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. Last Updated: 07/27/2016

End of the Wild Ride




It seems ages, an entire era, since my little brother opened the first American-style health club in Russia. Jake was 25 when the billboard was hoisted over eight lanes of traffic on Leningradsky Prospekt, renovations were completed on Lenin's crumbling Palace of the Young Pioneers, and Gold's Gym Moscow flung open its glinting glass doors on Thanksgiving Day 1997. His face was sketched in the Wall Street Journal. His gym was described in BusinessWeek and Forbes. Jake and his two 31-year-old partners - Paul Kuebler, a former Arthur Andersen accountant from California, and Vladimir Grumlik, a Russian fitness enthusiast and entrepreneur - had filled the hangar-sized arena with an army of fitness machines, Stairmasters and treadmills, as well as massage rooms, saunas, solaria and a beauty salon. Two bars poured cappuccino and bodybuilding drinks; a cafe served burritos and chicken breast salads; and past the aerobics studio and squash area were tennis courts of imitation grass and a basketball floor built by Nike.


At the grand opening ceremonies, nearly 2,000 pilgrims ogled the pec-decks and bench-presses, egged on by live Russian rock bands, Moscow Circus acts, and an exhibition of dunks and three-pointers by the former Red Army basketball team. Meanwhile, Jake and his partners strode among the revelers in freshly pressed tuxedos, dazed at the magnitude of what could suddenly be done in the former Soviet Union.


In those days it was being done all over town. Ray Markovich arrived in 1993 as a 27-year-old lawyer and, teaming up with fellow American Paul Heth and luring the sponsorship of Kodak, opened a movie house showing current Hollywood blockbusters dubbed into Russian. In 1997, the pair's first full year of operation, their Kodak Kinomir theater grossed over $5 million. Ohio native Scott Nicol was thinking of a career in office supplies when he noticed, on the desk of nearly every potential client, a bottle of store-bought spring water. Three years after self-funding his first trial shipments of ClearWater coolers, Scott had amassed nearly $9 million in sales and a customer waiting list that promised much more. Bernie Sucher, on the other hand, had left a roaring job on Wall Street to offer his goodwill and free business advice to the losers of the Cold War, having decided, at 33 years old, that he was done making tons of money. Apparently he came to the wrong place. Over the next few years Bernie founded a profitable book publishing outfit, the steak house Uncle Guilly's, the fitness club Moscow Beach Club and the two Starlite diners that each gross millions of dollars a year.


By the mid-1990s, over 100,000 foreigners had been drawn by Moscow's immense double appeal as both a rubbled monument to 70 years of Communism and a thrillingly blank slate. A boom was taking place, one that began with the thunderous collapse of the Communist Party in 1991 and grew louder as capitalism was hammered together atop the ruins. Sports bars and burger joints sprang open on the sites of defunct factories, making happy hours and buffalo wings brand-new staples of Moscow nightlife - and making instant tycoons of the young Yanks in charge. Hedge funds grew from near nothing and mushroomed, managed by tough-talking moguls who'd gotten C's in college economics the year before. Like Paris in the '20s or Prague at the end of the '80s, the city throbbed with the expectation and achievement of good fortune: a moveable feast of pelmeny and vodka; a spring heralded by the tweeting of mobile phones.


Twenty-something Americans had their own drivers run them around the city and were spirited off to duck hunts and dachas in the country. The capital's most venerable restaurants were filled with guys from Seattle and gals from Virginia and their spur-of-the-moment dinner parties for 14. If Scott and Ray and Bernie were the pioneers, then these were the throngs of expats who came on the bandwagon after them. Overzealous and hypersocial, they romped through the Wild Wild East, riding Russia's moment and - because they happened to be there at the moment - theirs.


"Back then, this was Boomsville," Jake smiles, tossing a basketball hand-to-hand behind his desk. From where we sit we can hear the clanks and grunts of people laboring under weights, the thudding of a techno song over the speakers. It's a wintry Tuesday morning and the gym is crowded, if not jam-packed: busy enough that he fears leaving his office for all the Russian and American handshakes that would keep him from scheduled meetings and phone calls. "It might have been stressful or anxious at times, but only in the onward-and-upward context of where to build the next business, which direction to expand, how to get even more customers or clients." He shrugs and throws me the ball. "I wasn't out getting blasted until three in the morning like a lot of other expats: I was usually here until three in the morning. But still, we were all caught up in the same feeling. Sometimes I'd walk around the gym alone at 12:30 at night, after it closed, and I'd get a swelling sense of: Wow. Things could not be going better."


