B-Tank Business Publication by Joel Klein, CPBC

DECEMBER 2018 | VOLUME 1- ISSUE 11

Exp Rea anded lE Sec state tion

MEET TEANECK'S LEGENDARY ELIE KATZ, CEO OF NATIONAL RETAIL SOLUTIONS EMOTIONS RUNNING HIGH ON AMAZON HQ2

LIEUTENANT COLONEL TRANSFORMS

ARMY CAREER INTO UPLIFTING BUSINESS MARAT MAAYAN BREATHES FRESH AIR INTO OLD PROBLEMS

INVESTING IN THE FUTURE OF OPPORTUNITY ZONES THEME SECTION: PROTOTYPES AND PRODUCTION. GET YOUR PRODUCTS ONTO THE MARKET. PERSONAL FINANCES: ARE ROBO-ADVISORS WORTH THEIR WEIGHT? VISIONS FROM THE C-SUITE WITH BRUCE KATZ, ROCKPORT’S CO-FOUNDER. CASH IN ON THE HOLIDAY FEVER

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W I L L I A M S B U R G

M O N R O E

CONTENT 6

Editorial

Inbox

Opinion

Guest Contributor

Business Inspiration

News Roundup

Marketing Musings

Hot Off LinkedIn

Through the Magnifying Glass of a Banker

Budding Entrepreneur

Tech Time

Frank Talk: A Roundtable Discussion on Employee Issues

Biz Tools

Vision from the C-Suite

104

Bookmarked

107

Real Estate Pulse

147

Future Entrepreneur

158

Contributor Directory

182

Wow Moments

183

Giftorama

BIZTANK 134

In Session

136

Upperide

141

Industry Facts

144

Meet the Mogul

143

Recap

LIEUTENANT COLONEL TRANSFORMS ARMY CAREER INTO UPLIFTING BUSINESS

Marat Maayan, CEO and co-founder of Salamandra Zone, worked to build a fire-safe elevator prototype as he led bomb disposal teams to disarm Iraqi Scud missiles during the Gulf War. Here, Maayan shares how he began Salamandra Zone with the knowledge that he and his collaborators could build the kind of company that Forbes magazine calls a “scale-up nation,” a company capable of building a global business.

THE INTERSECTION OF SCIENCE AND BUSINESS YIELDS NEW OPPORTUNITIES

The best new business ideas originate out of a need to solve a problem. Some problems are potentially deadly, such as the spread of illness through hand-to-hand contact, while others are inane, such as burrs catching in dog fur. Science routinely leads to the development or discovery of a new product idea that addresses an existing problem. Learn how scientific studies have allowed the creation of incredible businesses.

THEME SECTION: PROTOTYPES AND PRODUCTIONS

Have you always dreamt about producing the hottest selling item on the market? Do you love tinkering with gadgets? Learn how to take concept to fruition – and beyond. From producing prototypes to testing to manufacturing to warehousing, you’ll learn how to get your product onto the market.

TAPPING INTO HOLIDAY OPPORTUNITIES

Many retail businesses have dubbed the holiday season as the single most important reason they turn a profit. It isn’t only retail businesses who have the potential to cash in on holiday opportunities, though. Read 6 tips that can help you tune into opportunities of the season.

MAKE THE MOST OF AMAZON PRIME TIME 96

If you’re an Amazon seller you’ve surely geared up for the holiday season ahead. Find out how you can maximize prime retail time without falling prey to restrictions that have sent sellers deep into the red.

THE RISE OF ROBO-ADVISORS 159

EXPERTS SPEAK

98 4 | B-TANK | DECEMBER 2018

Once a Silicon Valley fad used by millennials, automated investment advisors are becoming ever more popular. How do they work? Who are the big players? Is it for you? Learn about how robo-advisors are leading digital platforms that rely on computer-driven algorithms to help clients invest money.

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EDITORIAL

Dear Readers,

don't usually listen to the radio in my car while driving, but that changed when the first snow of the winter, which crippled New York's roads and turned the tri-state area into a massive gridlock, appeared. NYC and its public agencies are usually well prepped for situations like this, but this time was different. I now appreciate the work that public officials do, when they do it right. It has also taught me a lesson on being well prepared generally, and especially in business. Like many others, I found myself in bumper-to-bumper traffic. At the time I reaffirmed the importance of a business like Upperide, the revolutionary helicopter ride company presented in this issue’s BizTank. Not having any other choice but to stay seated at the wheel in this cold, wet weather, I tuned into one of the popular local news radio stations. I was devastated to hear about the situation in Paradise, California where a massive campfire claimed the lives of so many and left thousands of families homeless. But I was awed to hear that many celebrities and successful people took the initiative to help those affected, providing financial aid and spreading awareness of the need. This really got me thinking about the importance of giving. With the holiday season in full swing, most businesses and entrepreneurs look forward to a successful season as many consumers hit the markets before the holidays. If you are an executive in business, it’s always important to remember that there are so many people in need. By making charitable contributions, even if it’s a relatively small amount to you, you can make a significant difference to someone. The economy is humming along and the employment picture is bright, so folks might just be in the spirit of giving now. For many businesses, charitable partnerships are key to their relationships with clients and local decision-makers. If you are unsure where to donate, think of a cause you can relate to. In a world full of causes, anybody can

B-Tank Inc. - A project of the

find one they relate to. Whether it’s to help the unfortunate in your community directly, or it’s an organization’s mission that resonates with you, in business, it’s always important to think about others. Even if you are a start-up or freelancer and a charitable cash donation doesn’t come easy to you, donating your services is also possible. This is sometimes referred to as “pro bono” — professional work undertaken voluntarily and without payment. In legal practice, pro bono is mandatory; I would humbly argue that almost every service industry can and should adopt this concept. As a business coach, I always urge my clients to find ways to give back and contribute to society — anything — even if it's something minor. What goes around, usually tends to come around, one way or the other. BizTank has also taken initiative and wants to help you give back. Therefore, I am making it my duty to incentivize your contributions to struggling businesses and entrepreneurs. For every $500 you spend on helping a struggling company, you will be eligible for an hour of business coaching and strategic advice from one of BizTank’s super-influential and experienced executive board members. On this same note, I'd like to point out that BizTank was launched with the mission to empower business transformation by targeting an audience of entrepreneurs and success-seekers and providing necessary solutions to their challenges. As we are growing, we are also broadening that mission of empowerment. Without spilling the beans, I suggest you follow BizTank and be on the lookout for some massively innovative undertakings, which will be announced and rolled out within the upcoming weeks and months. In the meantime I’d like to wish you very happy holidays, celebrated with your family and friends – while thinking about your neighbor in need. Joel Klein President and Founder of the BizTank and B-Tank platforms

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6 | B-TANK | DECEMBER 2018

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LET'S TALK BUSINESS.. ‫יואל שלום פריעד‬

LETTERS TO EDITOR Another Look at Quarterly Reports Dear B-Tank staff, Thank you for an informative and well-rounded magazine. We often do things just because that’s the way they’ve been done, without thinking about whether they’re actually the right way of doing things, or if another method might be more effective. This is especially detrimental in today’s evolving world, where continuous tech evolution allows us to be more efficient. I’m hoping that your new tech column will keep us all in the know. Another area I found this relevant was in your piece on quarterly reports. I don’t know what it’ll take to change the status quo, but it seems like change would be nice here. We are often so afraid of the repercussions of public opinion that we lose sight of efficiency. There is some historical evidence that investments by companies in longer-term projects (for example, research and development) dropped slightly when quarterly reporting was introduced in 1970. I read an interesting related piece in Kiplinger about another factor that might affect quarterly reports. The average tenure for CEOs is declining. If a CEO knows that the average term at a firm is six years, he’ll be looking at the (relatively) short term, instead of a complete global view. Though the trajectory here is more generous — we’re talking about years, and not just one quarter of a year — the pitfall of other factors clouding our judgment comes into play as well. It may be interesting for your readers to note, though, that many publicly traded companies did reach (or even exceed) their Q3 goals. But that's probably more telling of the economic times we live in than the merits of the quarter system. I’m looking forward to your next issue. Barry Ginzberg Lakewood, New Jersey

BizTank Obsession Dear B-Tank, Thank you for your quality business magazine. I’ve found it to be chock-full of important educational content along with a nice mix of exciting material that makes for a lighter read. I especially enjoy the BizTank section, which has taught me a lot about how investors’ minds work, what ideals to strive for in business, and how to chart a trajectory. I often stop in the middle of the read and try to predict how the investors are going to react to the deal — based on the questions asked, as well as the bit that I’ve come to know about them. Sometimes I’m on target and sometimes I’m not, but it’s always fun. The BizTank model introduced me to the inner workings of the investor model and I’m now obsessed with reading, watching, and learning about similar shows. I wish BizTank would release a series similar to Shark Tank or Entrepreneur Elevator Pitch so that we can enjoy more of the interaction and dynamism I’m sure those in the Tank actually feel. I’m waiting for the day that happens. Yitzy Elek Brooklyn, New York

Attitude Matters Dear Editors, I read and reread and reread the editorial in the October issue. Joel Klein elaborated on so many concepts that are important both in business and in life. While he mentioned people with specific talent, the many attitudes explored are in no way applicable only to people who’ve built a business out of their talent. Everyone who is involved in any part of the corporate world would do well to live by these dictums. In today’s day and age, we’re surrounded by a climate of entitlement instead of empowerment.

There are hashtags to describe every type of conceived wrong. In my opinion, that is not empowering at all; it is disabling. The world rewards “complainers” with a “victim” status that is meant to give them some sort of celebrity status. While confirming that we cannot judge people who were hurt by others, taken unfair advantage of, or who’ve felt discriminated in the workforce, I say: “Be smart. Don’t allow yourself to become a victim. Don’t dwell on how others wronged you; see how you can get ahead.” The 10 attitudes Joel shared with us pave a very clear path for us to follow. From personal experience, I know that I could’ve blamed my parents, my school, my community, my workplace, society, and who not for where I stood in the job market. Instead, I rolled up my sleeves and worked. I accepted gigs that helped further my career — despite the low pay. I became a yes-man. Once I accepted responsibility for something, I didn’t back down — even if things became tough. I honed my ambitious nature instead of allowing stereotype discriminations against my community to stop me. With the help of Hashem I made a name for myself in my chosen field. I earned a reputation as a hard worker who was willing to make things work. Continuously developing my skills, I reached a point way beyond the beginner stage and today I outearn many people who were my colleagues just a few years ago. And I don’t think this is because I am better or more skilled than them; I believe it's because I’ve taken ownership of my life. My message? Take charge of your life. Don’t blame others and become a victim of the times. See what you can do to move ahead — and you will. These 10 attitudes are a sure keeper that I intend to hold on to for a long, long time. With much appreciation, T. L. A B-Tank reader

B-Tank invites you to submit your comments and suggestions to inbox@btankmoguls.com. B-Tank reserves the right to edit all letters. 8 | B-TANK | DECEMBER 2018

OP-ED

Jacob Halberstam

Amazon's New Headquarters is Now HQ2 Squared

he prolonged dating process — during which Amazon was searching for a second headquarters — finally ended on November 13, after months of deliberation and debate. What was going to be HQ2 is now HQ22: the new headquarters will be split between Long Island City in Queens, NY and Arlington, Virginia, a Washington, D.C. suburb. With New York and Washington, D.C. employing energetic lobbying methods to bait Amazon, the results come as no surprise. Cities tried to outbid each other, promising tax breaks, property, and other benefits, dreaming of the day an Amazon headquarters in their city would provide thousands of job and tax revenue. It seems that this national competition was actually part of Amazon's plan when they announced their intention to open HQ2. Between NY State and NYC, Amazon will likely receive almost $3 billion in tax breaks and incentives. The decision was celebrated by both New York's governor, Andrew Cuomo, and the city's mayor, Bill de Blasio – but not without backlash from loud-mouthed politicians and activists. The interesting part is, the protest came from opposite sides of the spectrum. Of the most vocal opponents to Amazon's presence in NYC is congresswoman-elect Alexandria Ocasio-Cortez, who is a progressive socialist from NY’s 14th Congressional District. She is fuming that the government is giving tax breaks to the rich. Instead of the government investing in the high-tech job sector and luxury condo developments, she says, they should invest in the low-income working class and housing, and the city's crippling infrastructure. She also questioned the governor's office on whether Amazon had promised to hire from the existing community. Others on the far right point out that this arrangement between Amazon and government bodies resembles what's

10 | B-TANK | DECEMBER 2018

going on in China, where the government has a hand in all businesses. In response to the outrage governor Cuomo penned an op-ed on his website, writing off his critics in a bit of an arrogant way, citing the coalition of socialists and extreme conservatives. The conservatives, he says, are upset that NY has such a high corporate tax rate, and then offered major breaks to one of the biggest companies. He claims that this isn't totally accurate as corporate tax rates have gone down during his tenure. But he didn't completely dismiss the issue. “One could argue that in a perfect world no city or state would be legally allowed to offer incentives and there would be no competition for individuals or businesses. True. But this is not a perfect world,” he wrote. The governor continued on, claiming that the socialists are concerned that NY gave money to “one of the richest men in the country and that we should have given that money to the poor and needy.” Governor Cuomo states that although this argument is "politically appealing" it is "once again wrong." His counter claim? NY is giving Amazon nothing; their tax revenues will give the state $900 million annually. Now even if his calculations are right, this is only true if no other company — or a collection of companies — would take Amazon's place on the Island. In a radio interview on WNYC, in his weekly “Ask the Mayor” segment, Mayor de Blasio took a similar approach. If this will turn out to be a win for NY and its residents, that’s yet to be determined. But as for Amazon, they definitely won. They got double benefits by splitting their new headquarters between two locations, and accumulated a database loaded with info on many of the country's largest cities.  Jacob Halberstam is a finance enthusiast who loves reading anything and everything related to politics, finance, and economics.

ATTENTION BUSINESS OWNERS:

Here’s Your Essential Year-End Payroll Checklist

etting your year-end payroll information in order can be a daunting task, but it’s essential that you do! Especially since, the end of year represents the one time of year when it’s easiest to make a switch to a new provided because the least amount of paperwork is required to do so. “Payroll is integral to any organization because it represents an employee’s entire compensation such as salary, bonus and benefits”, says Joel Kohn, CEO and Founder of Fingercheck. “Payroll is the one item we see many companies look to simplify, especially during the end of year – making it one of our busiest seasons”. That said, we think it most appropriate to offer you a checklist on the basics you need to know to file your annual taxes properly.

1. Review each employee’s personal information: Make sure all employee information is up-to-date, re-verify social security numbers names and addresses.

2. Ensure all employee paychecks are correctly recorded: This includes any bonuses, commissions, handwritten checks, and voided checks–anything outside normal payroll.

3. Double-check employee wages, benefits, and deductions: Be certain you have the right pay rate, benefits information, and deductions recorded for each employee.

4. Have all PTO, such as vacation and sick days, in order: Determine how much PTO each employee has left, noting any remaining days left to roll-over into the New Year.

5. Health Insurance for S-Corp owners of 2% and above: If you have any company-paid health insurance for any S-Corp shareholders that own 2% or more of the company, it needs to be accurately taxed.

6. Order forms W-2 and W-3 from the IRS or other authorized provider: At the start of the year, you will send W-2s to your employees and the federal/state governments, along with W-3s to federal and state.

7. Check federal, state, and local taxes: These are typically updated annually so be sure to check them for any changes. And so there you have it – some basic but essential details you need to review for your year-end Payroll.

NEED A NEW YEARS’ RESOLUTION? Use Fingercheck’s all-in-one HR platform and never worry about any of these payroll or tax filing issues again – because they do it all for you for one low monthly, price, regardless of your payroll cycle and how many time you run payroll. Call them today at: 800.610.9501 or visit www.fingercheck.com

ABOUT FINGERCHECK: Based in Brooklyn, NY, Fingercheck is an independently owned and self-funded tech company providing an all-in-one HR, Payroll and Time Tracking into a single integrated platform designed specifically for small to mid-sized companies. The simple and easy to manage dashboard and mobile app, gives companies an entirely new look at their workforce activity and daily tasks – all while automating and simplifying payroll.

GUEST Fishel Mael

THE HUMBLE ENTREPRENEUR

middle-aged man who feels pride of accomplishment for having a fuller head of hair than his peers is a fool. A woman who thinks her diet or exercise regimen should get credit for her bone structure is equally silly. A corporate executive who ignores the benefits of the education, breeding, and connections provided by his parents and their network, and claims all his success is a function of his hard work, lacks credibility. But what about the entrepreneur? Isn't a business founder a self-made man or woman who can take full credit for success? After all, who else put in the bulk of the hard work, made the tough decisions, and took the financial and personal risks? Isn’t that how successful business founders portray themselves in business magazine interviews — the lonely hero, persevering by sheer grit? Yet even there, it's not the whole story. The entrepreneur may be endowed with intelligence, attractiveness, self-confidence — all thanks to parental genes. The paid education may have helped, or the access to capital, or the many mentors along the way. Perhaps the stint in the military or the time being coached on a sports team were advantages. Unfortunately, we don't get to hear from the less- and not-successful entrepreneurs to hear if they worked just as hard. If 80% of the new restaurants that started in a given period fail, the "winners" will give full credit to their hard work. But no one really knows if the 80% failed because of lack of effort. Which brings us to an undervalued but essential managerial quality — humility. 12 | B-TANK | DECEMBER 2018

What Humility Is and Isn't

Humility does not mean an "aw shucks" demeanor in which people downplay their skills and their accomplishments or act unaware of them. It does not mean lacking self-confidence, self-esteem, ambition, or a grasp on reality. Many great, forceful leaders have been humble. True humility means acknowledging that you are a recipient of gifts and opportunities that you hopefully use well. You know you are smart, persuasive, or a visionary and your résumé speaks for itself. The difference is that you don't make believe you did it all yourself and by your own efforts, or that everybody else had all the opportunities to do the same. Just as you had advantages, others have built-in shortcomings. If they don’t make the best of what they have, you have some right to be critical, but you don't make believe they had all of your opportunities. You also have room to acknowledge that others have gifts you lack, that you can learn from others, and that you are capable of being wrong or making mistakes. Jeffrey Krames, a bestselling author, writes that humility is one of the most underrated of all leadership qualities. Still, the value of leader humility is becoming more widely recognized. Jim Collins, in Good to Great, says that the best leaders combine healthy ego with humility and fully acknowledge the vital contributions of others to their companies' successes. According to the 2012 study by Bradley Owens and David Hekman, published in Academy of Management Journal, humble leaders are both better liked and more effective. A follow-up study in Organization Science shows that humble leaders have more learning-oriented teams, more engaged employees, and lower voluntary employee turnover. Nitin

Nohria, Dean of Harvard Business School, asserts that moral humility is the most important thing that can be taught at business schools like his.

Arrogant Blind Spots

The findings make sense when we consider the blind spots of arrogant leaders who lack humility: J Missed feedback — arrogant leaders know all the answers and can learn nothing from those around them. J Misjudging people's limitations — arrogant leaders assume that because they are more quick-witted or confident than others, they should talk over them or cut them off, and will miss nothing by doing so. Arrogant leaders thereby shield themselves from warnings about problems, oversights, and potential technical or public relations disasters that may be brewing. They also miss hearing about great opportunities and potential innovations that others may have brought to their attention. J Scapegoating — arrogant leaders can never be at fault, so someone else has to take the blame or the fall for failures. J Ethical lapses — arrogant leaders have no brakes on their rationalizations and their justifications and so allow themselves to make decisions without taking others' perspectives into consideration. This means they are vulnerable to ethical lapses that could endanger their companies. J Sense of entitlement — the arrogant leader feels unstoppable and deserving of all success, and so cannot understand how someone else could work harder, be smarter, or be more responsive to a client's needs. These leaders

are certain that customers who chose other suppliers are mistaken or that competitors used underhanded means to win the client's business. By contrast, the leader with healthy humility sets the tone for a learning organization in which people can be corrected and educated, and can complement and carry each other. The staff is more engaged, more likely to be loyal, and more likely to expend greater effort. There are a number of ways to develop greater humility: J Cultivate a greater sense of gratitude for what you have. Graciously acknowledge all of those who have helped you and your organization. J Recognize that others have skills and information that you do not have, and that that is a good thing because it means you have access to others' knowledge. J Practice empathy — picture yourself as a recipient of being interrupted, humiliated, or dismissed by someone like you in a public setting. J Think of the great and powerful who have come before you and have since been humbled or worse by circumstances beyond their control. And one last thought. Remember that line about the meek inheriting the earth? The correct translation of Psalm 37:11 is that "the humble shall inherit the earth."  Fishel Mael helps organizations and their employees work more effectively, and coaches executives and managers. He is an organizational psychologist, consultant, and executive coach. B-TANK | KISLEV 5779 | 13

BUSINESS INSPIRATION

The No-Brainer Decisions

ometimes a wrong play by a CEO can land a company in serious financial straits, even ruin. Unless the losses are later eclipsed by turnaround, experiencing a “failure” in business would leave most scratching their heads and thinking, How could I have done it differently? Curious then is the CEO who brought his company to ruin but didn’t regret his financially risky decision. In fact, he didn’t even think it was a decision at all but simply the right course of action. Furthermore, this wasn’t just a single decision, it was a lifetime of sticking to his principles. For many years Aaron Feuerstein was the owner of Malden Mills, a successful textile factory in New England. His grandfather established the company in 1906, and in the 1950s the company expanded rapidly into the city of Lawrence, Massachusetts, which had excellent textile labor. The mills in this location were booming as a result of the mass increase of production needed for World War II. However, in the slowdown that followed that era, the one thing Mr. Feuerstein did not seem to be worried about was his bottom line. In the modern industrialized era, it became commonplace to either squeeze the workers for every dollar, or move the factories abroad where labor was far less costly. Aaron Feuerstein did neither. He held that underpaying workers was the most dangerous threat to capitalism, and that it was his obligation as

14 | B-TANK | DECEMBER 2018

one of the largest employers in the area to ensure that his 3,000-plus employees were able to stay gainfully employed and support their families. While “conscious capitalism” is a trend that we are only starting to see the regeneration of in the modern era, it was unthinkable during the 1960s–1990s. However, despite paying fair wages and keeping his business in America, what happened in 1995 and how he responded is the stuff of legends. On December 11, 1995, Mr. Feuerstein’s factory burned to the ground, in one of the worst fires in the history of New England. While this blow was financially crippling, Feuerstein didn’t retire in comfort with the fire insurance money, pack up shop, and move to Florida. He didn’t cut ties with the industry and move his money elsewhere. He recognized the need to rebuild, not for the sake of somehow recovering his losses, but for the sake of continually providing for his employees. While his employees awaited their return to work, Aaron Feuerstein used his own money to keep his employees on the payroll and paid for their health insurance. The entire undertaking cost the company, and him personally, millions of dollars. When the company did reopen, it didn’t recover, due to the extensive costs, and other market factors. Six years later, his company declared bankruptcy, and Mr. Feuerstein left his position as CEO. Upon reflecting on his lifetime experience with his

Rabbi Jacob Rupp

company, especially in light of the financial downturn he experienced at the end of his career, Aaron Feuerstein stayed strong in his conviction that he did not make a mistake. Treating people in an honorable and respectable manner wasn’t being over the top; it was simply the right thing to do. Of course, he attributed his clear moral compass to his Jewish background. There are two details of this amazing business success story that stand out: First, Aaron Feuerstein didn’t see his actions as middas chassidus, but as the natural thing to do. Second, as much as we love the hashgachah pratis stories that end with happy endings, this one doesn’t seem to end as we would have liked. Very often we look at challenging moral dilemmas as just that — dilemmas. There is the way we want to conduct ourselves, and then the “right way” to conduct ourselves. Of course, no one is out to deliberately hurt another person, but we’re all highly conditioned to self-preserve and ensure that our legacy, family, and finances are safe. When we face dilemmas that seem to challenge our comfortable status quo we attempt to dig down, overcome, and create a kiddush Hashem. Aaron Feuerstein was a level above that; for him it wasn’t a dilemma. It was just what a person should do. Workers had to be paid fairly. People had to be treated nicely. When calamity struck and his factory burned down, it wasn’t a paralyzing decision for him to take care of his workers; it was just what he did as their boss. We want to hear stories that end nicely, the turnaround.

This is a compelling episode specifically because it didn’t end that way. Also, we might expect someone whose career ended with bankruptcy, especially a career that spanned so many decades, to be bitter and frustrated that it ended the way it did. The story doesn’t end there. In the many interviews Aaron Feuerstein did after he stepped down from the company, he was consistently b’simchah, clear that he’d made the right decision, and proud of what he did. He sought to stay busy and active, both personally and communally, until he was past 90. Staying positive, productive, and active despite setbacks is one of the greatest lessons that we can apply to our lives and businesses, at whatever stage we find ourselves. The legacy of Aaron Feuerstein and Malden Mills is far more than a lesson in leadership or in caring for one’s fellow. It is a profound story of kiddush Hashem, where one sees their moral duty as just the natural way one conducts themselves, and lives happily with the outcome no matter what it is. The seamless connection between one’s personal ethical code and one’s business code is the pure expression of how we should see ourselves in a professional setting. It is this kind of kedushah that is meant to manifest itself in the daily working life of a Jew.  Rabbi Jacob Rupp, a father of four, is a rabbi, executive coach, health and wellness consultant, and social media branding guru. He also hosts a Lift Your Legacy podcast. B-TANK | KISLEV 5779 | 15

NEWS

NEWS ROUNDUP WITH JAKE

TOP 5 BUSINESS AND ECONOMIC STORIES OF THE MONTH More and more countries want Israeli defense technology, even big, rich, and powerful countries like the United States. A top executive at Israeli defense giant Rafael said, in early October, that he expects the company to sell the Iron Dome missile defense system to the US next year. Israel has already sold other aspects of its missile defense systems to countries in Asia and Europe. Israel made a record $9.2 billion in defense sales to foreign countries in 2017 and is on track to break that record this year.

The killing of Saudi activist Jamal Khashoggi by his fellow countrymen at the Saudi consulate in Istanbul has many big investors cooling on keeping their money in Saudi Arabia, and this is already slowing investment. However, most of the biggest investors in the kingdom are staying put. 16 | B-TANK | DECEMBER 2018

Jake Novak

The tumultuous twists and turns continue at Tesla. Founder and CEO Elon Musk settled with the Securities and Exchange Commission (SEC) over charges that he manipulated his company’s stock price by using Twitter to make promises to take Tesla private. But Musk continued to use Twitter to tweet the government and criticize his financial rivals. Musk was forced to step down as chairman of Tesla over his behavior, yet he remains the CEO. Most investors, therefore, still see Tesla's stock as being volatile.

Stocks slumped sharply in October, with the Dow Jones Industrial Average finishing more than 5% lower for the month. Fears about rising interest rates luring investor money away from stocks played a big role, as did worries about the midterm election results. Investors feared that Democrats would take control of both houses — something that would possibly result in tax hikes and stifling regulations against businesses. Though this hasn’t come to fruition, stocks are still down.

On the brighter side, gasoline prices are falling again, average hourly wages are growing by 3.1%, (the fastest pace since 2008), and many retailers are expecting this holiday shopping season to be very strong. Walmart even says this holiday season will be its best ever. All of this represents a very rare confluence of economic conditions. Usually we see rising gas and oil prices when the economy is growing and we’re at nearly full employment. Much of that is because the US is now the biggest oil producing country in the world, pumping 11.6 million barrels per day. But it’s also because Saudi Arabia is working hard to keep supplies high in order to keep the US happy. The fact that Wall Street hasn’t shot straight up considering this strong economy is a good example of how Main Street and Wall Street often run counter to one another. A very strong economy and rising wages sometimes spooks the big companies that trade on the stock exchange because that means they will have to pay more for their workers. And while stronger consumer spending works to their advantage, the big companies can never be sure when that spending will dry up and they’ll be saddled with more workers and salaries than they can afford. Overall, this is a uniquely strong economy compared to what we’ve seen in this country over the past 50 years. The only problem is, we usually don’t get much of a clear warning when the good times are about to end.  Jake Novak is a senior editorial columnist for CNBC.com. Prior to joining CNBC, Novak co-created and oversaw programs for FOX Business and CNN.

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Marketing Musings ABRAHAM BREE

Wake Up and Sell the Coffee:

Does Rebranding Always Pay? A legendary retail coffee chain attempts to perk up its brand. But many wonder if the new marketing brew is more likely to get roasted.

affeine fanatics across the globe were rudely jolted awake by disturbing rumors: The iconic Dunkin’ Donuts retail chain is formally changing its title to a minimalist-themed, millennial-friendly, modern-toned moniker: Dunkin’. That’s right. Dunkin’. The multimillion-dollar name change, officially being implemented after months of exhaustive brand research and following a meticulous, forensic marketplace analysis, involves dropping the second word from the storied store name. “Our new branding is one of many things we are doing as part of our blueprint for growth to modernize the Dunkin’ experience for our customers,” Dunkin’ Brands’ CEO David Hoffmann said in a statement. “We believe our efforts to

18 | B-TANK | DECEMBER 2018

transform Dunkin’, while still embracing our incredible heritage, will keep our brand relevant for generations to come.” The new branding will appear on packaging, advertising, Dunkin’s website, and social media channels beginning January 1, according to the company. Stores will also feature new signage, while a few select locations utilizing Dunkin’s new design format have already tested the new name over the past year, as the company embraces this new brand platform. Sigh. Instead of being regarded as a timeless American institution of gooey-custard-donuty goodness and cozy-coffee-cup charm, Dunkin’ will now exude the same generic hipness exhibited by countless we-are-oh-so-trendy-pleasebuy-your-coffee-here retail clones that have sprouted up in countless shopping malls, rest stops, and gas stations.

This legendary institution of bluecollared caffeinated goodness is losing its homey, likeable luster and becoming yet another myopic brand â&#x20AC;&#x201D; the latest corporate casualty to jump on the wannabecopycat-lookalike bandwagon of hipsterization and millennialism.

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Marketing Musings

Starbucks.

The Coffee Bean.

Krispy Kreme.

Tully’s Coffee.

Tim Hortons. 20 | B-TANK | DECEMBER 2018

You know the look all too well. Reclaimed wood planks. Gleaming porcelain tiles. Vintage light fixtures. How utterly predictable. Basically… this legendary institution of blue-collared caffeinated goodness is losing its homey, likeable luster and becoming yet another myopic brand — the latest corporate casualty to jump on the wannabe-copycat-lookalike bandwagon of hipsterization and millennialism. Bad move. Quite possibly, consumers flock to Dunkin’ Donuts — baggy eyelids, baggy trousers, baggy overcoats, and all — precisely because it offers them a low-key, no-frills, pocket-friendly way to imbibe the obligatory morning cup o’ joe. There’s no pressure to slide on a pair of trendy TOMS, apply Great Lash mascara, or style that wavy pompadour with an Agave Healing Oil Natural Bamboo Paddle Brush before ordering a triple, venti, half-sweet, non-fat, caramel macchiato from your supercilious barista. The sequence for placing an order is surprisingly simple. Walk inside. Buy a humble coffee. Choose a basic donut. Pay the cashier. Grab a napkin. And leave. Who knew that such a simple, yet perceptibly effective, business model happily existed in 2018? Or at the very least… happily existed until Dunkin’ Donuts chose to abandon the singular strategy that made themselves successful in the first place. The appeal of Dunkin’ is, in my humble opinion, precisely that it’s the “Unjava”; the symbolic Uncola of the proverbial coffee conglomerates. The Unjava? Let’s take a little stroll down Memory Lane, with compliments to AdAge magazine and the Duke University Department of History, and peruse the underbelly of a groundbreaking marketing campaign from decades ago. In the early 1970s, as part of its new advertising strategy, the 7-Up Soda Company had J. Walter Thompson design a campaign that framed 7-Up as the ultimate oppositional drink: the “Uncola.” Rather than trying to play up the similarities the soda shared with its competitors, the new ads focused on its differences. In the company newsletter, the team explained, “Seven-Up advertising tells people that, of the three top-selling soft drink brands, 7-Up, the Uncola, is the only one with distinctly different qualities.” The Uncola struck a chord with the younger generation. They focused on puns based around the “un” part of the new slogan. By portraying Coke and Pepsi as “the Establishment,” JWT effectively situated 7-Up as an alternative brand for unconventional people. Out of this collaboration came one of the most famous advertising campaigns of the 20th century. Now let us collectively fast-forward, please, to the present. Some folks want to begin the day by sipping their gourmet jitter juice elixir amidst a crowd of MacBook-toting, fashionable gentlemen and dog-in-purse, iPhone-carrying, vogueish womenfolk. Enter the glamorous world of Starbucks & Co. And some folks want to begin the day sipping their plain jitter

juice brew surrounded by down-to-earth, sneaker-wearing, regular guys and happy-go-lucky, ponytail-bobbing, unpretentious ladies. Enter the wholesome world of Dunkin’ Donuts. But what happens when the trustworthy torchbearer of good ol’ coffee simplicity goes on a wild shopping spree… and returns looking more like a dashing downtown Brooklyn café and less like a longtime Main Street morning staple? The Unjava becomes undone. You’re inevitably left with a frazzled group of confused and frustrated customers who no longer understand how to relate to this once-cherished, previously adored brand. The brand equity swirls away in a fleeting puff of Blended Pumpkin Spice smoke. Which is why Dunkin’ has, quite unwittingly, served up a blistering pot of truly bitter coffee. The diehard Dunkin’ Donuts loyalists of America have passionately patronized this coffee shop for decades and embraced the authentic spirit of goodness it faithfully represented. Not because of the soon-to-be-installed fossilized wooden tables and hand-blown glass bulbs; but, quite the contrary, because it didn’t display the gentrified trappings of an understaffed, overpriced Park Slope café. So why would Dunkin’ Donuts uproot the sole unique selling point that sets it apart? Can somebody explain how trying to play second fiddle to a plethora of existing gourmet java shops is considered sound business strategy? Where’s the logic behind taking a winning recipe as a low-key, no-fuss industry differentiator and literally roasting it to a rancorous crisp? Surely, Dunkin’ doesn’t want to see a hefty segment of their customer base waddle away furiously in search of another low-cost, high-calorie, plainly brewed alternative. Yet, the plan of action being taken by this erroneous exercise in retail rebranding may unwittingly create a poor pecuniary outcome that, disturbingly enough, will threaten the future existence of the acclaimed Dunkin’ brand. One can only hope the shortsighted executives behind this soon-to-be-launched marketing debacle wake up and — quite literally — smell the coffee.  Abraham Bree is the creative director at C+A Global. His noholds-barred musings have been featured in numerous print and online publications. He resides in Brooklyn, New York, with his lovely wife, three colicky children, and pet goldfish.

Deeply Dunked:

Practical Takeaways “If you’re looking for the next big thing, and you’re looking where everyone else is, you’re looking in the wrong place.” — Mark Cuban, American businessman and investor “A brand is a set of expectations, memories, stories, and relationships that, taken together, account for a customer’s decision to choose one product or service over another.” — Seth Godin, best-selling business author “Stay true to your values. That’s why you were a success in the first place, and that’s how you make incredible things happen.” — Rafe Offer, CEO of cutting-edge music startup “Loyalty is built on the little things that you don’t really notice when they’re present, but you do notice when they’re missing.” — Peter Shankman, American entrepreneur and author “You have to understand your own personal DNA. Don’t do things because I do them or Steve Jobs or Mark Cuban tried it. You need to know your personal brand and stay true to it.” — Gary Vaynerchuk, author, speaker and internet personality

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HOT OFF A VA LUA B L E SCO O P O F F T HE LARG E ST B USI NE SS NE T WOR KI NG PLAT FO R M

Abe Post-Hyatt

Empowering Startups and Developers at Stack Overflow A fascinating article in Atlantic, titled, “The Coders Programming Themselves Out of a Job,” discusses what happens when a developer automates their own job. Is this a growing trend? Is automating your job simply doing it better? Where is the middle ground between automating mundane, time-wasting tasks and one’s entire job? How do we balance quality of life with coding velocity and efficacy?

I believe if you get the expected work done correctly and on time, more power to you. You should be paid for your contribution to the company. This is called being industrious, creative, and resourceful.

Paying IT people is extremely expensive, so if they have automated their job and still expect the high pay, I would say that is unethical. People should be paid based on the effort they put into their work.

After all is said and done, understand that companies are looking to maximize profits and pay off a few very influential stakeholders. Typically, a corporation will do anything to reduce its costs. Lots of tools will be implemented and automation is at the top of this list. However, an employee who does this will automate himself out of existence. No other way around it. Most developers will be out of jobs in the very foreseeable future. The rest will be servicing the machines. There will be a few lateral steps but inevitably, IT departments will be much smaller and will perform technician duties at a reduced pay rate. Compensation in IT has been stagnant for years. Machines need maintenance. Automation shifts job duties and creates jobs, while increasing the skills needed to perform them. Across the board what you get is a harder-to-reach minimum skill set for a livable wage, but more opportunity. 22 | B-TANK | DECEMBER 2018

If the coder had any business sense they would offer to sell the employer the rights to the automation program (buy-out) allowing the coder to cash out. Then the coder would either write a book about the experience, go to the media to expand their marketability, or get another position where they can do the same thing again.

These are issues that are completely predictable when you think about the initial problems of automation. Why would companies want to pay for something they’re not fully utilizing (the employee here). This continues the trend of companies making tremendous amounts of money with a minimal labor force that only continues to decrease.

I always tried — and sometimes succeeded in — obviating a company’s need for me. Essentially, I would either set up procedures and pull together resources so that less imagination was required, or I would identify somebody else in-house who could carry on more economically than me. Business as usual always bored me unless steady incremental improvements were possible. Automate the predictable, mundane tasks saving time for the real value of paying a human being: thinking. An employer who eliminates a position because it is now automated is foolish. You take that employee and see what else they can do.

Great initiative. Such employees should be promoted into a work-process improvement team to see what other areas of the company can be automated. And give them a big bonus if they can automate the CEO job and save the company millions.

While I don’t think coders in particular are lazy, this brought to mind that quote often attributed to Bill Gates: “I will always choose a lazy person to do a difficult job because a lazy person will find an easy way to do it.” My concern here is less about how ethical it is — if you can find an “easy” way to do your job and do it well, I don’t see a problem with that — but rather with the potential broader implications of job redundancy. Historically, innovation often renders many jobs obsolete over time, with new jobs often arising to replace those lost — but rarely have people endeavored to make their own jobs obsolete.

This is absolutely going to increase as automation and artificial intelligence become more prevalent. It’s already possible to construct a website without knowing any code. Companies like Weebly, Wix, and Squarespace advertise that fact as a pitch to prospective clients.

We all need to start paying more attention to how we are classified when working for someone. For instance, in the absence of a distinct contract stating otherwise, if you are a traditional W-2 employee of a company, any and all output you produce for them remains the property of that company. If you’re a 1099 contractor or something similar, however, then I think you’d be in a position to ask for additional compensation to buy the product/program that you have created.

I automated a lot of my work in financial services, and then moved on to other tasks that were more pressing than simple data entry. The unethical aspect of coding might occur if someone codes a job, collects overtime, but really isn’t doing the work. The better approach is to work with management to automate repetitive tasks and then see what they would like to do within the workflow. In large organizations, there’s always work to be done. In smaller organizations, automation means higher profits, leaner employee costs, and greater efficiency.

If you are being paid $100k to do a job and get it done well, I don’t think it matters how and even if you automate the work, you have just done $100k of work for the company.

I always enjoyed finding the coders who were present on the team. The key is KYE or knowing your employee, and matching skills to roles, not throwing bodies at tasks. In my case, I had a coworker who coded for a hobby and yet management had him processing forms manually. I enjoy talking to people so I quickly got him involved in some of my projects. Needless to say, he did not do processing after management saw his coding abilities.

Also, for a couple reasons, I don’t think you are “coding yourself out of the job” by doing this, especially if you’ve reached a level where you are capable of doing that. First, all code requires maintenance. Second, even as a junior, I’ve always had more responsibilities than just writing code or even anything involving a computer.

What are your thoughts? Join the conversation at info@btankmoguls.com. B-TANK | KISLEV 5779 | 23

THROUGH THE MAGNIFYING GLASS OF A BANKER DOVID KOEGEL

I want you to think about whether you are a businessman, entrepreneur, or leader. But, before I describe those three different types of people in business, I want you to think about your business goals. How often do you review whether your core business goals are being met? Wait! Do you have business goals or a business plan? I’d guess that most of you are nodding your heads NO, shrugging your shoulders, and saying, “I don’t need one!” OK, then what does your day typically look like? Do you wake up each day and say, "What I am going to do today?" Or, do you continue from where you left off yesterday?

The good news is: You’re not alone. The bad news is: You’re not enabling yourself to be very successful. Business plans and daily structure are the first common thread to success. (You can turn to a business coach to help you build a plan, or you can work on creating a plan on your own. For some basic tools there are a plethora of online tools and tips,

as well as dozens of books and available lectures.) After a number of trials and errors to achieve these two requirements, you’ll find what works and build from there. Everyone in business should have a good business goal. That said, I want to explore the different types of people in business.

ARE YOU A BUSINESSMAN, ENTREPRENEUR, OR LEADER? Here’s what a businessman, entrepreneur, and leader look like: A businessman is someone who sets up a business with an existing idea, offering products and services. He could be a leader or hire a good manager to lead. He is wise enough to know what he can’t do, and surrounds himself with a safety net of professionals to help with those responsibilities. A person in business, aka an entrepreneur, is a person who starts an enterprise with a new idea or concept, undertaking commercial activities. Very often he takes more risks, but these are calculated. He often does do not have great 24 | B-TANK | DECEMBER 2018

leadership skills. As Ken Krogue articulately describes: “Leaders walk in front and show others the way. They lift the heavy boxes first and, like Tom Sawyer, they start out by painting the fence better and faster than the crowd who gathered to watch them. It is awe that makes the crowd members pick up a brush and join in. But unlike Tom, they stay involved through the process and keep recruiting others. (Entrepreneurs figure out vinyl fences don’t need paint.) “Leaders don’t stop for nearly as many breaks or gather around and watch others, unless they are learning and

comparing. They always hoe to the end of the row, even in heat, a rainstorm, or when supper is calling. Leaders begin to sing out when the song begins, because they know the other voices will soon blend in and hide the fact they are slightly off-key. Leaders seek out the one lagging beyond, find what makes them tick, then challenge them to keep up and to keep time. Leaders are like the Marines…first in…last out. They don’t punch a clock, they get a job done, even if they mop up what’s left behind. Leaders work on the system, managers work in the system.” Entrepreneurship mentor and consultant Leonard C. Green always tells his students at Babson College that “entrepreneurs are not risk-takers. They are calculated risk-takers.” If you’re not naturally calculated then you need to acquire it. This skill cannot be purchased; it has to be practiced through mindful business exercises. Habits take 20–40 days to create. You may need a business coach to help identify what and how to acquire this skill. Now you decide: Who are you? No matter what you decide, it’s important for you to know that when a banker meets a new client, the impression the client provides is everlasting and will influence whether they will merit help when the business needs it. If you’re in your early years in business and are experimenting like the Wild West without seder, it will reflect and project that you are a greater risk. If you err and put the bank in an uncomfortable position too many times, you’ll be cutting your cord and you can forget about credit. Credit doesn’t just mean borrowing money. Credit can include gaining funds paid against uncollected deposits (funds that haven’t been approved for usage yet), getting a wire released in advance of confirmed funds arriving, or receiving a good reference for a new vendor. It will include accommodations outside the day-to-day purview of your business too.

