The Frustrated CFO

Quote of The Week: Cassandra's Curse

Quoted directly (as written) from the actual email sent today to the frustrated CFO by her CEO:

"Marina,

You are so right about the economy.  More than a half of the candidates I talked with today are looking for a job because they were laid off as the result of their companies' downsizing or being swallowed during hostile mergers.  One of the candidates worked for the same company for 20 years, and she is now looking for an entry-level job just to get stable employment with benefits.  Amazing!  Most people don't even know what's going on with the economy, because they listen to lies.

LF"    

Quote of the Week: Here Is Where We Are Now with Quality Control

From an actual email exchange that took place this morning (quoted as was written):

 

From a Customer to Operations Department of A_C Company:

Hi John,

Please deliver the second truckload from our current order on Monday 12/21.  Please confirm.

Customer 

 

From the Operations Department to the Customer, copying A_C Company's CEO as per protocol:

Good morning Bob,

Thanks for providing the delivery date!  We will begin to secure trucking.

Best regards,

John

 

From the CEO to the entire Operations Department, copying The Frustrated CFO and Managing Partners:

Please find a trucker who will not spill the product, drive into the customer's gardens, or drive recklessly through their parking lot damaging their employee's car, which all happened to this valuable customer in the recent past.

CEO 

The Frustrated CFO'sTalk on International Trade Turns into Gender Equality Q&A

If you took my absence from these pages during the past few months as an indication of my giving up on the blog, you were wrong.  This activity is important to me.  If nothing else, it lets me "talk" without being interrupted.  It's just that the time slot in my overscheduled life, usually allotted to the writing of the blog posts, had to be temporarily relinquished to an extracurricular activity of preparing for a talk I was invited to give to a professional group called Women in International Trade.

Oh, no-no-no!  I'm not talking about OWIT (the Organization of Women in International Trade), the big non-profit with global reach headquartered in Washington, DC.  This group is much smaller - sponsored by a reputable New Jersey CPA firm, it is pretty much localized to the international-commerce entities and banks (like PNC) with offices and operations in that particular state.  It's not like they don't welcome sisters-in-trade from everywhere, it's just how their network happened to develop: commercial clients of the said CPA firm, trade finance clients of the said bank, the local government bureau that deals with exports - all of them work and live in New Jersey.   

And the reality is, there are a lot of big and small international businesses located in New Jersey.  That's where you can have large office buildings that cost a fraction of what they would in Manhattan; there is plenty of open space for manufacturing and storage; there are Hudson ports that can berth oceanic freighters, etc., etc.           

Truth be told, I would never know about these particular Women in International Trade if it weren't for one of the group's member who is also one of my former trade finance bankers and a friend.  She is the one who mentioned me to the sponsoring CPA firm's Chief Growth Strategist - a force behind a lot of women initiatives in the Garden State. 

They've been inviting me to participate in various women's and co-ed business events for some time.  But I have to admit that when you live and work in Manhattan, the hassle of getting to an 8 o'clock breakfast meeting in New Jersey's Essex County makes such invitation very unattractive.  I mean you need to drive or get a limo.  You'll do it for business, of course, but for a semi-social gathering... that's a bit too much. 

Of course, your attitude totally changes when the same professional group invites you to appear for them as a speaker.  Vanity is a terrible sin - it demands constant massaging of one's ego.  That's why some of us write books that bring meager royalty, give lectures without fees, etc.  Plus, unlike the vast majority of people, I actually enjoy sharing my knowledge.  And not for narcissistic, show-off reasons - I get a kick out of recognizing to myself, "I taught her that."  So, naturally, I agreed.

After the initial invitation, I kicked a list of possible topics at the talk's organizer and we settled on two that we both agreed would be the most interesting to international-trade professionals: the position of trade finance in the value chain and KPIs specific to international commerce.  I was advised of the reglament: 1.5 hours talk and 30 min Q&A.

"Well," I thought, "If you are going to talk shop with a group of working women for 90 minutes at 8 o'clock in the morning on a Wednesday, you'd better make it engaging and gratifying," and went to work.  The rule  of thumb is that 90 minutes of talking translates into about 15,000 words.  And that's actually is not very short.

Of course, if you are the one who proposed the topic in the first place, you most likely know the subject at hand through and through; you have already developed original ideas and time-proven recommendations; your thoughts and opinions are well formulated.  And that's great, but if you are not a professional lecturer who does this sort of things all the time, you still need to outline what you want to say; you have to construct your delivery in a coherent and logical way; you must prepare an exciting Power Point presentation that would prevent your audience from getting drowsy, and use cultural references to make your points memorable.  Yeah!  If you want to impress people, it's a lot of work.  As I said, vanity - it costs you.  