Someone knocks on his door to say hello. There is the braying of a mobile phone and Jake digs it from his pocket, handling the two conversations at once - both in fluent Russian, but studded with Americanisms like "O.K.?" and aerobichesky" - and then a third as his sales manager enters with a question on membership rates. Someone else leans in to hand Jake a printout of an e-mail for him. He makes a face and hands it to me. Looking around, I can't help but think of the time my brother, at 8 years old, won first prize in a local agricultural fair for a batch of dessert. Within two weeks, Jake's Blue Ribbon Fudge was smartly packaged and sold at general stores throughout the region. This is a curly, gangly kid who accomplishes things, the sort of upbeat all-American who's taken this gray city by storm. Now presiding over a trained staff of 75 and a mostly Russian membership of nearly 3,000, Jake hasn't changed a bit.


But Moscow has.


The e-mail in my hand, addressed to a list of what looks like all the young expats in town, is an invitation to "The End of the Party Par-Tay!" - a farewell bash for two investment bankers that was quickly growing into a mass gathering for all outgoing foreigners and their well-wishers.


What was once a gold rush has become something of a ghost town. Since the economic collapse of mid-August, Moscow's giddy international free-for-all has become more than a crisis: It's a depression, fiscal and emotional. And as native Muscovites hunker down to endure escalating unemployment and sky-high inflation, the city's American population is simply vanishing in a torrent of good-bye parties: fired and transferred and escaped to warmer climes as the unforgiving Russian winter has set in. All except for those few original pioneers who, having succeeded at something new in the New Russia, are taking shelter in their shivering empires.


When the crisis struck, "Armageddon" was playing in the Kodak Kinomir cinema downtown. The single-screen theater has become an astronomical success, raking in the revenue of 10-screen multiplexes in American suburbs and more than any other movie house its size in the world. Its lobby is clamorous with sounds and special effects: piped-in rap music, a bank of TV screens blaring ads for upcoming films, the buttery stench of popcorn edged out by cigarette smoke from the young Russian women waiting for Club Hollywood to open. Ray Markovich descends a marble staircase - weaving between jagged sections of prison wire, a promo display to hype the movie "Out of Sight" - like a tired Cinderella at a ball of his own creation. Indicating the walled-off neon bar area being guarded by a giant plaster Charlie Chaplin, he explains that Club Hollywood's daily opening has quietly slid from 2:00 p.m. to 4:00 p.m. "We've had to scale back a bit since the events of August," Ray admits. He's trimmed hours in an effort not to cut employees or salaries; nonetheless his staff is slimming, as those who head back to school after the summer or return to work in their hometowns are not being replaced. Imported products at the refreshment stand are being phased out as well. For instance, cheaper local beers like Nevskoye and Baltika would soon be supplementing the Tuborg on tap.


"It's gloomy around here, no doubt about it," says Ray, who tends to track life according to movies. "Our earnings fell off a little bit with 'Mask of Zorro,' and have probably fallen off a bit more with 'Saving Private Ryan.'" However, he sees the crash as the bursting of a bubble that may have been overdue. "Maybe it's a good thing. Maybe it will stimulate domestic production, which this country could use. Maybe this is what Russia needs to redirect its energy into things that will provide long-term stability: domestic agricultural production, domestic industrial production, oil and gas resources." His mobile phone squeals and he answers it, pleads with someone at length in two languages. "For the past five years or so, business in Russia has been on a fairly constant up," he concludes, "and it was probably due for a down. Sooner or later it will rebound. It's just a question of how long."


Bernie Sucher, for one, will be here when it does. "The fact is, we're still alive here!" he shouts, striding in black leather jacket and black jeans toward "Diner One" - his shorthand to differentiate his flagship Starlite Diner at Mayakovskaya from the "bigger and badder" one at Oktyabrskaya. "I'm sure that's frustrating to many who, having lost all their money, wish us nothing good, and to many of our competitors who have already given up and gone home." It is Bernie's well-known face, even more than his 195-centimeter frame and shaved head, that draw the friendly gapes of customers as we enter the chrome structure and seek a back table.


Each diner was shipped in four gleaming 50-ton pieces from the Starlite manufacturing facility in Orman Beach, Florida, off loaded onto wide-bed trucks in St. Petersburg, and driven in convoys to the site, where it was assembled and crane-lowered into a ditch precisely its size - and inhabitable immediately, the vintage Campbell's Soup ads and antique Life Magazine covers pre-framed on the walls. It was thanks to this bizarre easy-install process that Bernie, busily preparing a third location in Moscow when the events of August struck, could simply re-route the new diner to a lot in Hollywood, Florida, where it is already open for business. "It's like a bomb's just gone off," he explains over our Cokes, pausing to acknowledge the regulars who wave from the next table. "Everyone is just trying to get oriented again. There's still too much smoke in the air to know exactly how we've been shaken up. But I think we'll dust ourselves off and look back and say, 'Yes, good things came out of this.'" Revenues at the diners are down about 20 percent, and all plans for expansion are up in the air. Nonetheless, as an avid activist for financial ethics and shareholder rights from his post at the home-grown Russian investment bank Troika Dialog, Bernie envisions a business community of the near future that will be of a higher, if leaner, quality. "This crisis has cleared out a lot of the transient expat schemers and carpetbaggers, that's for sure. Russia's not an obvious play or an easy buck anymore. Everyone's been damaged, and that includes a lot of the crooks in this place, both Americans and those who were born here. It's certainly changed the map. And I'd like to think that's for the better."


