Latin American Trade”>Latin American Trade
Russ Berrie’s Teddy Bear Philanthropy
Corrections or additions?
Survival Guide
These articles by Peter J. Mladineo and Barbara Fox were published
in U.S. 1 Newspaper on May 13, 1998. All rights reserved.
Jersey Boy Bruce Springsteen sang “Born to
Run.” Texan Lyle Lovett crooned, “That’s right, you’re
not from Texas/ But Texas wants you anyway.” They might as well
have been singing about high-tech venture capital, says Edward
Rosen, a high-tech entrepreneur. Once an oil baron’s paradise,
Texas has since become attractive to high-tech entrepreneurs because
of its tech-savvy venture capitalists, Rosen reports.
New Jersey, meanwhile, is a model of high-tech underachievement, he
adds. Once a hotbed for inventors, it now resembles a wasteland of
missed high-tech opportunities. Most of the “new” in New Jersey
has to do with new megastores, new highway construction, new sports
stadiums maybe — not new high-tech successes. Indeed, New Jersey-bred
entrepreneurs are born to run — to tech-friendly states like California,
Massachusetts, or Texas.
The problem, Rosen reasons, is that New Jersey venture capitalists
are more interested in maximizing returns than in helping New Jersey
become a more fertile ground for seed-stage entrepreneurs. “As
I look around the state I see a scattered number of venture capitalists
and they are not really interested in entrepreneurs with early-stage
technology,” he says. “They are really looking for mature
companies that are still private that they can get an equity position
in just before they go public.”
The root of the problem, Rosen says, is in the attitudes of the venture
capitalists. “The venture capitalists on the west coast are high-tech
people,” he says. “The people here are not high-tech. They’re
good marketing people, they’re good financial people — but people
out west have had a great deal of experience commercializing technology.
The New Jersey venture capitalists are defensive and want to play
it safe.”
While plenty of Princeton area venture capitalists would argue they
are the exception to that generalization (and point to a 1997 survey
that showed New Jersey ranking fifth in venture capital deals, up
from 10th in the prior year), Rosen charges on with his belief that
investors in the Garden State are more likely to invest in more mature
companies. “We have to cover the vacuum left by people who call
themselves venture capitalists who are really only interested in investing
in mezzanine companies,” he says.
Rosen speaks at the Venture Association of New Jersey, on Tuesday,
May 19, at 11:30 a.m. at Governor Morris Hotel in Morristown. Call
973-267-4200.
His speech, “Can New Jersey Become the New Silicon Valley?”
is more of a challenge than a question. “I’m angry because I think
New Jersey can do much, much better,” says Rosen. “More research
is done by more corporations in New Jersey than other states, yet
most of the entrepreneurs take their business to other states where
they have an easier time finding capital. New Jersey doesn’t have
a good reputation for high-tech and we’re not getting any better at
it.”
Last year Stuart Leslie, a Johns Hopkins University history of science
professor, gave a similar talk to Princeton University’s POEM Center,
“Why Silicon Valley is Not in New Jersey” (U.S. 1, March 12,
1997). Spinoffs from major New Jersey corporations, he said, often
leave the state because it is difficult to grow under the shadow of
their respective parents. “I think that they found a better climate
both literally and figuratively in California and Texas, where there
seemed to be room to grow and they were part of a network with companies
like themselves,” said Leslie.
But this too might be changing — Sarnoff’s website, for instance,
has several links to Sarnoff spinoffs. And if it’s any indication,
Leslie noted a trend where some Japanese high-tech firms were opening
offices in Silicon Valley and New Jersey.
Rosen, 60, has built two successful technology firms in New Jersey.
Leaving a career at Xerox in 1972, he co-founded Vydec in Florham
Park. This firm made daisy-wheel-based word processors and was heavily
reliant on venture capital to grow. Unfortunately, Rosen had to look
outside of New Jersey to find that capital. “I would try to get
people from the state to come and visit us,” he says. “No
one paid any attention.” Rosen was able to raise capital from
several venture capital firms in places like California, but ran into
problems when Exxon took a majority interest in the company as part
of its short-lived foray into the office products market in the late
’70s. When Rosen left, Vydec had grown to be a $100 million firm with
1,200 employees.
In 1979 Rosen started a Denville-based firm, Ziyad, which made dual-tray
sheet feeders for stand-alone word processors. Rosen kept a controlling
interest and in 1983 it did a $20 million public offering, underwritten
by Hambrecht & Quist. The firm was eventually sold to a competitor.
Rosen reserves some of his criticism for New Jersey’s small business
incubators. While they usually have good intentions, they often lack
staff with experience building a company or commercializing a technology.
“By and large incubators have done a nice job but they’re really
the stepchild of the state,” he explains. “They’re doing it
mostly because they’re supporting the universities — not because
they’re supporting the technologies.”
But Rosen is perhaps most critical of New Jersey’s pension fund, which
eschews venture capital investments. “New Jersey is one of half
a dozen states that doesn’t invest in venture capital,” he says.
“Everybody in the world knows you get a better return on venture
capital than you do on bonds.”