THIS IS WHAT JACK SEES

What can you do? Learn right from wrong with the bank. Right • Properly capitalize your business with enough cash to function properly. • Review your general ledger and go online to see your bank activity every day (yes, every day. It must become a habit every day — get the point!) to make sure you have sufficient funds to cover the checks that will be deposited into your account. Some banks offer the option of allowing you to see which checks will be clearing the following day. This is a great tool to help you and advises you of your required daily funding early enough to avoid that dreadful bounce. • Invest in understanding how cash flow works. Hire a good controller or outsource it. Without understanding your cash flow and books, you could be setting yourself up for a cash-flow crunch and eventual crash. Very often, crashes spiral into failures and business closures. I’d like to add an extra note of caution to the entrepreneur: You need a safety net of people to surround you. You have such great potential, but can’t always put on the brakes when a train wreck is imminent. That’s why you need a great assistant, controller, operations person, spouse, accountant, lawyer, etc. All these people are your extended brakes. They enable you to pause when you’re on a roll and don’t always see what’s coming up. You very often think you’re outsmarting the bank or trade — and may do so once or twice — but it’s inevitable they’ll catch on, and the consequences are not worth forfeiting the reward of a longer-term relationship. Treat your banker as one of the people helping you grow. Dr. Martin L. Kutscher, author of Living without Brakes, portrayed many entrepreneurs with the following cartoons:

THIS IS WHAT EVERYONE ELSE SEEMS TO NOTICE

BUILD RELATIONSHIPS, CREATE SEDER, BECOME CAREFULLY CALCULATED, INVEST IN YOURSELF, MAKE SURE YOUR MOTIVES ARE HONEST — AND NEVER STOP HAVING FUN WITH WHAT YOU DO. B-TANK | KISLEV 5779 | 25

Business Journey

with a Budding Entrepreneur

I’ve spent years reading business advice and getting guidance on how to turn a business in the right direction. From sales to marketing to finance, brilliant books and blogs authored by successful professionals abound; what I, and many of my friends in the start-up stage, struggle with is finding advice for those still testing the waters. We have a hard time figuring out where to start. In this column I’ll share how I went from being the clueless guy who needed a parnassah to a hustling business owner. We’ll schmooze about roadblocks which spring up out of nowhere, struggles which seem insurmountable, deals that go sour, and how to overcome them and move toward success.

Recap: I developed a low-carb baking kit and went through the process of figuring out how to package each item individually.

y plan was to have Aaron's baking kits in stores in early May, three weeks before Shavuos. I figured that the holiday season was a good time to give my product good exposure as people are eager to try something new for Yom Tov. I purchased my first order of ingredients in early April — which left me with little time to put everything together. There were nine ingredients that required packaging, and each package required a label. My goal was to get 9,000 units onto the market. Since I didn’t have a high-tech production facility with efficient machines, most of the work was done manually. My siblings and young nieces and nephews took turns helping me fill and seal the bags. We spent the bulk of our waking hours (which turned out to be more than our sleeping hours) 26 | B-TANK | DECEMBER 2018

measuring, packaging, sealing, and affixing labels. The only issue was that the box which would contain all of the ingredients hadn’t yet arrived. So, I had cartons and cartons of packaged ingredients, but nothing to put them into. I was hoping the boxes would come in at least four weeks before our desired release date so that I'd have at least one week for packaging. What happened instead was that the boxes came in on time, but the design was all wrong. How and why the prototype didn’t look right in bulk wasn’t the focus, in our race against time. My priority was getting the boxes reprinted and getting them onto store shelves. I knew I'd stay up all night for a week straight, if that was what was needed to get my product out into the stores. Months before, I had considered the distribution dilemma. I could do it on my own, which meant keeping inventory

Aron Kaufman on hand, going the rounds to build relationships with store owners and managers, and trying to sell. The benefit here is that I can sell my own product best (versus the distributor, who may be pushing hundreds of items), and that I wouldn’t have to pay the 'middleman's' fee. I know some companies who doubled revenue after taking charge of their own distribution. However, building relationships from scratch, and the overhead costs of being on the road and responsible for a large amount of collections were definite downsides. Another option is a third party distributor. A distributor works as a wholesaler; he buys stock in bulk, resells to retail outlets at a markup, and then pays up on the goods within 30-60 days of the purchase (hopefully). I had decided to go with a distributor, and the one I reached out to told me quite honestly that he'll try to help but he can't know in advance whether a product will be successful. Even large companies, he told me, often discontinue a product that they invested hundreds of thousands of dollars into because the item didn’t catch on with consumers. Of course, I didn’t believe that would ever be true of my baking kits. Going back to my packaging, the units were finally assembled just a week before Shavuos. The distributor discouraged me from rushing it at this point, since it wouldn’t be received well by the supermarkets; they were too busy stocking up on Yom Tov essentials. If my kits would fall flat upon the launch, they might never pick up traction. After burning the midnight oil for all that time, I was disappointed that I'd have to wait longer to see my product

on the shelf. I begged my distributor to take the product around to supermarkets, and he finally relented. I only got the product into kosher markets in Upstate N.Y., as the distributor I worked with didn’t service New York City — where I anticipated the product selling well. Today, I realize that may not have been the smartest thing. It would have been a lot smarter to face the fact that I was running late and that I shouldn’t launch a product at the wrong time. I also learned that in order to move things ahead I'd have to work much more in advance, so as to allow for mishaps. Working with time to spare also allows one to get things done right. Finding a distributor in NYC is a lot more difficult, as shelf space in groceries are quite limited and distributors are very selective about products they put onto the shelves. My persistence paid off, however, and I found a willing distributor. By then it was July — right before the NYC summer exodus — so the distributor decided to wait for summer's end before bringing my product to the stores. Where space is a priority, a lack of traction for such a long time endangers the willingness of store owners to keep products on the shelf. Now that my goods were out, I knew it was important to let the world know about it. What I didn’t realize was that I didn’t have a clear vision for where I wanted things to go. I didn’t know if my kits were a health product, a convenient boxed mix, or a fun “project.” In the next issue I'll discuss where my marketing approach went wrong, and how my company is doing today. 

How to get a product into stores

Suzannah Raff

Do a lot of research. Who is your competition? What is the • Follow through. Decide where you want to be and then network industry/market like? What are the stores you want to target? Who until you get in touch with the buyer for that store. Once a buyer are your customers? Know the answers to these questions well. has a mutual connection, they are usually happy to receive a Determine price, packaging, product, place: the four Ps. sample. Follow up a lot. Buyers are very busy but are mostly polite. Build the relationship. Find out why they said no and work • Make sure that there is a product/market fit: This means your on fixing any issues they have with your product. Or re-visit your product fits the customers you are targeting and fits the stores product/market fit because, if it’s not a good fit, you may have you are targeting, and that the stores fit the customers you are to ‘pivot’ to either find the right market or tweak your product targeting. In other words, do the people you are targeting shop to make it fit better. in the stores you are targeting?

• Network with other small brand owners to see what is working • My goal when I founded Cleo&Coco Natural Body Care was to get our products into Urban Outfitters, the parent company of for them and what is not working for them. There are lots of difAnthropologie and Free People. I studied the beauty products ferent industry shows, distributors and services, and you need that they carried and their packaging and designed our packto learn which ones are the best for your product/market fit. aging to fit their aesthetic and target market. I was fortunate to • Relationships are everything. Network with people in your network at trade shows with people who knew the Free People industry by consistently showing up at tradeshows, shows, buyers and a dream goal came true: All four of our Charcoal events and on social media. Be present everywhere that is tarDeodorants are now available at Free People! geting to your niche/product market, so you meet the right • Know your goal and make sure your four Ps align with that goal: people and build relationships. Don’t be afraid to ask for introProduct, Price, Place, Package. ductions and do the same for others. Suzannah Raff is the founder of Cleo&Coco Natural Body Care, a brand of all-natural body care products that make innovative charcoal deodorants, aluminum- and chemical-free. She is also a business coach. B-TANK | KISLEV 5779 | 27

Communicated

In the Ever-Evolving US Business Ecosystem, Fidelity Payments Stays Cutting-Edge Constant With its Sizable and Growing Global Clientele, Brooklyn-based Industry Pioneer Well-Established as Innovator

ike ad agencies and marketing firms, it almost seems as if there are dozens of payment companies, with new ones popping up almost every day. How is Fidelity Payments different? Experience, expertise, and leadership, for starters. Fidelity is hardly new to the industry. The fact that credit cards are mainstream is hardly news, either. With much of retail shopping done nowadays online, credit cards are well past “wave of the future” and have swept the shores of modern commerce. At the same time, hard cash is fading into obscurity; a growing number of experts forecast a completely cashless society right around the corner. But electronic transactions are a wave that Fidelity has not only ridden, but also commands as that wave continues to penetrate further inland. Launched in 1996 by Williamsburg entrepreneur Binyumin “Ben” Weiser, Fidelity Payments started off before many retailers were accepting credit cards — and even before the internet was a given presence in businesses. (Can you remember that?) Fidelity began as many start-ups do — in a home office. Today, like many successful start-ups, it boasts two huge state-of-the-art workspaces, a specialized in-house subsidiary, and well over 100 full-timers — not counting its 200-plus sales agents coast to coast. A review of its online presence reveals just how much clout, credibility and authority the company has attained in its 20-plus years. Fidelity’s payment gateway, Cardknox, boasts such landmark American establishments as Goodyear, Maglite,

28 | B-TANK | DECEMBER 2018

Century 21, EagleRider, and CitySights as clients. The in-house technology brain trust, which services the high-tech end of payment processing, provides companies large and small with highly customized solutions for electronic payments. These are centered on Fidelity’s proprietary technology that embraces flexible recurring payments, automatically updating credit card numbers, gift card processing, “tokenization” (a security encryption method that assigns unique IDs to every transaction), and intelligent transaction routing. But it is in its primary models — point-of-sale (POS) and e-commerce payment processing in the purchase of goods and services — where Fidelity continues to make its mark. Building steadily over the years on its “what you see is what you get” reputation for straightforward honesty, Fidelity brought the voodoo of credit card processing into the Orthodox business community’s vernacular — attracting and retaining thousands, then tens of thousands, of satisfied customers with its trademark simplicity and affordability. In turn, long-time customers have referred their own customers to the processing giant, with constant networking and established relationships — and billions of dollars transacted annually — weaving an ever-expanding web of satisfied clients. But while a good chunk of Fidelity’s industry-wide national and global business is outside the tri-state area, the company remains native and responsive to the frum community. One of many community industry examples? Walk into any kosher supermarket throughout New York’s five boroughs, or Long Island’s Five Towns for that matter, and chances are you’ll find the Fidelity logo on the checkout counter’s credit

card terminal. (Community anchors Evergreen, Pomegranate, and Seasons are Fidelity customers.) That flourishing relationship with the kosher food industry came to the fore at the most recent Kosherfest convention, where Fidelity’s booth featured an irresistible game show-like attraction hosted by celebrity Jewish journalist Turx. Those supermarkets, and hundreds of Jewish-owned businesses of all sizes across the greater tri-state area, are Fidelity’s foundation of success — and one upon which it continues to build an ever-growing roster of customers well beyond the borders of Brooklyn. Today, Fidelity is anything but another local provider. The company is backed by a major investment from the influential HIG Investment Group, which empowered Fidelity’s quantum leap to the next level of in-house high technology and highly trained technical staff. Fired by a workplace culture where employees are as helpful to each other as they are to their clients, Fidelity boasts a focused friendliness that’s personal and professional at once. Calls and e-mails get prompt replies, and ultimately a 98.3% customer retention rate); brainstorming is practically a way of life around the offices. Speaking of putting heads together to solve problems, Fidelity has built quite the reputation for client customization. With its teams of dozens of in-house programmers, tech

support staff, and customer support pros, clients small to large know they’ll never be farmed out to third-party anything. “I have had serious discussions with over 50 different processors to partner with my point-of-sale software business,” says Aluvii’s Robert Brinton. “Cardknox is by far the most advanced in their technology, including their browser-based EMV solutions, and their support is fantastic to me and my clients. These guys take all my ideas and suggestions and make them work for me.” And with Fidelity always on the cusp of innovation — either aware of it hot off the presses or introducing trendy industry innovations themselves — customers know they’re getting cutting-edge tech. From mom-and-pop stores to mid-sized retailers to national chains and franchises, Fidelity continues to work with them all. That’s why few Fidelity customers come away dissatisfied, considering the proudly insane lengths that Fidelity will go to deliver customized solutions, coupled with its low effective rate and proprietary transaction-optimization technology. Credit cards changed everything. The internet changed everything again. But with all that change, Fidelity has stayed the same — not just looking forward to the future or just embracing it, but verily shaping it with its industry-defining technology. 

Phone: 718.782.2823 Email: save@fidelitypayment.com Website: www.fidelitypayment.com B-TANK | KISLEV 5779 | 29

Our Picks for the Top Small Business Credit Cards

eople often ask us: Which is the best credit card available? It all depends — each business has different needs, and that will determine which is the best card for you. A number of variables can determine which credit card is the best option for your business, including how you use your credit card, what purchases are made each month, and whether you or someone in your business travels often. There’s no easy answer when it comes to determining which credit card is best for you. The following is a breakdown of the credit card options currently available.

The cell phone insurance alone makes up for the $95 annual fee.

1st Place: The Business Platinum® Card from American Express OPEN

4th Place: The Capital One Spark Cash for Business

This card is ideal for small businesses with significant travel budgets or those with consistent purchases of over $5,000. Here’s why: When you book flights and prepaid hotel stays through the Amex Travel Portal, you earn 5x Membership Rewards points per dollar spent. You earn a 50% bonus — effectively 1.5x points per dollar — on purchases of $5,000 or more, up to 1 million extra points per year. When you use points to book a flight through the Amex Travel Portal, you'll get 35% of your points back. The card includes $200 in airline fee credits each calendar year, essentially rebating part of the annual fee. (Because the airline fee credit is valid each calendar year, you could qualify for the credit twice in your first 12 months of having the card.) The card offers a slew of other benefits, including access to more than 1,200 airport lounges.

2nd Place: The Chase Ink Business Preferred This card earns valuable, flexible Ultimate Rewards points on small business spending. These points can be traded for cash back, transferred to frequent flyer and hotel loyalty partners, or used to purchase travel with a 25% bonus. The card also earns 3x points per dollar on the first $150,000 your business spends on combined purchases each cardmember year in several categories, including travel, shipping, internet/ cable/phone, and advertising on social media sites or with search engines. Purchases after you reach $150,000, or in any other category, earn 1x point per dollar. This card also offers cell phone protection. When you use it to pay your cell phone bill, you're covered for up to $600 for damage, loss, or theft of your cell phone or your employees' work phones. Although this is limited to three claims per rolling 12-month period, this can save you a fortune.

3rd Place: The Business Gold Rewards Card from American Express OPEN This card can be the go-to for small-business expenses, especially since the card offers 3x points on expenses such as Google advertising. With the $175 annual fee waived the first year and plenty of great transfer options via the Membership Rewards program, this card might be the perfect option for small businesses that spend $100,000 in office and advertising expenses. This card earns unlimited 2% cash back on all purchases. No categories, no points values or conversions, no redemption minimums. Rewards won't expire for the life of the account, and you can redeem any amount of cash back. The card has a $95 annual fee, waived the first year. At first glance, the Amex Blue Business Plus might seem like a better option, since it earns 2x points and doesn't have an annual fee. However, keep in mind that while 2x points may be more valuable than 2% cash if you redeem strategically for travel by transferring to partners, Membership Rewards points can't be redeemed outright for cash. You can redeem them for a statement credit, but they'll only be worth 0.6¢ each. This means that effectively, the Amex card only offers 1.2% "cash" back, compared to the no-strings-attached 2% from the Capital One Spark Cash. Credit lines are often limited with Capital One credit cards, and businesses with significant expenses may wish to go with the Chase or American Express options.

Honorable Mention: The Blue Business Plus Credit Card from American Express This card usually doesn't have a welcome offer, but it's currently offering a limited-time bonus of 10,000 points. Despite the fact that the welcome bonus is not that significant, the card offers 2x points on every dollar spent, on your first $50,000 in spending every year. There's also a 0% introductory APR on purchases and balance transfers for the first 15 months, and then a variable rate (currently 12.99%, 16.99%, or 20.99%). While funding your startup with a credit card may not be the best idea, the introductory APR can help if you have a few larger purchases coming up and are still working to get regular cash flow. Best of all, the card has no annual fee.  To learn more about your credit card options and for a free consultation, visit https://my.getpeyd.com/request-a-consultation

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WHEN YOU THINK REWARDS MANAGEMENT israel

airline miles

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WWW.GETPEYD.COM PHONE: (646) 801 - PEYD (7393) WHATSAPP: (516) 350-0838 INFO@GETPEYD.COM

THINK PEYD

Barbara Finkelstein

Lifeboat elevators and green factories:

Salamandra Zone breathes fresh air into old problems 32 | B-TANK | DECEMBER 2018

COVER STORY

LIEUTENANT COLONEL TRANSFORMS ARMY CAREER INTO UPLIFTING BUSINESS

B-TANK | KISLEV 5779 | 33

verybody knows that the least safe place during a fire is the elevator. The occupants of the World Trade Center on 9/11 knew that, as did the tenants of the Grenfell Tower block in West London in 2017. Without any realistic means of escape, many people stayed put and prayed for a rescue that never came. The conventional wisdom to avoid elevators during a fire is ready for an update. Thanks to his work with the Israel Defense Forces (IDF) in infrastructure and disaster recovery, Marat Maayan learned that an elevator may indeed be the safest and most reliable refuge during a building fire. Working with civilian firefighters and the Home Front Command — the Israeli organization that applies army search-and-rescue techniques to fires, floods, and terror attacks in civilian settings — Maayan organized a series of simulated high-heat situations in 1991 to determine what solution could turn an elevator car into a safe space. Maayan, now CEO and co-founder of Salamandra Zone, worked to build a fire-safe elevator prototype as he led bomb disposal teams to disarm Iraqi Scud missiles launched against Israeli targets during the five-week Gulf War. The career IDF man continued investigating emergency scenarios and viable fire evacuation routes after the Second Lebanon War in 2006, when he was put in charge of improving the IDF’s “operational continuity” — the ability of a system to recover after a catastrophic event. “I could see the difficulty that our first responders, in the army and in a civilian setting, were going to have in cities like Tel Aviv, where evacuation routes in the new tall buildings had not been sufficiently addressed in the architectural plans,” Maayan says. The evacuation problem was further exacerbated in Tel Aviv and other Israeli cities by an aging population. “We have people with disabilities,” Maayan says. “And we have young kids. When you put all these demographic groups together, you have something like 30% of the population that needs some kind of assistance during evacuation. And how were we going to move

34 | B-TANK | DECEMBER 2018

these very old and very young people? Certainly not via staircases that fill quickly with smoke, gases, and toxic vapors produced in the process of combustion.” Indeed, crowded, narrow, and inadequately reinforced staircases emerged as critical factors in the deaths of people trapped on 9/11 in the World Trade Center towers. The problem of building fires has grown exponentially since the 1990s with the construction of super-high towers in Israel and around the world. New York City alone has 129 buildings between 600 and 1,776 feet high. Burj Khalifa in Dubai, the world’s tallest building, rises a half mile into the desert sky. Shanghai, Seoul, Mecca, Tianjin, Shenzhen, Guangzhou, Chicago, Hong Kong, and Beijing all boast structures between 1,700 and 2,700 feet high. Israel is home to 21 buildings between 490 feet (Tel Aviv’s W-Prime Tower) and 781 feet (Tel Aviv’s Azrieli Sarona Tower). At last count, planet Earth had more than 3,000 skyscrapers higher than 500 feet. Urban policy strategists can only guess at the number of people who live, work, and visit in these behemoths. How could a rescue team possibly evacuate a tall building’s many occupants during a fast-moving fire when the rescue apparatus barely reaches beyond the tenth floor? An Everyday Solution for High-Rise Buildings Maayan believes that the most persuasive solution was the Israeli safe room, typically reinforced with four and a half inches of concrete, a heavy sealed window, and a steel, vault-like door. Mandated by the Israel Home Command in the wake of the Gulf War, the safe room and its occupants nearly always survive a crisis intact. Maayan observes that a tall-building fire today has become exponentially more dangerous than in past years thanks to a phenomenon called flashover — the moment certain organic materials undergo thermal decomposition and release flammable gases. Thirty years ago, when most furniture was made out of wood, the heat conditions for a flashover could take half an hour. With furniture made of synthetic or treated materials, however, the flashover point occurs within seven

COVER STORY

minutes. Consequently, firefighters have to get through traffic 23 minutes earlier than they did in past decades. Maayan says that with the chemical components that comprise furniture and paint, the expedited flashover problem grows ever more serious. Clearly, the rapid spread of fire is so complex that any feasible solution to fire evacuation cannot be a one-man show. To gain a greater understanding of fire evacuation solutions, Maayan reached out to Shimon Romach, Israel’s fire and rescue commissioner from 2002 to 2011. Romach’s long tenure in that role, his anti-terrorism experience in the Gaza Strip, West Bank, and Lebanon, and an additional nine years in industry, made him an indispensable expert on the subject. More recently, Maayan brought in Sagiv Weiss-Ishai, a licensed fire protection engineer with 20 years of experience in code enforcement. Sagiv was part of the planning and control team in three fire evacuation projects, adhering to safety codes published in 2015 by the National

We set fire to rooms filled with furniture, created real smoke, and watched to see how effective B-Air was

Fire Protection Association (NFPA). The NFPA code mandated that any elevator evacuation solution had to ensure that the shaft be free of smoke. Working alongside Yoel Sasson, a professor of chemistry at Hebrew University, and Dr. Uri Stoin, an applied chemist with a dozen “green tech” patents, Maayan’s team devel�oped a solution called B-Air, a system that converts toxic gases into oxygen-enriched air. The process cools the elevator air and keeps the flow of air steady to prevent smoke from entering the car as it moves up and down the shaft or stops to pick up more building occupants. “The challenge for us was to build a small system capable of converting fire smoke very fast into breathable air,” Maayan says. “This meant minimizing the toxic elements while enriching the elevator interior with oxygen — without having a flammable oxygen cylinder anywhere near the elevator.” The small B-Air box unit is secured onto the top or bottom of the elevator car. The unit’s sensors relay information about B-TANK | KISLEV 5779 | 35

by the Centers for Disease Control and Prevention, a federal agency whose mission is to safeguard the health of populations.

the gases inside the elevator shaft to cartridges containing a liquid chemical formula capable of neutralizing the toxic gases. Pumps suck the gases through the liquid, thereby converting them into breathable air. Maayan likens B-Air’s liquid chemical formula to ink cartridges in a home printer, where a few colors combine to produce dozens of hues. Likewise, the liquids in B-Air’s cartridges can be mixed dynamically to neutralize the array of gases in the elevator shaft. “We were in Northbrook, Illinois, last June to run some live tests at UL,” Maayan says referring to the global safety consulting and certification company previously known as Underwriters Laboratories. “As part of the UL protocol, we set fire to rooms filled with furniture, created real smoke, and watched to see how effective B-Air was. We were able to ascertain that we can take highly toxic smoke and create oxygen-enriched air. In short, we verified the stability of our technology.” The UL test has not yet been performed on an actual elevator. That phase of testing will take place in about a year when the Salamandra Zone team will affix the B-Air system atop the elevator and subject the smoke transformation system to a wide range of changing fire conditions. Because the US will be one of Salamandra Zone’s key markets, Maayan’s team will finesse the technology to align with strict targets set 36 | B-TANK | DECEMBER 2018

Getting Salamandra Zone off the Ground Maayan’s 27 years in the IDF taught him two sets of skills. He studied various methodological approaches to problem-solving, and he learned how to motivate teams. Uncertain, though, if his military experience had equipped him completely for the business world, Maayan enrolled in a bachelor’s degree program at Ben Gurion University in 2002, majoring in business administration, management, and operations. In the course of his studies, he came to see the role that government plays both in business development and the delivery of social services, and continued his education with a master’s degree program in political science and government at Hebrew University. Eight years later, in 2010, Maayan invested in a second master’s degree in government and terrorism at IDC Herzliya. With his career and educational bona fides in place, Maayan began Salamandra Zone with the knowledge that he and his collaborators could build the kind of company that Forbes magazine calls a “scale-up nation,” a company capable of building a global business that is headquartered in Israel, employs thousands of employees, and generates significant revenue. A “start-up nation” company, by contrast, tends to be acquired by a non-Israeli company — a goal not on Maayan’s horizon. Determined to build an Israeli company with Israeli, US, and Chinese markets in mind, Maayan first mined a surefire source of investment: his pension. “I had the confidence to invest in what I was doing,” Maayan says. “My pension supported the early days of research and development (R&D).” His initial results also inspired the confidence of various engineers, many of whom worked on B-Air without immediate financial compensation. Maayan’s “seed money,” and the sweat equity of his dedicated partners, ultimately convinced Israel’s Innovation Authority (IIA), an R&D funding agency, to conduct due diligence of his business model. To assure the IIA’s support, Maayan and his partners expanded Salamandra Zone’s business model to include an elevator evacuation solution for low-rise

COVER STORY

buildings, such as hospitals and assisted living facilities, as well as skyscrapers. “We wanted the Innovation Authority to understand that the first adopters for our B-Air evacuation system will be buildings that are not that tall,” Maayan says. “We know from fires in nursing homes that an elevator to evacuate old and disabled people can prevent death and injury. What is the solution right now? People in wheelchairs have to believe that someone will come help them get down several flights of stairs. And of course, most of the casualties would come from carbon monoxide, a deadly, odorless gas.” Stress Creates a Magical Environment for Start-Ups As Maayan sees it, his business idea could probably not have gotten off the ground anywhere else in the world but Israel — a fact that several Chinese colleagues observed at a recent business meeting. “These guys were reading Start-Up Nation, the book by Dan Senor and Saul Singer that asks, ‘Why does Israel give rise to more start-up companies than large, peaceful, and stable nations such as Japan, China, India, Korea, Canada, and the UK?’” Maayan recalls. “They offered an explanation. ‘It’s because your businesspeople draw on the social network they established during their military service,’ they told me. Okay. I agreed. One of my advisors, based in Washington, D.C., actually was a member in my military unit. So, yes, good things come from the bonding and trust you build during your service.” But Maayan’s Chinese colleagues were not entirely convinced. “They observed, rightly, that many other countries have mandatory military service that does not contribute to the development of an innovative business environment,” Maayan says. “They knew there had to be something else that was unique to Israeli society.” Maayan confirmed that the start-up mentality is a uniquely cultural — and Jewish — phenomenon. “I explained that in our culture, you cannot study Torah on your own,” he says. “You need a partner or a small group of students to analyze, discuss, and debate a text.” Maayan believes that this innately inquisitive way of learning spreads out over the entire society — religious and secular — creating a specifically Jewish consciousness that all but argues a more technologically advanced world into existence. “Our mode of study gives people permission to ask questions,” Maayan says. “To look for solutions. The recipe for the start-up mentality was born in our religious ideals.”

If people feel too comfortable, if everything around them is too nice, they have no motivation to change.

B-TANK | KISLEV 5779 | 37

Maayan contrasts this pugnacious outlook on entrepreneurship with the “let’s buy innovation” mindset he encountered at a start-up workshop he recently attended in Austria. “The workshop took place at a beautiful chalet surrounded by the Alps,” Maayan says. “It was sponsored by a billionaire who made his fortune in the computer industry. He and I were having a beer on the balcony in the sun. “I said, ‘Listen, Herman. You’ve put together a great workshop, but don’t expect to see any innovation come out of it.’ “He said, ‘How can you say that? I’ve supplied everything a budding entrepreneur could possibly want: A beautiful environment. Brilliant people. Money.’ “I said, ‘That’s the problem. When you’re in a comfortable environment, nothing can change.’” Maayan believes that comfort undermines the urge for innovation. “If people feel too comfortable, if everything around them is too nice, they have no motivation to change,” he says. “For 70 years, Israelis have been living in less-than-comfortable quarters. My ‘neighborhood’ is not as comfortable as my Austrian acquaintance’s. The need for change pushes us to make a difference.” Cleantech Brings Goodness to the Whole Planet Perhaps in another country then, a career in the military — in which Maayan never had to develop or sell a product — would have created the archetypical civil servant committed to the status quo. “On the one hand, it’s true that in my military career, I did not have to create a sale of even one dollar,” Maayan says. “This is why I work with people who have the right financial skills. In the end, we have to become a company that will be profitable.” 38 | B-TANK | DECEMBER 2018

On the other hand, Maayan observes, the financial imperative alone does not motivate his 11 employees to work long hours. “You need to combine profitability with the idea that you and your team are doing something important,” he says. “A big chunk of our motivation is not driven by money. It comes from the belief that one day we will save people’s lives. We are creating goodness around the world. This is the business way, the Israeli way, the Jewish way.” The drive to keep innovating has already resulted in C-Air, a cleantech system that Maayan and his team at Salamandra Zone designed after Israeli factory owners asked if B-Air could be adapted to detect and neutralize leaks in industrial zones. The first gas Maayan’s team tested was hydrogen sulfide, an odorless, flammable oil and gas byproduct that leads inevitably to loss of breathing and death. Under UL laboratory conditions, C-Air rendered hydrogen sulfide harmless. Salamandra Zone already has an arrangement with a factory in northern Israel to install C-Air for a standard three months. If this trial period is successful, the factory plans on buying two C-Air systems. “By itself money could never impel me to invest my family’s personal savings in a dream,” Maayan says. “Defining the great business, environmental, and climate problems in Israel and around the world, and coming up with sound business solutions to improve or save people’s lives has kept Salamandra Zone going these last five years. And it’s what will motivate us to identify the next problem — and the next solution — whatever the financial challenges.”  Barbara Finkelstein has contributed to B-Tank since 2017. She is at work on a book about mental illness and housing in the Bronx.

THE INTERSECTION OF

and

YIELDS NEW OPPORTUNITIES

Marcia Layton Turner

B-TANK | KISLEV 5779 | 39

he best new business ideas originate out of a need to solve a problem. Yes, there are plenty that are conceived in a boardroom or classroom — or even by accident — but the most successful are often the result of scientific research in response to obstacles. Some obstacles are potentially deadly, such as the spread of illness through hand-to-hand contact. The solution? A product called hand sanitizer. Other obstacles include the emerging concern over the extent of daily sitting, which raises alarms about fitness. Several products have been designed to combat this, from standing desks to wearable fitness trackers. And there are those obstacles which are relatively minor in impact, such as burrs catching in dog fur — which led George de Mestral to study the burrs hooks and to use them as models for hook-and-loop closures, better known as Velcro. Science, or scientific study, routinely leads to the development or discovery of a new product idea that addresses an existing problem. Addressing Major Social Issues In the case of FloodBreak, the problem was floodwaters pushed ashore in southeast Texas during Tropical Storm Allison in 2001. Houston was hardest hit, receiving more than 35 inches of rain and enduring $8.5 billion worth of damage, largely due to the flooding that resulted. Sure, there were active flood-control measures in place, but they were essentially ineffective thanks to requiring power to operate, which was not available, or manpower, which was often insufficient or error-prone. Lou Waters came up with the idea for an automated gate triggered by rising floodwaters. The FloodBreak AutoGate flood barrier uses the power of rising water against itself to automatically protect structures from flood damage caused by floodwaters. The barrier sits below

40 | B-TANK | DECEMBER 2018

ground level, on highways, roads, and sidewalks, unobtrusive until needed. Once water starts moving across the barrier, it automatically activates and begins rising to block the water’s passage. The rising floodwater creates the hydrostatic pressure to float the buoyant aluminum beam and activate the self-sealing rubber gaskets. The barrier continues to rise until it reaches a 90-degree angle and the pressure of the floodwater holds it in place as long as it’s needed. Once the water begins to recede, the barrier drops to its original flat position. Waters developed this passive flood barrier as an answer to the issues active flood barriers presented. In that sense, it was an evolutionary product. Designing Revolutionary Products Other scientific research has yielded innovative products unlike anything currently on the market. With food allergies on the rise, new products are springing up to help treat allergy attacks, replace foods found to cause allergic reactions, and to test for the presence of allergens in order to prevent such reactions. The US Centers for Disease Control and Prevention (CDC) found that the incidence of food allergies in children increased 50% between 1997 and 2011; 1 in 13 children now has some type of food allergy. One of the eight most common food allergens, responsible for 90% of food allergies, is gluten. Yet despite its prevalence, individuals diagnosed with gluten sensitivity or a gluten allergy previously had no way to be sure that prepared foods — even those labeled as such — were truly gluten-free. Shireen Yates and Scott Sundvor met at MIT and bonded over their food allergies and shared anxiety regarding eating in restaurants, never 100% sure that they wouldn’t have an allergic reaction at the table. They worked together to design a device,

Science, or scientific study, routinely leads to the development or discovery of a new product idea that addresses an existing problem.

named Nima, that tests for the presence of gluten in foods. It’s compact and portable, so families can bring it with them to confirm food is gluten-free before digging in. Nima’s founders also developed a peanut tester to confirm dishes are peanut-free for individuals with peanut allergies. Nima is a new market entrant designed to address an emerging concern about food safety for the growing number of food-allergy sufferers. Modeling Products after Nature Other products aren’t developed based on scientific research, but on nature. Studying the structure and capabilities of living organisms has spawned many new product ideas. Mimicking human movement was the goal of exoskeletons, which were conceived to help individuals with mobility challenges become upright and mobile. Several research universities have created their own variations of exoskeletons. The Phoenix medical exoskeleton is just one example of science-turned-product, providing individuals with a device that wraps around the body and supports movement from a seated position to standing, to walking. While the product is still in the investigational stages, similar versions will likely soon hit the market. Another group of scientists is trying to model a new product after an elephant’s trunk. Scientists at the Georgia Institute of Technology and the Rochester Institute of Technology are studying how elephants use their trunks to pick up small objects. The scientists’ goal is to better understand how elephants use their boneless trunks to pick up objects of varying sizes. Their hope is to use the elephant trunk as a model for robotic hands or grippers that have the fine-motor capability to pick

up items of varying sizes, materials, weights, and shapes. Likewise, other companies are using spiders and other insects as models for robots that move. Tapping into Nature Other for-profit ventures leverage existing natural resources, such as wind, to generate electricity. Off the shores of Scotland floats the world’s first floating wind farm, which now powers 20,000 UK households — Equinor’s Hywind project. Floating wind turbines capture winds that pick up out at sea and convert them to electrical power that is delivered back to the mainland. While wind turbines designed to generate electricity from wind are nothing new, placing them at sea is. There have been advances in the world of plant science too. As the average growing-season temperatures continue to rise due to climate change, the growth and production of plants are being negatively impacted. This means food will be increasingly harder to come by, putting added pressures on farmers to stay in business. Fortunately, food scientists discovered that they could increase production of plants like soybeans, black-eyed peas, and cassava by increasing production of a common protein in plant leaves. Plant Biotechnology Journal reported that this minor modification led to 27–47% increases in production. These types of scientific discoveries help solve problems like food shortages while also creating new business opportunities for farmers and growers. Whether scientific developments lead to business opportunities that contribute to social issues or improved quality of life, there’s no question that some of the world’s biggest innovations started with science. And that science will continue to be one of the best sources of new ideas for the future.  B-TANK | KISLEV 5779 | 41

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Stu Sjouwerman

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is the CEO of KnowB4

Tech Term

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they really tried to describe was the omission of the “decide” step in the OODA Loop. Educating yourself and your employees about social engineering can prevent attacks. Show your employees how it works. Train them how the bad guys try to manipulate employees. Explain the exact mechanism so that your employees actually understand it, and are able to apply what they learned. A trained employee is much harder to fool, and dramatically less gullible, when they are confronted with attack vectors that try to social engineer them.

red flags here...”) 3. Decide using the data and orientation toward rational, productive behavior. (“I’m not clicking that!”) 4. Action putting that decision in motion. (User clicks on the Phish Alert Button instead.) The game for the bad guys is to get inside the OODA Loop and cut out the decide step. That is the exact anatomy of social engineering: subversion of the decision-making process. The bad guy wants your user to react without much (or any) rational thought. The click, or the opening of the attachment, are actions based on emotion. A good example is the attacker artificially creating shock (such as writing “Celebrity Death!” in the subject line of the email) in the mind of your user. What

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The OODA loop is the decision cycle of observe, orient, decide, and act, developed by military strategist and United States Air Force Colonel John Boyd. Here’s how OODA loop applies to social engineering: 1. Observation: Your end user is active in your organization getting their tasks done. Suddenly the end user observes something that seemingly they need to do something about, either to prevent a negative consequence or benefit from an opportunity. (The attacker’s first attack vector.) 2. Orientation in business refers to human judgement to put happenings into context with past experience and business understanding, to quickly predict what to do next. (“Hmm, I see phishing

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tidbits to keep you tech fit

Think Before Yo u C l i c k

tech time

Tech safety

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Efraim Wachsman

is a full-stack software developer at Maven Software Solutions, a full-service custom software develo p m e n t c o m p a n y.

tion, search engines will quicker rank an encrypted website over a non-encrypted one, which will help your SEO.

without being read by some evil hacker? Encryption locks your message with a public key (the lock) before sending your message, and only the recipient, who has the private key (the key), can revert the mumble-jumble to plain text. Any website that uses “https” uses encryption. Besides for the obvious security benefits of using encryp-

Encryption is a method of encoding and protecting private messages using a system of virtual locks (public keys) and keys (private keys). Crypt is Latin for vault. Most internet activity boils down to sending and receiving messages from your browser to the website server. How can you ensure that your message gets to its destination (such as your bank) safely

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Encryption?

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Mordecai Holtz

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is part of the global network of key opinion leaders for Huawei, China’s largest and fastest growing tech company.

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Leah Freiman

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attack. SentinelOne should protect you 100% of the time. That’s why it has been ranked as the number one anti-ransomware product for the past seven years. Can we be biased and say there is nothing like Israeli high-tech?

and block those. SentinelOne looks at patterns of behavior instead. So if something looks like it’s going to go wrong, SentienlOne will block the activities. This can create a lot of false positives for the admin monitoring the program, but a good security analyst will be able to identify and differentiate between the two and work out the kinks so that it shouldn’t continuously block non-threatening activities. The best antivirus won’t protect you from a ransomware

ture that will shut the ability to disable the rollback feature in your computer — something a hacker wants to do so that you cannot restore your “unaffected” Windows. The SentinelOne solution combines endpoint detection and response (EDR) capabilities such as remediation and rollback as well as widespread visibility — even in encrypted traffic for threat-hunting purposes. This means that a generic antivirus will look at signatures of what viruses do

SentinelOne is a next-generation cybersecurity, anti-ransomware solution, focused on protecting the entire company. The SentinelOne endpoint protection technology focuses on behavior blocking and leverages artificial intelligence to protect you — rather than using signatures, which an experienced hacker can override. This makes it a compelling replacement for other antivirus programs on the market. In addition, SentinelOne has an exclusive fea-

Anti-ransomware

CEO of ITCON, Yo u r C y b e r s e c u r i t y E x p e r t s .

B-TANK | KISLEV 5779 | 43

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stages of fulfilling its full potential, it can already be applied to different uses in marketing. The most obvious is to display a product in a realistic way that enhances the shopping experience. As tech giants push their vision of the world directly into viewers’ eyeballs, they’re all experiencing a similar problem: The biggest challenge is to apply AR technology to everyday life in a way that the headsets will eventually turn into everyday consumer products.

Tech Solutions

+ + +

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ing in popularity because it brings elements of the virtual world into the real world. It allows users to continue their regular lives while enhancing the things they see, hear, and feel. Compared to VR and MR, augmented reality lies somewhere in the middle of the mixed reality spectrum, bridging the real world and the virtual world. Lumus, a pioneer in the AR space, is the provider and developer of the core tech that enables AR to succeed. The company is working on optical technology for see-through wearable displays and serves multiple AR vertical markets, including healthcare, manufacturing logistics, avionics, and more recently, consumer products. While AR is still in the early

According to International Data Corporation (IDC), AR is expected to be a market of $215 billion by 2021. Microsoft, Google, and Apple all seem to agree that AR will revolutionize the way we interact with technology, each company determined to beat the competition. Consumers won’t connect to this new age of reality on a laptop or a phone: We’ll need to strap on some expensive headgear and interact with the space around us. In that sphere, anything can happen. While AR may not be as exciting as taking a virtual reality roller coaster ride, the technology is proving itself as a very useful tool in our everyday lives. From social media filters to surgical procedures, AR is quickly grow-

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Augmented Reality (AR) is a live direct or indirect view of a real-world environment whose elements are augmented by computer-generated sensory input such as sound, video, graphics, or GPS data. Mixed Reality (MR) is the merging of real and virtual worlds to produce new environments and visualizations where physical and digital objects coexist and interact in real time. Virtual Reality (VR) is a computer technology that replicates an environment and simulates a user’s physical presence in that environment, allowing the user to interact with it. Coined as the next big thing in tech, AR, VR, and MR are all in the stage of building hype.

The New Age of Reality in 5G

Tech trends

Frank Talk Discussions about employee issues

Esther Zohn, SPHR, SHRM-SCP

44 | B-TANK | DECEMBER 2018

Corporate Culture

In this column, Esther Zohn, a human resource expert, moderates a roundtable discussion on relevant employee issues. This month she discusses what good career development is, how it helps career advancement, how to develop a career within a company that doesn’t offer formal training, and other tips on career advancement.

Tamara Levin

Rob Martinez

Vanessa Shaw

Levin is a senior HR professional with 20 years of experience. She has worked for Samsung Electronics and Cognizant Technology Solutions, focusing on employee culture, employee engagement, and diversity and inclusion.

is the VP of sales for the communications division for Eventide, which creates NexLog Communications Recorders and software designed to meet the specialized needs of public safety and other mission-critical communication users.

created a company called Human Side of Tech, where she works with HR, talent, and culture leaders to bring creative opportunities to innovate the employee experience with Design Thinking through her online community, The Workplace Lab, as well as public events.

Defining Culture Esther: We hear a lot about having a good corporate culture. Can you please define what corporate culture is?

Rob: Culture is the unspoken atmosphere in which everybody works together to get stuff done. There isn’t necessarily a defined set of rules, but it directly affects every aspect of an organization, including their bottom line. Tamara: My take on culture is that it’s the DNA of the company — what the organization stands for. It’s their mission and their values. I agree that it’s really unspoken. It’s about how people relate to each other. It’s about the company strategy, what we’re doing within the company, how to

treat people, or how to make people feel included in what the company stands for. It’s also what the company is striving to build. It’s very much a shared set of values, a shared set of ethics, and a shared vision of what drives us and what we’re driven by to be successful. Vanessa: Right now there’s a lot of buzz about culture and around organizational design, asking the question: How do we design better employee experiences? How do we create more modern workplace culture? I think this shift is a positive direction forward, to have a deeper understanding that culture exists within our workplaces. People debate about culture — is it perks or employee benefits? Culture isn’t just about the way we interact and participate in groups, but it’s the guidelines we create — what we believe is good or bad, right

or wrong, and what we’d deem as functional or dysfunctional. When we have a view of culture that’s just about organizational culture, it limits our opportunity to create a powerful shift.

