The Rock That Survived Every Storm

August 1998. Russia’s government declares default. The ruble collapses from 6 to 21 per dollar overnight—a 70% devaluation. Real incomes drop 31% in a single month. Fashion retailers across Moscow (Москва) immediately raise prices 200-300% to match their dollar-denominated costs. Boris Ostrobrod (Борис Остроброд), running a fledgling chain called Sela with just 1-2 stores, does the opposite. He freezes all prices for exactly one month while his stores empty, his suppliers panic, and his losses mount.

Crisis is terrible for those who have debts. But if a company doesn't spend significantly more than it earns, it is capable of surviving crisis

The Engineer Who Became a Retailer

Boris Mikhailovich Ostrobrod wasn’t born into fashion. He was born in 1957 in Kamensk-Uralsky, an industrial city in the Urals, and trained as a mining engineer at Leningrad (Ленинградская область) State Mining Institute. For eight years, he served as chief engineer at Lenin Stadium in Leningrad, managing complex operations and learning crisis response under pressure. When the Soviet Union began its death throes in the late 1980s, Boris did what many engineers did: he found a side hustle.

In 1987, he co-founded Blik, a photo restoration cooperative with his cousin Arkady Pekarevsky. They charged 18 rubles per restored photo—“crazy money for those times,” as Boris later recalled. It proved he could spot opportunities in chaos. Three years later, in 1990, Boris emigrated to Israel (Израиль), settling in Bat-Yam near Tel Aviv. The rocky cliff overlooking the Mediterranean—sela in Hebrew—would eventually inspire his company’s name.

His philosophy crystallized early: “If you want to become rich, you must work for the poor. Second, it’s pointless to specifically choose a market—you need to do what is currently possible.” This wasn’t aspirational advice. It was survival logic from someone who’d started with nothing.

The Accidental Insight

In January 1992, Boris attended a clothing exhibition in China. He ordered four containers of down jackets, paid upfront, and waited. What arrived was ten containers—the Chinese supplier had sent every order from the exhibition to the one buyer who’d actually paid. Boris panicked. Then severe frosts hit St. Petersburg. He sold the jackets from his office window. “We got lucky,” he said. “While he was having doubts, the clothes sold out.”

That moment revealed something most Russian entrepreneurs missed: there was massive pent-up demand for affordable quality fashion. The veshchevye rynki—open-air clothing markets—were full of customers willing to buy, but the products were terrible. Boris targeted those customers with slightly higher quality at similar prices. The name “Sela” in Latin script led Russians to assume it was European. Boris didn’t correct them.

By 1996, his first branded store in St. Petersburg was generating ~$100,000 per month. He was building something, but it was small—just 1-2 stores by 1997. His competitive advantage wasn’t scale. It was relationships. His Chinese suppliers knew him personally. “They’re ashamed to do a bad job personally for me,” he explained. They operated po ponyatiyam—by understandings—rather than formal contracts. That trust would prove critical.

The One-Month Wager

August 17, 1998. The Russian government announces it cannot service its debt. The ruble begins free-falling. Within days, it collapses from 6 rubles per dollar to 21. Boris’s entire inventory—bought with dollars from Chinese suppliers—tripled in cost overnight. Every other fashion retailer immediately raised prices 200-300% to match. The economics were brutal: hold prices, go bankrupt. Raise prices, survive.

Boris announced a one-month price freeze.

There was no sophisticated analysis. No board debate. His stores were small. His debt was minimal. His suppliers trusted him. He had room to absorb losses that larger, leveraged competitors didn’t. But the decision still made no rational sense. Customers flooded his stores, buying everything at prices that were now 30-40% below market. His margins didn’t just compress—they went deeply negative.

His competitors assumed he was finished. One month of selling dollar-denominated inventory at old ruble prices would drain whatever reserves a small operation could possibly have. Then the freeze would end, he’d raise prices like everyone else, and it would be over. They were half right.

The Decision Room

What made Boris think he could survive what his competitors couldn’t? The answer lay in three structural advantages invisible from the outside.

First, scale. His 1-2 stores weren’t a weakness—they were agility. Larger retailers had hundreds of employees, long-term leases, supplier contracts spanning continents. Boris had minimal overhead. “Crisis is terrible for those who have debts,” he would later explain. “But if a company doesn’t spend significantly more than it earns, it is capable of surviving crisis.” He’d engineered his business to operate lean. The 1998 collapse tested whether that discipline created room to maneuver. It did.

Second, family alignment. This wasn’t a corporation answering to external shareholders demanding quarterly returns. Boris’s wife Irina helped with design and production setup. His son Eduard, after serving in the Israeli Air Force and earning an MBA, would become VP for Development and HR. His daughter Alexis graduated from Shenkar College of Engineering and Design and became Art Director, designing Sela collections. When Boris decided to freeze prices, he wasn’t convincing a board—he was convincing his family. They understood the long game. “I want my children to work, to have a creative beginning in them,” Boris insisted. “Without a goal in life, a person’s psyche begins to break down.” The price freeze was the goal. Survival with integrity.

