Category: Business

Business-Lunch Scene Today: Cipriani Wall St.


R_671_main_imgFor many years Cipriani restaurant at 55 Wall St. (aka Cipriani Club 55) has been a staple location for Financial District's lunchers with company-paid expense accounts: classy, convenient, prestigious, comfortable, and moderately tasty (not enough to distract you from a business conversation, yet sufficiently to leave you and your guests satisfied).  And, of course, the drinkers can tease themselves here with famous Bellinis, that pre-war invention of Giuseppe Cipriani -  a mix of Prosecco (the Italian answer to Champagne) and peach puree; the only coral-pink drink in a flute I've ever seen straight men drink.

Being tied up in Midtown offices for years and always insistent on people coming to my turf, I have not been at this Cipriani location for a while.  Now, firmly based on Broad St., I am basically around the corner from the place.  So, it was only natural that an institutional investor picked it for a lunch meeting with me.

I arrived first and had a chance to observe the scenery for several minutes without any distractions.  So, this is what it's like here now?  For a hot second I thought I was in a wrong restaurant.  I remember the place being abuzz, full of men and a few women in Italian suits, their conversations merging into one low-volume background sound.  Now, at 1 pm (the busiest of  the lunch-time hours) the restaurant's occupancy is about 40%, which is not enough to blend the voices – you can clearly make out dialogues at different tables.

The most remarkable change, though, is in the contingent of patrons.  While all suits in attendance were of the familiar ilk (well, maybe not all of Italian make anymore – my observation is that Brooks Brothers' off-the-rack outfits, now predominately made in China, are gaining more and more ground here), there were several tables occupied by new fixtures. 

There were two (!) Russian tables.  The largest round table in the middle of the restaurant was occupied by a mixed-gender group of New Russians: Rolexes, Cartier tchotchkes, Zegna (men) and Chanel (women) suits, skirts too tight and too short, hills too high, voices too loud, full bottles of drinks on the table.  Several tables away from them, in a much quieter corner, were two Russian models: 6-feet tall with legs growing out of their armpits, long dirty-blond hair, indistinguishable faces with unnoticeable makeup, Roberto Cavalli jeans and blouses, marinated salmon and water on the table.  Well, nowadays, these people are everywhere.

It was really another couple that surprised me: A young (at least by the contemporary standards - about 38) stay-at-home Dad with his 4-year-old daughter on his lap.  Both of them were wearing high quality, expensive, but tastefully understated and casual clothes.  Except that the girl's outfit and hair were somewhat disheveled, apparently from unyielding resistance to Dad's feeding attempts (hence the lap position – to prevent spontaneous running).    

The truth is, though, I shouldn't have been surprised.  This pair was here probably for the same reason the Russian models were: most likely they live nearby, in one of many Financial District's ex-office buildings, now converted by their owners into condos to increase occupancy and profits.  They belong to the previously unimaginable in this area dog-walking crowd I try to get through every evening on my way home from the office.        

Don't get me wrong, this is not about Cipriani's shrinking revenues.  Who the fuck cares? I don't.  These people have hotels and restaurants all over the world; they've soldered through tax evasion suits and who knows what else.  Both Club 55 and Cipriani Grand Central are still prime choices for many non-profit, political, and commercial organizations hosting fundraisers and galas.  And I hear that the wedding business is going strong.

But I view all these shifts and changes, largely unnoticed by others, as evidence supporting my strong opinion that we live in a new economic stage – the one that doesn't fit into Nobel-prize-winning formulas; the one that leads rational thinkers to pessimistic predictions of the future that's coming both to Main Street and Wall Street.  Of course, we can pacify ourselves by saying that Cipriani is too outdated and stuffy; that the younger high-rollers prefer hipper places at nearby Peck Slip and other tiny waterfront streets.  But surely that alone wouldn't account for the dramatically reduced attendance in this brand-name establishment. 