The third week of January came, and there I was, in New Jersey, shaking hands with the organizers and the attendees - by all appearances a group of successful and confident women, whose statuses make it okay to be out of the office in the morning hours for the sake of this event.

I proceeded with my presentation and it went well: they paid attention, they were interested, they nodded, they offered sensible and appropriate comments, they loved my visual tricks, and they sincerely laughed at my jokes.  The time ran out.  "Do you have any questions?" I asked.  I was convinced that I've had a pretty good idea about the points of the talk that could've prompted further inquiries.

Imagine my surprise when the first comment/question I've received was, "You are obviously a strong woman.  In your professional capacity, how do you handle male resistance to your authority or any other sorts of gender difficulties?" (Notice how the question was formulated: The woman had no doubt that I've encountered such obstacles ans she wanted to know how I dealt with them.)  

Slightly taken aback by the sharp shift of gears I skipped a bit, but really - just a bit.  I don't need to prepare for a gender equality discussion; I was born ready for it.  So, I briefly described my experience: the unfair treatment; the skewed perception; the idiotic remarks; the preferences given to nitwits because "they have to support their families" (many of us have to do the same); which battles I pick; what I say and how I say it; when I bite my tongue and walk away; how I lie in wait and then find a way to teach them a lesson, etc., etc.

Oh my God!  It was as if that question and my answer triggered a flood.  Apparently these women found my interpretation of the international-trade topics quite clear.  What they were confused about was why in 2015 we are still treated like second-class citizens.

At this point (the time was, obviously, running out), everyone talked fast.  Many things were mentioned: "honeys" and "sweeties," unequal raises, unreasonable promotions, difficulty of holding back the tears, female professional "ceilings," the insulting male disbelief at a good-looking woman who is also smart.  Amazingly, there were not a single person who didn't have something to add.   Nobody said, "I have no idea what you all are talking about."  You know why?  Because there were no men in the room.

One woman in her 30s who was just recently appointed to a Marketing Director position (her warpath has just began), asked me whether I was born "this tough."  Actually, I've thought about it before.  What I told her was that we (i.e. the women who want to succeed) are not born tough.  What we are born with is the ambition, the desire to be rewarded in accordance with our merits, the need to be treated as human beings regardless of our gender.  But, while we claw our ways towards whatever peaks we want to achieve, we have to acquire toughness.  We have to harden or they will eat us alive.

It is possible that I will never see most of the members of this group again, but when we were saying our goodbyes we felt like sisters.  I taught these women a thing or two about trade finance and performance analytics, and, in return, I've learned a lesson of my own:  There are no happy and satisfied women in international trade (and, I dare to extrapolate, in other business activities as well), because their ambitions and efforts are constantly curtailed on account of their gender, which is silly, irrelevant, anti-merit, and (call me an idealist) anti-American. 

You Are the Most Knowledgeable CFO EVER... How sad!

Let me explain to the handful of readers who actually noticed my absence from these virtual pages that this is what it takes for a small business to close a $20 million three-year capital financing deal with a global bank (such as Citi):  You basically have to put your entire fucking life on hold. 

That is, of course, if you are someone like me - a CFO who rolls up her sleeves and plunges herself into the nitty-gritty of negotiating every single definition, every single term, every single condition, and every single covenant of the Term Sheet and then the  Credit Agreement in a pursuit of getting the best deal possible; someone who has the grasp of a fox terrier, who can shove pushy bankers and lawyers right back where they belong, who is not afraid of the ambiguous formulations, obscure terminology, and legal jargon.

But that's it, isn't it?  In order to be able to get exactly what you need out of any deal that involves money-holders and their supporting infrastructures you need to know your business better than anyone else and their business better than they do.  You need to speak their language and your comprehension of it must be more nuanced than theirs.  It's nothing short of a battle for the business survival, and if you don't prevail you and those who rely on you lose.  It's like in Game of Thrones: Tyrion's Champion, Prince Oberyn, mortally forfeits the battle to The Mountain, and that spells really bad news for Tywin Lannister's youngest son.  

