Excerpt from LE DEAL
by J. Byrne Murphy
Chapter 4
Plunging In
Pg. 22 — No one could accuse us of thinking small. We had deliberately targeted the biggest, richest, most complicated market in the world. We weren’t out to conquer so much as to charm and to entice 320 million people (USA population: 280 million), in an area of 800, 000 square miles (USA: 3, 000, 000 square miles), divided into twenty-three countries (USA: one) speaking eighteen languages (USA: one), at the time conducting business in sixteen different currencies (USA: one).
Looking back, we may have been naively ambitious but we weren’t stupid. We understood from the start that we would need help. Lots of it. And on that score we were either very smart or very lucky, because the first two allies we recruited proved invaluable from the first meeting and continued by our side for years thereafter.
Pg. 28 — On the plane trip home, I began outlining what would become the business plan for importing the McArthurGlen concept to Europe.
Business plans are almost always mind-numbingly boring, full of jargon and statistics. But a business plan is the road map defining what you will do, when you will do it, the resources you will use, and, of course, the projected “fabulous result” of your grand vision. No serious business plan projects anything other than a “fabulous result,” or it wouldn’t be written. “The plan” becomes your calling card for raising the money required to start the new venture, and is the guide book by which your investors keep track of what you do with their money. The prose may not be elegant, but it doesn’t need to be. It is addressed to a highly select audience-the handful of people who will join you on the adventure and those who will underwrite it. If you can’t persuade them that you’ve asked and answered the right questions, and that you’re the right team to “make it happen,” you’ll quickly find yourself alone at the starting gate. You’ll not only be lonely. You won’t have a business.
Back in Washington, I holed up in an upstairs room of our little house that was still filled with unpacked boxes. I continued scribbling away for five or six days, venturing out only to join Pamela in celebrating Avery’s first birthday.
Writing the business plan for a multi-country, multi-cultural, pan-European rollout of a new retailing concept was exciting stuff. As I sat there, alone and unfazed by whatever reality awaited me across the ocean, the possibilities were endless. Even the due diligence seemed exciting: Paris, London, Milan, maybe Berlin (why not?), and let’s look at Madrid…
The essence of the designer-outlet concept couldn’t have been simpler: selling end-of-season leftovers of famous high-fashion brands at bargain prices. Who wouldn’t like Polo Ralph Lauren - or Gucci, or Prada, or Nike - at 30 percent to 70 percent off the regular prices? It’s a win-win-win idea that benefits the manufacturer, the retailer, and the ultimate customer. But as usual, it is the details that matter, and our business plan covered all of them.
Pg. 29 — Where do you market such goods? How do you control the sales? How do you protect your full-price retailers? And possibly the most important question, how do you protect your most valuable asset -- the reputation and goodwill of the brands you’re selling?
We knew the system worked in America, and we were convinced we could make it work in Europe.
A key factor in our business plan called for identifying and securing partnerships with local business leaders in every market we entered. We needed partners who knew the country, knew the language, understood the local politics, and were familiar with the appropriate laws.
The fact that I had never worked in Europe, that I had never visited a McArthurGlen outlet center, and that our little team of merry developers had no money didn’t faze me. As a matter of fact, it didn’t even occur to me as problematic.
It was a grand plan, filled with passion and the smell of adventure, and we made it even grander by ordering custom-designed binders, with hand-constructed and gilded boxes in which to place them. Then we shipped them out to that tiny select audience who would control our future. The recipients must have thought the Gutenberg Bible had landed on their desks, their names written in calligraphy across the cover, announcing our vision for Europe. In retrospect, we were, naturally, short on substance so we poured on the sizzle. We were very bullish.
And very naïve.
As for the challenges of never having been to a McArthurGlen outlet center, much less developed one, and never having lived or worked in Europe, and having no money, those were simply problems and we would find solutions. We were Americans, and that’s what Americans do - solve problems and more on. I assumed that was why we were in business.
To address our lack of funds, we went to our local banker, a man named Bob Pincus, the one who knew our track record so well. Six of us pooled our meager resources, and more importantly, offered up our personal guarantees to the bank, thereby pledging whatever assets remained in our names after the S&L debacle. This included Pamela’s and my shiny new house and our not so shiny bank accounts. It included pledging whatever cash was in those accounts: cash saved for future tuitions and mortgage payments. In other words, if for whatever reason this concept of bringing designer outlets to Europe failed and we couldn’t pay back what we’d borrowed, then the bank would take all our personal assets in lieu thereof. Just like the banks had foreclosed on all of Joey’s assets the prior year. Altogether, the pledges and guarantees were enough to secure a two-million-dollar loan.
It wasn’t nearly enough, but it would to have to do.
A short while later, I was sitting by myself in what had to be the loneliest hotel room in Paris - now the official headquarters of a brand-new company dubbed “McArthurGlen Europe.” A company that was comprised of me, just me. I sat there with a pencil, a pad, and a phone. The only thing missing was someone to call.
Because I didn’t know anyone in Europe to call.
Excerpted from Le Deal by Murphy, J. Byrne Copyright © 2008 by Murphy, J. Byrne. Excerpted by permission. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.