A sober eye cannot help but track the obvious trend: the empty tables; the unoccupied offices; the converted buildings; the diminishing number of Italian suits on display.  It illustrates only too well a poignant number recently featured in New York Magainzine's Approval Matrix: 46% of New Yorkers are barely making more than the poverty threshold.  And it is pretty clear to me that, contrary to the popular opinion, 53.99% of the City's population don't make quite as much as they used to either.  The remaining 0.01% (not 1%, you fools!) are in a position to never get affected by any economic changes.  They can have Bellinis (and everything else) any time they want.                    

More on Nepotism (The Moviemaking)


In my earlier post The Curse of Private Business: Nepotism, I have touched on the damage this phenomenon affects on commercial enterprises and its unfairness to people who still believe in the power of merit-based rewards. It is a complicated topic, though, because when it comes to our own kids we are dedicated to their support. And we would like to believe, of course, they deserve it. It’s the undeserving support that’s problematic?

At the end, to underscore the pervasiveness of this issue I pointed the readers to the familiar territory of pop culture:

“… the industry where nepotism is the most prevalent is the one that suffers the most from lack of fresh talent is the entertainment business.”

Last week, I was told that an IMDb community’s member (Feodor8, I believe) contributed to this very topic. I only had time for a quick look and now the disucssion has been removed. Even without the original material at hand, I would like to comment on few aspects of the “article.”

I hope that the piece was deleted due to the author’s aggressive attitude, which irked me as well, and not because the topic was deemed too sensitive. The contributor didn’t need to resort to offensive tirades and bickering with the commenters.

Considering how intensely he feels about this issue, I found this movie fan’s list of Hollywood players with family connections under-researched. Let me visualize it from my memory… Talia Shire was there, but strangely her son, the adorable and talented Jason Schwartzman was not. Futher into the Coppola clan, Sophia was present, but her brother, director Roman was not. Was Nick Cage (born Coppola) there? None of the three younger Balwin brothers who followed Alec into the acting trade, were mentioned. Alexis Arquette got on the list, but her immensly talented sisters Rosanna and Patricia did not (I don’t remember whether David was there)… And I could go on and on…

Why do it at all, if you do it half-assed? This is so typical – people complain about quality, but cannot live up to their own standards. The same goes for the general public’s opinion-forming process: the prevailing tendency is just to scrape the surface without looking into the root of a problem. The “article’s” author blamed the plunging quality of the entire American cinema on people with family ties, even the talented and hard-working. That’s just superficial.

Remember, this is a CFO’s blog. Filmmaking is commercial enterprising and like any business it abides by basic economic law of supply and demand. The power is with the movie-going audience. If they did not pay their hard-earned money to see the movies feodor8 rightfully condemned, the studios wouldn’t finance them.

In the past 5 years Angelina Jolie (Midnight Cowboy Jon Voight’ daughter) starred in 7 feature movies. How many of them did I see? None. Yet, in the US alone they earned $440 million in the box office; all commercial successes!!! That’s the demand—and the supply follows. The quality of filmmaking is in your hands, dear audience. As long as you are willing to pay for crap, it will be made.

On Service Quality and Self-Worth: Unknown 500


Clueless There are smart people out there who always place their personal interests ahead of everything else.  I wish I could be like that, but I'm not.  In my life, other people and things end up claiming higher priorities than Me.  I'm one of those schmucks who get overwhelmed by the sense of Responsibility, as in guilt (familial) and duty (professional), and push their private matters aside.  I know, I know – at the end of the day by abating those feelings I essentially attend to my personal needs anyway, but that's a psycho-philosophical issue we can contemplate.  In real time it feels as if I do everything for others and neglect myself. 

That's why it takes me six months to get my ass to a dentist.  And that's why I let a bunch of out-of-pocket medical expenses to accumulate before I'm pushed to the wall by the deadline to file for reimbursement from the Flexible Spending Account (FSA, aka use-it-or-loose-it pre-tax medical expense program).  It's not just me either – two of my employees completely missed the cut-off dates for filing their claims, thus losing the portion of the wages they have been contributing to the FSA.  Maybe my attitude robbed off on them.  And that's too bad, because no job deserves such loyalty unless you work for yourself or someone dear to you.