The problem is that most corporate financial executives don't see it that way: just like many other salaried employees, they don't care to know anything beyond bare necessities and they don't feel fiscally responsible for their companies' wellbeing.  Hence, the low levels of professional awareness and circumvention of sophisticated issues is observed in most CFOs and Controllers today.  And it ends up costing employers a pretty penny in unnecessary legal, accounting, and consulting fees.

Hey, you don't have to take my word for it.  By the way, all numbers below are real and quotes are taken verbatim from various communications. 

Let's see.  When the bankers presented us with the Term Sheet back in March, I did not get either our corporate attorneys nor independent CPAs involved at all.  The bank's credit risk group and I spent two months going back and force, until I got the document into an acceptable shape (estimated savings on legal and financial consulting fees - $50K).  As a part of the Term Sheet, I insisted on the bank's due diligence and legal expenses (changeable to us) being capped (estimated savings - $35K).  

The Citibank people, stuffed to the gills with data and reports I've provided to them during this process, kept telling the other members of my Board of Directors things like, "Oh, that Marina, she is amazing! She is the best!  She is so tough!"  They would write emails like: "Thanks, Marina.  This is very helpful, plus your expertise is tremendous!"  As if I was performing some magic tricks - I was just doing my job... thoroughly.  When the Term Sheet was signed and sent to the bank my future relationship manager asked me in confidence (referring to the owners), "Do they understand that the only reason they are getting this deal is you?"  Hmm...

After successful due diligence and final approvals from the bank's Credit Committee, the Agreement package (186 pages of documents) was emailed to me by Citi's lawyers.  The lead attorney asked me in the cover email to provide him with the contact info of my legal representation, so that lawyers could start dealing with each other directly.  I was like, "Fuck, no!" 

You see, as soon as you officially appoint a lawyer as your representative, the other side is not allowed to discuss anything directly with you.  Here's what happens:  Let's say the bankers propose an additional clause or some adjustment; they call their lawyer; their lawyer contacts my lawyer; my lawyer, who doesn't know much about the intricacies of my business and is not allowed to make any decisions on his own, delivers the request to me.  And then in the opposite direction: I formulate my response; now I have to explain to my lawyer all details in a digestible format so that he can deliver them to his legal counterpart; the latter than communicates them to the bank.  

Are you counting the connections?  We are talking quadruple billable hours on both sides!  And it's like that for every single issue and point.  I'm not doing that! I say, "Excuse me, sir, but for now you will be talking directly to me - at least until all business and financial kinks of these documents are ironed out.  Okay?"  

Professionally lawyers are just as obnoxious as doctors - they think that their diplomas make them better than other people (yet, they discuss economic matters with me as if they too had a PhD in the subject and an MBA).  So, at first the bank's attorney bristles, but, as I start beating him up on one point after another, he gets quite tamed and develops respect.  He actually says, "I hold you in high esteem," which is very nice, because the majority of these assholes don't ever want to admit that you are their equal (estimated legal fees savings - $30K).

Finally, I was satisfied with the contract and introduced my attorney into the mix.  He literally had ten comments on the legalese and after that the process turned into technical preparation of documents between the two legal firms. 

 

Total closing fees savings upon signing: $115,000. 

 

I am his client, so my attorney feels free to make a frank comment: "I have to say, you are the most knowledgeable CFO I've ever met, and I'm not even talking about your understanding of the contracts.  It's everything.  Most of the time I talk to your peers and they are like...  I'm sorry...  They don't know shit."

On the day the deal was closed one of the shareholders wrote to me: "...Your performance transcended what could reasonably have been expected from a typical CFO."  

Well, that' nice, isn't it?  Except that all these praise-singers probably think that I'm flattered by their compliments (as if I live for their approval).  But I am embarrassed: I keep thinking how all those ignorant CFOs and Controllers taint the image of my profession.  And everybody thinks that you are just like the rest of them until you prove otherwise. 

People say to me, "What difference did it make for you personally?  Did you get a deal-completion bonus?"  And some ask, "Why try so hard?  You don't even care about 'business' things as much as you do about art!"  

They are absolutely correct: Yes, some music passage, or a scene in a play, or an image, or a hand-written poem will make me cry; yet, most people with whom I work can't even imagine tears in my eyes.  And no, I didn't get an extra bonus.  And I don't consider this my personal vocation.  But the circumstances of my life made this into my paying occupation and I have to measure myself by my own standards: as long as I must waste a huge chunk of my life on making other people rich, I'd better do it to the best of my abilities.  Why other CFOs don't feel like that?  Well, everyone probably has her own story, but mostly it's that plunging-quality-of-everything effect I like to write about so much.  It's pervasive.                             