Someone stops by to ask if Bernie's going to the mass farewell party. I eye the triple-decker sandwiches (at "Pre-Crisis Prices!") on the oversized menu. "It's still too early to tell the future," he resumes, pawing at his jacket to find his ringing phone. "We're still stumbling to our feet after the concussion of the blast."


Scott Nicol, in any case, appears to have gotten over his shell shock. Pleasantly flushed from his morning workout, he meets me in the upstairs cafe at Gold's Gym and fills a cup from the ClearWater bubbler beside us. Expat entrepreneurs here are linked this way, in a tight network of bright ideas: Jake's gym stocks Scott's water; Scott and Jake and Bernie go to the movies at Ray's; Ray and his partner Paul work out at Jake's. Scott reports his recent drop-off in terms of units - approximately 20,000 coolers currently distributed across Moscow, short of the 24,000 mark he would have hit without the crisis - without dimming his smile. For him, he maintains, things are far from over. In fact, he's cheered by the bleak economic climate that's freezing out his competition.


"Before this, Russia was such an attractive market that you had all kinds of people coming over and throwing all sorts of money around," Scott says. "Multinational corporations could set up shop and throw out a lot more capital than the rest of us. Now there's almost nobody willing to come over and take that kind of risk, so there's plenty of room for companies like ClearWater to grow." Now married to a Russian woman and the father of three Russian-born children, Scott is not budging. "I say if you want to leave, then good, leave. This is a country with 25 percent of the world's natural resources, with 140 million people who are still going to eat, who are still going to drink, who are still going to use the phone and watch television and exercise and consume goods. The window of opportunity may be smaller - but not for those of us who have already established ourselves." He gestures out over the balcony at the vast room of people pushing and pulling at machines. "We're already inside the house."


In another room of the house, however, Jake is starting to weary. As a half-dozen well-wishers and staff members file out of his office, he musters a smile and hands me another e-mailed reminder of Friday's good-bye bash. In the months before the crisis, Jake and his partners were at work on a business plan to open four new gyms across the former Soviet Union within three years. Now such optimistic pursuits have been traded for "Crisis Buster" sales in the Gold's clothing shop and a more sober focus on staying afloat.


"There's no question that the romance of being here is gone," he confides as we groan home through traffic in his second-hand Niva. "The overall mood has done a complete flip. Now it's all about managing a crisis and minimizing damage, instead of making the most of an opportunity." He swerves to avoid the veering car in front of him. "Since the day I got here, five years ago, this place has been transient. Interesting expats would head back home, and more of them would arrive the next day with great ideas and big plans." He leans into another turn and his mobile phone somersaults to the floor. "Now people are just leaving."


Over the course of the week, flurries of e-mails and advertisements in the eXile have inflated the going-away party to an all-out extravaganza. There is deejayed music, free booze, prize giveaways, and shirts for sale that read, "The IMF gave my country 45 billion dollars, and all I got was this lousy t-shirt!" By the time Jake and I wrestle our way into the club, it's mobbed. Ray and Scott and Bernie have stayed home, but there is no shortage of entrepreneurs. We point and nod at the kid from Manhattan who sank half a million dollars into the swanky cigar bar that was scheduled to open last fall. We have a drink with the newlywed couple who pooled their savings to launch an office furniture business - and moved excitedly into their showroom the morning of Aug. 17. In the shoving before the bar, a guy in a rumpled suit and skewed tie buys me a lemon-vodka affair and clinks our cans. "It's the party at the end of the world!" he sings out, and delivers a toast to his flight home to Maryland the next morning. Perhaps, in a city where hotshot capitalism arrived as shiny and suddenly as an American diner from the sky, some sort of harsh reckoning was inevitable. And maybe the same unflinching attitude that got people like my brother to this bare frontier in the early 1990s will equip them to survive, and even prosper, now that it's been razed once more. I turn from the bar to hand Jake a drink - but he's been jostled to the far corner of the teeming room. He stands by himself amid the high-fives and slam-dancers, barely sagging under the 27-year-old weight of ambition.