But, as Bill Cosby would say after a 30-minute introduction, this is not what I was going to talk about.  This should explain, however, why when I was filing my FSA claims online a couple of weeks ago I had to upload quite a few receipts (required as supporting evidence) covering pharmaceutical, medical, and dental co-payments.  

Here is what happened.  I entered all claims, uploaded scanned receipts, pressed the "Submit" button… and the system hanged.  You know, one of those dead freezes when nothing moves no matter what you do.  Okay!  Not a big deal for someone who's been dealing with computers and the Internet, like, forever.  Close the browser, open the browser, go back on the website, log in, retrieve the claims (thankfully saved), upload…  Same shit! 

Well, as you can imagine, entering all information item by item, scanning individual receipts, etc.  took a "minute" already, so I wanted to resolve this bullshit ASAP.  I located the tech support number and dialed it, cursing under my breath the Flex provider for not offering a dedicated debit card option instead of this cumbersome claim filing. 

In the receiver a Steve answers.  Like I said, I'm an experienced Internet user, so I go straight to the core issue, "Is there a limit on the number of documents a user can attach to a claim?  Or maybe on the total size of attachments?"  Tech support is not customer service and it's reasonable to expect that they will catch on your short-cut approach.  Uh-uh!  Not Steve!  He asks, "What is the problem?" and I'm forced to explain the whole thing anyway.

He listens and says, "I've never heard about a size limit." (Note to all, only 1 out of 10 service people fully understands the system he supports.) "But I know what the problem is - you are having an Unknown 500."

Wait a minute, wait a minute: he knows that I'm having an unknown something?  That sounds strange, doesn't it?  But I keep my cool – I understand it's a system error: "What kind of error is it?"  In return he asks (you cannot get a straight answer out of this guy no matter what!), "Do any of the files you are uploading have a '+' or a '-' in their names?"  "No," I say, "they don't.  I know that that's not allowed.  In fact, one of the scans originally had dashes in the name, but I deliberately renamed it before the uploading."  That was foolish of me to volunteer all that information.  Because now he goes, "That doesn't matter, the system still knows that the dash was there."

Really, dude?  I ask, "Are you telling me that this FSA processing site is capable of recognizing in MY computer that a file USED TO have dashes in its name?"  He confirms, "Yes, that's correct."  "Not the size of all the attachments, but the expunged name?  Are you sure?"  He confirms again.  Okay, humor me: "So, how can I remedy this?"  "Log out, shut down your computer, reboot, and then you should be able to upload your receipts," he advises.                     

Bill Cosby is definitely on my mind today, because it was him who said "as ridiculous as some things may sound, there come desperate times when you are ready to try anything."  My rational mind did not believe for a single second that it would work, but it was a proposition of a quick fix and time is of the essence.  So, after I'd hung up, I followed his suggestion.

Of course, it didn't work!  What did you think?  The guy pulled that tech recommendation out of his ass!  Didn't even offer to stay on the line with me to see if it was going to work!  Who does that?  I'll tell you who: unqualified, unprofessional, poorly trained, half-asleep, semi-retarded bitches that pervade our lives.

The right thing to do at this point would be to delete the original claims and file them in two batches instead of one.  Then call the tech support, find a supervisor (I noted Steve's full name)…   But my time is more important, so instead I downloaded the entered info into a claim form, put it together with the receipts, and did what we used to do "back in the day": faxed everything over.  You don't get a time-stamped system receipt that way, but it worked – I've got reimbursed in three days.

Meanwhile, the stupidity went unpunished.  Oh, well, we let go of things like that on daily basis.  What appalls me the most, though, is the audacity of this people!  You are called "Support," for crying out loud!  Someone in need calls you, you feed them some bullshit, hang up, and go on with your life?  And you get paid for it?  How do these people leave with themselves?  How do they go to sleep at night?  I have no clue.  I know I never worked like that. I simply couldn't.  But I bet it's much easier to be Steve.  I'm sure he never pushes his personal interests aside.  