Rumor Has It... Trouble Is Brewing in Private-Equity World

The other day I had a meeting with some big shots from Citibank's commercial landing.  Every single person at the table felt disappointed.  On my side of the negotiations, everyone was shocked that the bank came up with some really sneaky changes to the Term Sheet we have originally accepted.  Citibank's covert operatives were distressed to realize that their maneuvering didn't work on us and, moreover, we are absolutely ready to walk away from the deal. 

Nobody was disgusted more than me, though: I've rejected other lending candidates in Citi's favor based on the conditions of that damn Term Sheet; I've spent so much time and effort making sure that the deal comes to conclusion and closes by June 15th; I've conducted so many detailed discussions with the bank officers; I've plied the Credit Risk Group with tons of information and provided elaborate answers to every single of their drilling questions - dammit, what a waste!  I started getting up from the table, determined to say a cold goodbye ("Good day, sirs... I said, 'Good day'," or something like that) and leave everyone in the conference room to their own devices. 

But the bank's team leader didn't want to give up.  This seasoned warrior (whose bonus depends on the number of deals she closes) quickly swallowed the bitter pill of defeat and started deliberating the possibilities of remedying the unfortunate situation.  By way of explaining and excusing their underhanded tactics, she embarked on a tale of pressure and oppression all national banks suffer from the Office of the Controller of the Currency (OCC) that, empowered by the US Treasury's mandate, tightened the regulatory screws on all commercial lenders operating in small and middle markets.     

Ring-ding-ding!  The government is making it more difficult for small and mid-size businesses to borrow operating funds?  Tell me more!  

I can only attribute her sudden loquacity to the awkwardness of the impasse we have reached, to the thickness of the room's air that required some sort of easement before our dialogue completely choked.  Not only that she went into details of the new pre-lending qualification requirements for private businesses such as lower leverage (i.e. debt/equity) and higher fixed-coverage (EBIT + fixed costs/fixed costs + interest) ratios, but she also divulged some information bankers almost never discuss - she told us about a specific deal just killed by the bank's risk underwriters for the sake of compliance with the government's wishes.

It was the nature of the transaction in question that surprised me at first - a typical leveraged buyout (LBO) of a privately-held manufacturer, with a well-known private equity (PE) firm and a mezzanine lender already in place.  Citi was expected to step in as an institutional lender covering 55% of the contractual purchase price.  I might've been wrong, since I'm not exposed to M&A on daily basis, but I was under impression that banks are usually hungry for the high-yield rewards of such deals, especially considering the prominence of the PE behind it. The fact that this case was presented to us as an example of insufferable regulatory interference kind of confirmed my suspicion that Citi's bailing out was an unexpected turn of events for the bankers themselves.

So, did they get the explanation from their Risk partners? Yes, they did: The due diligence suggested that the deal had a high probability of a quick turnaround.  In other words, it was expected that the PE firm would quickly flip the acquired company's stock for a nice profit leaving the company to deal with the loan repayments.  Ok, but isn't that the nature of any private equity transaction, regardless of whether the ownership is sold fast or kept in-house for years?  The loan repayments always come out of the company's operational cash flows.  The liability is a part of their balance sheet.  Hmm...     

Anyway, the talkative tactics worked and we all decided to go back to our respective drawing boards instead of walking away from a very promising relationship.  Good!  But the story of the killed LBO kept gnawing at me. 

Ok, on the surface, it may seem that the government is working hard on protecting taxpayers from a possibility of another bailout.  But

1. Citigroup was one of the first bailees to repay the government ($51 billion) with the highest profit on the bailout list (additional $13.5 billion).
2. As we know, it wasn't the commercial lending, but the sub-prime mortgages and the securitization thereof that was at the core of the financial crisis and the subsequent bailout.  That is why the government-sponsored Fannie Mae and Freddie Mac top the bailout chart with $187 billion of the received support between two of them.
3. Of the top 20 bailout recipients the one with the largest debt still outstanding since 2008  is General Motors (as of 05/29/2014, $11.5 billion is still due)- an automaker, a public company, a NYSE's Blue Chip.      

Wait a minute, wait a minute!  Private business vs. public company?  These Treasury moves have nothing to do with the fiscal protection of the nation.  It has to do with the government's continuous prevention of the stock-market crash and massive panic that will follow.  Too scared to deal with the long overdue adjustment, it has been doing everything in its power to direct both public and corporate investments into the shares gambling of mythological proportions. 