Leadership Responsibilities Esther: Who defines the culture? Is it the senior leaders who are responsible for creating the culture in an organization?

Tamara: I think that there are all kinds of ways that we can influence culture at a peer level and a leadership level, but it certainly comes from the top. It’s everyone’s responsibility to live those values or share those values and make people feel welcome, where they can be themselves and bring their best selves to the office. B-TANK | KISLEV 5779 | 45

IF YOU PUT VALUES UP ON THE WEBSITE OR TALK ABOUT THEM IN AN ORIENTATION AND THEY AREN’T LIVED, THE CONSEQUENCES ARE VERY BAD FOR EMPLOYEE MORALE, EMPLOYEE RETENTION, OR EVEN THE VIEW FROM THE OUTSIDE.

Vanessa: If the culture that’s created is highly collaborative in that there’s a lot of opportunity and input from multiple levels, I think there’s a greater chance for the bottom-up influence to help drive and shift the culture. But that doesn’t always work. An example that really shocked a lot of people was what happened at Etsy. They had a really strong culture, but their CEO was ousted by their board and a very sales-driven CEO was put in his place. Half the company was fired along with the CEO, and the company changed from being a B Corp into a C Corp and it completely shifted the culture. Even though Etsy had a very bottom-up-oriented culture where there was a lot of opportunity to influence it, it changed because it was a public company, with a board that had unmet expectations. Esther: Do we hold leaders accountable for creating the culture? Can employees actually change the culture without that leadership buy-in, or does it have to be a shared goal for everyone?

Tamara: I’ve seen some examples where employees have rallied around something that’s important to them and created the culture. An example would be giving back to a community. There were groups of employees that decided to get together and to start supporting causes that were important to them, and from there other teams joined and they decided to build that into their citizenship strategy. This wasn’t something that came from the top but that organically grew, and it is an example of culture that came from the employees themselves, but it was very much supported by the leadership. Esther: How do subcultures live within the larger company

46 | B-TANK | DECEMBER 2018

culture? We know that there are often separate team cultures or cultures within geographies. Do you find that a company culture can still be successful with these separate subcultures?

Rob: Yes, I think so. A large company is typically going to have a publically stated mission which is available on its website, and it’s up to the local leadership and geography to map their culture to that overall culture. You have to drill down to what this mission statement really means and how you apply it locally. Given all the differences we may have across geographies in the world, what amazes me is how similar we really all are when you get down to it. If the company has set that up well, it all comes through, and if you hire right, it’s managed naturally and the culture is a place for people to grow. Tamara: I’d agree with that. Most of the companies I’ve worked at have been internationally owned, but the key to having a healthy organizational culture, regardless of the other cultures that are within, is respect for each other. When you get into a room, regardless of whether the people are from the corporate office or traveling in from abroad, if there’s a mutual respect for each other, you can respectfully discuss if this is going to work in this geography or won’t, and come to the middle. It comes to what is the core mission. What are the core values that this company is living by? I’ve also seen it go the other way — when a culture of fear of not conforming is prevalent and those who have a difference of opinion aren’t respected, or even marginalized. This type of environment can impede a healthy organizational culture.

Creating Culture Esther: One of Enron’s values was integrity, yet the leaders didn’t demonstrate integrity when running their business. If you look at many

company web pages, the values often sound the same. Is it enough to put some values on a web page and does that create the culture?

Rob: I’d say no. It has to be driven from the top down. You have to get out there and live it every day, and can’t just put it on a website and expect people to pick up on it. Examples of good culture in the company and community have to be celebrated and the company needs to recognize people who do good things and demonstrate the values. If it isn’t celebrated, it won’t get replicated. Tamara: I couldn’t agree more with what you said. I think even more so if you put those values up on the website or talk about them in an orientation and they aren’t lived, the consequences are very bad for employee morale, employee retention, or even the view from the outside. Nowadays it isn’t hard to post a negative review and call a company out for being what they are in a good way and in a bad way. I think that if they aren’t lived by the top management, that can create a very toxic environment and one of mistrust. Vanessa: I’d add something about the values. A lot of companies are struggling with how to define their values and how they can be lived. When you add the international aspect, it means

different things for different cultures regionally. For example, a company might say they have a belief in trust and transparency and, in some cultures, trust and transparency are polar opposites. If they trust you, you won’t go telling everyone all the details of what you were told, but transparency means being open, so it’s nuanced. There’s a book called Principles written by Ray Dalio, the founder of Bridgewater Associates. In his book, Ray talks about how his company drives the idea of establishing principles and translating them into a behavior. For example, if the value is trusting in truth and radical transparency, it means realizing you have nothing to fear from knowing the truth, and knowing that you have integrity – and demand it from others

CULTURE IS IMPORTANT BECAUSE PEOPLE WANT TO BE ATTACHED TO A COMPANY THAT HAS MEANING.

Explaining what the value looks like, how it’s lived, and how it’s put into action takes the value a step beyond just a statement. Esther: We talk a lot about having a good culture. Why is that so important? Does culture equal a successful company? Does a company with a good culture mean that employees are high performers?

Rob: I think you have to have the basics B-TANK | KISLEV 5779 | 47

WHEN WE HAVE A VIEW OF CULTURE THAT’S JUST ABOUT ORGANIZATIONAL CULTURE, IT LIMITS OUR OPPORTUNITY TO CREATE A POWERFUL SHIFT.

— a company that makes sense with a strong product or service. Once that’s in place, culture is paramount because you want to attract the best people to your company. Culture is important because people want to be attached to a company that has meaning. Esther: Does culture mean I get free food and have Ping-Pong tables and happy hour? Is that culture or is there more to it?

Rob: No — those are trappings of an environment. Those things can lead to a good culture because they may enable interaction, openness, and the like. But in and of themselves those don’t make a good culture. If I’m giving out free food but my employees can hate each other, they’ll come grab the free bagel and go back to their offices. The benefits should enable that culture to thrive. Tamara: I’d agree with that as well. I think that those are all nice to have, but if you look at what are the main reasons people leave and are disengaged, it isn’t because of any of those things and, conversely, they don’t stay for any of those things. You can have all those wonderful perks, but if employees feel they aren’t valued as a team member or have the support of their leadership in terms of professional development, there isn’t a culture there to keep the employees. You can call it respect, you can call it trust, you can call it a culture where someone feels that they belong and that they’re valued and that the company values them and will treat them right. That means a lot more in my opinion than all those perks that are nice to have, but they don’t make a culture and they don’t keep the people.

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Hiring for Culture Fit Esther: How does a company hire for “culture fit” and is it important to do this?

Rob: Early in my career, I was recruited by a small company. My first interview was with one of the co-owners of the company. If I got invited back, I had to interview with 10 others around the organization. That’s how they assessed culture. He assessed my ability to do the job pretty quickly, but the reason for the comebacks was fit. We did interviews there for years like that. I’d say we made very few poor hiring decisions. Nowadays you bring people in and let them spend the day or two with your organization. You get to see if they fit and they get to see if they want to be there and if this was what they had in mind. Sometimes people will self-select and not want to work there. Tamara: I think it’s important to know what type of styles will work well in an organization so that people feel successful. One example that comes to mind: Recently I was speaking with a colleague who was exploring her next opportunity. We spent a great deal of time discussing environments and cultures she enjoyed and worked best in. In her case, she thrived in an entrepreneurial environment where she could run with an idea and try it out, whether it would succeed or fail, and one where she could build her own agenda. It was helpful, as it gave both of us a sense of what type of companies and their cultures may work best for her and what may frustrate her. That was an indication for me of where “fit” is important to understand when considering where a person works. When hiring, I think it’s helpful to ask questions about what motivates them and what may frustrate them.

Vanessa: I want to disagree. I think the term “culture fit” is really risky because it influences culture bias and that’s a huge reason why corporations struggle to make sure they have a diverse community of employees. A lot of organizations work off the “Do I want to have lunch with this person?” culture fit and do they seem like us, feel similar to us, and will they ensure that we retain our culture as it is. I think the dialogue we need to be having is, what is the contribution this person can bring to our culture? What value can they add to our culture? Often we mistake culture as being something that’s set and never evolves or changes, but culture changes every time a new person arrives or leaves. That’s just the nature of what culture really is. If we set the standard that people need to fit into a culture that’s staying the same, then you’re only bringing in people that are more like you. Our business is going to continue to grow and evolve and we want to continue to integrate new and fresh perspectives and new contributions that can look different. This is the foundation of creating cultures that are inclusive, create a sense of belonging, and create a safe place for a diverse perspectives, which will spark innovation. When we serve from that angle, we don’t just create space for people who are unique or different; we help our employees push out of their comfort zone to shine in ways that they may have limited themselves because they want to fit in. Rob: Vanessa, you make an interesting point. By “fit,” it isn’t to conform, it’s can we work with this person to

get to the next level, to expand our way of thinking? Do they fit in terms of making us better? What does “fit” mean to an organization? Is it to conform? If so, you’re probably on a path that won’t be successful. If “fit” means we bring you in and get diverse ideas, someone who thinks out of the box and brings a new perspective, that can be a refreshing thing. Esther: What kind of advice can you give to business owners to create good culture and, on the flip side, what kind of advice can we give to employees to find the best culture for them?

Tamara: For business owners, be open to new and different ideas and vantage points. When looking to build a strong culture and workforce, do a great deal of listening to what’s important to employees, what they want out of their company, and what will help them be more engaged. Make it more of a conversation and collaborative process that involves multiple people within the company. For employees or potential hires, be yourself. Don’t try to fit something if it isn’t you or try to be someone you are not. Ask many questions, do your research, and try to network with colleagues. Vanessa: For business owners, boards, and executives, I have two recommendations to learn more about culture. The first is last year’s letter from Larry Fink, the CEO of BlackRock (available on their website). He talked about how data shows that culture is now a risk for companies and impacts their success, so boards are now going to be monitoring

organizational culture. Culture is something that needs to be mitigated like any other risk. The second is from Tatyana Mamut, a tech executive who worked at Amazon, Salesforce, and IDEO. She’s designed a framework (available on her website) on culture risk and the five threats to your organization. She believes the job of the executive is to put in place anchors to keep the culture stable even as the company scales and grows. Those anchors are establishing principles, mechanisms, and behaviors at every layer of the organization. Rob: From an employee point of view, it depends on the economic times. Right now it’s the employees’ market, so be very discerning and don’t jump at the first job that comes your way. Ask to spend some time in the office environment or field environment to get a sense of what the role is like. From an employer point of view, be open and be transparent. If you’re transparent about your company, that’ll come through to the prospective new hires and to your employees. Listen to what your employees have to say. For those running the company, you need to be tapped in every moment of every day to the company culture. Develop touchstones you can rely on and have your own perspective by walking around and observing.  Esther Zohn, SPHR, SHRM-SCP, is the director of talent strategy at Audible, a subsidiary of Amazon. She has worked as an HR director and business partner in many different industries, most recently in high-tech.

Want to see an employee issue addressed? Send your questions to info@btankmoguls.com. B-TANK | KISLEV 5779 | 49

AND

Prototy Produc

Always tinkered with gadgets? Was never sure how to bring it onto the market? Confused about legalities in production? Wonder about warehouse challenges? Learn how you can do all that â&#x20AC;&#x201C; and way more.

ypes ctions

52 | B-TANK | DECEMBER 2018

Sarah Ogince

PRODUCTION

YOUR

PLANT The ins and outs of production in-house and outsourced

n our tech-savvy, service-oriented economy, most of us don’t think about selling products to make our fortune. But the truth is that most businesses still make money by making something, be it LCD screens or gluten-free cookies. At some point, these companies all face what’s known as the make-or-buy decision: Manufacture in-house or outsource? And if they decide to outsource, is domestic or overseas the way to go? Judging by the “Made in China” labels found on everything from T-shirts to iPhones, it might seem like an easy decision to make. The economic incentives of manufacturing overseas are great enough that for many large companies, it’s a no-brainer. For small businesses, however, the picture is more complicated. Manufacturing small quantities overseas is often inefficient and expensive, and even when producing in-house or outsourcing domestically is more costly in the short term, it can pay off with long-term benefits. Here’s what’s important to consider when considering your production plan. B-TANK | KISLEV 5779 | 53

WHY IN-HOUSE?

Making a product in-house gives a company total control over the manufacturing process. That means quality can be controlled and maintained with precision and production volume can be tailored to demand. This is a huge advantage for any company — consistency and quality are what make the product viable — but for new businesses, it’s especially important. New products typically go through many iterations based on trial and error and customer feedback, and if production is outsourced from the start, these minor adjustments become difficult to make. If the product can be produced on a piece-by-piece basis using manual labor (think handmade jewelry sold on Etsy.com), then overhead can be kept low and there’s no worry about excess inventory piling up. Another major advantage of in-house manufacturing is intellectual security. Once the recipe for those gluten-free cookies, or the proprietary insulation on a heating element, has been sent to a third-party manufacturer, it’s a lot easier for someone to take it and set up shop with a competing brand. That’s why Coca-Cola produces their syrup concentrate in-house and then sells it to bottling plants all over the world. It’s also important to take note of whether a facility can offer all the benefits that make it worthwhile. The savings that come from mass production won’t materialize if the factory isn’t already making the same (or a similar) product. When manufacturing in-house, Mary Apple, founder of Pretty Pushers, advises having a list of good vendors and alternating among them for risk diversification and competitive pricing. “Your once grateful vendor might ignore you when he’s got a bigger customer, or your timely guy might have a factory fire and go out of business for a few months… The key is having a handful of good, or okay, vendors that you can bounce between,” she told Entrepreneur.com.

WHY NOT

Producing in-house works well when the product doesn’t require a lot of machinery to make. If it does, the company is looking at a large initial investment: purchasing or leasing a factory and machinery, and hiring staff to run and supervise production. For early stage companies, this presents a 54 | B-TANK | DECEMBER 2018

significant challenge. Cricket Allen, founder of The Perfect Snaque, a nutritious snack company, told Entrepreneur in an interview that she recommends avoiding risks in the initial stages by leasing or renting space and equipment. “Our mantra in manufacturing, and overall, is ‘crawl, walk, run,’” she said. Investing heavily in the manufacturing process requires steady sales to cover the bills. Beyond the actual lease payments and staff salaries, keep in mind insurance, taxes, and utility costs. If sales aren’t steady and strong enough, a company may be forced to start and stop production, which, given the fact that overhead and expenses will remain constant, quickly becomes prohibitively expensive. The best way to keep costs under control is to choose a location carefully. Taxes vary from state to state, and some states offer economic incentives to attract businesses that create jobs. On the flip side, some states require a percentage of extra inventory to be counted as incoming revenues, which can be extremely costly, forcing a business to pay taxes on its own stock. In places like that, it may be more cost-effective to outsource manufacturing just so there isn’t the risk of carrying inventory. In addition, consider the accessibility of the manufacturing plant, both to skilled labor and for shipping purposes. “It’s absolutely crucial to make sure you’ll have a skilled labor pool to select from before you start your company,” Lucinda O’Reilly, marketing director at Ecotile Industrial Flooring, advises in a Guardian article titled “Five Vital Steps to Set Up a Successful Manufacturing Business.” Finally, be aware that a portion of the manufacturing costs will have to be passed down to customers, and may make the product unviable if competitors are able to charge significantly less by outsourcing their manufacturing. Still, consumers may be willing to pay more for a high-quality, consistent product — and advertising the fact that cookies are baked in-house may make them more appealing to buyers. Finally, don’t forget about storage. It’s easy to forget the cost of warehousing while calculating the money saved by outsourcing production. For online companies with no storage capacity, some suppliers and distributors may be able to ship directly to customers, a practice known as drop-shipping.

PRODUCTION

MADE IN THE USA

If manufacturing in-house is too expensive, outsourcing domestically may be a good option. Many of the benefits of in-house production — quality control, security, speed — can still be gained in a domestic outsourcing partnership. Keeping production onshore allows a company to keep a close eye on the process without wasting employee hours on international travel. It also cuts out the time and expense of shipping internationally and dealing with customs. If timely delivery of the product is essential, then domestic production is the answer. In fact, a recent study cosponsored by consulting firm McKinsey found that many clothing manufacturers are planning to move production out of Asia and back to America and neighboring countries in order to cut shipping times. Automation is another benefit manufacturers enjoy on American shores. A pair of jeans, for example, can be made 40-90% faster in America with the usage of robots than the pace in Asian factories. Fashion trends, fueled by social media, move so quickly these days that many don’t survive the average 30-day sea trip from Asia. Add the nightmare of stock held up at the port due to customs (these issue do happen, much as we wish them away) and a business owner may find himself with a load of completely useless stock. Another advantage of domestic outsourcing is the lack of a language barrier. Considering how many details must be negotiated before production can begin (Who pays shipping costs? How much credit is the manufacturer willing to extend? Will they expedite production to meet demand?), this isn’t a minor issue. For new companies, establishing a good rapport with the supplier is particularly important because many manufacturers, both domestic and overseas, will give smaller orders low priority, potentially compromising both speed and quality. US companies are bound by much more stringent regulations and standards for manufacturing than those overseas, which generally results in a better-quality product. That, combined with many Americans’ desire to create jobs and support the economy, is what makes the “Made in the USA” stamp such a valuable marketing tool. Domestic production also avoids the kind of bad PR that has dogged companies like Apple over poor working conditions in its Chinese factories.

TAKING IT OFFSHORE

Let’s just say it: Offshore production is cheaper. Thanks to a massive labor force and little to no regulation, labor costs in Asian countries are a fraction of those in the US. Even factoring in the cost of shipping and storage, taking production overseas still pays off on the balance sheets of most large and midsize companies. It’s a calculation that Norman Goldner, owner of All Shore

Industries, a company that makes digital screen displays and power cords and does contract manufacturing for other businesses, knows well. In 1999, All Shore moved all of its production from Hillside, NJ, to Asia. All Shore is large enough to maintain offices in both Taiwan and Staten Island, thus mitigating the biggest drawback of overseas production: quality control. For smaller businesses, Goldner says, dealing directly with overseas producers can be risky. “There are factories out there producing products that are faulty. Since we have offices in Asia, we can reject it right there instead of having it shipped here and sent back, but smaller businesses don’t have that advantage.” All Shore’s contract clients (mostly large companies pro-

Consumers may be willing to pay more for a high-quality, consistent product — and advertising the fact that cookies are baked in-house may make them more appealing to buyers.

ducing subparts to be incorporated into larger products), benefit from the firm’s Asian presence and expertise since they have someone on-site to oversee things. Those who want a similar experience on a smaller scale can deal with quality-assurance inspectors and import agents, who oversee production and may be willing to sell products in smaller quantities. These do increase the cost, however, and some of these firms have been found to be unreliable themselves. Still sold on offshore? Select the country carefully. Some countries are richer in the resources necessary to produce certain products; China has access to a lot of metal, whereas other countries don’t. Check out Country Commercial Guides (export.gov) for market conditions, opportunities, regulations, and business customs for over 125 countries. Also, don’t forget that tariffs and quotas on imports vary by the country and are changing all the time. (Consult the headlines for the most up-to-date information.) It’s true that low costs have made offshore production the norm for the past three or four decades, but the trend is slowly reversing itself. As consumers become more conscious of the economic, environmental, and social impact of having goods made cheaply overseas, even large companies are starting to “re-shore” at least part of their manufacturing. For a small business today, answering the make-or-buy question is a complex process that requires both introspection and a careful calculation of the bottom line.  B-TANK | KISLEV 5779 | 55

From Idea to

Impleme

56 | B-TANK | DECEMBER 2018

David Marion

ntation A roadmap to successful product development B-TANK | KISLEV 5779 | 57

eople who come up with new products advance society and unlock possibilities for consumers and businesses alike. Without dedicated innovators who can think outside the box, we could still be using PalmPilots, floppy disks, and dial-up internet, and we’d likely be paying top dollar for long-distance calls and getting our vacation photos developed from negatives. Product development is not for the risk averse. Several research reports, including a recent Harvard Business School study, show that more than 90% of new consumer products fail in the marketplace. In the same vein, a remarkable 97% of all filed US patents end up not turning a profit for their inventors, with only 7% even recouping the costs of filing and registration. Yet, entrepreneurs with a winning idea and the resilience needed to bring it to fruition can reach tremendous fame and fortune — just think of the success of the inventors behind Post-its, smartphones, and other products that are staples of most people’s everyday lives.

explains. She and Jared got Hang-O-Matic off the ground with the support of family and friends, by spending a large chunk of their own savings, and ultimately by selling their dream home in Lake Forest, California, and moving to a less expensive area to secure the funds they needed for product development and marketing. Having skin in the game is far from all it takes. If there’s no market for your invention, you shouldn’t quit your day job just yet. “Everyone thinks their baby is cute,” says Karina. “But just because you’re excited about your idea, it doesn’t mean anyone else will care about it or see a need for it.” To know whether your idea is commercially viable, you need to research your potential market and target audience. This means gaining a clear understanding of why your idea is unique, what problem you’re looking to solve, how many people are affected by this problem, and — most importantly — whether they care enough that they’d spend money on your finished product. “One way to find out if your idea is marketable is to go to a mall, walk up to people, and ask them if they would use your product,” says Karina. “Don’t ask your friends and family — you have to ask strangers and you have to ask a lot of them. Many inventors are afraid to walk up to a stranger and describe their idea, since someone might steal it. But you have to take that risk — there is no way around it.” Another key step is to review your competition. Is there a company already providing a similar product or an alternative solution for the problem you identified? If so, how is your product different? If your product represents an original solution to an unmet need, why has no one else invented a product that addresses the need? For this kind of research, the internet is your friend. “When searching for competing products, you need to exhaust all

If you’re not willing to take risk or commit your own resources, you can’t expect anyone else to help you.

Is Your Idea the Next Big Thing?

Turning your idea into a product and launching it in the market can be daunting, especially for new inventors. “The first question you should ask yourself before pursuing your idea is, ‘Do I have money?’ and the second question is, ‘Do I have time?’” says Karina Rabin, who is part of the husband-and-wife team behind Hang-O-Matic, a best-selling hanging tool that her husband, Jared, invented while in college. Karina and Jared also run and host The One Pitch, a popular online show that helps innovators navigate the path of taking ideas from concept to market. “If you’re not willing to take risk or commit your own resources, you can’t expect anyone else to help you,” Karina 58 | B-TANK | DECEMBER 2018

PRODUCT DEVELOPMENT

The benefits of being able to visit your factory, speak with the team in your own language, and see the product in person can often outweigh the higher costs of working with a domestic manufacturer.

options,” Karina advises. “Go on Bing, Google, AOL, Yahoo, and other search engines, and for each of them, look for keywords that are specific to your invention. Use all possible combinations of your keywords and go through at least 20 pages of hits for each search to make sure you’re covering all bases.”

Clearing the Legal Road

Before investing time and money in the physical development of your product, you need to ensure you won’t be infringing on anyone else’s intellectual property. Additionally, when the time comes, you need to patent your idea to ward off potential copycats. Searching patent registration websites, such as the United States Patent and Trademark Office, Google Patents, Free Patents Online, and the World Intellectual Property Organization’s PatentScope site, can help you find out whether there are existing or pending patents in place for inventions similar to your own. Ari Torenheim, president of One Stop Manufacturing Services, a company that provides all-in-one product development services, notes that it’s critical to be thorough when searching for patents. His firm had a customer whose invention was similar to an existing product that was patent protected according to the packaging. However, upon conducting a full search, Ari’s team found that the competitor hadn’t yet filed a patent application, and that the inventor was in the clear to proceed without violating patent rights. “I highly recommend using an intellectual property service to research whether your idea has been patented,” Ari says, adding that these firms are well versed with patent databases and classification systems, and able to search more extensively

than the typical layman. He also emphasizes that this service is different from that of a patent attorney, who’ll write and file a patent on your behalf or review your application if you choose to draft and submit it yourself.

Building a Prototype

Once you know that there’s a market for your product and have applied for patent rights, your next step is to build a prototype. This can be an arduous and time-consuming process that involves many moving parts. You need to find a manufacturer, designer, and other vendors; negotiate deals; oversee production and testing; and manage shipping logistics. Ari notes that using an outsourcing company can streamline this work greatly; an outsourcer has relationships in place with numerous vendors and factories in the US as well as internationally, and is typically in a position to negotiate prices and look out for red flags better than an individual entrepreneur. A key decision to make is whether to manufacture overseas or at home. Many entrepreneurs choose to work with international factories to cut costs and gain a larger profit margin. What’s right for you and your business depends largely on how complicated your product is, your production scale, and the costs of labor, materials, and shipping. Ari suggests that simple products, which require less oversight during production, are produced in large batches, and can be shipped at a reasonable cost are good candidates for overseas manufacturing. On the other hand, the benefits of being able to visit your factory, speak with the team in your own language, and see the product in person can often outweigh the higher costs of working with a domestic manufacturer. Also, for some B-TANK | KISLEV 5779 | 59

Pitching Your Product Doing your due diligence to understand your market, customers, and competitors will help greatly once you’re ready to approach investors. A good rule of thumb when pitching to venture capitalists and business angels is to be confident and get to the point quickly. Be prepared to concisely explain your idea and why it’s a viable opportunity for the investor. Optics are important too. Investors cannot always vet early-stage product ideas as rigorously as they’d like. To that end, they have to bet on the people — which is why confidence and making a positive impression can spark a financing deal.

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PRODUCT DEVELOPMENT

companies, producing locally may be critical for their brand and image. There’s no right or wrong answer — Ari says that it all depends on the product. “Sometimes it’s better to get the machinery you need and make the product locally. For example, a clothing line can be made cheaper in the US if it’s not produced in large quantity.”

Packaging Your Product

An important feature that’s often overlooked by inventors is packaging. Even for the most innovative, high-quality product, you’ll face difficulties launching it in the marketplace if the packaging looks cheap and unoriginal. “Don’t cut corners to save money on packaging,” says Karina. “Jared and I made that mistake and because of it, we had to start over several times with new designers and ended up losing a lot of money.” She adds that it’s critical to test your packaging with real potential customers before approaching retailers. Once your product hits the shelf, it’ll sit next to numerous competing or similar products. Without professional-looking packaging that makes your product stand out, it can easily be overlooked by customers or even dismissed by the retailer. “Your packaging has to present the product as a masterpiece,” Karina says. “The money you spend on quality design and packaging will help your business in the long run.”

Entering the Market

There are several ways to enter the marketplace. You can sell your product online through your own website or trusted e-commerce sites, such as eBay, Amazon, or Bonanza — or offline through your own mom-and-pop store or established retailers. Starting online is an accessible low-risk option that does not require any significant investments, large inventories, or capacity to fill large purchase orders on short notice. However, once you’re ready to move your product in larger quantities, getting it on the shelves of retailers is a great way to bolster your sales volume and profits. To break into the world of retail, you need to connect with buyers and convince them to start carrying your product. This process is similar to approaching investors — the key to success is to be brief, concise, and able to explain in a few words why selling your product would be profitable for your potential retail partner. Also, much like the process of landing an investment deal, navigating the road from pitching to receiving a signed purchase order can be quite the challenge. “You have to hustle,” says Karina. “Email people, call

them, and attend trade shows to get the word out about your product and to get in front of retailers.” Karina and Jared got started in the retail space by exhibiting Hang-O-Matic at two large trade shows for housewares and home goods. She notes that trade shows are excellent opportunities for meeting buyers, handing out samples, and increasing exposure for your business. Working the floor and drumming up attention for your product requires a lot of stamina and an outgoing personality. “If you’re shy, don’t go to a trade show!” Karina says, explaining that it’s key to take initiative, invite people to your booth, and have business cards and samples ready to hand out to your visitors — or else you and your product might just get lost in the shuffle of the show. Following up with your leads is just as important. Make sure you have several ways to capture your prospects’ contact information, including a business card drop and sign-in sheets or a lead generation app. Then, reconnect as soon as possible after the trade show to offer samples or any information the buyer requested. This is when you can discuss a quote, and — if possible — close the deal!

Building Buzz for Your Brand

Whether you choose to sell your product online or offline, your work is far from done after you’ve received your first order. Driving sales by creating buzz and visibility for your brand is an ongoing effort. Fortunately, building an effective marketing strategy for your product does not require a big budget. With nearly 70% of Americans of all ages using social media on a regular basis, social networking platforms provide a cheap and easy way to reach a broad audience and build brand awareness. By using platforms such as Facebook, LinkedIn, Twitter, Instagram, Pinterest, and Snapchat, and creating targeted content for each of them, you have a powerful set of tools at hand to engage with your customers, gather market data, and connect with new audiences. Bringing an idea to life is not simple. Yet, the process can be incredibly rewarding for those who thrive on uncertainty and the excitement of creating something new and unique. Your product could end up on the shelves of big-box stores or, once we get there, in households on Mars. Much like the imagination of the entrepreneur, opportunities abound.  David Marion writes for top US and international organizations. His clients comprise a virtual Who's Who of world business leaders, such as Columbia Business School, Deloitte, IBM, Quest Diagnostics, the United Nations, and more. B-TANK | KISLEV 5779 | 61

7 1

COST-EFFICIENT WAYS TO HELP YOU LAUNCH YOUR BRAND

While launching a brand may have once meant attacking the billboards, creative minds have learned that there are many more ways to get the word out. Here are a handful of ideas to help you launch your brand without the cost of a public billboard.

Rochel Sam

IN THE NEWS Writing a PR article is your way to send a message

something.

of the service you provide in article format. This conversational approach provides your viewer

It also builds an association with real-life events that engenders emotions and places your

with a chance to get a more personal feel for your service. It also allows for the addition of details that cover more ground than a short

company in the reader’s mind. This memory is then ready for retrieval at the moment the reader needs your product or service.

tagline would. While a PR article doesn’t have to be news

Make sure you use less “I” language, and more “You” lingo. You want to give your customer the

related, the advertising vibe is way less apparent when it is. This means that the reader’s mind absorbs the information — including your

feeling that they are your focus, so it’s ideal to abandon a self-centered message. Local newspapers or venues where you regularly

company name — without the natural reluctance one generally feels when wary of “being sold”

advertise may print your press release at no cost, making this option cost economical as well.

SHOW YOU CARE Sponsoring community endeavors by teaming up with local non-profits or distributing free products to help the community can get you noticed. Aside from the free publicity, touching your customers hearts — not only their wallets — helps brand you as the company that cares, and goes a long way in building the customer base you crave. Partner with your charity of choice, or an organization you feel might reach the demographic your product itself attracts.

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LAST-MINUTE GRABS

COMPANY COLLABS Look for other entities looking to produce promotional events to see how you can collaborate for a mutually beneficial outcome. Keep in mind, though, that you want to team up with someone who shares your target audience with you. If you’re a baby shoe brand for example, try teaming up with another baby-geared brand and offer combined giveaways on social media platforms. Both your following and your partner’s are people who have babies, and a combined giveaway can give all those promoting companies involved a chance to reach each other’s followers and double their audiences.

MARKETING

THE TIME TICK See if your local flower shop, grocer, clothing retailer, or even a rental space can offer you space for a pop-up shop. Popups offer a unique allure: Like a one-time sale that instills the inclination to grab the last piece before it’s gone, a “temporary store” versus a permanent base puts the pressure in not delaying a visit to peruse and physically test out your merchandise before the store — and the opportunity to purchase — disappears. The short-lived and periodic nature of a pop-up also lends the perception of novelty, and an exciting and newsworthy aura for the visitor — almost like they’re on a trip. Your store, for the day, categorically becomes an “event,” as opposed to simply a “where” or a “what.” With the right designer, planner, and perhaps a little munch to excite the taste buds, your product is well on its way to finding a new, excited owner.

If your product fits the bill in lastminute shopping picks like chewing gum, earbuds, a softcover book, or the like, negotiate with retail stores to sell your item on consignment. This gives potential customers a chance to mull over your offer while they wait for their purchases to process. An exchange with the business owner — where you’ll display their business card or offering — might further motivate their participation.

CALLING CONTESTANTS Hold a contest where individuals are called upon to participate by showcasing how they’re using your product in a creative way. People like getting noticed based upon their personal talents. The benefits of this are twofold: Firstly, while the contest runs, you have participants create a buzz about their entry in the contest. And second, after the results are in, your winners will create some more buzz telling about their success. The winner’s family and friends will feel a personal draw toward the service that touched their friend or loved one. As part of your winning requirements, make sure friends are getting tagged on social media. This is a winwin for all involved.

TAPPING INTO INFLUENCERS Interviews with people of popular interest help you win their followers as new customers — and make your brand a trusted one. Social media influencers with audiences that fit your customer base allow viewers to feel both: "I gotta have it if this social media personality has it” and “I can relate to this woman, so if she likes it, I probably will too…” The influencer of choice should be someone who has a moderate amount of followers. Too many, and advertising costs will be steep, plus chances are that the influencer doesn’t have much personal connection with her followers — and your product may seem like less of a need for the average consumer. 

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Benjamin Goldburd

OFFSHORE ACCOUNTS Nowhere safe to hide… foreign funds, that is.

hat’s it. It’s time to come clean. Well, actually, the time to come clean was a few months ago when it might have actually made a difference. The hard truth is that many people need to talk about this issue and have not, and it could end in disaster. I’m referring of course to foreign banking and investment accounts. Offshore accounts can become a dangerous possession if they haven’t been reported to the Internal Revenue Service, and things have only become more dangerous now that the IRS has recently done away with the Offshore Voluntary Disclosure Program (OVDP). You see, the IRS put the program out to pasture on September 28, destroying a viable road for taxpayers who haven’t been reporting these accounts in other countries without fear of jail time, only a hefty monetary fine. Now, the gloves are off; there’s no viable method for relief for those who’ve been deliberately hiding funds overseas and haven’t come forward until now. The IRS may begin a new program at some point, but they’ve given no indication when and if that would become a possibility. This means that not only are gargantuan monetary penalties a certainty in cases of revealed offshore funds, but also the prospect of very real prison time is back to being front and center for those who are caught. If one believes they fall into this category, it’s time to call your lawyer, quick. So, is all hope lost? Not for those who weren’t “willful” in not disclosing their monies overseas. For those who innocently didn’t realize that they had to report their overseas funds (think previously unknown inheritance in a faraway land… but be sure it’s not from that pesky Nigerian Prince) the IRS offers the Streamlined Procedure. The penalties

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and cost of entering this program are much lower than the OVDP, but you must certify under oath that you didn’t act “willfully” in your lack of reporting, and the IRS reserves the right to audit your account just like any other tax return. Additionally, unlike the OVDP, there’s no promise of security against future prosecution should willfulness ever be discovered by the taxing authorities. Now, there are legitimate reasons for having an offshore account. Possession of one alone doesn’t earn you the ire of the taxing authorities; not reporting such funds is the issue. So, if you have business overseas that requires the use of a foreign account, it’s crucial that you keep up to date on the requirements for reporting these accounts to the IRS. Under current law, US taxpayers (you) have an obligation to report offshore financial accounts if the value of all of the accounts together exceeds $10,000 at any point throughout the year. Such value that even momentarily passes through a foreign account, whether business or personal, requires the filing of a Report of Foreign Bank and Financial Accounts (FBAR), a filing to discuss with your accountant or lawyer. It goes without saying that any income derived from within these accounts or through any foreign transaction, whether business or personal, requires proper reporting on your US tax return. Those that do business overseas should be sure to keep this all in mind; if you’re found to be hiding such accounts, the consequences can be dire. Happy hunting!  Benjamin Goldburd of Goldburd McCone LLP is a tax and business lawyer in New York City. Benjamin advises businesses and their founders on their road to success and hopefully toward a magical exit.

LEGAL

Offshore accounts can become a dangerous possession if they havenâ&#x20AC;&#x2122;t been reported to the Internal Revenue Service, and things have only become more dangerous now that the IRS has recently done away with the Offshore Voluntary Disclosure Program.

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Chavy Helfgott

STOP TALKING JARGON Nine tips on how to turn copy into leads

“I

like to read boring stuff.” Said no one, ever. Even the buyer for that retail chain you want to convince. Even the CEO of the company that could use your equipment.

So why, oh why, are most manufacturer and wholesale marketing materials so immensely snooze-worthy? Not sure what I mean? Let’s go through some excerpts from actual websites and see:

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•

What’s wrong with the excerpt

•

How it could be better

SALES COPY

Mistake #1:

Make vague and implausible claims “Your number one global resource for quality, innovation, dependability, and distribution.” Really? There’s absolutely no other manufacturer in the world that’s as good as you? Let’s get real. The only thing that tagline will do is make the reader say, “Let’s skip this and get to the real stuff I want to know.” And that means that you’ve wasted the most valuable real estate on your website or brochure on worthless jargon.

Mistake #2:

Toot your own horn “We manufacture products in eight production facilities, employing more than 7,000 employees worldwide. The plants are in India, China, Mexico, and the USA, with a total manufacturing floor space of over 1,300,000 square feet.” Um…why are you telling me all this? Do I care about the size of your operations? Of course not!

Copy Fix #1: Be specific and focused Don’t say quality — tell me how you’re quality. Don’t say dependable — tell me how you’re dependable. And don’t say four things in the headline! Choose one that defines you and stick with that. Like this: “Save on repairs with components that don’t need constant care.” Or, “Keep your shelves stocked. Delivered on time, every time.” Or, “Sell unique products. Customized items made fast using 3-D printing.” See the difference? These new taglines tell the reader a specific detail; they address pain points and concerns. And that is what a tagline should do.

Copy Fix #2: If it makes no difference to your client’s experience — don’t say it. If it does make a difference to your client, then reframe it so it focuses on them. Let’s rewrite the above excerpt so it’s relevant to the client: “Join our growing portfolio of thrilled clients. We are trusted by so many companies like yours that we now have eight production facilities — that’s more than 1,300,000 square feet of factory space all devoted to making products that will satisfy you.” But if you can’t find a way to make it matter to your clients, leave it out. You can tell your kids, your spouse, your partners, your shul buddies. Be proud of yourself. But don’t feature it at the top of your website.

Mistake #3: Sliders

“No money down 12— protection guarant— save time and— no money dow—” Yeah. That’s what’s going on in your web visitor’s mind if you’ve got a slider running at the top of your home page. Nix it! I don’t care how cool it looks. I don’t care if all your competitors have one. I don’t care if you have so many cool pictures to display. 99% of the time, sliders are a waste of space.

Copy Fix #3: One stationary image and headline The top of your home page “above the fold” (before you have to scroll) has one purpose — to get the site visitor hooked and ready to learn more. You will never fit everything you want them to know in that space. And you don’t have to. All you need to do is get their attention; get them to think, “Hey! I need what they offer. Let me learn more.”

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MANUFACTURING

Mistake #4:

Copy Fix #4:

Overemphasize years of experience “About us: With over 35 years of experience in the winter gear sector, we know the industry inside out.” This isn’t a job interview. The number of years you’ve been producing will have little bearing on my decision to get your product. Maybe you’ve been making mediocre things for 20 years. Testimonials? Yes! Authentic product reviews? Yes! Those should all be prominently featured on your home page. Because those things tell me: What makes your product so awesome? Why do I need it? Experience? On its own, it doesn’t mean much.

Mistake #5: Keyword stuffing

Biggest no-no ever! Even Google won’t be tricked by this anymore. These days, Google’s AI is sophisticated enough to tell the difference between worthwhile quality content and — well, this: “Our window installation company can provide you with incredible prices on highquality windows. Our window installation company has provided the residents of Philadelphia, Delaware County, including Springfield, and Moorestown, New Jersey, with exceptional window installation for years. Our window installation company is both cost and time efficient.” And yes — there are still plenty of websites out there that sound like this. Make sure yours doesn’t even resemble it!

Mistake #6:

Use the experience for extra reassurance Though it won’t bring in the leads, experience can certainly be a factor in helping you clinch the sale. You can put it in a seal-type logo above your headline, or at the foot of the home page.

Copy Fix #5: Talk naturally. Then fit in keywords where it makes sense Of course, SEO research is important. Find out what keywords people are searching for. But don’t use those words as the foundation of your website; write effective copy and fit the keywords in where they make sense.

Raise doubts by stating the obvious

Copy Fix #6:

“We employ only the most experienced installers who take pride in their work and have all of the necessary qualifications.”

Focus on things you do that are unique and unusual

Um, why are you even planting the idea that your installers might not have qualifications? It should be self-understood that you’re qualified; emphasizing it might make me think you really aren’t.

Things like, “Weekly trainings ensure that our staff is up to date on the latest in the industry.”

Or: “Our goal is to achieve the highest standards of operational, manufacturing, and environmental efficiency.”

Or, “Our production equipment is upgraded annually, so you get the highest quality items possible.”

One minute — if that’s your goal, does that mean that you don’t have the highest standards yet?

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Mistake #7:

Copy Fix #7:

Use long, uninterrupted blocks of text “This material has become one of the most popular and cost-effective flooring choices for the commercial environment today. Its durability and style are the top choice for offices and lobbies. The product comes in simulated wood-floor looks and tile looks to suit any decor. It is very low maintenance and requires no wax or treatments to keep it looking good. It is resistant to stains and is not affected by water as natural wood products are.” Truth? I lost you at “durability and style.”

Mistake #8:

Break things up Use short paragraphs, short sentences, and lots of bullet points and icons. Especially on a web page, people “scan” — and they won’t absorb anything they scan in a long paragraph format.

Copy Fix #8:

Include irrelevant details “About Us: Lander Microelectronics Group Co., Ltd. was initially established under the name of Lander Microelectronics Co., Ltd. on June 10, 1985. It was registered as a public company limited on August 16, 1995, and the name changed to Lana Microelectronics Group Company Limited.”

If it’s boring and irrelevant, leave it out

Okay — remind me why you’re telling me all this? Even the bit about the size of your factories was better than these technicalities that tell me nothing about how your company can help me.

No explanation needed.

Mistake #9:

Copy Fix #9:

Be formal

Be conversational

The most common objection I get from B2B companies is this: “But it sounds so unprofessional!”

Original: “We also offer a variety of PET substrates for organizations committed to using greener materials.”

Can I tell you a little secret? “Professional” is a code word for “clichéd, jargon-y, and stiff.” Anyone reading your marketing materials is a person. And people like real. People have emotions. People get bored. This is especially true in manufacturing. Your buyers are not just getting one product — they’re placing large orders for items that were probably produced thousands of miles away. You need to build trust. And what’s the best way to do that? Talk to them. No, don’t talk like a millennial. You can keep the grammar and sentence structure conservative. But that’s no excuse for talking like dictionary.

Translation: “Your company is committed to using green materials? You can choose from our selection of recyclable PET substrates.” Original: “We have the resources to manufacture close-tolerance stamped parts flexibly and economically, while overcoming the challenges associated with complex geometries and the processing of high-strength alloys.” (Ouch! That was a tough read.) Translation: “Close-tolerance stamped parts can be tough — and expensive! — to produce. But our extensive line of machinery allows us to offer these components at very competitive pricing.” “Have prototypes with unusual shapes? We’ve got your back. You’ll get error-free, well-formed components — even the ones made of high-strength alloys.” In the words of Jennifer Forget (VP Client Engagement, Austin Williams): “B2B never has to be boring. The idea is to turn something technical into something that is simple, relatable, and breakthrough.”

