewee): Yeah, another piece of advice. If you are ordering a batch, try to ask for a sample or ideally for 10 samples because it’s much easier to send you one ideal thing, but sending you 10 is more challenging. Like buy 10 samples and then you will be able to see if that’s consistent quality or they just found like one ideal iPhone case, for example. And that was it.

Sometimes suppliers, they do this. So they try to find this ideal product to like ideal to a T. And then the entire batch is no, nothing like the sample, just nothing like the sample.

Morgan Friedman (Host): Ah, that, I hadn’t thought of, of buying multiple ones in advance, but that definitely makes sense.

Irina Poddubnaia (Interviewee): Yeah, well, there’s certain products that doesn’t make sense if that’s probably something expensive, if it’s $300 or something like that. But if you are buying for some accessories, phone accessories, or some, I don’t know, cutlery or whatever you can think of that’s easy to ship that is not high tech, because again, the electronics we ran into the issue of margins because in China, the electronics costs the same way how it costs abroad, and you have to buy enormous amounts to make some money there.

That’s the problematic part, because when we were moving to China, we were under this delusion that we can go on the streets and buy cheap iPhones. Like, come on, never happens. Yeah.

Morgan Friedman (Host): Yeah. They see you’re not in their guanxi, and then suddenly the price goes up.

Irina Poddubnaia (Interviewee): Well, I guess it’s just that it’s branded tech. Uh Apple iPhone, they are branded and they are… in China, they are even more expensive than the rest of the world. Who knew? When we were visiting, we didn’t know about that. So, yeah. So that would be another piece of advice just to order multiple samples to see if the quality is consistent and good all the time, not just with this one sample that they’re going to send you.

Morgan Friedman (Host): I love it. And any final pieces of advice or have we basically covered it?

Irina Poddubnaia (Interviewee): Well, I guess to prevent the problems, you just have to be persistent in communication, and it helps if you have good systems in place. For example, if we were not using Alibaba… When we were not using. It’s not if. When we were not using Alibaba, we bought a batch of phone cases, and they turned out to be a different model, and we were not able to return them. That was the end of the story. Those phone cases just… We decorated the bathroom with them because there wasn’t any other use for them. Just literally like the entire wall of phone cases. But that was the like… The monument of stupidity, you know.

Morgan Friedman (Host): I think a powerful use of intermediaries there is because they’re the ones that take on the risk, they can they can charge much more. So often, people complain, “Oh, it’s so much more expensive on Amazon, Alibaba, wherever.” on the other hand, like, amazon’s famous for their like easy, simple returns. You’ll never have a problem if you complain and that’s, and they make their money on that margin there.

Irina Poddubnaia (Interviewee): Absolutely because if you don’t use any intermediary system and you are not protected as a buyer, there is a high chance that you’re going to run into problems.

Even like a very recent case, it wasn’t with physical goods but with the service. The provider… I got careless after like where all stinted glasses were shattered, like some of it grew back. I could care less. And I worked with a service provider with 100% prepayment. I paid a thousand dollars to the person who was supposed to create an outline for the course about the software that I have, TrackMage software. And that person, they didn’t do anything. They just gave us a series of questionnaires and harassed my team to fill in the questionnaires. But once we filled those questionnaires, they didn’t give me the outline of the course.

With ChatGPT right now, it’s like three seconds task. But previously, before ChatGPT, now we have to talk about that. Before ChatGPT, I was willing to pay a thousand dollars so another human being could review our systems and come up with a good outline for the course. But that’s not the end of the story.

I asked for a refund because, like, you literally didn’t do anything. So, the person said that, “Well, you know, we haven’t signed the contract, but you know, I’m not going to refund you anything.” I said, like, “What? You’re not going to refund me anything? You shouldn’t have signed an NDA and provided your company details there.”

You shouldn’t have in that case. If you want to scam somebody, don’t provide all the details so that they can go to the court. We sued the guy. We got the money back.

Morgan Friedman (Host): Good for you. Good for you.

Irina Poddubnaia (Interviewee): Yeah, but still it fits with a Client Horror Stories theme because I think that’s like… never underestimate an NDA. Yeah, never underestimate an NDA in agreement or some other means of like solidifying the terms of your caliberation. It literally can save you the money, and you can return them back. So…

Morgan Friedman (Host): Yeah, often a signed document can go very, very far.