Third, supplier relationships Boris had spent six years building since that first Chinese exhibition in 1992. His suppliers operated po ponyatiyam—by understandings rather than contracts. “They’re ashamed to do a bad job personally for me,” he explained. When the ruble collapsed, those relationships meant flexibility. Competitors running on 30-day payment terms faced immediate supplier demands for dollar payment. Boris’s suppliers waited. Not because of contracts, but because of trust built through years of paying upfront when others didn’t.

His competitors saw a small retailer making an irrational gamble. Boris saw an engineering problem: absorb short-term losses to acquire an asset—customer loyalty—that larger, leveraged competitors couldn’t replicate even with capital. The margin compression was brutal. But the calculation was sound.

The Loyalty Engine

September 1998. The price freeze ends. Boris’s financial losses are serious. But something else has happened: he’s acquired “masses of new customers who were able to appreciate the product quality.” They remember. When prices normalize across the market in October, these customers don’t return to competitors who’d raised prices 200-300% during the panic. They stay with Sela.

Boris’s son Eduard would later articulate the philosophy: “In crises we had different goals and tasks. Yes, we needed to cut costs and increase sales, but there were low rental rates, opportunity to enter new locations.” Crisis wasn’t just about defense. It was offense.

In 1999, Sela opens its first Moscow store. The franchise model takes off—not because of capital, but because potential franchisees trust a brand that honored its prices during crisis. By 2003, there are 200 stores. Sela wins Brand of the Year at the Effie awards. The customer loyalty from 1998 has become a flywheel: loyalty enables franchise growth, franchise growth builds national presence, national presence improves supplier terms, better terms enable competitive pricing, competitive pricing reinforces loyalty.

The pattern repeats. In 2008, during the next financial crisis, Boris launches Sela’s e-commerce platform. Online sales triple during the crisis while competitors retrench. CEO Natalia Chichenova later calls it “a very correct strategic initiative.” The 1998 playbook is operational: when others defend, attack.

The Unreplicable Advantage

While competitors focused on replicating Sela’s pricing or store design, they missed the competitive moat: Boris’s relationship-based supply chain. It started in January 1992, at that Chinese clothing exhibition. Boris ordered four containers of down jackets and paid upfront—unusual in an era when Russian buyers defaulted constantly. When ten containers arrived instead of four, it wasn’t a shipping error. The Chinese supplier had received orders from dozens of exhibition attendees. Only one had actually paid. He sent everything to that one buyer.

That moment established a pattern. Boris operated on integrity when competitors operated on leverage. “The supplier also has children, a home, a family,” he once explained. “As soon as you leave him without bread, he either disappears or tries to grab something from you.” So Boris never squeezed. He paid on time. He paid upfront when he could. He visited factories personally. The suppliers knew him by name.

By 1998, those relationships had evolved into something unreplicable: trust-based flexibility that no contract could codify. Design happened in Israel, where Sela maintained offices. Production happened in China, with suppliers Boris had worked with for six years. When the ruble collapsed and competitors’ Chinese suppliers demanded immediate dollar payment, Boris’s suppliers waited. Not because legal agreements required it—because personal relationships enabled it.

Competitors could analyze Sela’s product mix, reverse-engineer pricing strategies, copy store layouts. They couldn’t replicate six years of payment integrity. “They’re ashamed to do a bad job personally for me,” Boris said of his suppliers. That shame—that personal accountability—became Sela’s invisible advantage. During the 1998 crisis, it meant the difference between bankruptcy and expansion.

The vertical integration from Chinese factories to Russian storefronts, mediated through Israeli design offices, created a supply chain where relationship capital mattered more than contract terms. Competitors running transactional supplier relationships discovered too late that contracts don’t create flexibility during currency collapse. Trust does.

The Third Test

2014-2016 brings sanctions and another ruble devaluation. By now, Sela is a 600-store operation across 14 countries generating $200 million in annual revenue. It’s no longer small and nimble. But Boris’s philosophy hasn’t changed. “Crisis is scary for those who have debts,” he says in 2016. “But if a company doesn’t spend significantly more than it earns, it is capable of surviving crisis—tighten something, give up something, cut something.”

He restructures ruthlessly, shifting from franchise to company-owned stores to improve control. Real estate opportunities emerge as weaker retailers collapse—38% of Russian shopping center closures in this period are fashion brands. Over 50 fashion retail networks collapse between 2014-2015 alone. Sela survives.

The survivors from the early 1990s Russian fashion retail wave can be counted on one hand: Gloria Jeans, Elis Fashion Rus, Zarina, Sela. That’s essentially it. Industry analyst Ivan Fedyakov, CEO of InfoLine, calls Sela “a company that can safely be called a phenomenon on the Russian market.”

The Fourth Test

Three years after Boris sold Sela, the playbook faced its ultimate validation. In February 2022, Western sanctions triggered a mass exodus of foreign fashion brands from Russia. Zara, H&M, Uniqlo, Mango, Massimo Dutti—over 120 international retailers suspended or terminated Russian operations. Shopping malls across Moscow and St. Petersburg emptied as anchor tenants departed. The Russian fashion retail market faced a void representing billions in annual revenue.