Chavy Helfgott is a self-processed product aficionado. She spends her days (and often nights) writing copy for e-commerce businesses that makes readers say, “Hey! That product is talking to me.” B-TANK | KISLEV 5779 | 69

MANUFACTURING TIDBITS

Exports are booming in the US. Hereâ&#x20AC;&#x2122;s a breakdown of the most popular industries being exported:

Travel and transportation

Food, beverage, feed

Oil, fuel, petroleum

$236 billion

$133 billion

$109 billion

Aircraft and engines

Auto parts, engines, car tires

Finance and insurance

$99 billion

$86 billion

$76 billion

Industrial machines

Passenger cars

Pharmaceuticals

$57 billion

$53 billion

$51 billion

Source: US Department of Commerce

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“If you deprive yourself of outsourcing and your competitors do not, you’re putting yourself out of business.” Lee Kuan Yew, first Prime Minister of Singapore, who transitioned the country from third world to first world.

In the sharpest increase in manufacturing production since April 2012, US manufacturing output increased 3.5% year on year in September 2018. Trading Economics Production is the largest multiplier of any economic sector: Each dollar’s worth of goods produced generates an additional $1.89 in output from other divisions in the economy. Bureau of Labor Statistics Although the number of Americans working in the production industry is over 12.56 million, the share of Americans working in factories has fallen far from its 1950 peak of 30% to roughly 8.5% in 2017. Trading Economics Compared to other blue collar workers, those working in the manufacturing industry generally earn a greater salary, with the average being $56,799 annually. Bureau of Labor Statistics The real stars of the manufacturing resurgence may be the smaller cities. Nine of the top areas for industrial growth are small- and medium-sized metros. Forbes Of the US’s total imports by value in 2017, 45.9% were purchased from providers in Asia. North American partners supplied 25.9% of import sales to the US while 21.1% worth originated from Europe. The remaining few percent were from Latin America, Caribbean and Africa. World’s Top Exports B-TANK | KISLEV 5779 | 71

M.C. Millman

THE

WAREHOUSE How to operate an efficient warehouse The key to getting your product to clients around the globe often boils down to a well-organized warehouse. Here are some of the challenges and solutions to keeping a well-oiled warehouse.

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WAREHOUSING

CHALLENGE Designing a warehouse for optimum efficiency, such as reducing the amount of times that any inventory item is handled between receiving and dispatching.

SOLUTIONS Reevaluate the layout of the warehouse regularly. Making changes does cost time and labor but soon pays for itself through enhanced efficiency. • Reduce travel time for order pick tickets, packaging, and shipping. Make it easier to move around your warehouse by allowing for strategically placed crossaisles rather than long single rows with no cut through. • Maximize vertical space by taking into consideration where the best placement for each product is, based on how often you need to access it. Keep in mind that demand for the item can change based on seasons, sales, etc. • Base layout on the particular needs of your warehouse. Some of those variables include: • which products are being warehoused • how the orders are filled • what size shelving needs to be used • Before choosing a warehouse, make sure it suits your needs. It’s worth getting the layout done professionally so you get things right the first time, making your warehouse work for you. • Preplan and design: • How much racking is needed? • How big do the aisles need to be? • Which machines are needed? • What sprinkler system do you need? (Depending on the height of the warehouse, these can get prohibitively expensive. Look into what’s required for the sprinkler system before committing to a new warehouse location.)

CHALLENGE Avoiding hazards to maintain safety in the warehouse

SOLUTIONS • Follow all OSHA requirements. • Post warning and informative signs throughout the warehouse. • Train employees in workplace safety by creating educational materials, including a warehouse safety checklist of tasks and activities. The warehouse manager can rely on the checklist for providing employees with an understanding of and accountability for safety in the warehouse environment. • Provide periodic training sessions to ensure consistent workplace safety practices. • Establish a safety committee to empower employees to communicate and follow through on potential workplace safety hazards or concerns. • Be aware that for safety reasons, racking needs a building permit which can sometimes prove challenging to acquire. • Post clear safety expectations in close proximity to all equipment to provide safety reminders and to give constant visual reminders of the dangers of using equipment such as hydraulic dollies, forklifts, and hand jacks • Set minimum safety standards as a reminder that safety is a priority, e.g., wearing of hard hats and safety goggles. • Conduct regular safety sweeps using the warehouse safety checklist by walking around to make sure that: • Shelves are fully anchored to the floor. (Since inspectors can come unannounced, any loose shelving that was added or that came loose after an inspection can cause a warehouse to be closed down.) • Walkways are clean, in good condition, and free of potential safety hazards, such as stray cords, liquids, or debris • Make sure racking has protectors by its sides as even an otherwise strong rack can be hit by a forklift. • Place fire extinguishers every 50 feet. • Properly position materials with heavier loads stacked evenly on lower or middle shelves and only remove one load at a time (unless heavy racking that can hold up to 35,000 pounds is installed.) • Ensure proper emergency signage for moments when seconds matter. These include: • emergency exits • eye-wash/shower stations • first-aid kits • fire extinguishers.

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CHALLENGE Maintaining quality control (QC)

SOLUTIONS • Follow the first in, first out method, which ensures that perishable stock is used before it expires by moving it through each stage in strict order. • Maintain efficient stock by keeping track of: • available stock • expirations • batches sold (in case an issue arises) • how much stock is available • how much stock to keep on hand (based on experience)

CHALLENGE Keeping up to date with innovative technology/automation in warehousing

SOLUTION Attend warehousing shows to see what’s new that can work for your warehouse in the most efficient way possible.

CHALLENGE Creating a team of warehousing staff

SOLUTIONS • Make sure only employees qualified for a particular job are doing that job — for example, driving or operating a forklift. • Provide uniforms for a clean, neat look that will bolster respect for the business from customers and employees alike. • Require mandatory attendance to training programs since this will keep team members informed and up to date with any new system features. This maximizes the potential of new systems, programs, and methodologies. • Offer incentives for appropriately safe behavior reported by other employees to encourage more of the same and to show how important such behavior is in the workplace.

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WAREHOUSING

LOOKING TOWARD THE FUTURE

aniel Faintuch, vice president of Marketing and Sales for BionicHive, talks with B-Tank about his company, which is due to release Squid, an autonomous fleet of robots designed for the warehousing market in 2019. Squid offers flexibility and scalability to existing warehouse infrastructure. It will increase productivity while offering significant labor-cost savings, as warehouses will no longer require workers to load and unload their stock. “Newer solutions are much more affordable than conventional automation from 10 or 20 years ago,” says Faintuch. “The older automation took four to seven years before a warehouse could expect a return on their investment; our company promises a return on your money in less than two years.” Systems such as the one Faintuch sells, as well as others emerging onto the market, are simple and affordable to install and can retrofit into existing warehouses. All that’s required is the installation of the rails for the robot to run on. The BionicHive robot itself is small and portable and works through the software management system that receives the orders. Instead of the method used by most warehouses today of sending a message to an

employee with a scanner to get the box to fill the order, it’s the robot that goes. The robot knows where each item in the warehouse is because it’s the robot that put it there in the first place, recording the location of every item for future reference and sending it to the software management system. The robot has a camera on the side so it can take an image of the shelf to identify where the correct box is. It can also double-dip and get a box from behind the first if necessary. The robot also comes with safety features, such as sensors that keep it from driving over obstacles. “The system is meant to last for a very long time without much maintenance,” says Faintuch. The robot system has the mechanics to make sure it’s reliable with redundant features as well. For example, the robot has a double power pack. Even though the first battery has enough power to run the robot efficiently, there’s always a backup battery on board so that it won’t stop in the middle of a task, e.g. — while climbing a shelf. The robot also submits all mechanical information to the server so that any problems or maintenance requirements can be spotted in advance.  Yossi Weiss, manager of Bob’s Commercial Steel Shelving, Inc., which provides services for warehouse layout, racking, shelving, and mezzanine installations all across the US, contributed to this piece. B-TANK | KISLEV 5779 | 75

Rhona Lewis

COSTCUTTING

TIPS

FOR

ccording to Forbes, strategic cost cutting helps lower the cost structure, but itâ&#x20AC;&#x2122;s not about getting cheaper. Instead, strategic cost cutting helps ensure an organization is ready for growth. It focuses on the aspects of the business that are controllable, while freeing up resources to fund transformation and future growth. How can your company cut costs in the right way? Which smart moves should you take to increase your profits?

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COST-EFFICIENCY

Cut in the Right Places What often goes wrong when companies cut? When looking to save money, companies may tend to go for the approach that seems the fastest, fairest, and most straightforward. They simply define the amount of savings needed and then require each department to cut costs by a similar amount. It’s a dangerous and ineffective practice. By cutting equally everywhere, companies are not considering their strategic needs. Before you slash through all departments equally, check if you can eliminate redundant or irrelevant processes. Can you remove layers and expand your managers’ span of control? Are your HR and IT departments duplicating certain activities? If so, make the deeper cuts here.

Identify Key Activities and Make Them More Effective Product development accounts for about 80% of your product’s cost. You can save a significant amount of money on parts, materials, quality, and labor by considering cost reduction during the design phase of your product. Prototype developers help you consider manufacturing issues such as raw material selection, design simplification, and even the final packaging at the concept stage to reduce material, overhead, and labor costs. Don’t forget to design for quality: high quality and reliability within the products eliminate rework, which increases labor costs per unit.

All the Same Standardization can reduce manufacturing costs by 50%. Once the purchasing of parts and products is standardized, overhead costs, such as purchasing, put away, picking, and bill paying, are reduced. Reducing components means less testing of incoming components. On the production line, this means fewer picking and manufacturing errors, which in turn means fewer quality problems. With standardized components you can change over work centers quickly because you won’t have to put away and restock as many components with a product switch. Standardization means that manufacturers can focus on improving their response time and provide customers a quick turnaround on requested products.

Shop Smart with Comparison Shopping Use search engines to find the best price for any component that you need. Since the market is extremely competitive, it can be time-consuming to find suppliers who’ll actually deliver high-quality parts at the low prices that they claim. The trick is to build a list of trusted suppliers so that you can channel the time you save searching for the right supplier into areas that can make your company grow. To do this, check out product availability, shipping terms, lead times, and shipping rates. Find suppliers who

deliver what they promise. What’s the company’s track record? How long have they been in business? After you’ve completed this process, your comparison shopping involves checking only your top few suppliers to compare prices on each product. Of course, you should still monitor supply costs by checking for discounts and investigating alternate sources. And additionally, don’t be embarrassed to ask for discounts: Many businesses will offer discounts on products — especially

if you pay your bills on time. Want to save more money? Don’t stop at comparing parts. Compare services like phone, internet, and cable plans. Often, companies try to entice new customers with ridiculously low deals to start, only to raise them significantly later. So while you may want to cash in on the good deal, make sure you know when it expires so that you can follow up with a request for continued preferred rates.

B-TANK | KISLEV 5779 | 77

Economies of Scale

Cut Labor Cost

From Trash to Treasure.

As a company grows and the amount of units produced increases, the company should be able to decrease its costs. When this happens, throw a party: Economies of scale have been achieved. Why do higher production rates lower the cost per unit? Four quick reasons: 1. Specialization of labor and more integrated technology boost production volumes. Are you producing products in batches, such as shirts or mugs with company logos? A significant element of the cost is the set-up. Aiming for larger and faster production runs will lower the unit cost and give you a competitive marketing edge simply because the setup costs are spread across more shirts. The fear of taking the plunge to invest in updated machinery or even robots can be mitigated by the realization that increased production lowers overall costs. 2. Lower per-unit costs can come from bulk orders from suppliers. 3. Your internal functions (accounting, information technology, and marketing costs) are spread across a higher number of units. 4. You can take advantage of volume discounts. It’s often possible to make these large orders and arrange for staggered delivery and payment so that inventory levels are kept down.

Labor costs average 20 to 35% of gross sales, so you want to keep these costs down. Here’s how: Overtime can be a heavy labor burden. Paying one and a half to two times the regular hourly rate can add up quickly, especially in times of heavy production. Every company has peak production times. A clothing designer business may need extra help to produce summer styles. Instead of hiring fullor even part-time employees, hire temporary help at these times to keep your production line going strong. Avoid overscheduling by investing in predictive scheduling software based on sophisticated algorithms so you can look ahead at the incoming production demand and make the scheduling decisions from that data. Encourage the staff that you do have to become more efficient at their job by training and educating them. You’ll see improved production and ultimately a reduction in labor costs.

Every manufacturing process creates a product — and waste. You can cut costs on waste-disposal fees by finding a productive use for your waste. For example, slag waste, a by-product of steel plants, can be used to produce cement; discarded corn husks are used for animal feed. Robert Castaneda, co-founder of Greenlink Renewable Energy, has some more ideas: “Removing and burying plastic wastes costs between $50 and $200 per ton on the East Coast,” he says. “We're focusing on turning waste plastic into valuable fuels such as diesel for generators and machinery.” Greenlink also turns organic waste into methane, a renewable gas used to generate electric power. Figure out what waste your company is producing and see if you can find a market for your trash. After all, one man’s trash is another’s treasure.

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Paying one and a half to two times the regular hourly rate can add up quickly, especially in times of heavy production.

COST-EFFICIENCY

Ship Effectively Are you shipping parcels? Understanding your shipping agreement — the surcharges, corrections, and adjustments on your bill — can help you save money. Cost Cutting Consultant Yisrael Markowitz says that clients can save money in specialized shipping negotiations, credits, and carefully reviewing shipping invoices. “One client paid $5 shipping rates for coffee tables,” he says. “Since the client was making a net profit of $20 on the table, it sounded like a good deal. Until we pointed out that the handling charges ate into the profits. It really wasn’t worth it for him to continue with this product.” It’s also important to examine invoices for charges for accuracy, incorrectly assessed charges, and to check that all eligible credits appear on subsequent invoices. FedEx and UPS both have on-time delivery guarantees. If these aren’t met, you can get your money back and use credits gained to save in distribution. “When you understand what you’re paying for,” Markowitz adds, “You can avoid charges. There’s no point paying for overnight delivery from, say, New Jersey to New York; delivery automatically happens overnight by ground.”

FedEx and UPS both have on-time delivery guarantees. If these aren’t met, you can get your money back and use credits gained to save in distribution.

Bartering Outside the Marketplace

Keep Your Employees Healthy and Happy

Bartering has been used for millennia as a way for people to exchange goods and services. You can cut costs by bartering for some other product or service that you need. Craigslist, a site that serves more than 20 billion page views per month, putting it in 11th place overall among websites in the US, has a “barter” section which offers goods-for-goods trades and service-for-service barters. To use Craigslist for bartering, list your product or service as accurately as possible and describe what you would like in return. Business bartering is treated as a normal business transaction — you’ve received payment for the goods or services you provided and must therefore list it as taxable income.

Workplace stress is exacting an ever-higher physical and psychological toll. Stress drives down productivity and drives up voluntary turnover. Be proactive and counteract these negative effects. Jeffrey Pfeffer, author of Dying for a Paycheck, identifies several better work practices that can cut these costs. Start with job control — the amount of discretion an employee has to determine what he does and how he does it. If you dare, you can even follow companies like Google and Zappos and set up some pop-up nap pods for as little as $150 — or a Productivity Boosting Nap Pod for as much as $16,000. 

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k forward to servicing your legal needs.

212-336-8063 mberkowitz@arelaw.com

Tuvia Rotberg TUVIA ROTBERG, ESQ. MARK BERKOWITZ, ESQ. Mark Berkowitz 212-336-8175 212-336-8063 trotberg@arelaw.com mberkowitz@arelaw.com

TUVIA ROTBERG, ESQ. 212-336-8175 trotberg@arelaw.com

PARTNERING WITH US CUSTOMS

Amster Rothstein & Ebenstein LLP • 90 Park Avenue • New York, NY

TO PROTECT YOUR Amster Rothstein & Ebenstein LLP • 90 Park Avenue • New IP RIGHTS AND SUPPLY CHAIN

he United States represents roughly 29% of the world’s consumer market, making it by far the largest single consumer market on the globe. Consumer goods ranging from clothing to electronics, cosmetics, jewelry, and automobiles are purchased by consumers across the 50 states on a daily basis. A significant portion of these goods are manufactured outside the shores of the US and arrive via various points of entry. US Customs and Border Protection (CBP) is stationed at those ports of entry and offers valuable services for your business. Here’s an overview of what they do:

How CBP Protects Intellectual Property Rights CBP is tasked with securing our country’s borders. This includes searching inbound cargo for items that pose a threat to our economy (e.g., intellectual property violations), health and safety (e.g., products that don’t comply with FDA or EPA regulations), and national security. With respect to IP, business owners face a daily struggle to combat the sale of counterfeit and pirated goods. For example, the sale of counterfeit goods causes brand owners to lose revenue and those counterfeits harm the brand’s reputation. A substantial share of these “knockoff ” products are imported through the same channels and points of entry as legitimate goods. Thus, stopping knockoffs at their points of entry, before they can ever be sold to consumers, is beneficial for brand owners and consumers alike. Thankfully, CBP provides a simple and relatively low-cost service to assist in enforcing IP rights at the border. 80 | B-TANK | DECEMBER 2018

What You Need to Get Started CBP has the power to detain and seize products that infringe registered trademarks and copyrights. Therefore, if you’re selling branded goods, the first step in the process of leveraging the protection offered by CBP is to obtain federal registrations for your trademarks. That means registering your mark (i.e., brand) with the US Patent and Trademark Office. Importantly, CBP only recognizes trademarks that are registered on the “Principal Register” — the register reserved for stronger, more unique trademarks. In other words, in order to obtain the benefit of CBP enforcement, a trademark must do more than merely describe your goods (e.g. “Coca-Cola” is protected while “carbonated beverage” is too vague a term to be able to demand protection). Merely descriptive trademarks are registered on a separate register and such trademarks will not be enforced by CBP. If the goods you seek to protect are works of authorship (e.g., games, plush toys, books, etc.), then you must first register your work with the US Copyright Office. Recording Your Mark with Customs Once you’ve obtained the necessary federal registrations, the next step is to record your trademarks or copyrights with CBP. When it comes to using technology, CBP is ahead of many government agencies. Specifically, CBP utilizes an electronic system for recording trademarks and copyrights, which simplifies the process and puts your IP information at the fingertips of CBP agents. CBP also encourages business owners to submit additional information that can help customs identify infringing cargo. For example, rights owners may submit “allegations of infringement” if they have

LEGAL

specific information regarding a shipment of infringing goods. Savvy business owners will prepare product authentication guides and training manuals, or even provide or participate in training classes to help CBP spot fakes. These guides will typically include annotated photographs highlighting the difference between the genuine products and the knockoffs. The training classes offer CBP officers the opportunity to view genuine and fake products firsthand. In short, the more information you provide, the more successful CBP will be in protecting your IP rights.

What to Do If Your Goods Are Flagged No system is perfect. CBP occasionally misidentifies authorized goods, resulting in their detention and seizure. By law, CBP has 35 days from the date cargo arrives at a given port to detain the products for further examination. During that time period, CBP is required to provide the importer (or its customs broker/ agent) with an explanation for the detention. Specifically, CBP must issue a written detention notice providing specific information about the detention, including: the specific reason for the detention; the anticipated length of the detention; the investigations to be conducted on the goods; and the nature of any information which, if supplied to CBP, may accelerate resolution of the detention. Should you ever receive a detention notice, do not delay in responding. If necessary, consult a lawyer as soon as possible. In some cases, providing CBP with simple information can avoid a costly seizure of your goods. For example, if CBP has detained your products as possible counterfeits, providing CBP with a letter of authorization from the brand owner may bring the matter to a close. After the 35-day detention period, the cargo must either be seized or released — it cannot be held in limbo. In the event that the merchandise is seized, the case is forwarded to the Fines, Penalties, and Forfeitures Office (FP&F). The FP&F prepares a formal, written seizure notice, which is sent to the importer. The seizure notice will detail the cargo seized and the legal basis for the seizure. Once a seizure notice is received, the importer is allowed 30 days to file a petition with CBP. In the petition, the importer will need to explain why the cargo should be released. In a climate where talk of border control is associated with controversy and political rancor, the type of border control that protects US businesses should be applauded. Savvy business owners will leverage the power of CBP to prevent counterfeits and pirated goods from ever reaching a US consumer, and they’ll take steps to protect their supply chain from competitors. 

KEEP CLEAR FROM PRYING EYES How to maintain control over your confidential shipping information In addition to protecting your company’s intellectual property, CBP provides a method to protect the links in your supply chain from prying eyes. Have you ever wondered about where a competitor was sourcing products overseas, or do you wish to know the name of the factory that manufactures its products? It’s often easy to find out. This is because CBP makes “vessel manifest data” (that is, an importer’s or exporter’s shipping information) available to the public. (Air, rail, and truck shipments aren’t made public.) Websites such as ImportGenius and Panjiva gather this information and offer it to the public for a fee. As result, the names of importers, their suppliers and manufacturers are often just a few clicks away. Importantly, CBP allows importers to request confidential treatment of import information. Once granted confidential treatment, CBP is prohibited from disclosing manifest data relating to your shipments. In addition to basic company information (name, address, tax ID), a request should include any variations or potential misspellings of your company name that a shipper may use (e.g., B-Tank, Inc., BTank Inc., B Tank Co.). It typically takes CBP two to three months to process a confidentiality request. The confidential treatment will remain in effect for two years and it can be renewed for additional two-year terms.

Mark Berkowitz and Tuvia Rotberg are attorneys with the New York law firm Amster, Rothstein & Ebenstein LLP and practice all aspects of IP law. B-TANK | KISLEV 5779 | 81

M.C. Millman

MEETING THE STANDARDS FOR

The heady rush of a new product

ou’ve spent months — if not years — developing it, and now, you think it’s ready to go at long last. But wait! Don’t take that heady step of going into production and placing your product into the buyer’s arena just yet. This is definitely a time to accept some age-old advice and look before you leap.

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COMPLIANCE

Compliance: How to Know if You Are or if You Aren’t

All products need to be compliant to any number of tests. The prototypes must not only be compliant, they must prove their compliance as well. Sometimes the factors involved in carrying out the necessary steps to acquire the required certification can be overwhelming, especially if you don’t even know what’s required in the first place. Mel Singer, CEO at Madison Safety & Inspection Inc., explains some of the benefits of testing a product before distributing it. “By having these tests done, you won’t get stopped nor have your merchandise seized by the customs border control for noncompliance. It’s also important to have all of your required certifications in order to have an efficient Amazon listing and avoid being closed down by Amazon’s safety team.” Taking these precautions means there won’t be any nasty surprises somewhere down the line when you thought you were all set.

Compliance Awareness for Children’s Products

Every toy imported to the US or EU needs chemical and physical testing and certifications. The chemical testing is to rule out the presence of heavy metals such as lead and phthalates, and the physical testing is to make sure there are no small parts, sharp edges, or finger holes. Singer talks about some of the details one needs to be aware of when creating a product for children. “You have to know what age the item is intended for. If it’s for kids below age three, there can’t be any small parts before and after the abuse and drop test. The prototype has to be at or below the allowed limit for hazardous chemicals, and it has to have tracking information on it in case of a recall, along with all the warning and recommendation labels required for such items.” Children’s textile items need to pass the flammability burn test. Children’s pajamas, for example, have an approved burn rate of 3.5 seconds. If the material has a quicker burn rate, the item won’t be approved for sale.

Electronics Regulations

All electronics must comply with Federal Communications Commission (FCC) regulations. The safety standards of electronic products are under the jurisdiction of the Underwriter Laboratories (UL). Meeting UL standards is recommended but not required. However, a manufacturer is held liable for any unsafe products sold. By meeting UL standards one can avoid having to issue a costly and damaging product recall should there be an issue with a product. Achieving UL

certification, though, can be a costly process.

Textile Labeling

Textiles need to be appropriately labeled with care labels and fiber composition, as well as care instructions and a country of origin label that must be clearly visible not only on the product but also on the packaging. If the authorities discover that you’re importing products that are technically noncompliant, you might have to issue an immediate product recall. This can mean financial ruin to small companies and startups. If you’re only found to have a “minor” violation, such as a textile missing the appropriate label, you may be allowed a second chance to re-label the goods. But why take chances?

Food Compliance

Someone looking to open a business in the food industry has to meet many regulatory requirements, says Sussy Kraus, a food scientist and food safety consultant with Focuss Group, located in Monsey. “To be in compliance, he’ll have to decide what the scope of his business will be, what the product is, who he’s targeting, if it’ll be sold retail or wholesale, and whether the product will sell locally, interstate, or online. Some requirements apply to all food businesses, while some are specific to the particular food product.” In addition to federal, state, and local requirements, there are different industry standards for those who’d like to sell to chain stores such as Costco or Whole Foods, or through national distributors. These chain stores require sellers to prove that there’s an effective food safety system to ensure that they’re in compliance with the Food Safety Modernization Act (FSMA) and all other legal requirements. There are three ways for a food facility to prove that it’s compliant. The most basic level is when the business itself claims compliance through a letter of guarantee to its customers. The next standard is where an accredited third party audits the food facility for compliance. The highest level, which would satisfy global food safety requirements, is through Global Food Safety Initiative (GFSI) – benchmarked standards. Some chain stores send their own auditor to their suppliers to ensure compliance. “The best time to set up your food business correctly,” says Kraus, “is right when you start out. You’re going to need to be legal and straight and to train employees to do the same. Doing it right from the start means that you’ve already created the proper culture and attitude in your place. But it’s never too late to change… as long as there’s a strong management commitment.’’ B-TANK | KISLEV 5779 | 83

The Change Theory Change can be difficult, especially in an established business — but if done the right way, your business will meet with success. Follow the change management theory to successfully implement changes. If just one component is omitted, the change experience becomes negative.

VISION

SKILLS

INVENTIVES

RESOURCES

ACTION PLAN

CHANGE

SKILLS

INVENTIVES

RESOURCES

ACTION PLAN

CONFUSION

VISION

INVENTIVES

RESOURCES

ACTION PLAN

ANXIETY

VISION

SKILLS

RESOURCES

ACTION PLAN

RESISTANCE

VISION

SKILLS

INVENTIVES

ACTION PLAN

FRUSTRATION

VISION

SKILLS

INVENTIVES

RESOURCES

TREADMILL

Adapted from Enterprise Group Ltd.

Changes in Compliance The Food Safety Modernization Act had a major impact on the food industry. Whereas until recently there used to be only three industries (meat, seafood, and juice) that made hazard analysis and critical control points (HACCP) mandatory, food safety lobbyists and victims of food poisonings wanted reform in all food industries. Other changes involve those who import food. In the past, the FDA was responsible for making spot checks on the billions of dollars of imported foods to make sure the food was safe. But now, it’s the responsibility of the importer to oversee that any foreign supplier is compliant and responsible. For instance, the importer now needs to make sure that any company he does business with has a food safety plan that’s comparable to FSMA requirements, and the supplier must continually prove its compliance every step of the way. Focuss Group was recently involved with a meat supplier that got stopped at the border because listeria was found in the meat. The company had no idea where the contamination had come from, but it was their responsibility to discover where things had gone wrong in the process their supplier had initiated. Records showed that during the course of the meat production, a machine in the production line had broken down. The maintenance crew had fixed it, but since the production had gotten backed up, the meat company failed to do a full cleanup. After this was discovered, the company adopted a new policy that included a new hygiene clearance record.

How to Be Compliant

Companies walk through every step of the process the food goes through (from 84 | B-TANK | DECEMBER 2018

purchasing, to receiving, to processing, to cooking or baking, to packaging, to warehousing, to storage and shipping) for preventative control. A flow chart for every product helps assess at what point there could be a hazard and how to prevent it. Every point in the process needs to be written down and recorded so that answers are always available if there’s a government inspection. FOCUSS Group was called in after a company operating without a license had $32,000 worth of products seized. Health inspectors had traced the product from the supermarket shelf to the company’s headquarters, and found that while the bottle read “Keep Refrigerated,” the place where the product was being made didn’t have a refrigerator. In actuality, refrigeration was only recommended to increase the product’s shelf life after opening. But, because it had been kept at an ambient temperature for a week, the health department wanted to destroy it. The company sent the product for a lab analysis to prove the product’s quality, provided a review of the production process (to prove that the product didn’t require refrigeration at any point), and procured an expedited license for the business. A food safety plan was also created to ensure that the product would be handled safely both during and after production. All of these steps played a part in getting the product returned to the business — all $32,000 worth of it. Staying in compliance for any product can definitely be a challenge, but the investment of both time and money as well as the focus on doing things right will pay for itself financially — and guarantee peace of mind. 

The Hazards Three hazards the health department looks out for in food: 1. Microbiological, including listeria, E.coli, salmonella, parasites, etc. 2. Chemicals such as allergens, molds, and chemical residue 3. Glass, metal, or wood particles, or twigs and shells

Allergens around the World Eight major allergens must be mentioned on the labels of food sold in America: milk, soy, wheat, peanuts, eggs, tree nuts, shellfish, and fish. Other countries, such as Canada and Europe, include mustard, sesame, celery, and nitrates.

Communicated

COMMUNITY MEETS CORPORATE: ’THE EASTGATE GROUP’ A LEAGUE OF ITS OWN P. Friedman

saac Weinberger exudes crackling energy that immediately draws me in, as he speaks with the passion and excitement of one half his age. He describes his vision animatedly and articulates his company goals clearly with a confidence borne of extensive experience, as he guides me through images, details, projects, and successes of his construction company, The Eastgate Group. With the conviction of a man who knows his work and loves it, Isaac has taken his company, based in Chester, NY, and put it squarely on the map along with other commercial giants. Here, he and his team tell me how and why. Prudential Financial and Eastgate Group met last summer. Prudential was looking for a dynamic team to construct their state-of-the-art regional headquarters in Bridgewater, NJ — a 12,000-square-foot office complex, with ready-to-go workspaces, conference rooms, cafeterias, and state-of-the-art wiring and technology. The project kicked off right on time and was completed in a record six weeks, to the absolute satisfaction of Prudential, who is now a regular client of Eastgate. This successful project was another corporate feather in the hard hat of the Eastgate team, who pride themselves on professional efficiency and their ability to run any large-scale

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project on schedule and within budget, leaving no detail to chance. Meticulous planning coupled with flawless execution is what gives Eastgate the edge. Here’s what happened when an avid NBA fan wanted to bring his passion home. Eastgate was tagged to build his $7 million mansion in Riverdale. In addition to 10 bedrooms and an indoor pool, the owner wanted to fulfill his boyhood dream and include a fullsize, full height regulation basketball facility in the basement of his home. He asked Isaac skeptically if that could be done, and the Eastgate team affirmed that indeed it could. Eastgate’s engineers and architects put their heads together and took the complex plan from the drawing board to reality. A double-deep pit was dug through 22 feet of rock, using industrial machinery to hollow out what would eventually become the concretelined, steel-topped sports court underneath the house. A scant few months later the proud owner of an in-house underground basketball court shot his first hoop — and scored. As did Eastgate, who once again proved they are the people to turn to when you want to make things happen. Under the leadership of founder and CEO Isaac Weinberger, The Eastgate Group proves that know-how,

C. 917.440.4500 P. 845.783.0217 F. 845.783.3278

THE EASTGATE GROUP PLAN

P E dedication, and broad experience competes comfortably and on an equal footing with known commercial contractors. Contrary to popular belief, size does not determine success. A team that combines passion with professionalism is the team that will see your project through to its satisfying end. Isaac has been building his career, his company, and a multitude of homes and projects for close to three decades. His portfolio is a showcase of the diverse, the different, and the beautiful, ranging from a 100,000-square-foot New Jersey-based pharmaceutical facility, and a one million-squarefoot fit-out for a major US cabinet manufacturer in Newark. Tenant fit-outs rank high on the Eastgate to-do list as their team is competitive, efficient, and has the know-how to get multiple office space outfitted and ready within an allotted time frame, according to the individual client’s needs, budget, and corporate requirements. Recently, Isaac got a call from a very satisfied Eastgate customer, himself the COO of a large company. The client had a winning bid for a US government construction project and wanted Isaac on board immediately. Navigating city and state agencies can be a logistical nightmare for most, but Eastgate has proven itself over time with its ability to fulfill, overcome, and comply with all the official paperwork, protocol, and requirements. Upon the project’s completion all city, state, and federal building ordinances and regulations were clearly met. Safety regulations were adhered to and all inspections passed with ease. Uncle Sam was now a red, white, and blue feather in the cap of Eastgate. Eastgate’s attractive website and social media presence is a dynamic display of impeccable style and obvious success. Visiting their site is a pictorial experience. Viewers will keep clicking to see more, long after all images are viewed. The vibrant images attest to a diverse range of construction activity and schemes. They include many sprawling medical facilities and a magnificent birthing center, a couple of largescale public school facilities, and sprawling condominium complexes. Two New York-based

THE EASTGATE GROUP

DESIGN

eastgatebuilders@gmail.com www.theeastgategroup.com

BUILD

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are custom builds for the food service and catering industry. This broad range of completed projects serves as a bricks and mortar testimony to Eastgate’s broad ability and industry leadership. The company has also been heavily involved in retail construction, building and renovating storefronts throughout the greater North Jersey and Hudson Valley regions, and lending its experience to a portfolio of dozens of satisfied business and municipal customers. Speaking to Isaac, it becomes apparent that home is where the heart is. His face lights up as I ask him about his first love: custom residences. That’s where his building journey began. In a market flooded with small-town contractors, Eastgate has created and filled a unique niche — custom-built homes. Isaac himself meets potential clients over and over and listens to them as they describe their dreams. He takes notes as they speak and translates their fantasy into accurate drawings, their specific requirements into figures and numbers. He pulls it all together seamlessly, taking into consideration the client’s unique vision, individual taste, space, and budget, and makes it all happen with precision, ease, and speed like only he can. Working on these homes is what propelled Isaac further out and was the impetus for the company’s growth to encompass projects on a much larger scale, including tenant fit-outs and corporate office space. Eastgate COO Jim Lewis, and the several project managers employed by the company, exude much of the same exactitude and drive as their boss. The company is fueled by excellence and thrives on the many challenges presented in large-scale building projects. Their team creativity, professional approach, and unending attention to detail make Isaac and Eastgate the first choice for so many, when moving beyond the drawing board and into the building site. Isaac has slowly and successfully moved Eastgate away from its origins as the community’s builder and has injected the experience, energy, and focus needed to take Eastgate forward to meet corporate America.

C O M M I T M E N T

A team that combines passion with professionalism is the team that will see your project through to its satisfying end.

845-783-0217 // theeastgategroup.com B-TANK | KISLEV 5779 | 87

Karen’s 6 Picks

Lift Karen Behfar

Karen Behfar holds a bachelor’s degree in special education and a master’s in psychology. She’s a real estate broker, and along with her husband, Aharon, owner of the Behfar Team. 88 | B-TANK | DECEMBER 2018

Well Said

“Know your product better than anyone, know your costumer, and have a burning desire to succeed.” — Dave Thomas, founder of the Wendy’s restaurant chain This quote epitomizes the way I think and approach success. When I started out in real estate, people thought I was crazy for entering open houses just as an observer, without having any buyers for the house. But I was confident that learning the market, and getting to know what it is that people look for, would be the most valuable tool in succeeding in real estate. My obsession with learning the market follows me until today and aids me in understanding the Flatbush market, which is far from clear-cut. I’m at every inspection, learning the values, the homes, and people’s preferences. Listening more than speaking enables me to find homes that fit the buyer’s criteria without dragging the process along.

Broadening Connections

An app that I can’t see myself without is Instagram. Although you’ll never see my face on Instagram, it’s the means through which I’m most often recognized. I sold my first house through Instagram and it accompanies me along my successes until the present moment. My background and master’s in psychology helps me center on the things clients would like to hear, as opposed to throwing homes at them without understanding what they’re searching for. The app allows me to reach many people and forge relationships with individuals who’d otherwise be beyond my reach.

Biz Tools

Mind Your Time

A Lighter Note

This cartoon exemplifies an idea that I believe is vital to building a successful company or business. The reality of starting a business is that it often appears as though failure is looming in the distance, despite hard work. While it might seem like it’s the end of the road, giving up prematurely is disregarding all the success waiting to be unleashed. People have preconceived notions of what success is and when it should kick in. With proper guidance, coaching, and hard work it’ll come — though it might not be in the way or at the time you expected. You never know how close you are to attaining your goals, but by giving up you’re destroying the possibility of ever finding out.

Many people enjoy using different apps to keep track of their schedule, but I prefer writing my list of daily responsibilities by hand. I view my mind as a pile of open files, but as I write down each task I find my mind clears up and the files are slowly stored away. I always tackle the most dreaded task first and then continue down the list. Two solid hours without taking calls allows me time to finish every task on my list without getting distracted. Another tip that helps me a lot when life is overwhelming is to take a few minutes and list three things I’m thankful for. This keeps me in check and brings me back into the present moment.

An Eye on the Why

Always having the “why” in mind is most definitely a powerful tool in staying motivated. When things fall apart, it seems as though the cycle of success is broken and it can be difficult to carry on. I find that knowing and reminding myself of the purpose behind my work and sacrifice acts against the feelings of despair that enter the mind when failure hits. That’s why I like to keep a photo of my family on my desk: It helps keep me on track when I find myself getting carried away. The why and purpose of doing what you do is individual, yet regardless of what it is, being aware of it and keeping it in the forefront of your thoughts can work as a constant motivator.

Building Rapport

Since I put a great emphasis on learning the market and constantly educating myself, I picked up a lot of knowledge that can help my clients, as well as others who are looking for service in other areas of real estate. Marking myself as an expert as well as making myself very available to others and freely sharing my knowledge has helped me become known as the go-to person for all things real estate. People know that whether they’re potential clients or not, they can call and receive advice and information on different matters. This does volumes in terms of building business relations, since I’m often the first name that comes to mind when people realize they have a need for my service (or when they’re asked for a referral for my service).

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Vision from the C-Suite

Yitzchok Saftlas

Strategic business advice and insights from C-level executives, who appeared on a 77WABC’s Mind Your Business with Yitzchok Saftlas

ruce Katz was born into a shoemaking dynasty. His grandfather, Samuel Katz, founded the Hubbard Shoe Company back in 1930 and spent his life in the industry, as did Bruce’s father, Saul Katz. In 1973, the shoemaking industry largely shifted overseas to cheaper labor markets, and Hubbard Shoe Company closed its doors. Bruce and his father instead founded The Rockport Company — a leading player in footwear today. Bruce also pioneered the first large-scale online community as a discussion group for many prominent newspapers and magazines. He’s also heavily involved in Rosewood Stone, an internet-related investing platform. In 2014, Bruce returned to his shoemaking roots to establish Samuel Hubbard shoes. He’s been recognized as an “icon of the footwear industry” and is the first person to engineer athletic-shoe comfort into non-athletic shoes.

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Bruce, tell us about yourself. As the founder and CEO of Samuel Hubbard Shoe Company, what can you tell us about your journey in the shoemaking industry?

Shoemaking is in the Katz family blood. My grandfather was in the industry and my father and I founded The Rockport Company together. I took a hiatus from the industry for nearly 30 years, but my daughter, eight years old at the time, encouraged me to get back into the shoe business. I had no idea she even knew about the family business! Everyone knows the saying “beauty is pain.” How is Samuel Hubbard Shoe Company redefining beauty and comfort?

The idea is to create a shoe that features athletic shoe comfort but is appropriate for a business setting. To me, the gold standard in ultimate comfort is when I forget I’m wearing shoes. Nothing makes me happier than hearing customers tell me they walk around their houses in their Hubbards — because they’re more comfortable than their slippers. Mission accomplished!

The Un-Sneaker is a trademark of your brand. How has this one innovative idea grown your business to be one of the tops in its industry?

The secret of the Un-Sneaker, the dress shoe look with the sneaker feel, lies in its design. At Samuel Hubbard, we work only with top-quality materials and top-quality designers. Ironically, the project was initially supposed to be called the “fast track,” but it took about a year and a half before we rolled it out! Some shoes take two and a half years to design before I’m happy with the product; it’s a long process of trial and error. Can you tell us a little bit about how you grew your business?

I was used to the industry’s high volume that I’d been dealing with at Rockport, so my first order was for 15,000 pairs of shoes! My website first launched in January. Between January and June, I sold 123 pairs, out of my original 15,000, and every time a pair was sold it made office news! I realized that unless I could figure out a way B-TANK | KISLEV 5779 | 91

Vision from the C-Suite

anywhere! The bottom line is that customers are attracted to quality — they appreciate when there are no corners cut, and they’re willing to spend for it. What’s your advice to budding entrepreneurs in terms of scaling a business? What’s the best business model for growth?

Many entrepreneurs are laser focused on growing their business and gaining scale — even before the business becomes profitable. My advice is to focus on becoming profitable earlier and then working on gaining scale, even if that means delaying the expansion process. to communicate with people, I may as well have opened a storefront somewhere 50 miles off the highway in North Dakota — I was virtually off the map. So, I decided to invest $200,000 into ads. I took out my first ad in the New York Times and the response was immediate; every time I spent money on ads, I’d make up for it in the revenue it generated. Wow. You’re saying print ads really helped jump-start your business. In today’s world, how do you feel about traditional media versus digital advertising?

Print ads are invaluable in creating an image. I doubt Ralph Lauren, for example, could have created the same brand personality and identity without using print ads or billboards. Although digital advertisements are useful in generating brand recognition, they’re also very ethereal. Because digital media is so intangible, you can’t replicate the charisma invoked by an Armani billboard through an Instagram post. How did you get brick-and-mortar retailers on board with your product?

At first, when I’d go around selling my shoes to retailers, I encountered the same reaction from all of them. They all loved the product and admired its quality, but they were concerned about the price point. The typical Hubbard shoe costs around $225 to $250, and retailers were skeptical whether they’d have the customers for it — but they all asked for a pair for themselves. Once they agreed to stock a few pairs, the results spoke for themselves. The customers were hooked! Sometimes, consumers understand the product better than the retailers. In the same way that there’s no going back to a Windows once you splurge on a Mac, you can’t go back from Samuel Hubbard. You won’t find a better shoe

The American Business Awards has named your customer service team the winner of the Gold Stevie Award for Customer Service Department for the second year in a row! Can you share the secret for building a customer service team that’s “second to none”?

Customer service is an integral part of Hubbard shoes. My father always used to say, “We’re making friends, one pair at a time,” and that’s truly the Samuel Hubbard motto. Every customer is a relationship. I’m very insistent that every call is answered by a person. You’ll never call and have to “press 1” or get transferred multiple times before reaching a live person. My employees love working at Samuel Hubbard, because they never have to say no to a customer. I’m very trusting of my customers — I don’t want to penalize all of the honest people because of that one guy who will take advantage of our outstanding customer service. Bruce, thank you so much for sharing your insights. Any final takeaways?