Creative Marketing, or The Frustrated CFO Attends Louis XIII Legacy Experience


Louis-XIII-Barrels-300x239General public, constantly bombarded by advertising campaigns from TV screens, Internet sites, pages of periodicals, billboards, transportation exterior, etc. is rarely aware of the fine correlation between the commercials it is forced to absorb and the economic nature of the products being promoted to them. The majority of consumers don't realize that Mad Men, both real and fictional, are after the largest chunk of their disposable incomes – the money spent on what's known in the economic science as "normal" goods, i.e. every-day necessities with a moderate income elasticity of demand.

In plain words it means that when people's wealth increases, the demand for the normal goods increases at a slower than income rate. It's not like you are going to start using twice as much detergent if your salary doubles, but you may switch to a more expensive brand, which supposedly delivers cleaner and brighter clothes. And that's why commercial sequences look like the war of brands: Progressive vs. Geico aka Flo vs. Gekko; Advil vs. Alive, Post vs. Kellogg's, etc.

On the other hand, marketing for "inferior" goods (i.e. those for which demand decreases as income increases) is basically non-existent. It would be a waste of the advertising budget to promote items that sell themselves anyway because they are the cheapest in their product groups. For a store-brand quart of milk at 99 cents you don't even need too much color on the packaging. On the other hand, to sell a quart of the fancy Farmland Special Request Skim Plus Milk for $2.99 you need it to stand out on the shelf in its purple lettering and black cow spots.

What about even fancier, extraordinarily expensive items? The ones labeled by the economists as luxury goods, for which demand inexplicably increases more than proportionately when income rises? We don't see much advertisement for them either. Yes, from time to time De Beers injects a bit of its A Diamond Is Forever campaign into various media. And on a rare occasion you can catch on TV one of those sexist (targeted exclusively to men) Porsche commercials. If you are a tennis fan watching one of the Majors you get to see Roger Federer in a Rolex ad… rarely.

But, have you ever seen a broadcast spot for a $12,000 Chanel suit? A $350,000 Harry Winston diamond necklace? A 73-foot ocean yacht (about $1.3 mil)? A Bentley (average price $200,000)? Louis Roederer Cristal Rose 2005 ($600 a bottle)? How about a public notice for the upcoming Sotheby's Fine Art auction?

One may think, "Well, if I had this kind of money, I would've found those things." Who doesn't want a yacht with a polished mahogany stateroom? Or a rare car? Yet, it would be a mistake to think that these items don't require any form of marketing or that they are above competition. Yes, rappers drink and rhyme about Cristal, but according to many experts the champagne that can really blow your mind is Dom Perignon White Gold Jeroboam, which can demand an auction price of $40,000 per bottle. Imagine that you can afford it – how would you know about its existence? These products are exclusive rarities that occupy narrow niche markets. Hence, they call for innovative, targeted marketing tailored for creating brand awareness.

Enter Remy Martin Fine Champagne Cognac (est. 1724) and it's most privileged drink – Louis XIII cognac.  Blended from 1200 eaux-de-vie aged from 40 to 100 years, in very special 300-year-old oak barrels hidden in a secret cellar in Grande Champagne region of Cognac, France, and, when deemed ready by the Cellar Master, bottled into proprietary Baccarat crystal decanters – this is as high-end as brandy can get and its price reflects it: a "regular" bottle goes for $3,000 and limited editions (such as Rare Cask or Black Pearl) can fetch anywhere between $22,000 and $44,000 per bottle.  And I can personally vouch that it worth every penny.  I mean, that shit will spoil you for life: you try it and you don't want to drink any other brown-colored grape liquor no more.

