Why We Buy (29 page)

Imagine—you could cyber-experience a concert, anything from Balkan Beat Box to Maurizio Pollini. You could rent it, buy it, mix it or go to a club and actually attend a concert. An expert would guide you every step of the way. And your connection to the place would be fostered by an online community.

Now
that'd
be music to my ears.

H
ere's a boarding pass. Step on it—the gate's closing. Pop a Xanax, fasten your seat belt, extricate that blue blanket from its shrink-wrap.

Oh, and the aisle seat is mine, an anatomical necessity for a guy with long legs.

Time for a trip around the globe, from Italy to India, with a few stops in between. Business
and
a little pleasure.

In the late 1980s, Envirosell found itself at a fortuitous crossroads, in that whatever direction we chose to take was going to lead us
somewhere
new and promising. We could either plow time, energy and resources into expanding our business here at home, or we could train our binoculars on the great big world out there. A trade-off, absolutely, but for me the decision was easy: go global.

If we'd stayed put, we'd probably be a lot bigger in the U.S. than we are today. But from a strategic point of view, transforming Envirosell into a business that understood the needs of international retail and shopping was a huge plus in terms of what we could bring to the table in the U.S.

I'm also totally at home traveling—about as comfortable boarding an airplane and navigating the wild world as just about anyone I know. Having a fiercely independent live-in significant other and no kids freed me up to spend good chunks of time on the road, too. Once I've cleared customs, my adaptive skills are up to speed as well. I'm not talking about backpacking in the Himalayas or finding the best B&B in Chiang Mai. I'm talking about being able to competently go around the world in ten days, in and out of multiple time zones, and stay more or less sane, healthy and in a good frame of mind. Plus, it's a thrill to be able to fold up your American glasses and try on your new
gafas,
your
magane,
your
occhiali,
your
óculos.
You see everything in a new light. Such as, what are some of the things that make this store or mall here in Cape Town or Shanghai work that wouldn't go over in Colorado Springs or Austin, Texas? Or, why the heck hasn't an American retailer ever thought of this? Truly, under the best of circumstances, and even the worst, it can be a revelation.

My only wish? That I slept better on airplanes. Sleeping in public is hard, and I'm no good at it. My theory is that the people most at ease doing it grew up sharing a room with a kid sister or brother and got used to it. I slept alone back then.

Buckled in? Up we go. First, though, let's backtrack a little.

In the early '90s—remember, this was before e-mail—my fax machine whirred out a sheet of paper. The fax came from Alberto Pasquini, who was then the managing partner of Creativity Italia, a point-of-purchase agency. He'd read about Envirosell in one of the trade magazines and invited me to visit him in Milan. I was already sold on the idea of opening up a European office and was commuting back and forth across the pond, trying to scare up business. I happened to have a trip planned the following week and was able to get my airline ticket changed so that I could fly into Geneva and back home to the States from Milan. Ten days later, I took the train from Lausanne, Switzerland, to Milan to meet up with the guy who'd sent me the fax.

Alberto was born to have an exclamation mark at the end of his name—maybe half a dozen. Flamboyant, snowy-haired and in his late forties when I first met him fifteen years ago, he was a sort of
Mediterranean P. T. Barnum. On that first visit to Milan, Alberto took it upon himself to introduce me to a woman he knew by the name of Giusi Scandroglio, who ran a small market research company called QT. “Here,” he said in his charming fractured English, “is your future partner.” I can remember thinking,
What are you talking about here, Alberto?
But Giusi and I shook hands and made all the right small talk. And things went no further than that. Over the next year or two, I found reasons to go back to Italy. Each time I went, it dawned on me that Alberto had managed to choreograph my schedule so it involved—somehow—Giusi.