The private businesses and the private equity investors act against this insane agenda by laboring hard under the natural commercial formula of growing capital through realized profits generated by functional enterprises.  To undercut these efforts, the proverbial "they" are willing to sabotage private businesses, which hoi poloi knows nothing about, in order to continue ballooning the stock market cancer, so that the general public with their Ameritrade accounts and 401(k) plans invested into "emerging" markets is kept at bay.

Well, I will not fold!  I will get that Citi line!  As hopeless as it may be in the long run, I take a great satisfaction in the fact that my daily work is essentially a part of the Fiscal Resistance. 

CFO Folklore: Delusional Self-Involvement of Business Owners

As my readers know, years ago I've made a career choice of avoiding large corporations and their tall organizational structures.  I prefer small and mid-size companies allowing opportunities of direct interactions with business owners - the very people responsible for recognizing one's efforts and allotting rewards.  It's not for sissies, of course, because in this environment you cannot hide your incompetence or laziness in a mass of indistinguishable drones - you and your work are on the spot and in full view all the time. 

Even for a highly skilled professional with a strong work ethic it's not easy to be constantly exposed to this very special breed of people - the entrepreneurial bosses, who, God bless them, unwittingly provide me with endless writing material.  I guess it will be several years into my retirement (assuming I will live that long) before the urges to highlight this or that aspect of their psychology and behavior will ceise.

It's uncanny how many common characteristics are shared by private business owners.  For example, all of them operate under the same delusion that employees care (or should care) about their companies just as much and exactly in the same way as they themselves do.  It's especially amazing to me because most of them are pretty levelheaded and highly functional people, yet they insist on this deranged assumption that doesn't fit into any rational frame of thought.

For a business owner his company is his life's endeavor, his singular purpose, his channel of expression and fulfillment, his source of pride and wealth, his outlet of personal freedom.  The owner/CEO's opinion overrides everybody else's; he is the only one with a full authority to direct the company's development in any direction (to a success or to a downfall); ultimately he holds all employment strings in his hands; he can say or do whatever he wants (within the limits of the law, of course); nobody watches his time, assesses his performance, addresses his shortcomings.

On the other hand, for an employee, no matter how dedicated, loyal, hard-working, conscientious, and highly positioned, a job is just a job - a line on a resume.  It cannot possibly be anything else, because there is no such a thing as a job security anymore, no matter where you work.  If the current employment ends, there most likely will be another one after.  Nowadays, probably shifting down, but maybe shifting up - who knows?  There must be something, or there will be oblivion.  For many of us, a job is just a source of sustenance, not the means of self-satisfaction.  And when it comes to personal freedom... I already wrote about it four years ago (Bill of Rights in Small-Business Environment ).

Clearly owners and their employees are conditioned to look at the business from different platforms.  It is preposterous to assume equal attitudes from unequal parties.  Yet, the faulty presumption persists and is manifested by various business owners quite frequently.  I'm sure many of you have experienced it first-hand. 

On the rare occasions, when opportunities to be frank present themselves, I try to explain to CEOs that their employees have their own individual life agendas: what's good for you, your business, and your pocket, Mr. Boss, is not necessarily all that important to them.  Sometimes I even draw Maslow's Hierarchy of Needs:  you see, I say, you cannot expect them to be proud of working in your wonderful growing company if they cannot make ends meet and feel overworked. 

Agh, it's no use!  Just the other week I was discussing (via email) with one of my clients, whose company made the 2013 Inc. 5000 list of the fastest growing companies in the nation, whether I should enter them into consideration this year as well.  It's my assessment that the negative outcome (everyone was complaining about the endless solicitation calls from various service companies) outweighed the pleasurable, yet hard to measure, positive impact of the resulted publicity.  He had no rebuttal to that particular argument.  Instead, he replied to me with the following:

"The ranking is something about which we can all be proud, and which thereby directly affects the morale of our staff, who both see results of their hard work translated into an accolade and have the pleasure of working for a company that has been honored.  I know I bathed in the warm glow of the company's recognition."

Of course he did!  It's his company.  He is rightfully entitled to tell about it every single person he meets.  But can you believe the gall?  They "have the pleasure..."!  Seriously?  Even the ones with $40K salaries and one-week-a-year vacations?  Uh-uh, Mr. Boss, the pleasure is all yours. 

Business-Lunch Scene Today: Cipriani Wall St.

For 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.                    

On Service Quality and Self-Worth: Unknown 500

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

General 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

In 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."