It was the fast-growing and hungry for new clients EastWest Bank who invited me to participate in the cognac's exclusive (20 people) degustation event jointly hosted by the bank and "the brand ambassador" (i.e. a good-looking English-speaking Remy Martin's representative) in a building in SoHo formerly owned by Charging Bull sculptor Arturo Di Modica and temporarily converted to accommodate the  Louis XIII presentation.  It was an installment in Remy Martin's marketing campaign called Louis XIII Legacy Experience, which has been on the World Tour for six years, rolling through the cities with major concentration of wealth – New York, Los Angeles, London, Dubai, etc. 

This is how it works:  In each location, the brand's representatives contact high-net-worth individuals, heads of private financial institutions, high-tech moguls, distributors of other luxury goods (Ferrari and Porsche dealerships are always targets), etc. and offer them an opportunity to host an exclusive event for their most important customers, prospective clients, business partners, or other wealthy friends.  The price tag… NOTHING!  

It's truly a marketing tool.  What Remy Martin gets out of it is: 1.) The brand recognition through introduction of the drink to people who may never heard of it before; 2.) Additional entries in their contact list – one of the leggy hostesses meets you at the entrance with her iPad and asks you to share your business card and/or an email with Louis XIII; 3.)  Spot orders of both "standard" and special-edition bottles of the famous drink - I know for a fact that before our event was over all Rare Cask and Black Pearl bottles on display were sold.

With no price tag attached, what does the Experience offers to guests? 

The event starts with a gathering/mingling part.  In our case, quite excellent Piper-Heidsieck champagne (with refills) was passed cocktail-style accompanied by extraordinary finger-food trays (I wish I knew who the caterers were), while people talk to each other, looked at the displays of special Louis XIII, and read leaflets about the silent auction of silkscreens and lithographs made in Andy Warhol's Factory, which lined the walls of the drawing hall (an NYC-specific added benefit). 

After that you are taken to a screening room (red semi-circular couches) for a presentation of a film that tells the story of Remy Martin and its highest-priced product.  Next, we were led to the underground level (a fortunate feature of this particular venue – it looks like a cellar with exposed brickwork and arches), where a surprise display was revealed: an actual 300-year-old barrel, previously used to age the cognac for 100 years and now retired due to its diminished quality. 

Over this artifact a 750-ml bottle of Louis XIII de Remy Martin was opened and pored into the proprietary Baccarat glasses (if a group is larger and/or more valuable to the organizers, Le Jeroboam, 3-liters-full, is used).  Warning you not to down your drink right away, the "ambassador" gives a mini lesson on the proper tasting of the dark-amber liquid.  Let me relate the first bit: like with many other drinks, you start with the nose.  The difference is that, instead of trying to squeeze as much of your face into the glass as you can, you experience your first nose of this incredible cognac at the stomach level.  As a person with chronic respiratory aggravations, I was very doubtful - I didn't expect to smell anything.  But let me tell you: the power and the complexity of that aroma…  It will probably take me extra 100 words to describe it.

While recovering from the magic of swallowing the drink, you are invited to place an order for your own bottle of Louis XIII complemented by two glasses of the same type you are still holding in your hand.  With that comes a special perk from the ambassador: if you order a bottle from him you get your initials engraved on the decanter. 

I know that on some occasions the Legacy Experience rolls into a dinner, but for us that was it.  Still, what an amazing adventure!  Thank you, EastWest Bank! Everyone leaves feeling incredibly grateful to whoever invited them to participate in this memorable gathering.                   

Are you grasping the commercial meaning of this?  This is genius!  Nothing short of a double-impact marketing: Remy Martin broadens its brand awareness and sells some of its ultra-expensive booze, while the co-hosts, being the actual invitors, make a lasting impression and raise their customers' satisfaction.

In this predominately business crowd, one guest of a guest was an artist. And, of course, she was the one who has recognized the familiar traits in the creation of Louis XIII cognac: a single person, the Cellar Master (presently, Pierrette Trichet – the first female to hold the position), relying purely on her talent and experience, selects, blends, and combines eaux-de-vie to create a drinkable masterpiece - that's art. Well, it takes one to know one.  All I can say is that bringing a luxury product to a proper audience is not a trivial task either and the Legacy Experience is as good as it gets.