Italy as a concept is only one hundred and fifty years old. Then and now, the country is a collection of city-states, each one with its own distinctive character. Giusi is Genovese by birth and Milanese by choice. The Genovese historically wandered the Mediterranean mostly as merchants and occasionally as pirates—call it the light and the dark sides of the Genovese identity—whereas Milan is a city of industry, persistent, hardworking, focused, controlled. Almost everything of interest or significance in Milan happens behind a high wall or a closed door. It isn't so great a city to visit as a tourist—in twenty-four hours, you can see just about everything—but with a guide or mentor by your side, Milan can be a magical place.

Thanks to Alberto, meetings happened and before I knew it I needed an Italian office sooner rather than later, and who else to run it? Giusi Scandroglio. A woman who by taking the reins of Envirosell Milan has turned out to be exactly the person we needed, as well as purely Milanese in her values—focused, independent, knowledgeable, tireless and tenacious. Not an easy combo of attributes to come by, particularly for a female living and working in a male-dominated country like Italy.

Rule of thumb: With international expansion comes worry, tossing and turning at night and readjusting your vision to the local ways of doing things. In Italy, the payment system is enormously complicated. Every project you take on first has to be financed by a third party, typically a bank. That means that when someone signs a contract with you, it's more than likely you may not be paid for 180 days or so. I was willing to take a fall personally, but I didn't want Envirosell itself to be
jeopardized. So I took an ownership position in our first overseas office. Like so many journeys, the scariest step is that first one.

Once we'd broken into the Italian market, one thing led to another. One of our first Italian clients was Levi's Italia, and while we already had the company as a client here in the U.S., Levi's Italia led us to the jean market all across Europe. Within a few years, we were looking at Levi's and Dockers sales in Amsterdam, Stockholm, Lisbon and elsewhere. Before long, thanks to an alliance Envirosell had formed with the John Ryan Company, a Minneapolis-based retail bank marketing agency, we were introduced to the world of Brazilian banking; our first effort came when we worked for a company known as Banco Itaú.

Itaú is a completely vertically integrated bank. They make the furniture that goes into the bank, they assemble their own ATMs and computers, they own the construction companies that build their branches and they operate the complexes that house their staff. It's a privately held company that throws off more than a billion dollars a year in profits. Though who really knows—it's nothing at all like Chase, Citi or Bank of America. But then, it
is
Brazil. The typical Itaú branch could have as many as a hundred tellers. The first branches we saw had towers in the middle of the floor with hard-eyed security guards equipped with machine guns keeping close watch on the floor.

In Banco Itaú, we were looking at in-store signage issues, points of service, the design of teller stations and so forth, but instead of doing it at a three-thousand-square-foot Citibank in midtown Manhattan, we were carrying out our research in a twenty-thousand-square-foot Brazilian bank. Also, in Brazil, people's concepts of wait time are different. As I said earlier in this book, in the U.S. our internal clocks begin to ding after about three minutes, signaling impatience, but Brazilians' internal clocks swell to about five minutes, since they're far more accustomed (or resigned) to waiting. Another thing that surprised me was the complete absence of privacy, or more likely the resigned indifference to the fact that your most intimate affairs will be made public. If you're applying for a loan or a mortgage in the U.S., typically you take a seat at a bank desk and some officious vice president will ask you what your annual salary is, what your monthly credit card payments
are, whether you have any additional sources of income etc. In Brazil, you'll be asked these same questions, but the thing is there'll be half a dozen other customers awaiting their turns a foot away from you, and no one blinks an eye. It's not an ideal culture for someone who has a lot to hide.

In Brazil, like in many developing countries, much of the economy functions on cash. The employer might issue a check, but the check is then taken to the bank to be cashed. Many companies have a prescribed day and time when their employees descend en masse to get their checks cashed, and I can remember one afternoon when five hundred bus drivers turned up at our test branch. Also, in Brazil many people pay their bills, including rent, electricity and phone service, with cash at the bank. The branch is divided up according to different classes of trade. The lower-class cash-based customers, known as “Amigos,” go to one part of the bank, while the middle-class “Star” customers make their way to another. It's a noisy, hectic and altogether difficult environment. We loved it, though, and it turned out that Itaú loved us back. Within a year John Ryan had moved on, but Envirosell was invited to stay. Soon we added Brahma, the huge Brazilian brewer, to our client mix and found ourselves shipping members of our New York staff down to São Paulo left and right.