Above all else, follow your passion. I founded Samuel Hubbard because I wanted to create the most comfortable shoe that I possibly could — and I did! I love making my customers’ lives just that much more comfortable with the perfect pair of shoes — and receiving all the positive feedback is extremely gratifying. I love what I do, and it shows in the company’s success.  Yitzchok Saftlas is the founder and CEO of Bottom Line Marketing Group, an award-winning marketing agency helping hundreds of corporate, political, and nonprofit clients since 1992. Yitzchok’s book, So, What’s the Bottom Line? published by Morgan James, contains timeless advice for marketers, seasoned executives, and entrepreneurs. He’s the host of the weekly business radio broadcast, Mind Your Business on 77WABC in the New York/New Jersey metro area as well as on C-Suite TV.

Want more tips from the experts? Catch their interviews on MYBradio.com and tune in to 77WABC every Sunday at 10:00 p.m. (ET).

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Six Tips to Help You Make the Most of the

Mindy Cohn

Season

Deepen the Ties Holiday season is the perfect opportunity to network. Make it your business to stop by at parties, even if just for a short while, to mix with attendees so you can make new connections or reconnect. This is your chance to socialize with those you do business with, as well as to strengthen existing relationships and make new connections. Whether the gathering includes clients, employees, colleagues, or anyone else, this is a golden opportunity to strengthen connections in a relaxed, stress-free environment.

Tap into Buying Power The holidays are a great time to concentrate on leveraging all the right channels so as to get in front of potential customers by being in the right place at the right time. Being in the right place can be accomplished by sending emails designed with holiday templates and including a holiday offer (along with dates and deadlines that push the urgency factor). Social media is another channel you can utilize. Create a posting schedule before the holiday 94 | B-TANK | DECEMBER 2018

season to take some of the stress off you during a busy time and to keep customers engaged. Include season-themed content to give your social media presence an extra oomph of relevance.

Thoughtful Gift-Giving The holiday season is an apropos time to thank coworkers, clients, managers, and others. From greeting cards to gift certificates, an important factor in getting it right is making sure your gift has at least some kind of personal touch — even if it’s just hand-signing each card that goes out. Depending on your work relationships, you may want to give some colleagues or clients more personalized gifts — and you’ll want to put some thought into it so your effort isn’t wasted. For best results, think about who you’re buying the gift for. It’s not about you and what you like; try to buy something that will match the receiver’s style. Matching a gift to an individual’s hobby or interest will also help your gift to be more readily appreciated. Focus on what that person likes to talk about or even check out their interests on social media, which can also provide some helpful clues.

Avoid the Risk of Overspending Plan ahead to avoid the risk of overspending. For starters, create a budget and a shopping list to go along with it. Don’t forget to include all the little things that can add up as well like decorations, cards and postage, and extra food and snack items. Don’t overdo it on the holiday bargains. Not every alleged holiday deal is actually a good deal for you. And don’t forget — you made a budget, so stick with it. Keep your receipts — just in case you actually spot a real bargain for less than you already paid. There are also retailers who will give you back the difference if what you bought goes on sale for cheaper in their store within a specific time frame. You’ll need the receipt, though, for proof of purchase. Don’t overspend just because you feel the need to impress. Remember, that’s what your budget was for. You also don’t need to give gifts of equal value to everyone on your list, nor do you need to spend the same amount as the person who gifted you.

Avoid Online Holiday Shopping Scams If the deal looks too good to be true — could be that it is. Research the website you’re ordering from if you haven’t heard of it and if the price seems too low. The Better Business Bureau is a good place to start — check

if there are any complaints lodged against the company there. Online user reviews are also a good place to investigate an unknown site. When making a purchase from a place like Craigslist, don’t send money to a stranger. Buy local instead and then arrange to meet in a public spot. Some communities even have special parking spots which are police-designated safe spots for completing your transaction.

Getting the Most out of Holiday Vacation Plans If your holiday plans include vacation plans or even business travel with some time to tour, you might want to make the most of your travel budget. Try asking the locals for their ideas of places worth visiting to avoid some of the tried-and-true tourist traps and take in more of the local flavor at what will probably be a lower price as well. Walking five to ten minutes further for souvenir shopping might pay for itself in the end both in price and in added variety. You can also check for combo sightseeing passes that will both save you money and guide you toward the more popular sights you want to see. Booking reservations online for most places may also save money. Even if you’re already at the tourist attraction, you can often still book the tickets online for a discount. Check for other discounts as well, such as student discounts, and those for over-60s or under-18s.  B-TANK | KISLEV 5779 | 95

Ephraim Ausch

10 Tips to Cash in on Amazon

Advance Labeling

Sales

Is your shipment running late? Create your Fulfillment by Amazon (FBA) shipment while your product is still at your supplier or manufacturer. Have them label the products so that when they arrive in the US you just need a trucker to pick up your shipment from the port or airport and deliver it straight to Amazon. This means the products don’t have to come to you first for labeling — a step in the process that can cut into the time your product is available for sale.

Preferred Carriers When creating an FBA shipment — especially a large one — don’t choose “Amazon Partnered Carriers” for trucking; choose “Other Carrier.” This isn’t only cost efficient, but will also provide quicker delivery for your goods. Partnered carriers may take three to four weeks (during Q4) before your product gets delivered to fulfillment centers, and that can result in you missing out on sales during prime sales season. The reason why it takes so long for Amazon Partnered Carriers in particular is because only after your product gets picked up from your location will the trucker schedule an appointment with Amazon for delivery. During busy seasons Amazon will only give truckers availability two to three weeks after the request. A local 96 | B-TANK | DECEMBER 2018

trucker may be a bit more expensive, but they can get your product into Amazon that same week (or even that same day!). The reason for this is that they generally reserve Amazon appointments for drop-offs in advance for their shipments.

Sea Savings When replenishing a large amount of products, you’ll probably choose the option of shipping by sea. Importing goods via the West Coast generally takes 14 to 15 days, whereas shipping via the East Coast takes 30 days or more. Although you may think that you need your shipment on the East Coast, just put in an address close to the port in the West Coast and most of the time Amazon will give you a local warehouse to deliver your goods instead of sending it all the way to the East Coast.

Inventory Fees Amazon has made it very clear that they are not in the storage business and only in the selling business. To that effect, they slap sellers with high storage fees ($0.69 per cubic foot through October, and $2.40 per cubic foot from October to year’s end). When utilizing FBA, keep careful watch on your inventory during Q4. You don’t want storage bills to wipe out your profit.

Inventory Performance Index

Downplay the Negative

Amazon implemented a performance index in July to keep track of sellers’ performance when utilizing FBA. Sellers must be rated above 350 on the Inventory Performance Index (IPI). Sellers who score below 350 will be restricted how much they can send into Amazon FBA — something that can undermine sales in a huge way. If you want to send in lots of product during the holiday season and you see that your score is under 350, call Amazon and ask them how to change your turns of selling goods on Amazon from four turns (that’s the standard in your Amazon account) to one to two turns. This will allow a higher score on your performance index within seven days because the Amazon algorithm will see that you don’t have overstock in your inventory because it takes you six months or a year to turn your goods. If your score is good, don’t play with the turns.

Check your reports daily for negative keywords that bring you clicks you don’t want and eat away at your pay-per-click (PPC) advertising budget without producing any sales. This is especially important in Q4, as these clicks can eat up profits on good-going items. If you find negative keywords in your reports, copy and paste them into the negative keyword option so that your PPC campaign stops bidding on it.

Amazon Advertising Always, always have two advertising campaigns: an automatic campaign and a manual campaign. After a few days you’ll be able to see in your advertising reports from your automatic campaign all keywords that got clicks and how many of them got you sales. Utilizing the data from the automatic campaign, you can maximize good keywords by adding them to your manual campaign. This will allow you to control the bid — and bid higher — if you see that you’re getting good sales.

Advancing the Algorithm Using Facebook ads (targeted at the right audience) can be a huge advantage over your competition because Amazon’s algorithm loves when you bring outside traffic onto Amazon. It makes your product rank better and comes up higher in searches.

Account Health If you’re selling products from your own warehouse, always make sure to have products on hand. Stock overselling or pre-selling can lead to suspension if you aren’t able to deliver the goods on time.

Suspension Sorrows If you’re unlucky enough to get suspended, never try to contact Amazon yourself. Find an authentic pro to get your account back up and running. Doing it yourself runs the risk of multiple delays, while a pro may be able to set you back up in business within two days. 

Ephraim Ausch is the vice president of sales and marketing at Tactical Logistic Solutions and owner of a small boutique seasonal gift basket company. B-TANK | KISLEV 5779 | 97

PERSONAL FINANCES

Robo Advisors Jacob Halberstam

Once a Silicon Valley fad used by millennials, automated computerized investment advisories are becoming ever more popular. How do they work? Who are the big players? And is it for you?

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PERSONAL FINANCES

obo-advisors are digital platforms that rely on computer-driven algorithms to help clients invest their money. These systems will usually ask a list of questions to figure a client’s needs, risk tolerance, and other investment decision-making factors, and with that data and algorithms, it’ll spit out a proper investment portfolio for each client. Mostly, these robos invest the money in low-cost mutual funds and exchange-traded funds (ETFs). These robo-advisors are usually cheaper than traditional advisors. Most of these robos charge between 0.20 to 0.50% of assets under management (AUM), which is about 1% cheaper than the usual financial advisor. The fact that it takes a lot less money to get started is another benefit of the robo-advisors. More established money managers usually have high minimums of investable assets before accepting a client. Minimums for robo-advisors are generally in the low thousands, and some companies have a zero minimum. In 2017 total assets managed by these robos hit $222 billion, and that number is growing at a very fast rate of 68% a year. A very small percentage of the population’s money is invested this way, but it’s gaining popularity relatively quickly. Early Beginnings Betterment, an online investment company that launched in 2008 after the financial crisis, was the first one in the field. The actual technology wasn’t new, as these computerized software models to allocate clients’ money was being used by many big money managers. But on a straight-to-consumer level, they were the first. At first this technology was quite limited, as all it did was allocate money to particular investments. But like all technology, it evolved

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to offer many other complex tasks like comprehensive financial planning and tax-loss harvesting (to relievetax burdens). As the technology evolved, so did the companies offering them. Today many of the traditional financial platforms like Charles Schwab, Vanguard, and Fidelity offer such services. One of the issues that consumers complained about was the lack of ability to speak to a human. So today many of the robo-advisor companies offer a hybrid version where clients have access to licensed financial advisors as well, in the eventuality that they have questions. Some of the more established companies that launched such advisories are offering pretty much the same services they always did, only with an additional level of technology. This new wave of technology has definitely created an opportunity for the less affluent investors to get sound financial advice. Game Plan According to Investopedia there are more than 200 different robo-advisors, with many new ones popping up constantly. Which one is the best? The answer as usual: It depends. The more accurate question is, which one is best for you? For beginners starting out on their investment journey, the one that was first still remains atop the list. Betterment Digital, who introduced this technology to the public, advanced their offerings to take the top spot for the novice investor. Betterment offers the right balance of simplicity and sophisticated enough services newbies would want from a robo-advisor. Outside accounts like 401(k)s and IRAs can be linked to have them all in one place, and for Betterment to reshuffle assets according to how these other accounts are performing. They have exceptional

This new wave of technology has definitely created an opportunity for the less affluent investors to get sound financial advice. perks for novice investors, like a zero dollar minimum to open an account and the ability to buy fractional shares of stocks, so you can put even little money to work. They also offer a human touch, as licensed advisors are available to answer investment questions via video chat or phone. Betterment’s overall pricing is pretty much average, at 0.36% of AUM. Betterment also has a premium version, called (drumroll…) Betterment Premium. This service has a minimum account of $100,000. It offers unlimited text or phone conversations with Certified Financial Planners (CFPs), and options of flexible portfolios (where you can choose a specific security to invest in, and the advisor will create a portfolio based on those preferences). It also comes with a little higher price tag, averaging at about 0.50% AUM. Advanced Plans For more seasoned investors, who have accumulated more money and want more options, Schwab’s Intelligent Advisory takes the cake. It has an account minimum of $25,000 and the cost is 0.43% of AUM. This service offers comprehensive planning delivered from CFPs, with video chats up to an hour and by phone six days a week with easy scheduling on their online booking system. This is a real “hybrid option,” with a lot of automated features and tech, while having professionals to talk to along the road. Schwab also has another cheaper service called Schwab Intelligent Portfolios with a minimum of $5,000, but this option doesn’t have many of the premium features (see table for comparison). Another option for the seasoned investor that deserves a shout-out is TD Ameritrade’s Selective Portfolios. They also have a minimum of $25,000. It’s a very personalized service. Each client receives a personalized performance video every quarter with updates on their portfolio. Twitter Chatbots and Facebook Messenger are also available for clients to connect. Another benefit that TD offers is that you can enter one of their 364 branches throughout the US to speak with a financial advisor. But it comes at a little hefty price of 1.10% AUM — pretty much the same that a regular advisor costs.

Vanguard Personal Advisor Services is a better option for those nearing or already in retirement. They offer advisors for a complete retirement drawdown, Social Security optimization, and other more complex retirement planning needs. There’s a minimum of $50,000 and the price is really not expensive at 0.38% AUM. So does this spell the end for human advisors? Well, research has shown that at times of financial turbulence and market downturns, people don’t really trust machines. They need to be able to speak to a human — preferably a professional — to calm them down and talk them off the ledge. This caused the more established companies to offer increasingly more human association with these services. In fact, many of the companies offering robo-advisors are pretty much online financial advisors. This obviously means that for now human advisors are safe. They just might need to go work for such companies. Additionally, these robo-advisors have shortcomings that I think will rear their ugly head in a few years. For instance, people who are uneducated in many financial terms are answering questions to these robos without properly understanding the question. If questions like risk tolerance and investment needs aren’t answered accurately, outcomes won’t be in line with true needs. A few years down the line people will realize this, and real human investors might make a comeback. I think in general, working with a financial advisor that you can be sure relates to you and your needs is always a good idea. That’s not to say robos shouldn’t have a place in your financial life; just make sure they’re working in your best interest.  B-TANK | KISLEV 5779 | 101

PERSONAL FINANCES

Overview of Robo-Advisors Robo-Advisor Name

Account Minimum

Total Average Cost

Human Financial Advice Availability

Special Perks and Features

Total AUM

Ally Invest Managed Portfolios

$2,500

0.40%

Works along with Ally’s many banking features. Also, they don't have thier own funds, so they can offer more investments.

$60 million

Betterment Digital

0.36%

Licensed advisors available via phone or chat

No minimum, with an array of other handy tools.

$14 billionƣ

Betterment Premium

$100,000

0.50%

Unlimited access to CFPs

Flexible portfolios according to your liking, and more human interaction.

14 billionƣ

E*Trade Core Portfolios

$5,000

0.37%

Access to the E*Trade advisor team for simple questions by phone

Free for the first six months, cash reward, and one month of free trades for deposits of $10,000 and up.

Not available

Fidelity Go

$10

0.35%

Access to the regular Fidelity team for questions

Fees might go down as Fidelity recently rolled out mutual funds with zero fees.

Not available

Schwab Intelligent Advisory

$25,000

0.43%

Access to a team of licensed advisors for many things including more extensive planning

Easily sync many outside accounts, to have the advisors give advice on them, and make better decisions with them in mind.

$33 billion

Schwab Intelligent Portfolios

$5,000

0.15%

One of the cheapest options on the market.

$10 billion

TD Ameritrade Essential Portfolios

$5,000

0.37%

Licensed advisors available via phone or chat

Partnered with Amazon to have Alexa with Echo give market updates.

$19 billionǂ

Many more sophisticated investing tasks like tax-loss harvesting are available. Also quarterly updates on accounts for each client on individual performance.

$19 billionǂ

TD Ameritrade Selective Portfolios

$25,000

1.10%

Access via phone to a team of licensed advisors, and in branches around the US

Vanguard Personal Advisor Services

$50,000

0.38%

Phone calls or video chat with CFPs available for more advanced personal goals

Many extremely valuable tools for those close to or in retirement. They also offer many advanced investment tasks.

$101 billion

They help with tax optimization and offer some other banking-related services. They also wave the management fees with accounts larger than $10,000.

$10 billion

The service is free for simple investing and portfolio management. Only the funds and ETF management fees are passed down to clients. More sophisticated services come at an extra cost.

$153 million

Wealthfront

WiseBanyan

$500

0.33%

0.12%

ƣ Both Betterment services combined ǂ Both TD Ameritrade services Combined

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Source: TheRoboReport.com

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BOOKMARKED The Business Book You Want to Read Naftali Tessler

EntreLeadership By Dave Ramsey

“Growing leaders was too refined and calm for me, but growing entrepreneurs was too wild and chaotic for me. So I decided we needed to grow a combination of the two… and thus the EntreLeader was born.” —Dave Ramsey

About Me Leadership is one thing and entrepreneurship is another. Both are strong qualities, but the best organizations are led by individuals that are entreleaders. EntreLeadership shows that by combining the traits of a daring, risk-taking, go-getter attitude, a passionate entrepreneur, and a cool, disciplined, calculated, rational leader, you can build a successful business.

About the Author Dave Ramsey is one of America’s most trusted sources for financial advice. His radio program, The Dave Ramsey Show, is among the top 3 talk shows in the US, heard by 13 million listeners. Dave is also the author of several best-selling books on finance and leadership, including Financial Peace and The Total Money Makeover. 54 | | B-TANK OCTOBER 2018 104 B-TANK | |SEPTEMBER DECEMBER -2018

The Read Whom:

About:

CEO, COO Leader, Entrepreneur

Business philosophy and structure

When starting, managing, or growing a business

Available

When:

Audio:

Publishing Date: 2011

Quick View J

Building and growing a business

Achieving financial peace for business

Establishing communication

Recognizing that people matter most

In Review: EntreLeadership is an inspiration to anyone who is in a leadership position or wants to be in a leadership position. Each chapter sets a solid framework for one of the essential elements of starting, running, and growing a business. Too many business books use highfalutin language and delve into complicated procedures which turn off readers. In EntreLeadership, Dave’s nononsense approach makes it easy to apply his recommendations and gets us to jump into action quickly — so that we get results quickly. The book touches on most topics that a small business owner will face over the course of running their business. It starts with setting goals and making them clear and trackable, moves on to tips for prioritizing and time management, and then delves into the issue of hiring, training, communicating with, encouraging, compensating, and, when necessary, firing, employees. The author also shares hands-on tips for marketing, sales, accounting, financing, and vendors. In short, every quality you need to be a leader, and run an honest and successful business is covered. And, most importantly of all, the author walks the reader through it all in a step-by-step, easy-to-implement manner. If you choose to listen to the audiobook, you’ll get to hear Dave share inspiration through personal stories. The power and passion in his voice will make you feel as if you’re in the same room as him, benefitting from his one-on-one advice. Once you read the book, check out www.entreleadership.com for live events which will further help you develop yourself as an entreleader.

“The bad news is… YOU are the problem. The good news is… YOU are the solution” —DAVE RAMSEY Here’s a quick glimpse at what the book offers: Hiring, Firing, and Personality Styles “Business is easy…until people get involved.” This book offers a lot of good material that covers the entire life cycle of an employee. From the step-bystep process of hiring team members to an onboarding process for maintaining good work, to the unfortunate situation of letting an employee go, you’ll learn how to determine the root cause of the failure — and how to avoid it. Building Unity and Loyalty “Treat others as you want to be treated” is a core EntreLeadership principle. When you would expect to be praised, praise. When you would

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need training, train. When you would need some grace, give some grace. When you would expect a reprimand, give one. If you treat your employees with dignity, they’ll repay you with loyalty and motivation. So respect them and go out of your way to please them. Unity, like so many other things in this book, is seldom found in companies but is always found in great companies. People don’t naturally unify; they must be led to do so. Unity can be created only when the team not only knows the company cares for them but when the team members care for each other. Here’s how you can amplify the success of your business through recognition and inspiration: holding employees accountable, coaching, leading, cheerleading, motivating, inspiring, and creating a

great work environment. All of the above will pay off with interest. Building a Business Bigger Yourself At some point as your business grows, you have to start delegating decisions to others. Delegation is one of the most misunderstood and abused areas of leadership. And when it’s done wrong, it actually creates more work — and a lot more mess — for everyone involved. This book will show you how to properly delegate, which will allow you to focus on growing your business instead of concentrating on everyday tasks. The key to that is to make sure you’re surrounded by people who share your perspective on how the business should be run and that you trust to make decisions that are good for the business.

Expert Talk

My Take

“Like Dave, I believe that a business isn’t good unless it also does good — for its employees, partners, and the community it serves. A business cannot have true success without also having a soul. In this book, Dave shows us how to have both: great leaders who are also great people; great companies that are also great families. I plan on applying these lessons to my own small business — I only wish he’d written about them years ago. Entrepreneurs are needed in America now more than ever — but there’s a big difference between starting a company and leading one. And there’s an even bigger difference between a company that’s valuable and one that has values. But Dave has figured out the recipe to being both things at once, and his lessons are invaluable. In fact, my only complaint is that if he’d published this a few years ago, he would’ve saved me a lot of sleepless nights trying to figure this stuff out on my own.” —Glenn Beck, New York Times Best-Seller author

People who talk business with me can feel the passion I have for leadership and helping others develop. I attribute a large part of that passion to this book. Dave taught me that the bad news is… “I am the problem” and the good news is… “I am also the solution.” I can decide to grow. Grow my abilities, my character, my education, and my capacity. The reason I recommend this book so highly is because the author utilizes his real-life experience to make people and businesses work like a well-oiled machine. This book helped me be more productive in the workplace, build employee morale, and with my time management. I’m an employee, not an employer. But, as a leader within a large organization, I found this book to be very helpful. 

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Naftali Tessler is on the leadership team at Hamaspik of Kings County, an organization that provides community health and human services. He has a strong passion for leadership, is successful in creating an environment of team collaboration, and is very influential in motivating people to grow and become better leaders. Naftali is also a community activist advocating for the community and its people.

Real Estate

PULSE News Tidbits

108

Real Stakes in Real Estate

110

Keep Your Money in the Family

114

Basics and Beyond

116

Case in Point

120

Financing

122

Construction Corner

124

Timeline

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News Tidbits in Real Estate Senators Call for Investigation Into Real Estate Laundering Law Vulnerabilities In South Florida, federal authorities are about to take hold of 16 high-end properties that are suspected to be tied to the defendants of a $1.2 billion Venezuelan money laundering case. According to two US senators, Chris Van Hollen (D-MD) and Sheldon Whitehouse (D-RI), the risk of money laundering in residential real estate is high. Calling for more oversight into the real estate sector, these two senators sent a letter to the Government Accountability Office (GAO) stating that, as opposed to the lending sector, the real estate sector doesn’t have enough oversight, and there are therefore more opportunities for money laundering than in the lending sector. This fact, they wrote, presents “increased risk of access by foreign and domestic criminal organizations.” This letter came out a day after the New York Times’

investigation accusing President Donald Trump and his family of involving themselves in a series of elaborate schemes — including some that may be illegal — to avoid paying taxes on the family’s vast real estate empire. The lawmakers’ petition includes an assessment from the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). In 2016, the FinCEN began requiring insurance title companies to report the identities of individuals behind all-cash buys in various vulnerable locations such as Miami. Lawmakers are now moving to expand that program from just a handful of US cities to include all stateside transactions. Even with these FinCEN reporting requirements in place, political infighting has hampered cracking down on money laundering in the US real estate scene.

Machines Taking the Place of Humans as They Learn Commercial Mortgage Brokerage With automation and technology stealing many formerly available jobs, are mortgage brokers next to feel the heat? A minimum of two companies have released software aiming to replace human brokers with artificial intelligence that’ll be capable of identifying potential investors instantly, enabling mortgages and sales to finish in a fraction of time and cost. Hopeful employees in the industry claim that the need for the human touch will always be crucial for high-dollar transactions. Others, however, cite examples of many fields in which we have relinquished control to technology, including the sensitive field of medicine and surgery. They assess that if there’s equipment available in which fewer brokers can competently deal with more deals in

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less time, it’ll definitely lead to displacement in the future. eVest and Remissary, two recently launched platforms, are both working toward this goal of automating mortgages. eVest hopes to “democratize” commercial real estate by going directly to investors with “online public offerings.” eVest’s algorithm matches up potential lenders and borrowers, both those who have enlisted in the program, and through searching out public records and social media for wealth indicators. Remissary does things a bit differently. The platform is more of a hybrid between an online marketplace and a traditional brokerage. Borrowers and lenders are matched via the platform, but borrowers also get a Remissary broker who collects a fee if a deal closes. Both are making use of technology to cut out the need for brokers.

Rob Feingold

Walmart’s Full-Fledged Battle Against Amazon Is Reaping Rewards When compared to the previous few years, when e-commerce — majorly Amazon — was eating into their profit, Walmart saw a big jump in sales this year. This past quarter has shown a 40% increase in online sales. Company officials predict that this rise is here to stay for the full year. Meanwhile, store traffic was also up 2%, and US same-store sales increased 4.5%. This surge in digital sales alongside its fastest growth in store sales is the largest they’ve seen in a decade. Revenue has increased 3.8% to $128 billion, way over analysts’ assessments of $125.97 million. After its strong quarterly earnings report, Walmart’s shares increased 9%. It seems as if the world’s largest retailer might just stay that way, proving all doomsayers wrong. While the convenience, pricing, and lifestyle changes of online shopping have given Walmart a strong punch, the popular seller has gathered its strength and punched back, hard and smart. The only one area in which Walmart hasn’t been

expanding is its opening of new locations. While in preceding years, they’ve opened a few hundred stores a year, the plan for this coming year is to add a mere 15 locations. Instead, the focus is on updating, upgrading, and making the most, the best, and the most modern convenience out of its existing centers. Their network of close to 5,000 stores gives them much leverage against Amazon for speedier delivery or pickup options. By the end of this year their online grocery delivery option will be available to more than 40% of American households. Part of the remodel strategy is also grocery pickup for online shoppers, including drive-through options, which are available at more than 1,800 of their locations. With their acquisition and recent relaunching of Jet.com and their new partnerships with Nike and Apple, among others, Walmart may yet remain the king of retailers.

A First for Manhattan: $30 Million Real Estate Property Tokenized Without Blockchain As a breakthrough in the history of New York City, a luxury Manhattan condo development was the first major asset to be tokenized on Ethereum. The 12-unit building, with 1,700-square-foot units, is located at 436 and 442 E 13th Street in the East Village, and was recently appraised at more than $30 million. Tokenization is the process of representing the ownership of real assets digitally on a blockchain. Propellr and Fluidity are the two companies that are the initiators of this new method of financing. Products and services they offer include the creation, distribution, and transferring of digital securities. While the market in New York is always strong, it can take some time to sell in new construction. Taking the initiative to finance this property with blockchain tokenization will hopefully lead to more developers taking the same route, explains Ryan Serhant, the listed broker on the deal. Tokenization can remove the pressure of traditional bank financing, which is much healthier for

both the project and its stakeholders. This new method of financing can serve as a better alternate route for investors. While the traditional structure in the real estate market of financing hasn’t evolved in a long time, with this new technology, a transparent and trustless ecosystem can help the market’s potential for liquidity. This Manhattan asset is a first, a model for the evolution. The market, and especially millennials and the high-tech society, is ripe for just such a change. Investors will have the choice of receiving either analog or digital interest on their securities, which should cover all bases of interested investors. Along with the other benefits of this system, the assets will become available globally, directly between buyers and sellers. Having a landmark such as this Manhattan building as a model for tokenization will certainly work to speed its popularity. 

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Real Stakes in Real Estate

Harry Dublinsky

n this column, moderated by Harry Dublinksy, we’ll be interviewing real estate giants, and providing B-Tank’s readers with industry insights and analysis. Over the past two decades, Harry Dublinsky has been actively involved in many high-profile and complex transactions advising clients on launching start-up companies to major real estate transactions. Thanks to Harry’s knack for facilitating strategic introductions, many of his clients have forged viable new business partnerships. An avid networker, Harry has developed strong, working relationships with key industry leaders, public officials, investment banks, entrepreneurs, family offices, and high net worth individuals. Harry routinely gathers the brightest business minds to participate in business events. He’s currently produced over 60 events throughout the past eight years, ranging from intimate roundtables to cofounding large R/E Private Summits (600+ attendees). Such events are often referenced in major media outlets. Harry, a managing director at EisnerAmper LLP, is a CPA and member of the prestigious Counselors of Real Estate (CRE). He is also a past chair of the Real Estate Committee of the New York State Society of CPAs.

Prepared for print by Jake Novak

Opportunistic Futures in Opportunity Zones

hen the Republic an tax reform bill was making its way through Congress in 2017, the plan’s changes to corporate tax rates and caps for property tax deductions earned almost all of the attention.

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But in the months since the law was signed last December, more finance experts have finally begun to take notice of the plan’s blockbuster new rules for investing in “Qualified Opportunity Zones.” Qualified Opportunity Zones are meant to encourage long-term investments in low-income urban and rural communities nationwide. They do

Richard Shapiro

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that by offering major tax advantages that are unlike anything else ever seen in the history of American financial regulation. Qualified Opportunity Zones leapt onto the front pages of the newspapers in early November when Amazon announced it would be putting a new headquarters in Long Island City, Queens. To get the details on how Qualified Opportunity Zone investing can work and how much of an effect it can have on the economy as a whole, B-Tank visited the offices of Richard Shapiro at EisnerAmper, one of America’s biggest accounting and advisory firms. Shapiro is a tax director and a member of the Financial Services and Corporate Tax Groups at EisnerAmper. He has more than 40 years of law firm and accounting firm experience as a specialist in all aspects of federal income taxation. Richard has written and lectured extensively throughout his career, including co-authoring a regular column in a major international tax publication on financial products and currency strategies. For almost 25 years he wrote the tax booklet made available to individual investors by the various US securities exchanges. Prior to joining EisnerAmper, Richard served for many years as the national director of tax of a national accounting firm, and later was the director of tax for the financial services practice of two other accounting firms. Most recently, Richard was a tax principal in the financial services and national offices of a Big Four accounting firm. Here is what he has to tell us about Qualified Opportunity Zones. B-Tank: What are the basics behind Qualified Opportunity Zone investing that every investor should know? Richard Shapiro: The point of this is to try to get more capital invested into more areas that are relatively depressed. To do that, the plan incentivizes investment by offering significant tax benefits. I think there is real need in many of these areas. There are Qualified Opportunity Zones in all 50 states and territories; this is a marriage of need and opportunity in a very positive and proactive way. Basically this plan allows people to take capital gains from almost any kind of sale, and within a certain amount of time, invest it into a Qualified Opportunity Zone through a Qualified Opportunity Fund and defer those gains from taxes for several years. Again, this can be a capital gain from almost anything. It can be from selling stock, selling real estate, or selling art. And the real special aspect of this is that if the capital gains put into the Qualified Opportunity Fund grow in value and the investor holds that money in the fund for at 112 | B-TANK | DECEMBER 2018

least 10 years, those added gains will never be taxed. Thus, this new investment option is getting more attention from accountants and lawyers with business clients than I’ve seen from any piece of legislation in a very long time. But potential investors should still be aware that there is still some "meat" that needs to be put on the “bones” of regulations that have already been released publicly regarding this opportunity. The administration is promising more substantial details before the end of this year. B-Tank: What’s the time limit investors have to put that money into the Qualified Opportunity Funds and still get the tax benefits? Richard: The base rule is from the time that you realize the gain, you have to make an investment in the Qualified Opportunity Fund within 180 days. The rules are a little different for investments made by partnerships, but that 180-day time period is the key number. B-Tank: Why do you think this new investing rule was so ignored until the last few months and weeks? Richard: I’m not sure, but it's possible that it was simply drowned out by some of the more marquee aspects of the tax reform bill like lower tax rates for individuals and corporations, the special rules on deductions for “pass-through entities,” 100% expensing rules, and changes on state and local tax deduction limits. Another reason is the Qualified Opportunity Zone rules are a little more complicated in some ways. In any event, it’s not under the radar anymore. If you talk to tax and real estate professionals across the country now, they’ll put the Qualified Opportunity Zone provisions very high on their list. That’s also true for professionals in the investment community. B-Tank: Where is most of this money from the Qualified Opportunity Fund expected to flow into specifically? Richard: My sense is that the initial activity from this money will flow into real estate projects. But the law will likely lead to more businesses setting up in the zones, and we could even see operations like nursing homes being set up there. We’re hearing about people putting capital together to develop shopping complexes, industrial/factory complexes, and some other very unique projects. Of course, people are now talking about Amazon’s decision to put its new headquarters in the Qualified Opportunity Zone in Long Island City, Queens. But how much of that investment will fall under the tax rules for the Opportunity Zones is not clear from what we know right now.

B-Tank: What’s the best way for someone to start the investment process in a Qualified Opportunity Fund? Richard: Calling a professional service firm that has set up a group to handle these investments properly is certainly a way to get access to the knowledge on this marketplace. And if people have a financial adviser or contact with any investment professional, I’d say it’s likely they will at least know where to properly direct a potential investor. B-Tank: What about people who already own properties in the Qualified Opportunity Funds? How can they take advantage of these new rules? Richard: At present it isn’t clear if someone who has already owned land in one of the zones can take advantage of the opportunity zone rules. And, there are significant rules on the amounts of improvements that need to be made for existing properties in the zones. So it may be that the best benefits for current property owners will be that the value of their buildings or other properties are now going to increase and their

properties may become attractive for acquisition by a qualified opportunity fund. B-Tank: Opportunity Zone investing allows stock investors the chance to shield major stock gains from taxes. Do you think this could be a bearish sign for future stock gains since it gives investors a place to stash their money other than in the equity, or in stock markets? Richard: Considering the time rules that dominate the tax benefits here, the Qualified Opportunity Zone investments will not always be attractive to stock investors working on time horizons of under five or 10 years. Also, heirs who will inherit Qualified Opportunity Zone investments will not get the same tax benefits they would from other kinds of assets. For more diversified investors, this will attract some money that may otherwise be in the stock market, because there aren’t too many other opportunities to have taxes disappear on a long-term basis. 

REAL ESTATE

Keep Your Money in the Family The Most Dreaded of All Taxes: Recapture Tax

Yonah Weiss

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y now you’ve learned about the great tax benefits available for real estate investors, especially depreciation — the “king of all deductions.” Just in case you’ve been thinking that Uncle Sam is your friend, it’s important to remember that there’s a dark side to depreciation — depreciation recapture tax. The IRS is out to get all the money it deserves, so eventually they’ll come asking for this tax. This is done when a real estate property is sold. That’s right: All that money you deducted as depreciation over the years of owning the property is taxed upon the sale,

as long as there is a gain. What’s the reasoning behind it? Well, the IRS figures that since you enjoy the benefit of lowering your taxable income year after year by claiming depreciation expense against your rental income, they might as well get a piece of the pie when you get rid of the property. How big of a piece? Up to 25% of the “recaptured” portion.

Common Misconceptions

Myth: You can choose not to claim depreciation and, if you decide to forego depreciation, you won’t be subject to depreciation

recapture in the future. They can’t recapture something that was never taken, right? Fact: Wrong. You can choose not to write off depreciation expense against your rental income. That part is true; technically, you aren’t required to claim it. But doing so will not avoid depreciation recapture. While claiming depreciation expense as a deduction is technically a choice, depreciation itself is not a choice. The IRS will treat your property as having been depreciated even if you choose not to claim depreciation expense. So of course, you should take the depreciation or you’ll be paying taxes twice to the IRS. What a lot of people may not know is that depreciation recapture is only applicable to the extent that you had a gain on the sale of the property. This is sort of a perk that the IRS gives us by saying, “Hey, if you didn’t make money, then I’ll just let you have that old depreciation free of charge.” The following example can help give a clearer explanation of depreciation recapture tax: J Purchase price of rental property = $325,000 J Land allocation = $50,000 (not depreciable) J Building allocation = $275,000 J Yearly depreciation = $10,000 (remember, residential rental property is depreciated over 27.5 years) Let’s assume you sold the property after three years. First, we need to calculate your basis in the property: Basis = purchase price – land value + improvements – accumulated depreciation Your basis in this example is $325,000 ($275,000 building + $50,000 land) + $0 (for simplicity’s sake, we’re assuming no improvements in this case) – $30,000 (depreciation on the building for the three years you’ve held the property; zero depreciation for land) = $295,000. Second, we will need to calculate the gain using the following formula: Gain = sale price – basis Finally, we will have to determine the nature of the gain (capital gain vs. depreciation recapture). Sale price = $340,000 Original purchase price = $325,000 Basis = $295,000 Your gain in this scenario is $45,000 ($340,000 – $295,000). But remember, you’ve depreciated $30,000 over the

three years you’ve held the property. Enter depreciation recapture: $30,000 of the $45,000 gain must be “recaptured” and taxed at ordinary rates up to a max of 25%. The remaining $15,000 is taxed at the preferential long-term capital gains rates. This type of depreciation recapture concerns Section 1250 (real estate) property; however, depreciation of Section 1245 (personal/tangible or land improvement) property is taxed at ordinary income tax rates. Here are three points of consolation about this recapture of depreciation: If you’re selling the property, hopefully you’ll be making a pretty good profit. After all, the longer you hold onto the property, the more of the property you’ll have paid off, resulting in more equity and more cash at closing. Hopefully the property has climbed in value as well — way more than the depreciation cost. 1. During all this time that you didn’t have to pay taxes on that income, you were essentially using the government’s money tax free. So even if you do have to pay it back at a 25% rate (which might be lower than your income tax rate anyway), it’s still not due until you sell. Just think: the IRS could have charged you that amount each year. 2. The only true way to get around depreciation recapture (other than selling at a loss) is to do a 1031 exchange and defer your taxes for as long as possible. In a 1031 exchange, also known as a like-kind exchange, an investor can purchase another property and carry the proceeds and tax basis forward into the next property. Essentially, you could continue to do this for the rest of your life, always trading up to the next big deal and never paying that tax. Of course, someday when you finally do cash out, you’ll have a large accumulated tax bill, but likely you’ll be so rich it won’t matter. 3. Always consult with a tax strategist when investing in real estate. Don’t try to tackle these obstacles on your own. Without the proper planning and execution, you can wind up in a hole you didn’t even know existed, or completely miss out on an opportunity for huge tax savings.  Yonah Weiss is a powerhouse on property owners’ tax savings. As a cost segregation consultant, Yonah has assisted clients in saving tens of millions of dollars on taxes through cost segregation. B-TANK | KISLEV 5779 | 115

Basics & Beyond

L. Aron Gottlieb

A Beginners’ Market

any wonder if it’s possible to enter the wonderful world of real estate without any previous knowledge or funds. The short answer is yes and no; although funds can be borrowed, knowledge cannot. As previously discussed, real estate allows you to diversify in many directions and create a niche that you feel comfortable with. Many students in my courses start with absolutely no funds. They look for deals, bring those deals to buyers, and then collect a finder’s fee. Many of them are actually involved in construction and know about up-and-coming deals. They want to understand the real estate business better so that they can earn a nice commission via the finder’s fee. A finder’s fee is a commission that one earns for finding deals. Getting paid a commission is usually only for licensed brokers; however, it’s common practice for a finder’s fee to be paid to anyone who brings a buyer a good deal, having made that fee a prerequisite for bringing the deal. A finder’s fee is usually a smaller commission than a typical broker earns but is nonetheless a great way to start. Another downside for a non-licensed deal finder as opposed to a licensed broker is that he is usually not legally covered by a contract. He has to draft a separate agreement with his buyer and rely on the buyer’s credibility that he will be paid. In contrast, a licensed broker is always part of a sales contract and gets paid at closing. I have suggested to some of my students to try and work with a licensed broker to make sure they get paid a commission in cases where they feel the buyer or seller is dishonest and may not pay them. Let’s not forget the old saying: “Better one bird in the hand than two on the tree.” I would rather see them split or share a commission than lose the opportunity 116 | B-TANK | DECEMBER 2018

to earn a finder’s fee. (Most savvy real estate investors do pay the fee to a deal finder. It’s simple business sense to entice these deal peddlers to bring more good deals. It isn’t healthy for anyone in any industry to earn a reputation as a non-payer.) Why doesn’t the deal finder become a licensed broker? The truth is that if in fact he enjoys brokerage, he probably should become a licensed broker. However, if he’s just starting out in real estate, he may not have a long-term plan: The deal finder jumps into the field looking for deals, hoping to be compensated accordingly. Eventually, deal finders either move on to full brokerage, or find another niche. I’ve had many people at my course who are actually in the construction services business; they sell flooring, kitchen cabinets, HVAX, etc., to the people buying units. They schmooze with the owners and occasionally hear of a deal to be bought, so they come to us to get the knowledge of how to get into the buyer’s seat. Another great way to get your toes wet in real estate is by syndication. A syndicator is someone who finds a deal, but instead of merely bringing that deal to a buyer he brings it to an investor. Sometimes one investor says that he likes the deal, but he only wants to invest a partial amount of what is actually needed for the transaction. Then our friend the syndicator must now find a second — or even sometimes a dozen — people to invest, until he has the adequate funds to proceed. He has to spend weeks and months finding the deal. Then he has to make an offer, create a contract, deal with legalities, and give a deposit — which often means tying up his funds. (All contracts have a deposit that has to be held in escrow; without a deposit the seller has no reason to believe that the buyer is serious. Being that most sellers don’t want anyone to

know that they’re considering selling their property, agreeing to sell without a solid contract is unheard of.) As soon as the syndicator signs a contract, he starts calling his list of prospective investors. Many may be interested while others may not. Knowing your investors’ appetite is crucial to succeed as a syndicator. If the syndicator succeeds in finding investors, he must also qualify for a mortgage; all this takes a lot of time and money. If the deal closes, he has usually earned a syndication fee at closing; but if the deal falls apart, guess who has to pay all the fees we discussed? That’s right — the syndicator! There are steps a good syndicator will take to minimize his risk, but since he’s the one driving the train, he’ll be the one holding the bag. However, when the deal does go through, the syndicator in most cases earns a handsome fee. The reason is because he’s the one doing on-the-ground research and is investing money into the deal before he even knows if it’ll go through. Real estate, like all industries, has the common law of business: Your reward is based on your risk. If you have what they call on the street “no skin in the game,” your earnings will reflect that. There are different deal structures that syndicators use to sometimes give them a quick fee, while others prefer to stay in the deal long-term. Some people start off in this industry by buying small houses, fixing them up, and either renting them or selling

them, aka “flipping them.” This requires much less capital to get started with and the profits or potential profits are available much quicker. Many move on from this field into larger deals once they’ve earned some capital, enabling them to afford larger properties. One of my very first students was very intimidated by the industry. He was afraid of buying skyscrapers and he didn’t have the funds to do that in any case. After a lot of hand-holding, and borrowing a deposit from a friend, he bought a two-family house. A while later he bought a four-family house, and then another house with eight units. He kept on doubling the size of his purchases, and today owns close to 1,000 units (along with that friend who trusted him all the way in the beginning). Many start off with zero funds as fix and flippers or syndicators, and eventually utilize their profits to invest in a diverse portfolio of real estate, while others are happy to grow the method that got them started and continue to perfect their system. Either way is great — as long as you make a business plan and stick to it! Hatzlachah!  L. Aron Gottlieb is the founder of New York Real Estate Course (NYREC), a “boot camp” course available online in both English and Yiddish. He is also the senior vice president of Diversified Capital, a Madison Title company. Email your real estate questions to info@btankmoguls.com. B-TANK | KISLEV 5779 | 117

The Fast Track to Real Estate Education Meet L. Aron Gottlieb who shares 18 years of real estate experience in his wildly popular real estate courses.