Sela, now operating under Melon Fashion Group ownership, didn’t just survive—it expanded. The infrastructure Boris had built proved transferable. Melon inherited more than stores and inventory. They inherited the crisis playbook: minimal debt structure, relationship-based Chinese supply chains, agility to move fast when competitors froze.

While Western brands wrestled with sanctions compliance and supply chain disruptions, Sela moved into premium mall locations vacated by departing competitors. The brand that had weathered three previous crises—1998 ruble collapse, 2008 financial crisis, 2014-2016 sanctions—faced a fourth test without its founder. The institutional knowledge Boris had embedded in operations, supplier relationships, and company culture operated independently.

This validated something crucial: the value Boris created wasn’t founder-dependent genius. It was systematic resilience. New ownership could execute the playbook because it wasn’t personality-driven. It was principle-driven. Low debt. Trust-based suppliers. Offensive moves during crisis. Market share gains when competitors retreat.

By 2023, as Russia’s fashion retail market reorganized around domestic and friendly-nation brands, Sela captured market share from departed Western competitors. The customer loyalty Boris had built starting in 1998—reinforced through three subsequent crises—transferred to new ownership. The 2022 Western exodus became crisis number four that Sela not only survived but leveraged for growth.

Boris didn’t live to see this final validation. He died in Latvia (Латвия) in February 2023, a year into the fourth crisis. But the fact that Sela thrived without him proved the playbook’s true value: it created institutional resilience, not founder dependence.

The Clean Exit

In 2019, Boris sells Sela to Melon Fashion Group for an undisclosed sum. The transaction includes 278 stores—143 company-owned, 135 franchised. The business continues operating under new ownership, which proves the value was transferable, not just founder-dependent.

On February 9, 2023, Boris Ostrobrod dies at age 65 in Latvia. The Sela chain continues. The crisis playbook—validated across three decades and four existential threats—has become institutional knowledge.

The Engineer’s Operating System

Boris’s crisis resilience didn’t emerge from retail expertise—he had none when he started. It emerged from an engineer’s approach to systems design. His mining engineering degree taught him to optimize for reliability under stress, not maximum output under ideal conditions. That mindset shaped every management decision.

“I try to train people to make decisions independently,” he explained in a 2011 interview. “If they cannot do that, it means they don’t match their position.” This wasn’t delegation for efficiency. It was building organizational resilience. When crisis hit, centralized decision-making created bottlenecks. Distributed autonomy created adaptability. His remote management style—living between Israel, Latvia, Russia, and China—forced this discipline. “I live everywhere,” he said. “There’s a computer for managing business. On each section I have competent people who receive assignments and then report.”

The family business structure reinforced this. Boris insisted his children work, not because he needed their labor but because he understood purpose as psychological necessity. “Without a goal in life, a person’s psyche begins to break down, they become inadequate,” he observed. “Many wealthy Russians have this problem with their children.” His son Eduard served in the Israeli Air Force before joining Sela. His daughter Alexis earned a design degree before becoming Art Director. They worked because Boris engineered a culture where contribution mattered more than inheritance.

His debt aversion wasn’t financial conservatism—it was strategic discipline. “Crisis is scary for those who have debts,” he said during the 2016 restructuring. Debt creates obligations when revenue disappears. Zero debt creates options. That principle enabled the 1998 price freeze, the 2008 e-commerce launch, and the 2014-2016 restructuring. Competitors with leveraged balance sheets couldn’t make offensive moves during crisis. Boris could, repeatedly, because he’d engineered flexibility into the capital structure from day one.

Even his philosophy about working for the poor—“If you want to become rich, you must work for the poor”—reflected systems thinking. Mass markets create resilience through volume. Luxury markets create fragility through dependence on discretionary spending. During crisis, the poor still buy clothes. The rich postpone luxuries. Boris engineered Sela for crisis from the customer segment up.

The leadership philosophy that enabled 30 years of crisis resilience wasn’t charismatic vision. It was engineering discipline applied to organizational design: distributed decision-making, purpose-driven culture, zero debt, mass market focus, relationship-based supply chains. Systems designed for reliability under stress, not maximum return under ideal conditions.

What Was Proven

Boris Ostrobrod’s philosophy extended beyond suppliers. “The supplier also has children, a home, a family,” he once said. “As soon as you leave him without bread, he either disappears or tries to grab something from you.” Extend this principle to customers during a crisis, and you have the entire strategy: treat stakeholders as partners to protect rather than resources to exploit.

Most retailers saw the 1998 crisis as a threat requiring defensive moves—raise prices to preserve margins, cut costs to survive. Boris saw it as an opportunity to create something unreplicable: customer trust during a moment of maximum vulnerability. Competitors could match his prices later. They could never match the memory of who held the line when it mattered.

Crisis strategy proved more valuable than crisis survival. Defensive moves preserve value. Offensive moves during crisis can create it. That distinction—between surviving and thriving, between reacting and acting—is what separated one small retailer from dozens of failures and built a 30-year legacy.

Last updated: January 15, 2026