Not much opportunity to come up for air in those days. But when we finally stood up and took a big collective gulp, we found that almost 20 percent of Envirosell's work was coming out of Brazil, accounting for nearly 30 percent of our total profits.

So what about opening up a Brazilian office? But this time, we all agreed, we'd do it as a licensee.

To set up a successful licensee in a foreign country, obviously you need to find a reliable partner. So we promptly began shopping around for the right person. Our search was narrowed down to women who'd had some experience owning and running a market-research business. What's with the reverse sexism? Quite simply, our experience in Milan had taught us a few things. Giusi had succeeded in a male-oriented culture, and we were eager to find her Brazilian equivalent—a woman who wasn't a stranger to facing those same odds and staring them into
submission. Also, the product we were selling wasn't exactly your everyday commodity.

Into Envirosell's life strode Maria Cristina Mastopietro, though everyone called her Kita. Big brain, big heart, broad shoulders and a memorable laugh. She had a master's degree from Stanford University and matched our profile to a T; she was, and is to this day, exactly the person we were looking for and more. Her business partner is a young, smart industrial engineer named José Augusto Domingues. They're a great team.

I won't ever forget the day when Giusi and Kita met for the first time in our New York offices. They were wearing identical outfits. Their purses were the exact same style. They carried them the same way. They owned the same type of car—same color, too, I might add. The similarities extended to the way each woman described her husband. They might have been talking about the same guy, though luckily for all of us, they weren't. And they also got along like old friends.

Typically when we license a business abroad, we fly our overseas partners to New York, where they spend a month or so with us learning the ins and outs of our business. Then the process is flipped. We ship some of our people abroad to help our offshore licensees set up shop and get rolling with their first projects. We provide training and marketing systems and control their Internet presence, and in return, our offshore partners agree to share a percentage of their revenues with us. We also have the right to review their performance. If things aren't going as well as we hoped, we take whatever steps we need to deal with what's not working and figure out how to fix it.

That's about the long and the short of it.

For a lot of our New York–based staff, working in Brazil was their first exposure to a developing country. Eye-opening, to say the least. Definitely an experience, particularly for some of our Midwestern-born employees who'd never left our shores before. Nothing bad ever happened, but there were a couple of incidents involving one of our blonde female employees being followed on the streets by wolf-whistling males.

Ten years or so after we set up our São Paulo office, Brazil is front
and center in our category management work. “Cat-man,” as we call it for short, examines how a category of goods is shopped at the point of sale. It could be baby products, canned soup or cell phones. Thus, rather than working for a retailer, we're throwing our energy behind a consumer goods manufacturer.

Cat-man work is booming in South America as companies like Johnson & Johnson, Unilever, Nokia and Motorola expand their offerings. Envirosell Brazil is now in charge of doing business in other South American countries, and we're currently in the process of changing them from a licensee into a joint venture. A tribute to all their spectacular work.

Unavoidably, though, our São Paulo office finds itself mixed up with currency, politics and soccer. It just can't be helped. There's no getting around that three-headed monster. Which means that if it's a crazy political year, or if the Brazilian currency, the real, takes a hit against the dollar or vice versa, well, fasten your seat belts, we may be in for a bumpy few months. Also, did I mention the World Cup? The entire country shuts down for three months. It tacks up the football equivalent of a gone fishin' sign. Nothing anyone can do about it either, except wave the yellow, green and blue flag back and forth for the home team.

 

Our first bout of world-class publicity came to Envirosell thanks to a young science writer at
The New Yorker
magazine named Malcolm Gladwell (yes, the very same guy who went on to write the two mega-bestsellers
The Tipping Point
and
Blink
). His piece, entitled “The Science of Shopping,” profiled what we do and went on to become one of the most reprinted pieces in
New Yorker
history. Moreover, it made this book possible.