What is your RE course all about? The course gives students an aerial view of the industry and how to save and make money by understanding the system from the inside.

Will I become a licensed broker? No. We teach entrepreneurial skills in the real estate field, and may advise our students to become brokers based on their personality type. In fact, many brokers took our course, and many of our students became brokers after attending the course. What type of people participate in your course? We have beginners straight from kollel, and we have business people looking for a second income or looking to invest their business profits. We also have students who want to invest money in order to marry off their children, or as a retirement account of sorts. There are also many students in our classes who already are involved real estate, but they want to expand their knowledge. They know that time is money, and they therefore don’t want to waste time making mistakes and losing money; they want to learn the system from someone experienced. What does it actually cover? 1. Real estate terminology 2. Different types of real estate investments and the advantages and disadvantages of each one 3. The best way to identify your niche market 4. How to work with brokers and find the best deals 5. How to evaluate a deal 6. Negotiation 7. Syndication, due diligence, and the contract 8. How to obtain financing 9. How to manage properties

That sound like a lot of information for one course! I spent a lot of time putting this course together so that each class packs a punch. I concentrate on making sure that beginners and those who are experienced can both benefit a tremendous amount from the course. We focus on a new topic every hour, and participants can later review the information by listening to recorded lectures. People marvel at how much they manage to learn so quickly. When can it be reviewed? A. The entire course is professionally recorded, and is available in either Yiddish or English to review online in video 118 | B-TANK | DECEMBER 2018

format. We also send the audio files via email. It’s also on our hotline if you’re driving and want to dial in. People review the recordings as many as three or four times. The beauty is that it’s always accessible. We also provide a loose leaf with a 450-word English-to-Yiddish dictionary to explain the industry terminologies.

Amazing. How long is the course? The course is 14 hours’ long. This includes a recently added halachah shiur to discuss pertinent halachic issues in this industry. We also have a class from a business coach.

I never did well in a classroom. Will I survive sitting in your class? Our students claim that the classes are vibrant and exciting. In addition to the actual information taught, I have a reservoir of stories to share, and I allow student discussions to liven things up. If you still don’t like the idea of sitting with others for so many hours, you can take the course online, or on DVD format. This enables you the freedom to take the course at your own pace and review it as often as you like.

Is it possible to succeed in RE without having any of my own funds to invest? Certainly! we have a lot of people who start off with nothing but energy. They learn how to use the energy to find deals. We have an information hotline (718-298-2559), with testimonials from past participants. To paraphrase one of them: “Nisht der vus hut der meah hut der deah, nor der vus hut der deal hut der deah.” The one who finds the deal is in the driver’s seat. Are you available post-course to help your students? Of course! I take great pleasure in seeing my students succeed. I’m constantly responding to emails and talking to students on the phone.

What is your real estate background? I manage RE in New Jersey and Pennsylvania. My company, Madison Title, provides many real estate related services, so when my students succeed, they often utilize my services. Then it’s win-win for everyone! You have me sold! How can I sign up? Call our office at 732-534-4702, or check us out online at www.nyrecourse.com (where you can view video samples as well). I look forward to helping you be successful in real estate. 

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EKG

REAL ESTATE

Case in Point

Joseph Jungreis

What investors look for when buying a value-add investment property

efore an investor puts his money down, there’s always the consideration of the end game. As with every investment opportunity, the real estate market is a complex one, deserving of much analysis and a thought-out game plan. Value-add, one of the important considerations in property acquisition, is where an investor can increase the income and decrease the expense, thus adding value to the property due to the increased revenue. Here are the basics of what a buyer will look at as part of the due diligence process:

1. Location:

Is the property near other properties you already own or close to the management office? By owning several properties in an area or if it’s near the management office, you can greatly reduce costs from an operational perspective.

2. Upside:

Is there any upside in the rents? In older properties or in growth areas, the in-place rents tend to be less than the market rents, especially when buying from long-term owners. Thus over time, an investor can unlock the upside in rents by increasing the rents to market rents.

3.Metrics

There are many different metrics that investors look at when analyzing an investment. Two of the main metrics are net operating income (NOI) and capitalization rate (cap rate). NOI is calculated as income minus expenses. Cap rate, also known as the percentage return on investment, is calculated as NOI divided by the purchase price. For example, if a property has income of $200,000 and expenses of $100,000, the NOI is $100,000. If the purchase price is $2,000,000, the cap rate is 5%. Most investors would approve investing into a deal at a low cap rate but would want to see the cap rate increase over time by unlocking the upside and cutting expenses. 120 | B-TANK | DECEMBER 2018

4. Property Tour:

How is the condition of the property? If there are any immediate repairs, or if you’ll need to make improvements in order to attract higher-paying tenants, these repair and improvement costs must be added to the budget. Can the layouts be changed? Older properties generally have layouts that can be altered or space that was never used before. If the increase in rents from the alterations offsets the costs, it can add great value to the property. Should the mechanicals be replaced? A great way to cut costs is by replacing old heating and electric systems. Usually, an investor earns his money back on the costs of these systems within two to five years.

5. Record Checking:

I call this the Sefer HaZichronos. It is imperative to check all records from the landlord and government. On the landlord side there can be issues with tenants and on the government side there can be violations that you should be made aware of.

6. Regulations:

Several counties and states have very strong rent regulations or zoning laws which can hinder you from unlocking the upside or making alterations. Don’t buy anything in these areas unless you’re familiar with the regulations.

7. Mortgages:

Local banks are usually more competitive in highly populated areas, such as New York City, than government and institutional lenders. If your game plan is to quickly unlock the upside and increase the NOI, you should consider a short-term loan of three to five years. However, if it’s a long-term play or if you’re afraid the interest rates will skyrocket, you should consider seven-to-ten-year loans. Asset Class: Multifamily Location: Bronx, New York Property was close enough to our NYC location, and we were able to use in-house management to save on costs.

Case Study Upside: Current average rents were 30% under market rents. Metrics: The cap rate was approximately 5%. Property Tour: The old owner did not live in the United States and all the apartments needed immediate repairs. The layouts did not need any changes. The mechanical systems required minor upgrades. Record Checking: Several tenants were in court for non-payment of rent and the property had a

tremendous amount of violations.

another purchase.

Regulations: Since we are NYC-based, we understood all the regulations and knew how to legally raise the rents on all potential vacant units to market rents, through apartment improvements

Vision: Although we had to budget for immediate repairs and renovations, we saw major value-add from the below-market rents.

Mortgage: We took out a three-year mortgage as we plan on refinancing and pulling out additional money when the mortgage expires. The proceeds from the refinance will then be invested into

Results: Within 18 months, we were able to clean up the building, renovate 40% of the units, increase collections, and increase the total rent roll by 20%. The cap rate has increased from 5% to 7%. ď §

Joseph Jungreis, vice president at ZP Realty Capital, is from a prominent real estate family. He has been extremely successful in brokering and closing numerous sales and finance transactions. Joseph understands the intricacies of every deal and gets deals done. Joseph graduated the NYU Shack Institute of Real Estate where he not only gained knowledge from top-tier real estate professionals, he also collaborated with some of the most active real estate players. B-TANK | KISLEV 5779 | 121

Steve Sears

FINANCING

Commercial Real Estate Loans: Which One Is for You?

our business is growing, and you need more people, which translates into more office space. You’re a newbie biz, working from home, and the time has finally come to start the arduous process of seeking a proper residence to grow and further your dream. There’s a fantastic “off-market” deal sure to give you unreal returns. In all of these scenarios, there’s no way you can get cash down. In order to accomplish this, you may need to find financing from the proper folks at a proper rate, which will enable you to make that move. So, who to approach and what type of loan to consider? B-Tank takes a brief look at several type of real estate loans.

when financial issues like lack of income may surface in the future, making a long-term plan more difficult to pay back. The cons: Since the payback must be quick, the payment will be larger. Should the borrower be lacking in revenue or money, this may be a challenge. To compensate bridge lenders for the short-term nature of a bridge loan, commitments often include myriad fees, some of which have the potential to overlap. Fees may include the following: a commitment fee; an exit fee: a deal-away fee; a duration fee; and an underwriting fee. Additionally, since the loan amount and the high interest rate and fees associated with the loan may be difficult to pay off, late fees and penalties may make the repayment even more difficult.

Bridge Loan

Real Estate Purchase Loans

For corporations and private equity sponsors pursuing large acquisitions, securing a bridge loan commitment may be the final component to a winning acquisition bid. In a bridge loan, the word “bridge” is the proper descriptor. The loan takes you from one spot to another, and from there you continue your journey. The application time is shorter, and approval and funding received from a private lender occur in a much shorter time frame compared to a traditional bank loan. Bridge loans are normally sought, and monies used, at the same time as longer-term financing is being researched and applied for, for use in the near future. Proof of business income and excellent credit scores are needed to secure the loan. Borrowers also need proof that they can afford the property’s current expenses on top of the loan. The pros: It gives the borrower a nice jump-start, and prompt repayment of the loan furthers credit reliability, especially when attempting to get more substantial, longer-term financing. In addition, a bridge loan could be a wise option 122 | B-TANK | DECEMBER 2018

Much like adjustable or fixed-rate mortgage loans, bankers provide traditional real estate purchase loans. The borrower must have a credit score of 640 or higher and must prove they have a good level of business and personal savings. The Pros: There are a number of real estate purchase loans that borrowers can choose from. Time frames vary, loans can be amortized (amortized loans are those with scheduled periodic payments that consist of both principal and interest), and the borrower can select comfortable payment options. Payments made on time will ensure the credit rating of the borrower’s business is on the plus side, avoiding problems should additional funding be needed. The Cons: Failure to make those payments could put personal credit history and future attempts to get another loan in peril. Also, the time from application to garnering funding could be lengthy depending on the amount of funding sought and the business type. Be prepared for some hard questioning from prospective lenders.

Hard Money Loans A hard money loan, normally supplied by individual lenders

and not banking institutions, is an interest-only, short-term loan for a real estate investor that allows them to purchase a property plus get additional cash to make repairs. Hard money loans are best for real estate investors who flip homes quickly. They may not have the cash to purchase properties or don’t want to tie up their own money in their deals. Most hard money loans will lend up to 70% of the after repair value (ARV). Upfront proof may be required that the loan can be repaid. The Pros: These loans close more quickly than traditional financing, which is very important in a hot buyers’ market. The lenders are less concerned with an applicant’s financial status, so an underwriting method may be nullified. Lenders normally don’t look at credit score ratings, but instead at collateral. The Cons: If the loan can’t be repaid, the collateral will be sold by the lender for payment. Also, hard money loans can be expensive. Interest rates in double digits can be expected, and an origination fee (upfront fee charged by a lender for processing a new loan application) may also apply.

Joint Venture Loans Joint venture loans are exactly as the title reads: joint. This

is where more than one business shares the loans — and the profits and losses of the property. If a business can’t obtain funding on its own, this type of loan can help them acquire properties. The application process, normally after approaching private lenders or online investment brokerage firms, is applied for by both businesses at the same time, either as incorporated or unincorporated joint ventures. The relationship or agreement doesn’t have to extend beyond the loan or property agreement. It is advisable that both parties seek legal

advice before even attempting a joint venture loan. A solid agreement is needed for smooth sailing. The Pros: The loan is a temporary arrangement, and both parties — although operating as separate entities — are partnering should additional resources be needed. Both businesses can share costs and risks and work together, which can aid a business during a struggle, and business and credit growth is possible for both. The Cons: Each party is responsible for debts, and must deal with the joint partner, with whom they are “attached” due to the loan. A poor decision or lack of commitment could hamper both parties.

Participating Mortgage Loans Participating mortgage loans allow lenders to share part

of the revenue generated at the commercial property and receive both the normal monthly mortgage payment with interest, while also benefitting from the rental income and sales monies from the property. Issuers of these types of loans are non-traditional lenders, like entrepreneurs seeking to invest in real estate. The Pros: A borrower seeking this type of loan faces a lower interest rate due to the fact that the lender shares part of revenue. In the near term, it could make it possible for the borrower to develop a more substantial property than he might otherwise be able to afford. The Cons: The lender shares revenue and the borrower gives up a lot of property equity. When seeking any type of commercial real estate loan, the prospective borrower must do their homework and speak to experts in the field. Being informed prior to entry is the key to satisfactory terms.  Nathan Perlstein, senior loan officer at FM Home Loans Mortgage Bankers, reviewed this piece for accuracy. B-TANK | KISLEV 5779 | 123

CONSTRUCTION CORNER George Hedley

FIX YOUR BIZ FAST!

etting long-term goals for your company is extremely important. But to make an immediate positive difference in your business, you need to start with immediate action. Often, construction business owners wait too long and postpone thinking or deciding about what they need to do to improve their companies. The dayto-day activities of bidding, negotiating contracts, scheduling crews, and meeting with customers forces them to keep their heads down working on getting projects finished. Stopping these ongoing and demanding activities for a short time to draft a written business plan, set goals, make tough strategic decisions, or look for areas to improve never seems to become a priority. Being too busy is a curse to business owners. Being busy causes you to do busy work and refrain from doing whatever is necessary to make more money, find better customers and projects, improve productivity, or upgrade your systems. “Busy” becomes your excuse to accept profit shrinkage, tolerate poor performers, accept poor workmanship, allow project managers to miss deadlines, let customers continue to pay slowly, finish late, not get change orders signed before you do extra work, win work based on super low prices, or make unacceptable low margins for the risk and responsibility you take. So how do you get off the “busy” treadmill?

Stop and decide what you need to fix!

In order to halt the insanity of staying on the “busy” treadmill and going nowhere fast, you’ve got to make and take time to think and plan your next step. Stop! Shut the door — and make two lists of: J What’s working? J What’s not working and needs to be fixed? If you have a management team or small group of key 124 | B-TANK | DECEMBER 2018

people in your company, involve them in this exercise. Get everyone together for a few hours to complete the lists. Think about and identify every part of your company and how well it’s doing. Be sure to include: J J J J J J J

J J J J J J J

Sales, revenue, and growth Profits and dividends Equity, wealth, investments, and cash flow Accounting, finances, and financial management Customers, markets, services, project, and contracts Business development, sales, and marketing Organizational structure, leadership, and management team Project management and field supervision Field quality and productivity Estimating and pre-construction Employees and training Job cost tracking Equipment Technology

What’s Working?

First decide which parts of your business are working well and don’t need a lot of improvement or enhancement. Often, business owners spend most of their time working in areas they enjoy and do well. To improve your company, you must work on areas you are not comfortable with and That need improvement. For example, managing people and making them accountable is not easy for most business owners. Therefore, they shy away from being tough with their staff and let them off the hook too often. In other cases, managers who are good at scheduling crews and ordering materials spend their time performing these tasks and therefore don’t delegate to their key managers, who could also satisfactorily

do this activity if allowed. And, more importantly, many business owners aren’t comfortable with financial matters and therefore don’t focus on their numbers, have updated job costs, maintain accurate estimating pricing, or review their financials monthly.

What’s Not Working?

Next, determine which areas of your operation need an upgrade, improvement, enhancement, or major change. Be real and objective. Look at your company like a consultant and don’t take bad news personally. If your weakness is the problem, identify it as an opportunity for improvement. You can’t be fully competent in every area of your business. Each person has strengths and weaknesses, so be objective and truthful in your analysis. If your strengths are building customer relationships, estimating, and pre-construction, then you need to stay focused there and address managing projects and field operations by hiring a senior manager to handle that part of your company. If your company is not organized or systemized, take a hard look at your administration and project management systems. Without written systems, your business will remain out of control. If you aren’t attracting new or profitable customers, you’ll need to address how you acquire contracts, your sales program, and your proposal follow-up systems. If your projects continue to come in over budget, you’ll have to address your job cost tracking systems, estimating standards, and field productivity issues.

Create Three-Month FIX-IT Goals

Prioritize which improvements will make the biggest difference to your company in the fastest way by identifying what you need to improve or work on over the next three months. From your FIX-IT list, select the top three to five areas you want to fix quickly and write out three-month goals to address each of these areas. Delegate to specific FIX-IT teams the responsibility to develop a solution to fix or standardize each improvement area. Have each FIX-IT team meet weekly until each of the priority problems have a written procedure or solution that can be implemented in your company. Three-month FIX-IT goals work well and can be managed without a major overhaul of your operations. By breaking down your improvement program into three-month bitesize pieces, you’ll make time to work on your company. Some of your challenges, however, may take longer than three months to fix or implement. So be realistic in your approach and modify your FIX-IT goals to address these long-term solutions as well.  George Hedley, CSP, CPBC, is a professional construction BIZCOACH, founder of Hardhat BIZSCHOOL (an online university for contractors), popular industry speaker, and author of the best seller Get Your Construction Business to Always Make a Profit! (available on Amazon). He helps contractors grow, make more profit, build management teams, and get their businesses to work for them. B-TANK | KISLEV 5779 | 125

A historical timeline of real estate mentionables 126 | B-TANK | DECEMBER 2018

Today, the sale of real estate abides by the following basic premises. Buying a property gives one the right to: • use (or not use); • exclude others from using; • irreversibly change; • sell, give away, or bequeath; • rent or lease; • retain all rights not specifically granted to others; • retain these rights without time limit or review. Though of course you must abide by the laws of the land, in general, if you own land, you’re the “ruler” of the property. But it wasn’t always like this. Here’s how the real estate industry looked throughout the ages.

Real Estate Timeline Creation to 1600 BCE “Might is right” and collective claim. Before the establishment of cities, groups lay collective claim to hunting and foraging territories. Private ownership is unheard of; all resources found on the land are to be used for the good of the group. Mesopotamian law. As cities are established and the “cradle of civilization” arises in Mesopotamia, property laws are established as well. These laws are depicted in the earliest Torah account of a real estate transaction — the sale of Me’aras Hamachpeilah. Real estate sales consist of two stages: payment of the price by the seller to the buyer, and taking possession of the property by the buyer. This is why it says twice that the field was transferred to Avraham, once for each stage of the transfer — after he weighed the 400 shekels of silver (Bereishis 23:17), and again after he buried Sarah Imeinu (ibid. 23:20). In Egypt and the Middle East, such transactions are usually documented in the form of papyrus or clay tablets. Many of the earliest known documents are land deeds, conveying property from

one private owner to another. Property is also transferred through wills.

Roman Law 753 to 31 BCE The jus civile (civil law) is developed. In Roman law, unlike the Germanic and English systems, both land and movable property can be owned absolutely by individuals. Real estate sales, mancipatio, or formal transfer of property, involve not just money, but also a ceremonial conveyance. This requires the presence of the seller, the buyer, five adult male Roman citizens as witnesses, a pair of scales, a man to hold the scales, and an ingot of copper or bronze. The seller grasps the object being transferred and says, “I assert that this thing is mine by quiritarian [Roman] law; and let it have been bought by me with this piece of copper and these copper scales.” He then strikes the scales with the ingot. Usucapio — ownership acquired by length of possession. In early Roman law, two years of continuous possession establishes title for land.

400s to 1000s The fall of the Roman Empire in the west brings turmoil and change to all of Europe, as land laws change based on the current invading tribe, whether it’s the Normans, Saxons, Anglos, or Franks.

1066 William the Conqueror brings feudalism to England. Nearly all English estates are redistributed to nine of his supporters. The king can reclaim his property if the feudal tenant fails to comply with his obligation, commits treason, or dies. Medieval landed property — the right to take revenue from an identified place, whether or not you work the land. Hungary. Only a “clan,” and not an individual, can own land. Sweden. One of the few European countries that avoids feudalism, and the majority of the population is free farmers who own their own land. Some merely own more land than others and are the “nobility.” B-TANK | KISLEV 5779 | 127

1190 Mortgages are first mentioned in English common law documents. In these documents, a mortgage is a conditional sale where the creditor holds the title to the property, while the debtor can sell the property to recover the money he pays.

Beginning of Modern Real Estate 1660 The Act of Indemnity and Oblivion make official the institution of land ownership in England. Feudal dues are abolished and taxes established. Tenures Abolition Act of 1660 legally markets the last vestiges of feudalism in England.

1690 John Locke’s Two Treatises of Government introduces the theory of property that will shape modern land ownership. In Locke’s formation theory, one is said to take ownership of any previously unowned natural product to which one has applied one’s labor. This is the turning point in history where, for the first time in any country in hundreds of years, land becomes capital.

New England/America 1600s Plymouth and Jamestown initial 128 | B-TANK | DECEMBER 2018

property holding method is common. Jamestown. Land is held and managed collectively, with each colonist to receive an equal share of the production regardless of his contribution. With no motivation to work, there isn’t enough food, and two-thirds of the original 104 colonists die before the first winter.

1611 Governor Thomas Dale visits and finds living skeletons bowling in the streets while fields go untended.

1614 Governor Dale converts much of the communal lands into individual three-acre tracts. Productivity increases seven-fold.

1617 The remainder of Jamestown land is privatized.

1620 Plymouth. Colonists begin with communal land and are near starvation three years later.

1623 William Bradford privatizes Plymouth land, and, as he noted, changes “made all hands very industrious, so as much more corn was planted than otherwise would have been.” The natural-rights theories of Locke and others, legal doctrines, and the practical experience of early colonies all lay the foundation for the prominence of private property rights in American culture. Quitrents – rent payments made by

a “freeman,” or colonist, as opposed to the service required in feudalism.

1682 William Penn introduces the concept of selling land for profit. He is “granted” land by King Charles II. He then officially purchases it from the Native American residents and resells it to colonists. Headright system. Fifty acres of land is granted to an individual based on his investment to travel to the colonies. To encourage more immigrants, individuals receive one headright each time they pay for the passage of another individual. This is the first introduction of a significant division between wealthy landowners and the working poor in North America.

1787 The Constitution of the United States of America is composed without any explicit mention of land ownership, as the founders want to avoid a strong centralized government with large say over property. Real estate is officially a private and local matter.

1791 The Bill of Rights is ratified, including the Fifth Amendment stating that no citizen shall be deprived of property “without due process of law; nor shall private property be taken for public use, without just compensation.” Though protecting the private property owner, this does give the government the rights of eminent domain.

Property Laws and Transfer in Ancient Israel After the Jews conquered Eretz Yisrael, each family in the nation was allocated a plot of land. Ideally, as expressed in the Torah, transference of property should only be through inheritance. This is corroborated by the laws of Yovel, which require all sold/leased land to be returned to the original family every 50th year.

Inheritance for Daughters 1780 to 1850s Publicly held land is introduced as the federal government acquired several million acres of land. Military bounties of land are handed out as pay for Revolutionary War veterans. Land grants to railroad companies help finance transcontinental rail lines.

1803 The Louisiana Purchase adds a large tract of land to the US.

1855 Baird & Warner is formed and remains the oldest real estate brokerage in the nation.

1862 The Homestead Act grants, for a mere $26, 160 acres to settlers who resided and worked the land for five years.

1867 The addition of Alaska brings the total federally owned lands to 2.3 billion acres, mostly through state cessions, treaties with Indian nations, and the purchase of land from foreign countries.

1886 The Big Die Up of cattle, caused by overstocked ranges and unregulated logging, leads to the beginning of the conservation movement and the creation of federally protected lands such as parks and wildlife refuges. These will no longer be available for purchase or grants. National forests and Bureau of Land Management–owned areas will be available for supervised use of natural resources, but the land itself can no longer be privatized.

After the case of the daughters of Tzelafchad, it was determined that if a deceased had no sons, the daughters could inherit the land, provided they married within the tribe so the land would remain in the proper shevet. Israelite Kings and a Change in Property Culture Shaul was crowned and kingship became the new leadership for Klal Yisrael. This, along with the growth of cities, changed the nature of real estate drastically. Because of debt, many small farmers were forced to sell their farms to wealthy families.

8th Century By this time, due to the purchase of properties by wealthy individuals, the old society based on the small farmer had been destroyed, as indicated by the censure of the neviim of the time. As Yeshayahu Hanavi said, “Ah, those who add house to house and join field to field, till there is room for none but you to dwell in the land!” (Yeshayahu 5:8). Michah also scolded those who “covet fields, and seize them; houses and they take them away. They defraud men of their homes, and people of their land” (Michah 2:2).

Eminent Domain in Jewish Law From the very beginning of the establishment of kings, it was understood that they’d have the power to take property, for just compensation, for reasons of national security. In fact, when Klal Yisrael first requested a king, The navi Shmuel warned them, “This will be the manner of the king who will reign over you… He will take the best of your fields, your vineyards, and your olive trees…” Some say that eminent domain only applied to individually acquired land, not ancestral lands. Others explain that the king only had a right to the fruit of the land and not the actual land.

The Case of Achav Hamelech and the Vineyards of Navos In this infamous episode, King Achav took a liking to the vineyards of Navos, which were adjacent to his palace. When Navos refused to sell it to the king, as it wasn’t for a matter of national security. Achav’s wife, Izevel, arranged to have Navos murdered so Achav could take possession of the fields.

B-TANK | KISLEV 5779 | 129

1908 The National Association of Real Estate Agents is founded.

1916 National Association of Real Estate agents coins the term “realtor.”

1929 The largest stock market crash causes the Great Depression and the collapse of the real estate market.

1934 The Federal Housing Administration (FHA) is created and initiates the modern mortgage aimed at lower-income people. In addition: The FHA offers 80% loan-to-value (LTV), 90% LTV, and higher. This forces commercial banks and lenders to follow suit. For the first time ever, home ownership is an accessible dream for the average American. Loan qualifications are based on ability to pay back a loan (as opposed to the old “knowing the right person” method). Fifteen- and 30-year loan terms are created. Quality standards are created to ensure that loans won’t outlast buildings. The FHA establishes the amortization of loans; people get to pay an incremental amount of the loan’s principal

with each interest payment, so the loan is gradually reduced until it’s completely paid off. (Before this, mortgages were interest-only payments! At the end of the loan term, the entire principal of the loan had to be paid up, leading to many foreclosures.)

1938 Fannie Mae (or the Federal National Mortgage Association) is created to increase the amount of money available to borrowers through mortgage securitization. It also mandates fair and efficient lending practices in order for lenders to have their loans packaged as securities and sold on financial markets.

1970 US Congress creates Freddie Mac (or the Federal Home Loan Mortgage Corporation) to increase the amount of financial capital available to mortgage lenders and borrowers. The organization purchases mortgages of lenders and offers the 30-year fixed-rate mortgage, allowing buyers to lock in a lower interest rate.

1980s This decade introduces the adjustable rate mortgages (ARMs), in which interest rates reset over the course of the mortgage based on the current going interest rates.

1992 The Federal Housing Enterprises Financial Safety and Soundness Act is passed to increase government oversight of the mortgage industry. This act creates the Office of Federal Housing Enterprise Oversight, which has some authority of Fannie Mae and Freddie Mac.

1994 Online property listings are introduced and available to the public for the first time.

1999 ZipRealty introduces the internet generation to realty. Move (formerly Homestore) is the first real estate company to go public.

2008 The Great Recession, caused in large part by a US housing bubble that burst, causes record-breaking price drops. The government takes responsibility for all outstanding mortgages purchased or promised by both Fannie Mae and Freddie Mac — a total of $6 trillion dollars’ worth of mortgages

2010 to Present The proliferation of internet provides easy access of real estate info to all; foreclosures and short sales are the most common listings on the market. 

Credits: Movoto.com, Owning the Earth. Andro Linklater. Bloomsbury USA; Reprint edition (May 19, 2015) Yehuda Shurpin. Eminent Domain in Jewish Law. Chabad.org 130 | B-TANK | DECEMBER 2018

LIVE AT OJBA CONSTRUCTION SHOW

B-TANK | KISLEV 5779 | 131

MEET THE MOGULS Founder and managing partner of ASM properties LLC., is involved in real estate dealings and developments across the US, and has invested in multiple start-ups in the fields of communication, craft beer, and entertainment, among others.

Mortgage and real estate industry guru and angel investor to dozens of businesses from food to fashion.

Anthony Pinkesz

Founder and CEO of 5WPR, one of the 15 largest independently owned PR firms in the US, and early investor in JetSmarter and other start-ups and ventures.

Founder, managing partner at DiamondRock, LLC., invests in public companies and is primarily responsible for developing investment strategies.

Ronn Torosian

Founder of Anthiem Ventures, an angel investment fund company investing in disruptive early technology start-ups, seasoned business leader and philanthropist, highly active in Jewish communal and educational spheres.

Shlomo Drazin

Founder and CEO of Logix ITS, an accelerator and incubator of companies in traffic, parking, and enforcement space. He's previously run a private equity fund, and written the business valuation manual for predecessor to Deloitte & Touche.

CEO and an owner of Curtis International, a consumer product manufacturer, and an investor in companies.

Aaron Herzog

Louis Newman

Dov Elias graduated as an attorney from NYU, has practiced real estate law, and is currently a real estate investor. He co-runs several charities including Avigdor's Helping Hand, Yad Chaya, and Hashevaynu.

Michael Schwartz founded and grew Ramapo Wholesalers into a multi-branch distributor with 7 locations before selling to Ferguson Enterprises. He is currently a business consultant and investor.

Vice-president of RIK Enterprises. RIK invests in commercial real estate and private equity and hedge funds, as well as in other industries. Nathan serves on the board of several international Jewish organizations.

Michael Schwartz

Dov Elias

Dan (Daniel) Bock is currently the managing director of Infinity Investments, LLC. Prior to forming Infinity, Dan practiced law in the areas of complex commercial transactions and litigation. He also serves on the Arizona Board of Advisors and National Council for AIPAC, as well as on Jewish National Fund's Arizona Board of Trustees.

Dan (Daniel) Bock

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Graduated from Sy Syms Business School in 1996 with a major in finance, and worked at HSBC. He later partnered with a cousin to buy Splash Home, an import company, while dealing in real estate together with his father. Drazin also serves as president of ebrew Academy of Montréal., and is involved in many other worthy organizations throughout Montréal.

Investor in dozens of start-ups and represents an investment group looking to fund exciting new companies.

Founder, president, and CEO of Holand Automotive Group. He built one of Montreal’s largest automotive groups, encompassing Holand Leasing, Omega Leasing, Rolls-Royce Motor Cars Québec, and Karma Montréal. Gad Bitton

Active investor in funds and real estate and early stage companies, film producer and venture capitalist.

Srully Wolfson

Ezriel Rappaport

Gedaliah Weinberger

Nathan Klein

Eli Verschleiser

Adam Margules

Neil Rock

Founding partner and chairman of the Multi Group of Companies, philanthropist, financier, real estate developer, and investor in commercial real estate and business ventures.

NEW INVESTORS Alan Wink is the director of capital markets at Eisner Amper, one of the largest advisory and accounting firms in the US, and a leader in the firmâ&#x20AC;&#x2122;s technology group. Alan has 20 years of financial and consulting experience, having served as Director of the Interfunctional Management Consulting Program at Rutgers Graduate School of Management. He also maintains an active contact base with angel investors, venture capital funds, private equity funds, and devises strategies that allow both entrepreneurs and their investors to achieve desired return thresholds.

Alan Wink

Elie Y. Katz is president and CEO of National Retail Solutions (NRS), one of the nationâ&#x20AC;&#x2122;s fastest growing POS networks. He has invested in and owned close to twenty food venues and his real estate portfolio includes commercial, mixed use, and land properties. Elie is also the deputy mayor in Teaneck, New Jersey. He has held several political positions in Teaneck, and helped bring the town millions of dollars in new revenue.

Elie Y. Katz

Yisrael (Freddy) Friedman is an alumnus of both RJJ Yeshiva in Edison, NJ and Brisk Yeshiva in Israel. He was hired by the Gateways organization over a decade ago to assist in their shidduchim division and has since made several hundred shidduchim. In addition to bringing couples together, Yisrael utilizes his experience as a matchmaking negotiator to broker and invest in several business sectors, including healthcare and real estate. Several years ago he joined Riverside Abstract to build relationships and expand their networks.

Yisrael (Freddy) Friedman

Shaul C. Greenwald, Esq. is the CEO of The Riverside family of companies which includes Riverside Abstract, Riverside 1031, Riverside TACS, and The Riverside Experience. Riverside has become a full-service, national title agency servicing the real estate industry with over 5,000 files closed and over $13 billion in transactions in 2017.

Shaul C. Greenwald

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In Session Presenters Prep Their Pitch Joel Klein The opportunity to pitch to investors is a significant milestone for every entrepreneur seeking to gain capital. In order to make the most of this opportunity, BizTank presenters use the SOAR method we developed for this purpose. This allows presenters to be proactive about how they’re going to share information, address investors’ concerns, and present a compelling pitch. In this new column we’ll show you how presenters prepare for their appearance at BizTank.

Name: Mendy Werzberger Company: Upperide WHY I CHOSE HIM:

When I first received Upperide’s pitch, I was a bit skeptical about the business model because I wasn’t sure about the market being viable long-term. This is because: 1. Helicopter commutes are considered a luxury “item” and are therefore only applicable to a limited market. 2. Drones have taken over many operations helicopters used to perform. 3. Flying cars are said to be the wave of the future. Being that Mendy is an experienced entrepreneur, though, I figured he must know something I don’t about the market. He indeed proved that he could overcome the challenges of the industry.

The SOAR Method in a Nutshell

trategy. Show that you clearly defined your company and have a sound strategy for where to take it. This includes complete familiarity with your product and a sound sense of your plans for its future.

pportunity. Demonstrate that there is opportunity for your business or product to go big. Market research about the industry, competitors’ successes, and your ability to stand out from your competitors can help you show your idea’s potential.

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nalysis. Crunch the numbers to show where your company is at from a financial standpoint, and how you’ve come to the current valuation. This may include past performance and a prediction for future performance.

ehearsal. Polish and practice, and practice and polish. This includes content of presentation, tone, hand gestures, posture, and so on. Practice before a mirror and before an audience; take notes and get feedback on how you can perfect your pitch.

Strategy Challenge: Some people see Upperide as a seasonal business — mostly in operation during summer months — with the additional challenge of not being able to operate when weather doesn’t permit it. Some also wonder about the value in air travel for short distances. Solution: While summer is prime season for Upperide’s services to the Catskills, businessmen are busy all year round and appreciate the efficiency Upperide’s transportation option affords them. The fact that the summer season brought in a profit — though it’s only a couple of weeks in the year — proves that the summer season is prime time and can bring an influx of revenue much the way holiday season does to retailers. The core of the issue, though, is that New York City is notorious for heavy congestion and poor transportation options. One of the biggest pain factors for businesses is time spent in traffic. This is true of time that cuts into the workday, as well as travel time that cuts into family time. Traffic is exhausting, and time is money. Cutting travel time by upward of 50% and cutting out the fatigue of traffic talks to everyone. While a private jet may be reserved for the super wealthy, ride sharing makes air travel accessible to the middle class as well. Upperide also makes bulk pricing packages available. This allows consumers to see that helicopter rides are affordable, which they like as they get a good deal, and it serves a business well by increasing cash flow. With all of the above, Mendy debunked my concern about helicopter commutes being limited to people in a high-income bracket.

Opportunity Challenge: Helicopter rides may, at first glance, seem like a luxury item. Therefore, the market may seem limited. Solution: In addition to the fact that Mendy’s current market is enough to turn in nice revenue, there is a lot of room for growth in several directions. While Mendy focused mostly on helicopter commutes, other areas of expansion he touched upon include medical transport, technology for air-travel ridesharing (such as booking), and the real estate factor in heliport ownership or management.

Here Mendy proved that my concern about flying cars soon hitting us and obviating the need for helicopter rides was answered here: He would position himself at the forefront of all things air travel and could pivot the business as needed. With so many opportunities in helicopter rides, it became apparent that my concern about drones replacing helicopters isn’t valid. To sum it up, Upperide showed that is has opportunities in: 1. Helicopter ride sharing. 2. Technology for air-travel ride sharing. 3. Several elements within heliport ownership or management.

Analysis Challenge: To prove that the company is worthy of an $8–9 million investment. Solution: Upperide was already in operation at the time they pitched to BizTank. They not only had all the infrastructure in place, they also had a very successful season behind them. Mendy was able to show that along with his partner, he has a fleet to accommodate demand, and a pricing model with fair markup that makes the service accessible to your average businessman and brings the company revenue. Our strategic partners at Eisner Amper crunched the numbers and gave a fair evaluation of the company for extra credibility.

Rehearsal Challenge: There are many different facets of Upperide that involved technicalities and numbers to show how it’s a proven concept. Solution: While our original plan was to bring the moguls out for a helicopter ride and present a very vibrant pitch up in the air, logistics proved this idea too much of a hurdle. Instead, we showed an animated video of city congestion (that the moguls could well identify with), and Mendy used that as a launch for his pitch. He used that introductory phase as an opportunity to appeal to the convenience of the helicopter ride sharing as it tackles a strong pain point many business owners share. He then waited for the Q&A session to get into technicalities about his fleet and other financials.  B-TANK | KISLEV 5779 | 135

Alan Wink

Ezriel Rappaport

Yisrael Friedman

Elie Y. Katz

Shaul C. Greenwald

EPISODE 51 NAME:

COMPANY/PRODUCT:

DESCRIPTION:

INVESTMENT SOUGHT:

EQUITY STAKE:

Mendy Werzberger

Upperide

Helicopter ride sharing

$8-9 million in seed round

50%

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Mendy Werzberger

THE PITCH A couple years ago I was spending between three to four hours on the road daily, traveling back and forth between my home in Monsey, my office in the city, and meetings in neighboring places. I said to myself, "There's got to be a better way because sitting in traffic every day of your life is not a great feeling.” Time is money, as they say in the business world. There's also the fatigue factor — especially if you are coming home late at night or leaving early in the morning. So I decided to create a helicopter commute service — which is way more affordable than a private charter. Flying cars are said to be the wave of the future. The helicopter commute service is an opportunity to get into this model. We did a pilot test in the summer of 2017, and we had a very, very successful summer. We had flights between Manhattan, Lakewood, the Catskills, Monsey, into the Hamptons and Morristown. Certain charters went as far as Boston, Washington, D.C., and Philadelphia. Our clients are attorneys, businessmen, people that own real estate across the Northeast and want to visit their properties, and so on. These people fly for a couple of minutes instead of spending hours on the road, and walk into their office or business meetings completely refreshed and raring to go. The typical flight duration from New York City to the Catskills is about 22 minutes. Flights from New York City to Lakewood are about 24 minutes. Flying

from Lakewood to the Catskills is 35 minutes. And flights from Monsey to Lakewood are 24 minutes; Monsey to New York City flights are 12 minutes. I have one client who told me that he used to spend about eight hours a week traveling to and from Philadelphia, doing his closings and coming back to NYC. Now, we fly him in at 7:30 in the morning, and he's in Philly at about 8:10. He’s in his first closing at 9:00, second closing at 10:00 or 10:30, and he’s back in his office at 11:30, with a full day ahead of him. Obviously, helicopters have been around for many years, but we have a model that’s going to make it economically affordable for the average middle-class businessperson. We chose the R66 turbine, which is a five-seater. It's got a low-scale backend management, a low flying cost, low maintenance cost, and is therefore more economical for the average middle-class client. We are not just a booking agent. We are partners with an existing company — Wings Air — that has their own fleet. This partner is a pilot, his father was a pilot, and he himself has been in this business since 1991. He has his own flight school, where he trains pilots. Our safety record is number one; we never had any kind of issues. There's another component to the helicopter business — real estate. What I have done in the last year and a half is search for certain locations in highly populated areas, where we can invest

in landing pads. This not only creates a landing pad for our use, but we can create an income out of it as well. We can charge other companies for landing fees and hangar space, and we also get storage on the facility for fuel source. We're actually looking into something in Brooklyn, which if it works out, will mean that we'll be the first and only heliport in all of Brooklyn! What we are looking for as far as investors are concerned, is to help us expand. We would like to buy our own fleet of R66 helicopters. In addition to that, we would like to put in localized hangars. We want to spread out the helicopters in different areas, since it ends up being cheaper to operate that way. The reason for this is that there's a charge for log time. We cut those costs down by keeping the helicopters in local destinations that are primarily in our demographics, and we can have them readily available at a much quicker time. We also need to develop the backend for a mobile app, and we want to embed CRM so that we can best serve our clients. Nobody in the New York, tri-state area in the helicopter business has ever done ride sharing. And there are only six helicopter companies. In our first week of launch last year, without doing any kind of advertising, we hit about 65,000 page views. During our test run last summer, we had a higher demand than we were able to service. B-TANK | KISLEV 5779 | 137

The Queries: FREDDY: What is the capital requirement you're looking for? MENDY: Well, our capital requirement for equipment is initial seed for financing the aircraft, plus the finance charge according to that, which is about $5 to $6 million. And then we have the backend to develop. In total, I'd say we want about $8 to $9 million. FREDDY: And there's no financing available for these helicopters? MENDY: There is financing available. The financing takes time, because it takes two and a half to three months to get the helicopters in front of the FAA to get them approved. The FAA has to approve every aircraft before it gets out into a fleet and out into public use; they take a vigorous test before approving it. The banks typically don't finance you until that process get approved, and

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then once those get approved, you basically get the financing that you need. There's a delay time from the time you actually purchase it until you actually get the financing in place.

MENDY: We actually made some profit in the first few months. ELIE: What is the pricing model?

MENDY: It can be up to three to four months.

MENDY: That depends on the location. A larger aircraft is in the mid-fours, but moving forward, we'll be operating smaller aircrafts with pricing in the mid-twos to the high twos.

FREDDY: So the outlay is only for three to four months?

ELIE: How many passengers do you need in order to break even?

MENDY: No. That's just for the helicopters. We also have financing and operations costs for the business, as well as upkeep for the aircraft. We need a burn rate before getting into the green. Helicopters do have a high residual, so they'll give us five-to-ten-year service.

MENDY: On the R66 â&#x20AC;&#x201D; which we plan to use â&#x20AC;&#x201D; two.

FREDDY: How long is that time?

ELIE: What was the result of your summer test?

FREDDY: I live in Lakewood, and I go the city two or three times a week and it takes about an hour and 40 minutes. If I have to drive eight or nine minutes from my house to the helipad, get myself buckled in, and then fly from the helipad in Lakewood to the helipad in Manhattan, get off the aircraft and to my location in Manhattan, how much

time am I saving? Unless it’s a heavily congested time… MENDY: Congestion in Manhattan is pretty much constant. Three weeks ago I had to pick up someone in Manhattan, attend a 20-minute meeting in Lakewood, and then get back home to Monsey. The entire trip took me an hour and 15 minutes. Do you know how long that would take by car? It's a five-hour trip that I cut down about 96%. FREDDY: That sounds like a private charter. MENDY: Yes, but our goal in the next three to five years is to have a fleet of enough choppers to cover every commute area possible. We'll have an app where people can book their private helicopter the same way you can for Uber. FREDDY: Which aircraft are you using now?

MENDY: I'm in a partnership with Wings Air. They have been flying since 1991, and they own 135 licenses.

and charter flights for private individuals. I'm revolutionizing the ride-sharing commute.

FREDDY: Why would you purchase new helicopters if Wings Air has helicopters?