Irina Poddubnaia (Interviewee): Yes.

Morgan Friedman (Host): And even if the NDA isn’t the contract, usually there are provisions in there that, that you can find some provision that he violated and use that as the wedge to get him.

Irina Poddubnaia (Interviewee): Absolutely. But in this case, the guy forgot. The guy was careless as well. He forgot to sign an agreement where the no-refunds policy would have been listed. You know, like, you know, you forget, okay, but you provided me all the information to sue you and that’s it. That’s what I did.

Morgan Friedman (Host): I also think a lot of people like that count on people not suing them like, “Oh, it’s not being worth the effort.”

Irina Poddubnaia (Interviewee): We’re just going to let it slide. Yeah.

Morgan Friedman (Host): Exactly. So it’s good that you did because when people actually follow through and punish the bad behavior, that disincentivizes that same person and other people from engaging in similar bad behavior.

Irina Poddubnaia (Interviewee): Yeah. And for me, it was another learning experience where I said to myself, like, never work with 100% advance payment again. Like, because again, like you were in China, you shouldn’t have paid him. You shouldn’t have worked like that. Just…

Morgan Friedman (Host): I think people in my experience, some people have good hearts and some people don’t. And the people that have good hearts, they want to be positive. They want to be optimistic. They want to trust people. So even after your rose-tinted glasses are shattered, you still have that instinct. “Oh, he looks like a good guy. Oh, she looks trustworthy.” So, so you.

Irina Poddubnaia (Interviewee): It’s not quite that. It’s just that when I provide the services, when I work with people, if something goes wrong, if a person is not happy, I refund the whole thing.

I once spent 13 hours with a company helping them optimize their processes, and they were not quite satisfied. I returned all the money. For me it’s natural because even when we were in China, when something went wrong at some point, what happened? We shipped the actual branded sunglasses to a different address. We just mixed the boxes. And the person, she was coming to me almost in tears, like, “where are those glasses? I need them because the customer ordered them.” And I said, like, “Wait, wait a second. Okay. So how much was that? Like, okay, we refund it to you.” And then I found the actual customer. They were in a different city, like a very distant city. I paid them to ship the glasses to her. I solved the problems.

Morgan Friedman (Host): A refund and the glasses.

Irina Poddubnaia (Interviewee): Yes, exactly.

That’s great customer service.

That’s great customer service at the expense of the business. But still, we kept the customer because we were working with wholesalers. Like, we were the wholesaler for them because we were retailers and we were wholesalers for them. And we were providing all those goods.

So we took it to an extreme with the customer service because every problem of the customer was our problem. And the same thing, I think, should have happened with that guy that I ordered the outline from. Like, if I’m not happy, why would you insist that you do the work? You didn’t. And again, there were some really clear evidence in our communication when he was claiming something that he didn’t do. The idea was that, still the court… the court was on our side.

Morgan Friedman (Host): Sometimes the courts work the way they should.

Irina Poddubnaia (Interviewee): Yeah.

Morgan Friedman (Host): Irina, Irina, I’m not going to try to say your last name as we wrap up. Irina P., this has been super interesting. Often in episodes, they’re enjoyable, but I don’t really learn much. But today I’ve learned like a whole book’s worth of what it’s like doing business in China and a bunch of Chinese words.

Irina Poddubnaia (Interviewee): Yeah, guanxi.

Morgan Friedman (Host): Yeah, and it’s just a powerful concept of taking the inner circle to an extreme. I’m definitely going to quote that. After the conversations we’re like, how quotable will it be? Will I reference things that I learned or I thought during the conversation, and I’ve learned a lot of great quotes from this.

So this has been great. Thank you for your time. Thank you for coming. And everyone who has watched us to the end, I hope you had as much fun as we had talking.

Irina Poddubnaia (Interviewee): I really enjoyed it.

Morgan Friedman (Host): Thank you and bye bye.

Irina Poddubnaia (Interviewee): Thank you. Bye.


This transcription belongs to Episode #42, please watch the complete episode here!