CFO Folklore: Don’t Let the Boss Argue Your Case for You


Opposite DirectionsIn a small business with a flat organizational structure, where every exec performs 10-15 jobs, there is always a possibility of timeline conflicts.  It's like cooking ten dishes on a four-ring range: eventually you run into a point when the same burner is needed for two pots.  Which one to put on?  There is really no such a thing as a right decision at times like that – you must simply follow your instincts.

Let's say your are in the final stages of negotiating a Credit Agreement renewal with your main institutional lender.  It's Thursday, 03/13.  You have scheduled a meeting with the bankers, their attorneys, and your own esteemed corporate lawyers for tomorrow afternoon to press on with a few remaining crucial changes before the deal is released for the approval by the bank's Credit Committee on Monday, 03/17. 

At 5 pm your phone rings:  It's your tax attorney hesitantly letting you know that his team must meet with you urgently tomorrow, because they just figured out that the company may have tax exposures in Illinois and Wisconsin; the extensions are due on Monday, 03/17 (somewhat hysterically); and, he is very sorry to tell you, but he is not quite sure about this and that's why they need to seat down and read you into the details of the Code, so that you can express your opinion, because nobody understands the business better than you do.  No, it cannot be in the morning, because it's tax season and everybody's schedule is full as is; only the afternoon is workable for everyone who needs to be there (except you, of course, but who cares).

By the time you hung up, it's too late to reschedule the bank – most bankers leave at 5 pm, just like the government.  Now, you've got a dilemma.  Bank or taxes?  Of course, you can tell the tax lawyers to suck it up and do their well-compensated jobs without getting you involved.  Yet, you cannot – that's not how you do.  But the bank is incredibly important: the last stages of negotiations are the hardest, because nobody wants to give up the last frontiers.  On the other hand, you are literally the only person in the company who can express taxation opinions.  At least the owner has been in a tandem with you on the contest of wills with the bank.  However, he is easily mauled by financial predators if he is left on his own.                  

But what are you going to do?  It's the balancing act – you have to optimize.  You cannot be in two places at the same time.  So you decide that the tax meeting is the one you must attend and send your boss to the other one alone.  And, of course, you prep him on Friday morning.  You go over all important points of the agenda with him and outline your position on every issue (in writing, for better retention).  Then you silently pray to Hermes/Mercury, the patron god of all CFOs, and go on to your appointment.

You don't disturb him during the weekend, but as soon as he shows up at work on Monday (around 1 pm) you pull him into your office.  "Well, tell me," you inquire.  He beams at you: "Oh, it went very well.  They practically accepted all the conditions on the list you gave me.  You should have the amended Term Sheet by tomorrow morning."  You are cautious: "Practically?"  And he clarifies, "There is one item.  They said they couldn't do anything about migrating from weekly reporting to monthly.  But I figured that was okay, right?  Just this one thing?  And what?  It's like a nine-line report, or something?  Probably a few buttons on your system, right?"         

Well, it's actually a 52-line statement with 5 supplemental schedules. It takes two of your staff accountants several hours to update all raw data and 2.5 hours of your valuable time every Friday to compile the reports. This was one of the top 10 most important items you've introduced into the negotiations right from the start.  Of all items that's what he decided to let go?  And what is it with bosses?  Why do they always assume that everything you do is effortless – fast and easy?  Just because you are toiling away without making any fuss?! 

You feel like Zorg from The Fifth Element.  "I am very disappointed!!!" growls Gary Oldman inside you.  If you want something done correctly, you'd better do it yourself!  Unfortunately, you don't have his powerful ZF-1 under your desk.  So, instead of simultaneously throwing flames and blasting freeze-rays, you grab your phone like a weapon and calmly explain, "These weekly reports end up costing you a lot of salaried hours that can be used more productively otherwise.  So, let me call and talk to them about it again."