SHAUL: Jet Smarter has a big problem right now as far as renewals. They got the initial push into the market in terms of getting people to sign up, but their model must be lacking if they are having an issue with renewals. But let me ask you something else. You rolled out your model in the summer, where your demand is constant

MENDY: Because they have their own existing business that they have to service; we want to scale the consumer side of helicopter commutes with a fleet that’s completely dedicated for this commute service. Otherwise, we can't compete and service our clients well. FREDDY: How much does it cost to run the R66? MENDY: About $550–$600 an hour. SHAUL: Why does Wings Air want to invest in your infrastructure? Why wouldn't they just buy a few of their own helicopters and get it done? MENDY: My partner's business is primarily modeled on tourism, filming,

Jet Smarter is a subscription service mobile community that offers carpools for private jets. Members can join private jet carpools in three continents, and they also get discounts on charter flights.

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and the weather is good for flying. What happens in the winter when there are many days you can't fly? MENDY: We can fly approximately 240 days a year, which is a nice number. ALAN: Does your $500 or $600 an hour operating cost include insurance? MENDY: Correct. ALAN: What is the insurance? MENDY: We have a $40 million umbrella policy that covers the aircraft. EZRIEL: Wings Air is staying partners with you? MENDY: Yes. EZRIEL: And what is their role going to be? MENDY: Their role is to provide the pilots, provide the experience, the maintenance, and the expertise in flying. EZRIEL: What do they get in exchange? MENDY: We started the partnership as a 50/50 partnership in Upperide. As investors come in there'll be dilution, like any other corporate structure. 140 | B-TANK | DECEMBER 2018

EZRIEL: It remains to be seen if there's enough people to support a daily commute service. I would need to hear a little bit more on that. MENDY: If we do three flights a day, we’re breaking even. Everything above the third flight is profit. There's also a very big demand for medical transports from hospital. EZRIEL: The thing that interests me specifically is to add in additional helipads, which has been pretty much impossible in the tri-state area because of regulations. Is there any reason you believe that you are in a better position than everybody else? MENDY: Yes. We found someplace in Brooklyn that had a sea plane operation. My background is in construction and I have a lot of experience with the Building Department. I went onto the Building Department site to see if anybody had any kind of aviation application in the last 30 years and I found several. One I looked at claims that because this location overlooks the ocean, there's no ordinance issue because you're flying straight out to the ocean and not over any kind of residential area. I sent this information over to my attorney and he feels that its something we can work with.

EZRIEL: I can tell you one thing: If you pull that off, you have a business. MENDY: Yes. If we pull that off, we have fuel. We have storage. We have landing fees. We have hangar space. There's a whole world. ELIE: What was your most popular route? MENDY: Catskills to Manhattan. EZRIEL: That’s a seasonal route. MENDY: Yes. But we have morning routes from Monsey and Lakewood into Manhattan as well. EZRIEL: That seems to be very doable with a single chopper. MENDY: Not if you want to keep aircraft stationed in each area to service it well. Our biggest challenge so far was that we couldn't accommodate demand. That was true during the summer and in the winter. EZRIEL: You can always do supplemental accommodation by using leased choppers or by using Wings Air's other choppers to fill in. You don't have to start off with a fleet of four choppers. You can start off with one. MENDY: We tried that. It wasn’t enough.

INDUSTRY FACTS

David Marion

The Future of Helicopters in the Age of Flying Cars

elicopter technology is the driving development behind flying cars.

Leonardo da Vinci would be surprised. Or maybe not. It took the world nearly 500 years — until 1939 — to manifest a workable version of the “air screw” he designed in 1485. Less than 100 years later, the technology behind its design is once again proving its value as the basis for the next dimension in travel and transportation — the flying car. Since its advent, the helicopter has been the workhorse of the skies. Helicopters made significant life-saving contributions during the Korean War; they were used by the military for reconnaissance and plucked the wounded from the front lines. Their ability to hover in place and move laterally, as well as up and down, makes them ideal search-and-rescue vehicles. They take adventurous tourists to remote ski slopes. Queen Elizabeth traveled in a helicopter when she went to visit her new great-grandson, Prince Louis.

urban areas without the need for long runways. Helicopters are generally smaller than planes and they can fly slowly and hover in one spot in the air. While helicopters were never suitable for moving large numbers of people like planes do, their technology could be perfect for personal flying vehicles and taxis. Several start-ups, government agencies around the world, and some big names such as Airbus, Uber, and Bell are developing their own version of personal vehicles and taxis. This year’s Consumer Electronics Show in Las Vegas was abuzz with several models on display. Still, there are many barriers that engineers and the industry need to break through in order to make flying cars a reality: J

Who could have imagined that the helicopters we know today would inspire the creation of the personal flying machines of tomorrow? The idea of flying cars might seem futuristic. After all, the world waits with bated breath for the introduction of driverless cars that stay on the ground. But the fact is that flying vehicles have been under development for years. Now that technology has caught up with the mission, engineers and tech companies are beginning to think that routinely flying ourselves to work or hopping into a flying taxi is no more than a decade away. Carnegie Mellon research professor, at Sanjiv Singh, has worked on bringing “personal air vehicles” to life for more than 10 years. “One key is vertical take off and landing, also known as VTOL,” said Singh. “We need a car that can fly like a helicopter, not an airplane.” Unlike airplanes, helicopters can take off and land in congested

Heliports need to be built. Uber, a huge player in personal air travel, calls them “Vertiports.” Whatever you call them, heliports must be designed to accommodate hundreds of aircraft taking off and landing in the same place, especially in congested urban areas. Integration of flying cars into public airspace. Research is focusing on both autonomously operated vehicles and remotely controlled flying cars with a human operator at the controls. Thousands of flight paths need to be coordinated in real time and safe collision management systems must be developed. The industry will also need systems to protect these valuable “cyber-physical” assets from loss and theft. Fuel. Clean power will likely fuel flying vehicles. This requires development of batteries that can deliver the energy required and be charged quickly at charging stations, which will need to be designed and developed. Solar power is also being studied.

The year 2017 proved to be a turning point in the development of flying cars. That’s when the nascent flying car industry saw a real uptick in venture capital funding — more than $310 million to date. Thanks to the helicopter and recent technological advances, it’s almost believable that in 13 or 14 years when you need to take your current kindergartener to college, you might be doing so in a flying vehicle.

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THE OFFER EZRIEL: I would love to hear some more specifics. I do believe that there is room for disruption in the chopper market by coming in with a lower cost. I am not entirely sure that these are the routes that I would be pursuing as a base. Based on what we have right now, there isn’t enough information for me to make a decision. I want to see more information. MENDY: Sure. I can share numbers in private. FREDDY: It's a great concept, and a ride-sharing helicopter service sounds novel. It's probably going to take a lot more than $8- or $9 million to set up the apps. To do something like Jet Smarter was probably, I would have to guess, tens of millions of dollars to start up.

I'm also concerned about whether this is a seasonal business for summer travelers to the Catskills. Can you get some historicals of what's happening on a Monday, Tuesday, or Wednesday in April, and then see what the demand is and come back? That data might interest us. SHAUL: I like the real estate factor of the model. The idea of having a heliport in Brooklyn is really crucial because going from Brooklyn or Queens to Manhattan to get a helicopter to take you to Lakewood or Monsey isn’t very likely. Once you have that it's not just about helicopters anymore. You'll just be able to lease it out and make other businesses on that spot.

ELIE: There certainly is a need for it, but I don’t think its for me. I would tell you, though, to start with your most popular route and build that out. Make it pay for itself, and then open up to the next route. Monsey Trails did this. Monroe Bus Company does this. I don't know if you are offering a minyan, though. It might be a little tough to get a minyan on a five seater! ALAN: I think it's an interesting concept. I'm just concerned that, out of season, can you create demand at those prices? I am interested in the real estate aspect though on the helipad, if that pans out. MENDY: Thank you very much, gentlemen for your time. 

Since this is a pre-funding pitch, there is room for more investors to come in. Contact us at info@biztankmoguls.com for more info.

142 | B-TANK | DECEMBER 2018

Season 11

Recap MAGAZINE

WISHES MR. AND MRS. ARON KAUFMAN

A HEARTY MAZAL TOV UPON THE BIRTH OF THEIR DAUGHTER.

Episode 50 The Hand Stuff Michael Hellerman, creator of an all-natural hand balm called The Hand Stuff, as well as several beauty products, is in a market he’s quite familiar with. Asking for an investment of $250,000 mostly for inventory and marketing, Hellerman offered 25% equity. Hellerman’s product is already being sold, and he has contracts underway with big-box stores. What most impressed the moguls about Hellerman’s presentation was his extraordinary sales skills, yet they opined that in order for his product to be successful, he needed a lot more cash infusion than he was asking for. Instead of investing in The Hand Stuff, Elie Katz invested in Hellerman, providing him with a senior position at IDT Global, along with the opportunity to bring his product into distribution at IDT.

MAGAZINE

CONGRATULATES

DAVID KOEGEL ON HIS NEW APPOINTMENT AS MANAGING DIRECTOR-VP OF STERLING NATIONAL BANK.

He has joined the Private Banking Group in Paramus, NJ and will continue to service middle market banking and borrowing clients.

WE WISH HIM MUCH SUCCESS.

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MEET THE INVESTOR

Elie Y. Katz Director of Capital Markets at EisnerAmper 144 | B-TANK | DECEMBER 2018

Benny Rivkin

I If someone takes the time and effort to learn the fine details of how the business is run, step-by-step, he can master the business.

f businessmen wore hats, Elie wouldn’t just wear many, he would fill a room with his collection. Although his current position is president and CEO of National Retail Solutions, his experience and expertise go well beyond his title. Elie has mastered many aspects of various businesses and uses his wealth of knowledge and expertise not only to advance his own businesses, but also to coach many others along the way. Jumping into real estate at a young age, Elie acquired his first property at the age of 19. By 25, he not only owned over 300 apartments spread across a few buildings in the tri-state area, he was also successfully operating his own Chinese restaurant. Over the last 22 years, he has opened another four Chinese places, four bakeries, a pizza shop, a Tex-Mex restaurant, and two Mediterranean restaurants. He's also been giving his advice and guidance to hundreds around the world who turn to him for his expertise. So how did Elie get the ball rolling and the cash flowing? “It all started with a candy machine,” Elie jokes. “When I was in ninth grade, I cut a deal with my school. If they let me install a candy vending machine, I would give them some of the profits. After they agreed, I took my bar mitzvah money and bought a candy machine. When my father found out, he reprimanded me for ‘wasting’ my money on that. But after a few weeks, on one of our many trips to Costco to replenish my stock of sold-out candy, my father turned to me and asked, ‘So Elie, how’s our candy machine business doing?’ I knew then that he was proud of me.” Born and raised in Teaneck, New Jersey, Elie went to Torah Academy of Bergen County and, after a year in Israel, attended Touro College. He saw opportunity with real estate and dipped into his bar mitzvah account — which had since grown to include his candy-machine profits — and used it for the down payment for a two-family house. From his initial purchase, he was able to grow his portfolio to include over 300 units, all while running his restaurants. Over the last decade, Elie has segued away from his active role in real estate and ventured out into many other opportunities. He has served as the president of Fabrix Systems, a cloud-based platform delivering DVR video, and arranged its sale to Ericsson for $95 million. He had a stint as the CEO of Zedge, the world’s leading ringtone and wallpaper app, and guided the transition of ownership for Vitarroz Foods, another IDT company and the second-largest distributer of Hispanic foods in the Northeastern United States. Another business accomplishment he is proud of is his leading role as B-TANK | KISLEV 5779 | 145

MEET THE INVESTOR CEO of Citizen’s Choice Energy. Today he is CEO of National Retail Solutions, a division of IDT, which services businesses with point-of-sale and payment processing solutions. How did Elie forge his path to success? In 2008, when the real estate market crashed, Elie felt a need to change his pace and move on to something other than real estate. He contacted his friends, Howard and Shmuel Jonas, Chairman and CEO of IDT, for any ideas or leads. Instead of just offering ideas, they gave Elie an offer to come on board with them. Elie entered IDT as VP of business development and hit the ground running. He took control of Vitarroz and transitioned in a new CEO, while raising profits by 10% and lowering expenses by 10%. After the sale of Vitarroz, he became the COE of Zedge for a year, executing his business plan and raising revenue by 17%. The next major step on his journey was his role as CEO at Citizen’s Choice Energy, one of IDT’s energy companies. Elie started the business from the ground up, taking advantage of energy deregulation, allowing private companies to provide energy to customers. In only two years, Citizens Choice had 24 offices, 16 vans, 6,000 sales reps, 200,000 customers, and over 24 million dollars in revenue. What’s his secret sauce? Every business has a system. If someone takes the time and effort to learn the fine details of how the business is run, step-by-step, he can master the business. Elie’s specialty is to go into a business and build it from the ground up, or to revamp what’s existing. “I learned these skills from owning my small mom-and-pop bakeries and restaurants,” Elie explains. When his bakery was threatened by a number of outside factors, including the trending “Atkins diet” (a dietary plan which avoid carbohydrates) and fierce price competition from Costco and other supermarkets who offered more for less, Elie was forced to learn how to adapt and adopt. He shifted his strategy and went from a bakery selling 80% retail and 20% wholesale to selling 20% retail and 80% wholesale. He was so successful that he grew the bakery from a local bake shop into a full-scale wholesaler with three additional locations! “When I founded Citizen’s Choice in 2010, I went into the Bronx and opened an office on a city block,” Elie says. “I hired sales reps, and I learned from each one. There’s a process to the business. I learn the process and I master the process. Then, after being successful in one project, I move to my next project!” It was his skill set and creativity that allowed him to be the perfect fit to enter into IDT and work on their business development. “The CEO and chairman of IDT are very creative, wonderful, and easy to work with,” Elie comments. “They gave me a great opportunity to utilize my skills.” Besides for having his hand in a few businesses, Elie is also an active politician who truly cares about his hometown of Teaneck. He served on the city council for 22 years, and was the mayor from 2006–2008 and again in 2016. During his time as mayor, he generated $3.5 million in new revenue, and a $2 million budget surplus. He also was responsible for 146 | B-TANK | DECEMBER 2018

a major infrastructure upgrade on Teaneck roads and was instrumental in creating many more open spaces and parks, among myriad other accomplishments. Despite his busy schedule, Elie, 44, has always put his family and philanthropic causes first. He tries to see off his three children in the morning before they leave to school and to be there at night when they go to bed. On Shabbosim and Sundays, he is exclusively available for his wife, Esther, and his children. “During my tenure as mayor, I almost didn’t see my children for two years,” Elie recalls with a chuckle. “Every Sunday was taken up by another event which I had to attend. It simply became too much.” Elie still retains his position serving Teaneck, the town which he loves, as deputy mayor. Elie is grateful to be active in both local and international philanthropic causes. He is very proud of the Helping Hands Food Pantry which he founded in 2008, serving 100 local Teaneck families every week. The pantry is staffed by volunteers and provides nonperishable food to low-income families. Elie partnered with other community leaders to establish the pantry, and his constant personal involvement ensures its success. He is also a board member of the local Chabad for the last 20 years, and a lifetime member of the Teaneck Volunteer Ambulance Corp. Although he resides in Teaneck, New Jersey, Elie’s heart is one with our brothers and sisters in Israel. He is an avid supporter of Magen David Adom, the lifesaving emergency medical organization in Israel. Two years ago, he and wife fulfilled their dream of donating an ambulance to MDA, enabling them to continue their work saving fellow Jews’ lives in Israel. Elie only gets involved in a cause if he can do it completely. “I don’t take on positions that I can’t do fully,” he explains. If Elie gets involved, he will follow through till the end, and make certain that the goal of the cause is achieved. Elie is always looking to invest in something new and fresh. He is open to any type of business, but the first place he looks at is its leadership. “Some people have a winning personality, and whatever they do, they’ll be successful,” Elie observes. “Others may have great ideas, but they can’t deliver.” Elie, like all active investors, is intrigued by any innovative ideas in the technology field, but he is very cautious when it comes to technology. Anything tech related has a chance of getting swallowed up by the tech giants. Some business models, as old as they seem, cannot be duplicated by the tech giants. “Take garbage hauling as an example,” Elie clarifies. “As big as Amazon or Google are, they’re not going into the garbage-hauling business. If the business is run well, you’re in good shape.” If you are reliable, hard-working, and easy to work with, Elie will take interest in what you’re offering. Many people have great ideas, but in order to be successful, you have to follow through and do something right. This has been Elie’s mantra, and he expects the same from people he works with. “I may not be the brightest bulb in the box,” Elie admits, “but I am reliable, dependable, and I get the job done.” It’s much easier said than done, but Elie has mastered the art. 

ENTR EPRE NEUR

FUTURE

Kayla “I want to invent an innovative product — something really cool in one of my STEM classes.”

Elise “My business is going to be called ‘Friday Stuff.’ It’ll be about all the stuff you need to do on Friday. We’ll do it for you! I’ll get an army of teenagers to work for me to help on Friday with groceries, picking up stuff from the store, errands, kids, or polishing silver.”

7 Business Decisions Companies Regret

Teen market

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Shelley

“I like creative stuff. I’d like to do something small — create a handmade artsy product to sell.

Michelle “I’d love to do something with food — sell food, eat food, ya know? Maybe I’ll do healthy baked goods for a healthier you.”

Leebee “I’ll do babysitting. I like working with kids so babysitting will be a good business.”

The Six Marketing P’s

“Last time we discussed how to zero in on the demographics of our preferred clients. Now I want to move on to what marketing is and how to create a strategy for it,” I start the class. Elise jumps up. “Marketing is advertising and your strategy is what you’ll advertise, where, how often… that kind of thing.” Nice! “Elise, I’m really impressed that you’re aware of that — but you’re wrong. And if it makes you feel better, many others think the same way. But marketing is so much more than that. The ad is just one tiny component of the overall marketing strategy. “Marketing is the creation and communication of the value of your product or service to your target audience to convince them to buy. Each piece is vital or it all falls apart. “Remember our pretty flower we spoke about last time? Let’s remind ourselves. We started with the seed, which corresponded to…?” “The core brand!” Shelley and Kayla say. “Great! You’re getting this! That

seed is connected to the center of the flower, which is…?” “Our target market!” the girls say together, again. “Amazing! And we need petals to make our flower pretty. Marketing is represented by that top part of the flower — six elements (petals) that revolve around the target market (center). Each one of those six petals have to match each other and the center. “The same way you won’t find a flower with one petal from a rose, one petal from a lily, and one from a tulip, you can’t have a marketing plan with mismatched elements. It just won’t work! Each element needs to match and work together.” “Wait, I’m confused!” Shelley has a question. “What elements and petals have to work together?” “We’re getting there, Shelley! It’s just a mashal. We haven’t yet said what the six elements are — just that they correspond to six petals on our marketing flower. “Now… presenting… the six p’s of marketing! Positioning, product, price, place, promotion, and process — in that order.”

B-Tank Teens Today's Teens. Tomorrow's Entrepreneurs.

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Business Decisions Companies Regret How much would you pay for a crystal ball that could predict your future and show you the outcome of any choice you make, before you even make it? And how much more valuable would such an item be to huge businesses, where each decision can mean millions of dollars earned or lost? Though you can purchase a crystal ball on Amazon for $4.99 (plus shipping), good luck trying to gain any insight into the future with it. Companies must rely on a combination of market research, experience, and board members’ intuition to decide whether to jump into or pass up the opportunity. Here are seven decisions I bet stakeholders wish they could turn the clock back on.

Esty Mendelowitz

New Coke

— If It Ain’t Broke, Don’t Fix It

For years, Coca Cola had outsold Pepsi by a large margin, but that changed in the 1980s when Pepsi went all out on an ad campaign targeting the younger generation. So Coca Cola decided to come up with a new formula that would outshine not only Pepsi, but even their own original recipe. You can’t fault Coca Cola for not researching their product because research they did. They tested the new formula on 200,000 subjects and the results were clear — New Coke tasted better than Pepsi and regular Coke. By 1985, the company launched New Coke and ended the production of old Coke. But consumers hated it. What went wrong? Taste isn’t the only factor when it comes to buying beverages. Habit, nostalgia, and loyalty are apparently even stronger than taste. Coca Cola was a tradition in America, something familiar, and it couldn’t compare to the new product. After fielding hundreds of thousands of angry phone calls and letters, old Coke — now rebranded as Coca Cola Classic — was back on the shelves and New Coke was relegated to the trash (and business failure articles). 148 | B-TANK | DECEMBER 2018

Firing Mark Cuban — Ouch!

In an interview on Thrive Global Podcast, tech billionaire and Shark Tank investor Mark Cuban recalled the boss who fired him for taking initiative, instead of praising him for showing initiative and bringing in revenue for the company. In 1981, Mark worked for a retail software company called “Your Business Software.” When Mark went out of the store during his shift to close a large business deal, he was let go, even though the check was for $10,000 (which meant way more than it means today). Looking back, Cuban says the experience taught him how not to run a business. That boss must be kicking himself today. If not for his short-sightedness, he could have had the help of the future mogul’s smarts and skills catapulting his business all this time.

JC Penny

— Honesty Doesn’t Pay

In 2012, JCPenny’s new CEO Ron Johnson promised to end the deceptive practice of fake prices. You know, the one where prices are inflated so that the ensuing discount looks like a great deal. Sounds like a great idea, because I, for one, hate to be misled. That decision turned out to be a big mistake. Shoppers missed the thrill of getting huge bargains and voted with their feet against Johnson’s “fair and square” prices that offered no coupons or discounts. You would think that shoppers like paying less over all else, but the psychology of shopping is a bit more complex than that. What makes an item attractive is not just its low price, but its perceived value. When you buy a sweater for $10, you assume you’re paying for a cheap, made-in-China product. But if a sweater was originally $75 and you’re getting it for $15 at 80 percent off, you feel as if you’ve beat the system and are getting a lot more for your money. Customers didn’t want just another cheap store, so sales dipped, and Johnson paid for it with his job.

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Eastman Kodak — Out of the Picture

It’s hard not to feel sorry for Eastman Kodak, the famed photography company that declared bankruptcy in January of 2012. After more than a decade, traditional photography has been completely eclipsed by digital photography, not to mention the ubiquitous camera phone, and Kodak bore the brunt of it. However, little known is the fact that Kodak actually developed digital photography. They had it, but chose not to go ahead with it for fear of disrupting their successful film sales. The first digital camera, called an electronic still camera, was patented in 1978, and its inventor, Kodak engineer Steven Sasson, was forbidden to talk about it or show it to anyone outside the company. Until the patent expired in 2007, the company made billions of dollars off it, since digital camera manufacturers had to pay Kodak for use of the technology. But each digital camera sold represented a loss for the company, as consumers no longer needed film, eroding the monopoly on every part of the photograph-developing process that Kodak once had. What would have happened if Kodak had marketed digital cameras on their own? Would they have remained at the helm of the photography business? We’ll never know for sure.

Western Union — A Bad Call

When Alexander Graham Bell invented the telephone, he offered to sell the patent to Western Union, the telegraph giant, for $100,000. Granted, that was a lot of money in 1876, but that wasn’t the issue at all. Western Union’s president William Orton dismissed the idea of a telephone as idiotic. Reportedly, the internal memo about the offer read, “The idea is idiotic on the face of it. Furthermore, why would any person want to use this ungainly and impractical device when he can send a messenger to the telegraph office and have a clear written message sent to any large city in the United States?” Even worse, Western Union later tried to challenge Bell’s patent, claiming he had stolen the idea of telephones. They lost when Bell countersued, and instead of becoming the owners of the next great invention, Western Union was stuck with telegrams and wire transfers.

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Yahoo

— Coulda, Shoulda, Woulda

In 1998, two college students named Larry Page and Sergei Brin offered their little startup to Yahoo for a million dollars so they could finish their studies at Stanford University. Their company was a PageRank system that now comprises the core of Google. Yahoo declined. They wanted their users to spend more time on their own platform instead of going to the most relevant website, as PageRank did. Yahoo declined Google again in 2002 when then CEO Terry Semel felt the $5 billion asking price was too high. What would Yahoo be worth today had it bought out Google, now Alphabet? Considering that Alphabet is worth some $250 million today, I’d bet the folks at Yahoo are deeply sorry.

Merger Ends in Divorce When German carmaker Daimler-Benz merged with Chrysler in 1998, analysts assumed it was a winner of a deal. At the time, Chrysler was the most profitable auto company in the world, driven by segment leaders such as the Jeep Grand Cherokee and the Dodge Ram. The plan was to use Daimler parts and vehicle architecture to reduce costs. In return, Chrysler was supposed to increase Daimler’s sales in North America. But cultural variances and differences in expectations caused a rift between the two companies. While Chrysler complained that Daimler broke the deal by withholding components of their luxury cars so Chrysler couldn’t use it, Daimler had never looked upon the deal as a merger, but as an acquisition. Daimler failed to appreciate Chrysler’s unique competitive advantage and insisted on doing things their way. For its part, many of Chrysler’s top executives responsible for its success either left or were fired. And massive competition from Asian carmakers didn’t do much good for either company. By 2007, Daimler basically payed Cerberus Capital Management $7.4 million to take Chrysler off its hands.

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Teen Mark-It

The Magic Brothers M. C. Millman “Pick a card, any card,” Yaakov suggests, and so the magic begins. Fascinated by magic tricks since a young age, Yaakov, who is nearly bar mitzvah, does not leave home these days without a having a card or two up his sleeve — or more like 10 tricks lining his pockets. Leaving his calling card — by giving a spur-of-the-moment ad-hoc magic show — has earned Yaakov the well-deserved reputation of an incredible magician. Yehuda, who is three years his brother Yaakov’s junior, as well as his personal assistant, comprises the team that is the Spectacular Schlachters, a magician and entertainer group. The pair performs at a wide range of children’s events, with Yaakov presenting a selection of magic tricks and Yehuda providing most of the jokes, as the pair banter with the audience for an enthralling magic show that consists of card tricks, sleight of hand, hat tricks, and handcuff escape artist presentations. “The show is a lot more organized since Yehuda joined,” 152 | B-TANK | DECEMBER 2018

says Yaakov. “He’s the funny guy, but he also helps the act because now it takes half the time it used to when I was on my own and trying to get organized between tricks. Yehuda is a complete organizational master. It really helps when I don’t have to be the one reaching for a prop for the next trick or picking an audience member to participate, and that just makes the whole show go a lot smoother.” Or at least they’re supposed to go smoother. “There was the time I was doing a trick that I’d invented,” Yaakov recalls. “For the trick, I put a fish in a cup, and then it transports from one cup to another. Yehuda and I were about to move on to a new trick when we noticed the poor goldfish squashed on the floor. It seems it had jumped out of the tank since the cover had not been put back on. We were lucky it was after I’d finished trick.” There were other times Yaakov didn’t feel quite so lucky. There have been times that Yaakov has left supplies at

home and he’s had to improvise, often making up tricks as he went along. “I learned pretty early on,” he says, “that if you mess up, you should just go with it and admit you messed up. That’s what I did one of the first times I messed up during a show on a card trick. I went on and flipped over the next card, and luckily that was the one we were looking for, so it all seemed part of the show and made the trick seem even better.” Recognizing their son’s entrepreneurial spirit, Yaakov’s parents encouraged and supported him right from the start, making business cards, telling friends and neighbors. Now they’re behind both boys 100% of the way. Yaakov performed his first show nearly four years ago — at the age of nine. “When I got my first magic set at age eight, I was very excited. I did card tricks for my friends and designed and printed out my own business cards. Then one day I got a call. ‘Are you able to perform tonight for an

upsheren?’ I said, ‘Sure.’ I had Yehuda to thank for that first show because he gave one of my business cards to the brother of the three-year-old.” Since that first time, the Spectacular Schlachters have performed at all kinds of parties and events — birthday parties, Melaveh Malkahs, Chanukah and Purim parties, upsherens, and others. The original act of 10 to 15 tricks has expanded to an over-45-minute repertoire of magic tricks. Most recently, the pair performed for a group of over 200 children at Hatzolah of Rockland County’s annual barbeque. “Sometimes, it’s hard to get people to believe that I’m serious when I say I do magic show performances,” Yaakov says. “I have business cards, but they still think I’m joking. But once I actually start performing, with a few of the tricks I always carry with me, people realize that I’m for real, and then they’re willing to hire me.” Yaakov admits to having been plenty nervous before his first show, although it turned out well enough — for a first show, that is. Yehuda, who goes by the stage name Fluffy, was also very nervous about his first performance. “I still get nervous,” he says, “but I’m not nervous at all once we start the actual performance.” The Spectacular Schlachters do most of their advertising by performing impromptu shows. “I didn’t always carry around my tricks, but now I’m always walking around with cards and other props so I can just pull over the kids in school and say, ‘Do you want to see

154 | B-TANK | DECEMBER 2018

“

There have been times when Yaakov has left supplies at home and he’s had to improvise, often making up tricks as he went along.

”

a trick?’ Our classmates help spread the word, too. A typical thing for them to say is: ‘Hey, you want to see a great magic trick? Go to Schlachter.’ We also hand out our business cards, and have hung fliers around town, but most of our jobs come from people who have heard about us from other people.” “We also have two relatives who have businesses,” says Yehuda. “And they let us put our business cards at their registers. One, my uncle, is a pediatric dentist, and the other, my grandmother, is a makeup artist. Within two weeks all 300 of the cards we put out in their stores were gone.” Since the shows are mostly scheduled for Sundays, motza’ei Shabbosim, and during vacation, this makes being seventh- and fourth-grade students that much easier for the magical pair (since they don’t have to worry about it interfering with their school schedule). But that’s not to say that there isn’t plenty of learning involved in being good showmen. “One thing I know now,” says Yaakov, “is to always act professional, such as the time last Chanukah we were called for a booking at a time when we’d already committed to someone else. I could’ve just said, ‘No, sorry — we’re already booked,’ but that wouldn’t have been professional. So, instead, I said, ‘Let me check my schedule,’ and then I said, ‘Sorry, but we’re already booked at that time. Can I do it another time for you instead?’ And then the woman booked us for a different date instead, but only because I didn’t just say no and instead offered a different time.” “You also need to be polite to people when they hire

you,” Yehuda adds. “After a performance, we go over and say thanks so much for hiring us for your event.” Both boys would like to continue to expand the Spectacular Schlachters. “I’m looking forward to having enough money to invest in the more advanced and professional magic trick props like the adults use,” says Yaakov. And although it’s highly likely that it’s in the cards, being successful won’t happen through magic, as both Yaakov and Yehuda know after all the shows they’ve worked hard on and performed together.

Advice from the Spectacular Schlachters for Young Entrepreneurs Aim for the moon because even if you fall, you’ll land among the stars. Never give up. Don’t get ahead of yourself too fast because if you look too far ahead, you might feel like giving up. Always act professionally: During showtime. With clients. With your business associates. With your employees. Every day. (You never know who might be watching.)

To nominate a candidate for Teen Mark-It, email us at info@btankmoguls.com.

B-TANK | KISLEV 5779 | 155

Kayla “I want to invent an innovative product — something really cool in one of my STEM classes.”

Shelley “I like creative stuff. I’d like to do something small — create a handmade artsy product to sell.

Michelle “I’d love to do something with food — sell food, eat food, ya know? Maybe I’ll do healthy baked goods for a healthier you.”

Leebee “I’ll do babysitting. I like working with kids so babysitting will be a good business.”

156 | B-TANK | DECEMBER 2018

The Six Marketing P’s “Last time we discussed how to zero in on the demographics of our preferred clients. Now I want to move on to what marketing is and how to create a strategy for it,” I start the class. Elise jumps up. “Marketing is advertising and your strategy is what you’ll advertise, where, how often… that kind of thing.” Nice! “Elise, I’m really impressed that you’re aware of that — but you’re wrong. And if it makes you feel better, many others think the same way. But marketing is so much more than that. The ad is just one tiny component of the overall marketing strategy. “Marketing is the creation and communication of the value of your product or service to your target audience to convince them to buy. Each piece is vital or it all falls apart. “Remember our pretty flower we spoke about last time? Let’s remind ourselves. We started with the seed, which corresponded to…?” “The core brand!” Shelley and Kayla say. “Great! You’re getting this! That

“Huh? Can I add perplexed?” “No, Michelle, just patience!” That got everyone’s interest. “A marketing strategy is a plan to reach a goal — normally an income goal — using those six elements.” Starting with positioning, we’re going to move clockwise around our flower. “Positioning means figuring out where you’re going to fit into your industry. Obviously, you’ll first have to have a good idea of what’s out there in your industry first. “Michelle, you want to sell baked goods. You need to start by scouting out what other options of baked goods are available. Who is your competition? What are they charging? What quality do people expect at that price? Then you need to decide where you’re going to fit into that industry. Are you going to sell a luxury item, a low-end, or something in the middle? Remember to always keep in mind where your target is expecting to find you.” “Of course, she should sell luxury — then she can charge luxury prices and make the most money.” Elise has it all worked out — except not quite! “Remember, all six elements have to match each other. As we work through all six P’s you’ll see that it’s not so easy to position yourself as ‘luxury.’ Let’s keep going and we’ll come back to that.” “Our next petal is product. This is a clear definition of exactly what you’re offering. If it’s a physical product, then defining your product is simple. If you’re selling a service, define what you’re offering and how your clients can buy it from you. Are they buying your time or are they buying a packaged deliverable? Again, keep in mind what your target expects to find in your marketplace. “Elise, you’re offering a service to help busy moms on a Friday. How exactly can they buy that help?” “I’ve already created my price list. Moms can buy hours of help, and the more they buy, the more they save,” Elise explains. “Love it! That’s great! So Elise’s product is hourly help and she has already built in a discount, which we’ll talk about when we get to promotion

next class. “That brings us to price. Now that you’ve defined exactly what it is you’re selling, you can attach a price to each item. Remember, your price has to match what your target audience would expect to pay — and be comfortable paying — for the product you’re selling within your current industry marketplace. “For example, if Shelley was to target young mothers with her baby jewelry, she would probably not be able

The same way you won’t find a flower with one petal from a rose, one petal from a lily, and one from a tulip, you can’t have a marketing plan with mismatched elements. It just won’t work! to charge much, as new parents have many other expenses. However, if she decided to target their grandmothers instead — well, grandmothers typically have more disposable income and love to splurge on their new granddaughters!” “I can’t just sell to grandparents,” Shelley says. “I need both parents and grandparents as customers!” “You can sell to both, but you definitely don’t have to. We’ll discuss more of this next class. “Our last petal for this class: place. Where are your clients and customers going to find your product? If it’s a retail product, will it be online? On your own website or on Amazon? Maybe in a store? In your own brick-

and-mortar store? Or in department stores? If you’re selling a service, will you be selling that service locally or remotely? From an office or from your home? Your answer will depend on where your target audience would expect to find you, at the price they’re going to pay for the….” “…product you’re selling within your current industry marketplace,” the girls help me finish the chorus. “Chad gadya, chad gadya!” Michelle finishes off for us. “Our final petals, process and promotion, are so huge that we’re going to leave them for our next class.” “No! I need to understand how this all fits together!” Kayla wants to know more. I decide to humor her. “In a nutshell, here’s what it is: Promotion is everything that you do to get the attention of your audience and process takes that attention and turns it into money in your pocket.” “That’s what I’m waiting for!” Elise says. “I want the money to start rolling in!” “We’ll delve deeper into those last two petals next class. Until then, I’d like you all to figure out how the first four petals we explained today work in relation to each other and your target audience. Learn about your industry so that you know where you fit in, then create a restaurant-menu-style price list so that I can see clearly what I can buy from you and how much I’ll pay.” We’re well on the way to a clear marketing strategy — and almost ready to make some real money!

Estie Rand is the founder and lead strategist of Strand Consulting, a boutique business consultancy helping small business owners earn more money with less headache. She is also the host and producer of the Business Breakthrough podcast where successful business owners share how they got there and what they currently struggle with. Estie created the Business 101 High School course to give today’s high school students the business and life skills they need to succeed in the 21st century. Learn more at www.estierand.com. B-TANK | KISLEV 5779 | 157

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EXPERTS SPEAK Business Emotions

Mordechai Weinberger, LCSW

Business Skills

James Alterbaum, Esq.

Business E-Commerce Hendrick Laubscher

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Business Finances

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Business Leadership

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Jerry Freedman

Andre Politzer

Eli Hochberg

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Business Emotions Mordechai Weinberger, LCSW

Dear Mordechai, I’m the manager at a small, homey-type office, where everyone is on good terms with each other. I’m in charge of making sure that the work is done, and that the employees are performing well. But I don’t have to be an old-school disciplinarian. For the most part, the employees are self-motivated, and we do have a bonus program to further incentivize them. My boss recently made a new hire, which has set everyone on edge. He’s young, somewhat cynical, and has a better way of doing everything. He’s ruined the atmosphere in the office, disregards my instructions, pokes fun at oversight, and is a general nuisance. The worst part? He’s our boss’s nephew and is here to stay. I know I don’t have the ability to change him, but I’m upset at how he’s managed to turn the office into a cross between a circus and negative water cooler chats. Is there any way I can at least temper the effects he has on the office?

ou are in the midst of a situation that would distress anyone. You have a great team working with you, the office is a positive, productive place to be, everyone is motivated, and your job as a manager is tremendously satisfying. Then one person comes along and sours the entire situation for everyone. First please reassure yourself that you aren’t the problem; negative people have a negative effect. My next comment is directed at your boss and business owners everywhere: A positive work environment is one of the top five reasons people give for remaining in their jobs, even if they aren’t paid what they’re worth and even if they have other options. Feeling appreciated and respected is more important than money. This has been proven again and again. At the same time, if the environment is upsetting, disappointing, or even toxic, people will flee. They’ll take less money if they have to, just to avoid spending the prime eight or nine hours of their day in a depleting, depressing atmosphere. The enlightened business owner realizes this and makes his

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workers’ satisfaction a top priority. Now, back to your question. You aren’t the boss, yet you’re stuck with the problem he created when he hired his nephew. What can you do? First of all, don’t keep your boss in the dark. Without being harsh or accusatory, let him know that his nephew is having a negative effect on morale. He needs to know this, because poor morale is a pending disaster for a company. It results in lower productivity, poor customer relations, lateness, absenteeism, and, as we noted above, high turnover. The owner needs to know that his business is at risk of these negative consequences, and as a manager, it’s your job to tell him. It might be that all your boss needs to do is make his nephew aware of proper office protocol. If he’s new to the workplace, he might not realize that his combativeness and cynicism are inappropriate in this environment. He might not be accustomed to working with people of different backgrounds than his own. Someone could provide some training for him in these areas and that might go far in solving the problem.

B Empowered

Nevertheless, whenever there are several people working together, there’s bound to be at least one who has a nature that conflicts with the general modus operandi. The office may have a laid-back atmosphere and in walks Mr. Intense. Or a creative, impulsive type might irritate a team that’s very organized and methodical. In your case, the positive team spirit is being upset by someone who seems determined to do things his own way. Learning to deal with different types is part of the personal growth we can achieve in these situations. One way to do that is to be direct. Tell him that you strive to keep the mood in the office positive and upbeat. Explain that everyone is sharing the same atmosphere, essentially breathing the same air, and it’s not fair to force everyone to deal with the negativity. Of course, you have to say this in a diplomatic, gentle way, but be clear and firm as well. Another option is to bring his negativity to his attention as it happens. Rather than speaking theoretically, respond to something he says with an honest reaction: “Are you being sarcastic? I’m not sure what you meant, but somehow I feel hurt.” Or ask him directly if he’s annoyed by the way you give instructions. “Am I saying something that rubs you wrong? Can you tell me how you’d like me to convey this kind of message?” You might also spend a week or so writing down things he says and does that are counterproductive and then reviewing this list with him. He can then see that this is a pattern of behavior that can’t be denied. If you can’t neutralize this man’s acidic personality, then you have to protect yourself and the others in the office against it. Here’s where proper boundaries can help. Interact with him only as necessary and focus on the more positive people and activities in your workplace. Instead of rehashing his latest affront, accept that he isn’t part of the team and therefore, he won’t act as if he is. Change your expectations and your stress level will change accordingly. Sometimes letting go of the tug-of-war gives the other person space to learn to become more positive and professional. One last suggestion for protecting the morale of your team, whether or not you’re able to get the boss’s nephew on board, is to fortify everyone in their commitment to keeping their words and interactions positive. There’s an excellent book called Positive Word Power, that you might suggest your co-workers learn together. Something that will bolster their awareness and strengthen their resolve to stay positive can only help. I can’t guarantee you that you’ll ever turn your problematic worker into happy and productive one. However, I can guarantee that if you work through this situation in a proactive, positive way, you and everyone in the office will ultimately benefit. Wishing you much hatzlachah.  Mordechai Weinberger, LCSW, is a life and business coach and the director of the Mordechai Weinberger Center for Wellness, a six-therapist practice that sees more than 200 clients weekly. He is also the author of two books, Alive! and Mastering Relationships, as well as the host of four weekly international radio programs promoting mental health awareness. B-TANK | KISLEV 5779 | 161

Business Negotiations James Alterbaum, Esq.

PREPARING FOR “PRIME TIME”

major business transaction, such as a liquidity event or change of control (sale), or debt or equity financing, is a complicated undertaking that requires significant planning and preparation on the part of a seller or an otherwise affected party. A comprehensive action plan should be in place, along with a team to guide the transaction to closure. The team generally consists of the following professionals: • Investment banker • Estate planning expert • Asset manager • CPA • M&A (mergers and acquisitions) attorney • Personal financial professional • Valuation expert The following are some areas you should be well acquainted with during this crucial period: A. CONFIDENTIALITY

Key stakeholders in a business (such as its employees, customers, and suppliers) are usually unaware that a business is for sale. Confidentiality, therefore, is crucial before and during negotiations. B. VALUATION

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or can break down entirely. Often, the disagreement stems from the seller’s unrealistic valuation. It’s imperative that the business be valued from the perspectives of: a. a financial buyer (more often than not a private equity firm) b. a strategic buyer (often an industry competitor) c. an interested party (such as an employee stock ownership plan [ESOP]) The valuation should be determined early on, along with the asking and expected price. An anxious seller might overlook certain aspects, such as tax planning, that will clearly influence the ultimate purchase price. The purchase price will vary depending on the structure of the sale (e.g., asset or stock sale), the nature of the selling entity (LLC, S corporation, C corporation, or partnership), the basis of the equity in the hands of the owners, and other relevant factors. Determining comparable industry sales and the metrics of valuation is imperative. An IP based business might measure value based on the value of its technology, while a professional firm might base value on a multiple of revenues rather than earnings. Clearly, different industries have different standards of valuation. The terms of payment and the nature of the consideration given are key: Is this going to be a cash deal, cash plus stock, or cash plus note? What if the buyer receives stock in the acquirer? What security is there for deferred payments?

B Skillful

Will the following types of security be considered from a protection point of view: letters of credit, guarantees, or side collateral? C. EFFECTIVE DUE DILIGENCE

The buyer will wish to reduce risk. It stands to reason that due diligence will be conducted prior to committing to the purchase of a business. A seller who doesn’t provide thorough information could be suspected of concealing potential liabilities. However, there’s no need to “open the books” before parties express serious intent of purchase and sale. Here are some safeguards to put in place: 1. Masked information. Information about customers, suppliers, and key employees can be “masked” early on, to be doled out only as negotiations intensify. 2. Confidentiality agreements. Includes non-solicitation agreements (protecting against “raiding” of key employees) and prohibitions against reverse engineering of valuable IP (protecting technology). Keep in mind that preparing materials for due diligence is a time-consuming process. Being prepared and anticipating what might be requested keeps the momentum of the deal going and sends the signal that the business is run in a professional manner. D. DUE DILIGENCE MATERIALS

Preparing for due diligence entails the following (not an

exhaustive list): 1. Financials. A comprehensive financial review consisting of several years of balance sheets and income and cash flow statements. Be prepared to discuss marketplace position, including sales reports, inspection of the business property, and equipment. 2. Expenses. Distributions by way of salary, dividends, and advances may often provide addbacks in the pro forma of the business post-transaction. 3. Milestones. A timeline of significant company events/ milestones. 4. Business organization. An organizational chart that shows supervisory levels and number of employees, including the following: (a) Total number of employees, listing the length of service for all employees (b) Payroll commitments, benefits packages, and other HR details (c) Background and qualifications of department personnel (d) Product development processes and design tools/ systems 5. Intellectual property. All IP that the company owns, which includes patents, inventions, invention studies — whether patentable or unpatentable — designs, copyrights, mask works, trademarks, service marks, trade dress, trade names, secret formulas, trade secrets, secret processes, computer programs, algorithms, confidential information, and know-how. B-TANK | KISLEV 5779 | 163

When the parties cannot agree on the selling company’s value — which often happens — negotiations come to a halt or can break down entirely.

For the above, the following need to be provided: (a) Copies of patent documents (b) Agreements and associated royalty reports obtaining or granting the right to use any IP. (c) Any outstanding order, decree, judgment, stipulation, or agreement restricting the scope of the use of any IP owned or used by the seller. (d) A list of pending litigation, including the status of any settlement discussions involving IP rights in which the company is named defendant or where the seller is a named plaintiff 6. Operations. Buyers will need to familiarize themselves with the day-to-day operations of the business, including processes and procedures, vendor relationships, ordering procedures, inventory management, management systems, and customer relations. 7. Customer base profile. Buyers can request a customer list. Due to the sensitive nature of this request, it’s typical to indicate the total number of customer accounts and the number of customer accounts that comprise total business sales in a “masked” form. 8. Key industry percentage of sales. 9. Sales and marketing. All sales tools and support programs should be described, as well as the company’s practice in the following areas: (a) Product selection (b) Literature (c) Training (d) Advertising (e) Tradeshows (f ) Lead generation (g) Newsletters (h) E-commerce 10. Legal issues. The seller’s list should include any and all: (a) Necessary permits, licenses, franchises, and other authorizations from public authorities (b) Pending or threatened action or proceedings that could materially affect business activities 11. Insurance issues. Are policies that are customary for the industry in place? Are these policies on a claims or occurrence basis? 12. Human resources. This includes union activities (if any), employee turnover, benefits (pension plans/savings, 164 | B-TANK | DECEMBER 2018

vacation policies, health [dental and optical] programs, disability programs, relocation policies, etc.); employee health and safety responsibilities. 13. Environmental matters. Has the business received any notices of violation, administrative orders, or compliance schedules? E. SEEING THE COMPANY THROUGH A BUYER’S BIRD’S EYE VIEW

A strategic buyer is one that can do more with its target than the seller through synergies in the form of: 1. Sales growth: The buyer might be able to grow the sales faster than the seller could. 2. Cost savings: eliminating duplication of resources or leveraging better purchasing power 3. Financial synergy: lower cost of capital or debt capacity The above should be part of the seller’s due diligence process when entering into negotiations. The seller wants to receive from the buyer an amount that includes the synergies in the valuation, and the buyer only wants to purchase what the business would be worth if it continued as a stand-alone business. The seller needs to make an assessment of the company’s value as a stand-alone company and then value it again from the viewpoint of the buyer, with the realization of potential synergies. It works to the seller’s benefit to understand the magnitude and importance of synergies to the acquiring company. If they’re important, then the seller is in a stronger position to negotiate a value that takes into account a portion of the synergies — increasing the selling price above a stand-alone value. If purchasing the company only plays a small part in realizing the buyer’s synergies, then the seller is in a weaker negotiating position.  James Alterbaum, a senior partner in the Corporate/M&A practice at Moses & Singer, is the chairman of its accounting law practice, with a unique business and entrepreneurial approach to the law. Moses and Singer was established in 1919 and is a law firm member of the MSI Global Alliance, one of the world’s leading international alliances of independent legal and accounting firms, with over 250 member firms in 100 countries. James has over 30 years’ experience in negotiating agreements and in corporate, securities, commercial, and employment law.

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Business E-commerce Hendrick Laubscher

HOW TO ADD THE E-COMMERCE CHANNEL TO YOUR RETAIL BUSINESS

t’s 2018 and if your retail business doesn’t have an e-commerce business, your business is unable to offer an omnichannel experience. An omnichannel experience provides your customer with consistent touch points over multiple channels (such as offline retail, online shopping, customer relationship management [CRM]). The lack of omnichannel commerce is a considerable disadvantage as more customers are moving online due to lack of time, convenience, and the wide variety of products that can be found online. Why is going online important? In the US, millennial customers (those who are reaching young adulthood in the early 21st century) are increasingly shopping online via their mobile devices instead of visiting retailers. The lack of an online offering ensures that your business does not exist to this highly profi table group of customers who spend large amounts of their income online. Secondly, unlike traditional marketing, online marketing can provide a business owner with metrics regarding the costs involved in generating a sale, the cost of acquiring a customer, and the customer’s long-term spending value at your business. This critical information is almost impossible to determine from traditional marketing and could therefore lead to unnecessary marketing costs. The lack of an online business can also lead to a considerable disadvantage against your competitors who may have an online business or might be selling their products via Amazon and Google Shopping (more on that soon). It may sound s trange, but having an online store also provides your business with a tool to potentially move customers into stores. There are certain categories such as apparel,

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home goods, and large items (think furniture, expensive home electronics, and fresh produce) that customers want to test and feel prior to purchase. As mentioned e arlier, business owners whose stores are not online are essentially dependent on traditional marketing (flyers, radio, and television). Some of this is very costly and generally out of reach for small- to medium-size businesses. This essentially means that your business is then competing against businesses that are selling similar products and have a far greater reach. Customers then become price sensitive and your business becomes a price dependent business with little or no margins and no real long-term relationships with your customers. By adding e- commerce to your business, your business has the opportunity to sell your products via popular marketplaces such as Amazon, Walmart, and eBay. These large companies offer business owners the opportunity to sell their products to huge audiences (much larger than most small and medium businesses will ever be able to generate independently) and be able to cater to customers all over the US and potentially internationally. The platforms provide small- and medium-sized businesses with an opportunity to generate significant revenue by leveraging business acumen and product knowledge. While these platforms are not free (there are commission charges), they provide small- and medium-sized businesses a channel to acquire customers at a lower cost than traditional media. Furthermore, their intent based customers on these sites generally leads to significant sales volumes. Using marketplaces also has its disadvantages — i.e., the

B Online

By adding e-commerce to your business, your business has the opportunity to sell your products via popular marketplaces such as Amazon, Walmart, and eBay. customer is not yours but rather the platform’s — but through clever marketing and analysis a select number of small- to medium-size businesses use marketplaces as a channel to grow customer sales via their own website. As soon as the customer from the marketplace provides you with an opt-in email address, your business has the opportunity to market to the customer and generate sales via your own website without marketplace costs. Which business owner doesn’t like making sales that are essentially without marketing costs?

What do you need to do to get your business online and e-commerce ready?

Let me be clear here: Small- and medium-sized businesses need to remain scrappy and resource-constrained as long as possible. What does this mean? The biggest mistake I see is that small- to medium-sized businesses grow too quickly and invest significantly into their online business without following analytics closely. The first thing a business/retailer needs is a website. As a business owner there are several options. You might have an existing website that needs to be upgraded, or you might need to start from scratch. If you haven’t yet done so, you will need to register a domain name via GoDaddy or Namecheap (Namecheap is my favorite as they offer extremely good value for your money). Once you’ve registered a domain name for your business or you need to upgrade your existing website, the next important question that needs careful consideration is what software you will use to power your online business. There are hundreds of e-commerce software businesses available, but Shopify and Magento will provide you with

really great long-term solutions without the need to constantly change shopping cart software (another endless capital expense). Shopify provides almost a turn-key solution while Magento provides a solution that requires development via software developers. Once you have your shopping cart ready, the next big step is to move your physical inventory online. (Please don’t try and place boxes on your notebook; it won’t add the products to your online business.) You’ll need to use manual data entry to add your products to your software. Don’t make a mistake and try to get everything on, and then launch your online shop (another mistake I see often). Use this upload as an analysis period. Upload some of your best-selling products from your brick and mortar store with products that you think will be popular. Once you have a good number of products online (I would estimate 50 products to be a good number), do a soft launch. What is a soft launch? This is a launch where you invite family, friends, and your best customers to shop your products online. Use your physical store as an acquisition channel (add a line to your invoices that you have an online shop and that you want your best customers to sign up for a newsletter). Essentially, you want to create an incentive for customers to join your small effort. Be honest with your customers regarding the fact that this is a test. These early customers will become your ambassadors over time. Disclosure: The author has no business ties to any business listed in this article.  Hendrik Laubscher has over a decade's worth of e-commerce experience in emerging markets and has worked for some of the largest e-commerce businesses in Africa. He curates a newsletter for e-commerce executives, Hendrik’s e-commerce newsletter, and is currently the marketplace research director and lead writer for Buy Box Experts. B-TANK | KISLEV 5779 | 167

Business Finances Jerry Freedman

THE FINANCIAL PICTURE

ou want to build that mega company. Or maybe you just want a mediocre company. All you can think about is pushing sales. Sales. Sales. Sales. Marketing. All you can think about is how you’re going to grow this company. Finally, you form your company and you implement your idea. Things are exploding. Sales are spiking. You’ve hired 10 people in the past year alone. You sit back and smile as you think of what you’ve accomplished. But as time goes by, your smile slowly starts to fade. Once the initial excitement dies down, you realize that although you’re concentrating on growth, you never really took the time to crunch the numbers, or even if you did, you really didn’t have a good grasp and understanding of the company’s financial health; you’re putting in all that effort, and you may not even know what’s going on in your own company. Are you making money? Which items and services are profitable? Are things being accounted for correctly? Why can’t you seem to have a good handle on the company’s expenses? Why can’t you look at your financial statements and truly understand how your company is doing? Why do banks not want to give you a line of credit? The good news is that these are all great questions. And the fact that you’re asking yourself these questions is one big step in the right direction. Understanding your company’s financial picture and health is the key to your success. There’s no more accurate depiction of your company’s operations and activity than the financial statements themselves. But the first step in this is to ensure that everything is being recorded correctly and accurately. If not, you can look at your financial statements and not have any clue as to what’s going

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on. In fact, this is most likely why you’re asking yourself the aforementioned questions. The key to ensuring everything is being recorded properly is to ensure that your bookkeeper and accountant understand the nature of the company’s operations. This is one of the biggest challenges I find when talking to bookkeepers. Understanding how the company makes money and its overall operations are key to accurate bookkeeping and records. Part of this is also understanding the impact of transactions on the company’s financial statements. One company we worked with was actually owed thousands of dollars from many of its customers, but that was overlooked. When the customer wanted to return goods, they’d send a return merchandise authorization (RMA) to the company. The bookkeeper would then issue a credit and send it back to the customer. Upon receipt of the goods back from the customer, the warehouse would notify the bookkeeper of the return, and the bookkeeper proceeded to enter a return, thus double counting the return. So the accounts receivable balance was way below what it should’ve been because of these double-counted credits recorded in error. Another important aspect of accounting for things correctly is ensuring that there are processes and internal controls for everything being done in the company. All the operations of the company should be in pursuit of ensuring that the company is a profitable enterprise. If there are no processes in place, this leaves room for error. For example, a distribution company with a large warehouse needs to make sure that there are proper controls in the warehouse. For starters, a physical inventory count of the entire warehouse should be done on a monthly or quarterly basis. Additionally, inventory

B Organized

Understanding how the company makes money and its overall operations are key to accurate bookkeeping and records. should be tracked using reputable software that’s part of or integrated with the company’s accounting system. One company we worked with was keeping track of over 100 high-dollar items in a spreadsheet and never performed an inventory account. When we compared inventory in the accounting system to the spreadsheet, nothing matched. The first thing we had the company do was a full inventory count of the warehouse. So the warehouse shut down for a few hours while the count was performed. Upon completion, the actual inventory in the warehouse didn’t agree with the spreadsheet or with the accounting system, resulting in thousands of dollars in inventory being unaccounted for. While the company was never able to figure out what happened with all the inventory, we realized one thing: There were no processes or controls in place to prevent issues and errors. Salespeople would come in and take items from the warehouse to show customers without communicating this to warehouse employees. At times, the goods would never even come back to the warehouse. Customers would come and pick up orders, but they would change the orders on the spot. Due to the time crunch, the warehouse employees would not update things in real time, and inventory records weren’t accurate. This meant that new orders placed weren’t reflective of current needs. The company didn’t have processes in place and therefore lost many thousands of dollars due to unaccounted inventory. Even in a service business, processes and controls are super important. Take something like company credit cards. Are all transactions approved? How about all the transactions that are being automatically charged on a monthly basis: Are they being reviewed for accuracy? Are they being charged the amount that was agreed upon, or are vendors tacking on additional fees? It’s also possible that the bookkeepers entering the charges may be making mistakes because they assume they know the numbers “off the top of their head” when they really don’t. Are the transactions for legitimate business purposes or is your employee buying lunch every day? Are all transactions reviewed for cost-savings purposes? One company I worked with had thousands of dollars in recurring credit card and auto-debit charges. Many should have been canceled ages ago. When we reached out to cancel

some of the charges, we were sent agreements that employees had signed way back basically agreeing to these charges and contract renewals. This brings up another point. Many companies are excited by the prospect of dealing with large national customers and vendors. The issue is that most large companies require lengthy contracts and agreements that are very cumbersome on an owner. Due to the perceived value of dealing with a large company, many owners and CEOs go straight for the signature line and execute the documents without fully understanding its implications. And it’s not just the large companies. Sometimes the prospect of paying a small monthly fee for a service can sound really appealing. In reality, by signing on the dotted line, that small monthly fee can turn into a large multiyear contract. It’s imperative that there are multiple levels of review of all contracts and agreements in every company, and that all reviewers are knowledgeable of the company’s operations and the agreement’s ultimate business implications. Another example in a service business is payroll. As a company grows, payroll becomes more and more cumbersome. Raises, new hires, and layoffs are all part of the complex payroll system. When payroll is entered, is someone reviewing the information other than the actual individual entering the information? Are departmental managers reviewing all time entry and overtime for their subordinates? Oversight is important to ensure general accuracy of data entry and basic calculations. Having processes in place across all departments in your company, as well as proper internal controls, will ensure accurate accounting and financial reporting. If the financial statements are accurate, then you can easily take a look at a specific period in time and see where the company’s strong and weak points are — so that you know what to improve and what to build upon. This will also allow for greater planning for the future, like budgeting and projecting, and for sustainable growth.  Jerry Freedman is a seasoned CFO and business advisor helping growing businesses realize their goals. Jerry’s musings on all things business can be found by following him on LinkedIn. B-TANK | KISLEV 5779 | 169

Business Leadership André Politzer

BUSINESS IS MORE LIKE THEATER THAN YOU THINK AND THAT’S A GOOD THING Going off script: A creative force when the same old isn’t enough

n a previous piece I introduced the idea of using acting skills in leadership. Let’s examine one skill of crucial importance, championed both by excellent leaders and our favorite acting teacher, Konstantin Stanislavsky. We’re talking about the skill of improvisation, a tool given to us by the creative spirit herself for both the expression and the building of self-confidence. Improvisation is the language of spontaneity; it’s essentially making the scene up as you go along. The act of improvisation — a skill that is built by practice — not only opens the mind to the limitless possibilities of discussion, consensus, and enjoyment; it also often proves that you’re much better at improvising than you thought. The coach/stage director will provide a few fundamental hints to prepare you for this exercise. It’ll be a short conversation on what you want to specifically communicate based on “facts” you want to improvise (such as building assertiveness, seeing things positively, etc.). You’ll be asked to write a bullet point referral card as a your visual reminder of topics you want to include in your “play.” Then you’ll keep the card where your eyes can catch these themes on the fly. The coach helps you build the ideal situation you want to create. Adding other “actors” on stage will provide you with interactions and challenges. You’ll learn quickly how you impact your audience. This alone will give you a thorough sense of confidence and a powerful presence only improvisation is capable of achieving. Practicing improvisation has several advantages. You become a more generous and creative communicator. You get to know what works and what doesn’t. You get comfortable

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accepting guidance and feedback. Perhaps best of all, you learn to trust your intuition, and when to trust it. Ari was at the top of the pyramid and enjoying an international reputation as a sales executive. Then his business was acquired by a software company and he found himself facing many tasks — many of which could have severely taxed his energy. For a series of upcoming presentations, he had to create and support a new global strategy. This was a huge task with many moving parts. He would then extol this new message at four major corporate events attended by thousands of employees and leaders, speaking of the plan’s merits and potential new markets. He would also share the company’s ambitious new quota objectives, which would put pressure on the entire staff. He had five months to prepare for this and felt incredibly overwhelmed by the amount of responsibility. What do you do in the middle of a chaos storm? Improvise. We saw Ari twice a week and his team once a week, and put them into some tough hypothetical situations that resembled what they might face in reality. In preparation for Ari’s first presentation — to introduce the new strategy to 3,000 attendees in Bern, Switzerland, including the worldwide CEO — we projected scenes of a huge concert audience on screens to simulate a crowd. We examined a video of him in his characteristic laid-back style, and studied his motions and movements, with an eye on how to help Ari bring assertiveness into his body language. Often we showed what he was doing and asked him to do something different, something unfamiliar to him. For example, we asked him to stand up straight with no hint of slouching, or face the questioner with confidence and no

B an Actor

Though difficult, facing these theoretical stresses becomes good preparation for facing real ones. shyness. Needless to say, this exercise alone can be a painful departure from the comfort zone. Some of Ari’s subordinates found his directions vague, inadequate to their understanding, and therefore frustrating. We could see it in videos. Little habits of speech — “I don’t know,” “something like that,” “I’ll try to” as opposed to “I will” — can create an atmosphere of uncertainty in any interaction. Likewise a defensive posture and avoidant eye contact suggest doubt. We worked to remove the vagueness from his speech, along with any visible hints of doubt. It’s difficult to break any habit, but the results came quickly, in the form of less protesting from his team and a clearer picture of the task. Then we were able to celebrate his ability and charisma. When working with Ari’s team we had them play out how they would improvise in the following situations: J J J J

They had just missed a board meeting.

A large customer wanted to cancel an order. They had an ugly argument with the boss. They were getting laid off.

Another important aspect of improvisation is to think in terms of story — that is, having a beginning, a middle, and an end. Thinking of beginnings, middles, and ends keeps focus on the result — the takeaway — rather than the difficulties of the present. We told one team member, Paul, that he was being fired. Paul knew that getting fired was only the beginning of the story, and that other parts would follow. And so he was able to imagine himself already at the end of the tunnel, with a new and better position, huge improvements in his quality of life, and inspiring leaders to work for. Improvisation put his creativity and imagination at the center of that effort. We coached each team member to act with confidence and to be as concrete as possible. As Stanislavsky said, “Generality is the enemy of all art.” Concrete actions help model appro�priate behavior, and keep the focus on task. In every case we asked participants to respond to developments in a productive and appropriate way, improvising from how they’d naturally react in those situations. Then we studied their reactions, their communications, their decisions, their ideas moving forward. Where anything seemed

counterproductive we tried to alter it. Where something worked well, we reinforced it and then gave them more challenging situations to work with. Though difficult, facing these theoretical stresses becomes good preparation for facing real ones. In Ari and his team’s case, the practice kept them smooth, agile, and responsive through the storm — and sales increased. A week after his presentation, Ari got a call from his CEO telling him to keep it up. He now speaks to masses of people. Meanwhile, the training he received is seen as a crucial step on the way to leadership responsibility. In another case, a famous female singer we’ll call Julie, an icon of the industry, asked for help managing her busy career. She needed to manage her makeup and fragrance company, learn to lead virtually while traveling, and begin an ambitious tour of the US and South America. She felt comfortable as a singer, but not so much as a leader. Julie jumped in with both feet, and made working with us a priority, more important even than concert rehearsals. We worked on building authority, giving clear directions, following up on requests, and showing anyone nearby the picture of a firm and smart businesswoman who wouldn’t leave anything undone. This was most clear in her growing willingness to delegate, something that did not come easy at first. As her business grew, she had to learn to scale things rapidly, letting certain responsibilities fall to those around her. Through coaching she was able to leverage her already exceptional ability to surround herself with people who complemented her strengths. She also learned to clarify her requests and expectations with concrete examples, provide clear directions, and give support to her team by using encouragement and compliments. Both Ari and his team as well as Julie saw tremendous success by utilizing their own skills and character that lay within each of them — a resource they were able to animate through the knowledge and practice of improvisation.  André Politzer, PCC, MBA, CPJ is the CEO of Majestery LLC and managing partner at Coaching Path. As an executive leadership coach and mentor, he helps leaders succeed by liberating their full executive potential. André lectures extensively and provides individual and team coaching, workshops, and retreats. B-TANK | KISLEV 5779 | 171

Business Networks Eli Hochberg

Beyond The Profile You see them every day in your feed. You might even know who they are from around the neighborhood. But have you ever grabbed coffee with your LinkedIn connections? In this article, I’ll show you how to move conversations offline and get to know your connections better.

OFFLINE > ONLINE Yes, using the platform is great. And, you’ll get tremendous success from staying online only. However, you can make deeper connections by taking the conversation off the web. Meeting someone face to face greatly increases mutual trust and respect — which are crucial to doing business together. Instead of pinging messages back and forth, get them on a call. Even better, invite them to a coffee meeting or lunch. How? I’m glad you asked. THE PROCESS Most people are wary of meeting strangers. However, a simple phone call is generally not an issue. So, start with that. After messaging a new connection and building up a conversation, try moving to the phone. Here’s a script: “Hey, it’s been great messaging you on here. Would you like to hop on a 15-minute call to see how we can pass business to each other?” If they say yes, great! Set up a time on your calendar (I use Calendly for scheduling) and get talking. While on the phone, make sure to find out if they’re located near you. If yes, and the conversation is going well, ask them to grab coffee with you. Then, it’s time for a meeting. AT THE MEETING Show up on time. This is probably the most important piece of advice here. Remember that this meeting is a first impression and those last forever. Be there punctually! I’ve met thousands of people over the years and the ones who came late always came across poorly. There’s rarely an excuse 172 | B-TANK | DECEMBER 2018

to be late. Don’t bother making one. Aside from showing up on time, come with questions. Look at their profile to see what they look like, what they do, and who they work with. Then, come up with a few questions that’ll spark potential synergy between you. A bonus tip is to ask open-ended questions that require more than a yes/no answer. This keeps the discussion flowing. Keep the conversation light and listen more than you speak. Be polite and professional. If you want to be classy, offer to buy the drinks. Take notes and ask follow-up questions. Bring a business card or brochure to show more. Find topics you both enjoy chatting about. Above all, have fun! The meeting will fly by.

FOLLOWING UP After you wrap up, it’ll be time to say goodbye. Exchange cards or email addresses and then, follow up! Send a short email or text the next day and thank them for coming out. Remind them you’re available if they have questions and offer to make connections for them. The more you offer to help, the more memorable you’ll be. And when they need someone to work with? Your name will be at the top of that list. That’s the power of in-person meetings. And that’s why you should try to set more of them. RECAP Use LinkedIn to build your online network. Then, work on taking it offline. Start with setting a quick phone call and then ask for the meeting. Once you sit down with them, listen and ask to learn more about what they do. Then, follow up to stay memorable. Happy meetings!  Eli Hochberg is an IdeaMaker at his consulting company, ELiVATED Systems. He volunteers as a Baltimore City Police Chaplain and is fueled by ADHD plus a constant desire to help others.

B Connected

SHADOWBIZ SNIPPETS I like to shadow successful people and ask for their best business advice. Here are some snippets:

“Don’t be afraid to ask for the business.”

Debi Howard Consultant, DH Marketing Group

“Always do the right thing, never blow your reputation for a short-term sale.” Shaun Hervey Recruiter, Hervey Consulting

“Make sure the business is founded on a meaningful purpose/ mission, and make sure everyone on the team has absolute clarity on what that is.” Yisrael Friedenberg Copywriter, Freelance

“Focus on what works. Too many organizations become paralyzed trying to keep up and do everything. Be realistic with your resources (budget and people) and grow that way vs. looking at what everyone is saying.” Sean Hulin Marketing Consultant, CMG Agency

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BR Guest Funding, LLC Funding

Breindy Dreyfuss Kew Gardens Hills New York 11367 347-670-0914 Breindy@BRGuestFunding.com www.BRGuestBusinessFunding.com

Asher New York

Marcy's & The Boys Club

Apparel

Asher K 1557 E 21St St Brooklyn NY 11210 info@ashernewyork.com www.ashernewyork.com

Full service funding specialist. Our funding sources specialize in all forms of financing: Line of Credit, SBA, Term Loans, Equipment, All Real Estate & Construction

Apparel

Asher New York features a quality selection of the brands you know at prices you'll love. It's the Asher difference.

Akiva Spitzer, CPA

Avrumi Werner 7 Fillmore Ave Lakewood Township NJ 08701

(732) 987-5100 info@marcyclothing.com

Marcyâ&#x20AC;&#x2122;s specializes in elegant, tailored, and classic clothing for men and boys. We have high end formal, business, and daily attire.

Daffodil Childerns Accessories

Accounting

Apparel

Akiva Spitzer, CPA 74 Herrick Ave 202 Spring Valley NY 10977

Full Accounting Services

Leiby Katz 1231 43Rd St Brooklyn NY 11219

(845) 356-0063 akiva@akivaspitzer.com www.akivaspitzer.com

(718) 972-1919 orders@daffodilny.com

Joel Fried CPA P.C.

High End Watches & Jewelry

Accounting

We are a childrens hosiery, accessories, and clothing store.

Apparel

Joel Fried 61-B South 8Th St. Apt. # 2-E Brooklyn NY 11249

(718) 513-9634 joel@jfriedcpa.com www.jfriedcpa.com

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Business advisory and accounting

Menny Hazan 742 Montgomery St C6 Brooklyn NY 11213 (718) 753-0503 Doroluxury@gmail.com

We sell all high end watches, diamonds and custom jewelry.

Maven Software Solutions Technology

Efraim Wachsman 21 New County Rd Airmont NY 10952 (845) 445-7300 info@mavensoftwaresolutions.com www.mavensoftwaresolutions.com

Fair Capital

Joshua Kohen, CPA P.C. Accounting

Joshua Kohen 23 Robert Pitt Dr Suite 102-F Monsey NY 10952

B2B

Tax Accounting & Advisory

(845) 517-4250 info@kohencpa.com www.kohencpa.com

F5 Web Solutions B2B

We save you time, money and sanity by building you a custom software to automate, integrate and standardize your business processes. Build it once.

Avigdor Grunwald 29 Bush La Spring Valley NY 10977

Debt Collection Agency

(845) 832-8880 info@thefaircapital.com www.thefaircapital.com

WEB Solutions Refresh | Redesign | Recreate

VOM - Virtual Office Management B2B

Joel Deutsch 57 Lorimer St Apt 1-C Brooklyn NY 11206 (607) 699-9635 Joel@f5websolutions.com www.f5websolutions.com/

We help you employ and communicate with full-time web developers, data entry, web designers, etc. from India based on your needs.

FMD Business Solutions Inc Mayer Drummer (845) 238-9400 info@fmdbusiness.com www.fmdbusiness.com

(845) 425-4555 info@vomonline.com www.vomonline.com

Professional Bookkeeping Company Cash Flow Management - Cleanups. "We mind your numbers - so you can mind your business."

Fingercheck B2B

B2B

Po Box 363 Harriman NY 10926

Hersh Leifer Leifer 4 Louis Ave Monsey NY 10952

QuickBooks setup & training, bookkeeping, payroll, sales tax, amazon settlement program.

Isaac Mittelman 1000 Gates Ave Brooklyn NY 11221 (800) 610-9501 ext. 510 info@fingercheck.com www.fingercheck.com

Fingercheck is an all-in-one HR software solutions company, offering payroll, time & attendance, onboarding, payroll finance, and much more.

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Empire Fire Solutions fire solutions

COMPLETE LINE OF FIRE EXTINGUISHERS

Israel Silberstein 1402 43Rd St Brooklyn NY 11219 (347) 413-8332 empirefiresolutions@gmail.com

We provide SAME DAY new SERVICE extinguishers Sales & Service To All Boros and service older ones. specilatizing in

CONSTRUCTION SITES

Complete Extinguisher Refilling Plant Violations Removed

Fire Hose

CO2 Beverage Refillintg

718.395.7060

Licensed by NYC Fire Dept

F: 347.413.8332 E: EmpireFireSolutions@gmail.com

Logicfold

Fidelity Payment Services

B2B

Zev Grunsweig 1424 42Nd St Brooklyn NY 11219 (718) 301-0263 info@logicfold.com www.logicfold.com

B2B

Salesforce Implementation Partner. Building and customizing software to help you run your business

Imperial Advisory

52 Spruce St West Hempstead NY 11552 (845) 519-4726 gershon@imperialgrp.com www.imperialgrp.com

Merchant Services

(845) 351-8610 shiakgroup@fidelitypayment.com www.fidelitypayment.com

Newhomerebate.Ca

B2B

Gershon Morgulis

Shia Klein 16 Country Hollow Woodbury NY 10930

Construction

As your Business Philosopher and parttime CFO/consultant, I will help upgrade your analytics and ensure your business makes better financial decisions.

Virtual Security

Dovid Lando 86 Fairholme Ave Toronto Ontario M6B 2W6 (416) 671-7258 info@newhomerebate.ca www.newhomerebate.ca

HST Sales Tax rebates for qualifying people who rebuild or remodel their homes

Impactful Coaching & Consulting

Construction

Consulting

Nechemia Polansky 483 Oak Glen Rd Howell NJ 07731 (732) 444-8880 ext. 103 Nechemia@virtualsecurityus.com www.virtualsecurityus.com

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We use the latest technology to integrate and monitor your whole property, providing peace of mind to property owners nationwide.

Naphtali Hoff 127 Aycrigg Ave Passaic NJ 07055 (212) 470-6139 info@impactfulcoaching.com www.impactfulcoaching.com

We work with understaffed entrepreneurs and small businesses to identify their challenges, goals, and the breakthrough actions that will lead to their success.

Keep n Kool Inc HVAC

Nathan Apfelbaum 79 Parkville Ave Brooklyn NY 11230 (718) 853-1001 keepnkoolinc@aol.com

Rollerwall LLC

Rafirosenberg.com

Construction

saul elbaum 11924 Gainsborough Rd, Rockville Potomac MD 20854

(301) 838-0450 saulelbaum@gmail.com www.rollerwall.com

"We are a Full-Service Commercial Hvac and Refrigeration company. We offer Great Quick and Affordable services

Consulting

With Rollerwall you can choose from 100s of patterns to paint beautiful walls that look like just wallpaper. Applies easily and within 20 minutes to any wall.

Perfect Estimates

Rafi Rosenberg 17100 Ne 19Th Ave C2 North Miami Beach FL 33162

(786) 514-3464 rafi@rafirosenberg.com www.rafirosenberg.com

I help people focus on what they need to do and love to do, by planning & executing digital strategies around clear goals.

Cyber Insurance Experts.com

Construction

Consulting

Shia Gluck 141 Division Ave 3-R Brooklyn NY 11211 (347) 572-3139 shia@perfectestimates.com

Complete takeoffs for construction companies and all your architectural plans including drywall and framing, interior and exterior, flooring, insulation, etc.

Boutique Seller Services Joel Wolh (732) 523-1102 info@boutiqueseller.com www.boutiqueseller.com/

(845) 302-1600 Service@CyberInsuranceExperts.com www.cyberinsuranceexperts.com

Fat Owls E-Commerce

E-Commerce

149 Newington Ln Toms River NJ 08755

Shaye Blumenberg 873 Route 45 Suite 202B New City NY 10956

We manage sponsored ads, create content, product-photography and video, amazon bookkeeping, consulting, product sales and more. Less talk. More work.

Eli Hefter 2805 Bartol Ave Baltimore MD 21209 (410) 985-1330 eli@fatowls.com

We help businesses get proper insurance coverage for financial losses occurred by Cyber Attacks or Data Breaches. Contact us for a free 15 min consultation.

FAT OWLS We sell Health and Beauty, office supplies, grocery, Home and Kitchen, Pet, Clothing, Toys, and Baby categories through Amazon (retail and wholesale).

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Supportive HR

Moxie Bookkeeping And Coaching Inc

Consulting

Barry Ackerman 43 Joseph Ave Staten Island NY 10314-5013

(917) 791-0801 barry@supportivehr.com

Provide HR services to companies of all sizes.

Brunner Consulting Usher Brunner (718) 431-0101 info@brunnerconsultinginc.com www.brunnerconsultinginc.com

Our experts help you evaluate your business's everything from finances to company structure and more. We'll promote your strengths and eliminate weak areas.

(732) 930-5871 Office@ProfoundBusiness.com www.securetechnyc.com

We help our clients strategize and plan in all areas of marketing & communication, portraying their products and services properly and creatively.

32472236655 info@gingertipple.com www.gingertipple.com

Kosher for Passover & Gluten-free brewer of beers.

(347) 255-0071 support@skycaremedia.com www.skycaremedia.com

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Avigdor Ehrenfeld 1650 45Th St Brooklyn NY 11204 (718) 854-3820 parkvillefood@gmail.com www.parkvillefoodcenter.com

Full Service agency for private label Amazon sellers.

Ehrenfeld's

Food Center

Grocery with exceptional customer service.

Feigin And Fridman LLC

Health Care Rehabilitation

Judah Gutwein

(424) 269-5478 Info@bestsellerlisters.com www.bestsellerlisters.com

Food

Sky Care Media

149 South Pkwy Clifton NJ 07014

mac schlesinger 2 Milrose Ln Monsey NY 10952

Parkviile Food Center

Food

Sint-Thomasstraat 51 Antwerpen Vlaanderen 2018

info@alifavorites.com www.alifavorites.com

An online marketplace to find all the greatest deals.

E-Commerce

Ginger Tipple Jeremy Sulzbacher

Chaim Frankel 5100 15Th Ave #6O Brooklyn NY 11219

Best Seller Listers

Consulting

Y. H. (Izzy) Levovitz

(347) 414-8286 ext. 407 tracy@moxiebookkeeping.com www.moxiebusiness.com

E-Commerce

Profound Business

1072 Madison Ave Lakewood Township NJ 08701

147 Prince St Suite 311 Brooklyn NY 11201

We provide accurate, reliable, full-charge bookkeeping so you can focus on your business. We understand your bookkeeping and leave it better than we found it!

Ali Favorites

Consulting

3611 14Th Ave Suite 555 Brooklyn NY 11218

Tracy Stanfield

Legal Services

We are a full service digital marketing firm specializing in the Healthcare industry.

Moshe/Michael Feigin 1037 Us-46 #107 Clifton NJ 07013 (973) 685-5280 michael@PatentLawNY.com

Patent and Trademark Attorney

Smartsimcha.Com

Chaim Krausz Design Marketing / Design

Hospitality

yechiel zidell 1380 North Ave Apt 422 Elizabeth NJ 07208

mylabelssupport@gmail.com www.smartsimcha.com

Smart Simcha is an online system that manages all the guest info for any type of simcha. We also provide custom, personalized invitations for each guest.

Trumper Insurance Asher Grossman (845) 356-1899 jay@trumperinsurance.com www.trumperinsurance.com

You’re in better hands! All forms of P&C Insurance.

(201) 222-3100 support@aboveflood.com www.aboveflood.com

david konigsberg 418 Clifton Ave Lakewood Township NJ 08701

Branding and Ads with message.

(732) 987-7700 Brandhero@getot.com

Optimal Targeting

Insurance

Davey Seidenfeld

(347) 578-4646 orange@chaimkrauszdesign.com www.chaimkrauszdesign.com

Marketing / Design

Above Flood Zones

1325 59Th St Brooklyn NY 11219

Lemme o'range it for you.

Brand Hero

Insurance

Pobox 913 Monsey NY 10952

Chaim Krausz 1227 43Rd Street #3 Brooklyn NY 11219

Marketing / Design

Remove the lender's requirement to buy flood insurance.

david konigsberg 12 Hillridge Pl Lakewood Township NJ 08701

Digital Marketing Agency

(732) 987-7700 david@optimaltargeting.com

Smartpay Payroll

Mark Weisz Graphics And Design LLC

Payroll Service

Marketing / Design

Mark Weisz 84 Finchley Blvd Lakewood Township NJ 08701

(973) 815-5200 mark@markweisz.com www.markweisz.com

We help our clients leverage the power of marketing their brand. Simply put, we create packaging that works.

Bizbuzz Promos

Good To Go Shipping / Freight

Retail

Efraim Miller 4509 14Th Avenue Suite 1 Brooklyn NY 11219

(718) 705-7733 sales@bizbuzzpromos.com www.bizbuzzpromos.com

Yossi Hettleman 250 Cedar Bridge Ave Suite 280 Lakewood Township NJ 08701 (732) 987-3996 info@smartpaynj.com www.smartpaynj.com

BizBuzz Promos provides printed promotional items, such as pens, mugs, t-shirts, and virtually anything else you can imagine.

Amrom Einhorm 4313 15Th Avenue Brooklyn NY 11219 (718) 484-0885 goodtogoez@gmail.com

SmartPay provides everything you’ll need for your payroll – direct deposit, tax management, unlimited payroll runs and more.

GOOD TO GO Shipping, Receiving, and Packaging for Amazon businesses.

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Goldstar Design

Eastern Equity Advisors Real Estate

Marketing / Design our passion, your success.

Shea Stern 5415 19Th Ave Brooklyn NY 11204

Product & Packaging Designer

Boruch Mandel 222 Carol St Lakewood Township NJ 08701

(718) 972-3262 goldstard@gmail.com @goldstardesignny

(732) 552-4661 bmandel@easterneq.com www.easterneq.com

Optimal Targeting

Marcus & Millichap Real Estate

Marketing / Design

David Konigsberg 418 Clifton Ave Suite 100 Lakewood Township NJ 08701 (732) 987-7700 info@optimaltargeting.com

Gleam N Clean LLC Office

Shaya Moskowitz 61 S Clover St Lakewood Township NJ 08701

(718) 887-5892 shaya@gleamncleannj.com

Fancy Inc Retail

Arthur Zelenkov 1996 Ocean Ave Brooklyn NY 11230 (718) 759-7824 info@furnitureassemblynyc.con www.furnitureassemblynyc.com

We are a full-scale Marketing Agency, geared towards meeting any and all of our clients marketing needs.

GLEAM N CLEAN LLC We specialize in janitorial and commerical cleaning, our goal is to have gleaming results. Our reputation is spotless.

FANCY INC We provide full service in the furniture industry. We receive, deliver, and install furniture.

The Travel Store Moshe Mittelman (718) 218-8489 mail@thetravelstores.ocm www.thetravelstores.com

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Chez Eider 2 Rudi G Way Lakewood NJ 08701

New Jersey Multifamily Real Estate

(201) 742-6177 chez.eider@MarcusMillichap.com www.marcusmillichap.com

Citadel Holdings Real Estate

Dovid Preil 15 Ha-Kfir St Apt 2 Giv'At Ze'Ev Israel (201) 357-7656 dovid@citadelholdings.co.il ww.citadelholdings.co.il

Invest in carefully vetted Commercial US real estate in $20,000 increments.

Simple Forwarding Inc Shipping / Freight

Abraham Orgel 14 Zenta Rd 112 Kiryas Joel NY 10950 (212) 203-5575 sales@simpleforwarding.com www.simpleforwarding.com

We do international shipping by air and sea. We ship from the manufacturing warehouse to the final point of destination (including Amazon FBA).

New York Fulfillments Shipping / Freight

Retail

908 Driggs Avenue Brooklyn NY 11211

Equity raises for commercial real estate.

Luggage, Bags, Travel Accessories & Beyond - Free Same Day Delivery in NYC

JOEL STERN 320 State Route 208 Unit 12 Monroe NY 10950

(845) 782-2301 Info@newyorkfulfillments.com www.newyorkfulfillments.com

Full service thirdparty logistics warehouse & distribution company.

Accentuations Kallah Furniture

Qualmax Supplies

ualmax supplies

Supplies

Retail

Yocheved Youngewirth 1501 60Th St Brooklyn NY 11219 (718) 972-2300 ACCENTUATIONSBYDESIGN@GMAIL.COM

We help Kallahs furnish their dream homes by providing affordable package deals for dining rooms and bedrooms.

(917) 826-0348 MR@Qualmaxsupplies.com www.qualmaxsupplies.com

Travel

Supplies

Joe Tober

Wood Crafts Manufacturer

Avigder Pinkesz (845) 371-8400 SALES@STARLITTRAVEL.COM

Secure Tech

Get Peyd Travel

Technology

1528 51St St Brooklyn NY 11219 (347) 294-5665 info@securetechnyc.com

Travel Agency. We get you from here to there.

7 Perlman Dr Spring Valley NY 10977

(732) 363-4077 woodpeckerscrafts@gmail.com

Yonah Weinstock

We Sell Janitorial Supplies and Paper Goods.

Starlit Travel

Woodpeckers Crafts

894 Bethel Church Rd Jackson NJ 08527

Moishe Rosenberg 103 Arlington Ave Lakewood Township NJ 08701

We specialize in the planning, implementation, and maintenance of all the IT infrastructure needs for small to medium-sized businesses.

We help customers navigate the credit card industry by advising them on all related matters and redeeming their rewards points from various reward programs.

Eli Schreiber

600 Bayview Ave Inwood NY 11096

(646) 801-7393 (PEYD) info@getpeyd.com www.getpeyd.com

Miles Cashing Inc. Travel

Avi Kahan 279 Rutledge St Brooklyn NY 11211 (212) 260-2274 Gelt@MilesCashing.com www.milescashing.com

Buying airline miles and credit card points , selling up to 70% off business class airline tickets

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E R U T P CA THE ! W O W

Business Moments that Inspire.

A day before the Mega Millions $1.6 Billion lottery drawing, my employer handed this out to all of us at Royal Image. While none of us ended up winning the big bucks, we sure won the feeling of appreciation.

Noticed an exemplary business practice? Were you made to feel like a valued client? Want to name an employee who outdid himself? Send your Snapshot Moment to wow@btankmoguls.com. All submissions should include photo, anecdote, and contact information. 182 | B-TANK | DECEMBER 2018

Credits: Art & Story by Yoel Judowitz / YJ Studios team

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fast Secure trusted Fidelity is the leading payments company in our community* *Find out why at TheresAReasonWhy.com

1.877.847.2555 save@ﬁdelitypayment.com www.theresareasonwhy.com

With Fidelity, what you see is what you get. It’s the reason our fine print isn’t real fine print.