There is some hope, though. Despite its past failures New Jersey still
has a sizable roster of large research bulwarks like Lucent Technologies,
AT&T, and Sarnoff Corporation. These large research companies have
traditionally been very protective of their research, Rosen reports.
“We’re not absent the R&D effort, but we’re absent the spinoff
aspect of that R&D,” he says.
— Peter J. Mladineo
As information technology makes businesses processes
more efficient, the concept of billable hours may be in for a significant
revamp as well. For consultants, the concept of physical work versus
virtual work is sure to fire up pricing debates everywhere, says Hubert
Kostal, a manager of data networking offers at Lucent Technologies
in Holmdel.
“A lot of the things you use as a consultant are no longer generated
from scratch for each and every customer,” he says. “Therefore,
as you are working for a client, you have the opportunity to start
much farther along. The question is, how much should a new client
pay for all the old information in the database? It’s the difference
between actual physical hours spent with the customer versus virtual
hours.”
The overarching question is, if technology streamlines processes and
thereby reduces the amount of billable hours, should less money be
charged for those tasks? “Because we have the capability to keep
things in electronic form we actually have to think about changing
the definition of billable hours,” says Kostal. “I don’t think
the debate is decided.
He speaks at the Institute of Management Consultants on Monday, May
18, at 6 p.m. at the Forrestal. Call 732-972-0549. “I’m really
coming at the billable hour issue from two different directions,”
he says. “One is reducing the amount of time needed for non-billable
activities and the other is to look at how you can essentially use
technology to create and support this reservoir of results.”
The amount of cost-cutting that small consulting firms can do using
new technologies is truly phenomenal, Kostal reports. “Right now
there are capabilities that you can put on a desktop or laptop PC
that give you the same sort of telecommunications support that in
the past would have required hundreds of thousands of dollars,”
says Kostal.
This discussion could redefine the value of experience and knowledge.
Kostal compares it to hiring a plumber: A $100-an-hour plumber is
called in to fix a leaky pipe, finishes the job in ten minutes and
charges for the full hour. The extra 50 minutes charged is justified
by the plumber’s knowledge.
But for a small consulting company, justifying the same fees for less
actual work could prove to be a more difficult task. One alternative
is to charge by-the-job rates: Kostal predicts that there may be an
erosion of contracts that call for hourly charges. “From one perspective
customers are wanting to pay for and consultants are wanting to bill
for specific results. You will pay me for that regardless of how many
hours I work — and I think there’s a desire to move towards that
for a lot of customers,” he says.
But in some cases it may be hard to define the exact results for a
given project. In other cases the project may have only yielded partial
results. Thus, keeping billable hours may be a necessary back-up to
ensure payment, Kostal explains. For example, someone hires an attorney
to fight a speeding ticket and the attorney only manages to get the
fine reduced. The attorney might need a record of hours worked to
justify a bill. “A lot of people are still using billable hours
so you can write that down on a timesheet and Boom! `Here it is, I
spent this much time.'”
— Peter J. Mladineo
Top Of PageBureaucracy vs. Art
Toiling in a bureaucracy is the very opposite of being
an artist, says Rebecca Reynolds, who is both a poet and the
assistant director of the honors program at Rutgers Douglass College.
“Being an administrator means that you are doing several jobs
at once and pulled in a lot of different directions. All day long
I am constantly attuned to other people’s needs — the deans, the
students, the parents — and am trying to take care of other people,”
says Reynolds. In contrast, “when I make a poem, I need solitude,
to reclaim an inwardness, to focus on what I am thinking and feeling.”
Reynolds will speak on Monday, May 18, at “Women and the Arts,”
a conference sponsored by the Rutgers Institute for Research on Women
at the Douglass College student center. The conference runs from 8:30
to 5 p.m. and will have panels ranging from gender and arts education,
career opportunities, and art world economics, to women and folk art,
and the arts as a medium of feminist social critique.
For instance, a panel on women and new media at 1:15 p.m. features
Tina LaPorta of Ars Electronics’s Future Lab, Kathy Brew,
producer, Thundergulch; Rachel Greene, editor, Rhizome Communications,
Robin Masi, founder of Feminist Art History Listserve, and Theresa
Senft, a performance artist.
Reynolds will be on a 2:45 p.m. panel entitled “Working Women
Artists within Institutions” along with her sister Leah (a sculptor
and mother), Tina Maschi (a musician and prison social worker) and
Gail Holy (a visual artist and returning student). For $30 registration
call 732-932-9072.
A native of Washington., D.C., Reynolds majored in English at Vassar,
Class of 1984, and has master’s degrees from Rutgers and the University
of Michigan. In addition to her administrative job at Douglass College
she also teaches courses in creative and expository writing and an
introductory course in Women, Culture, and Society.
Her administrative job involves recruitment and lots of paperwork,
but she has leavened her duties and turned her job into something
more sympathetic to her interests. “I chose to take on a lot of
advising and student interaction that sometimes is pretty exhausting,”
says Reynolds. “But those are the things that keep me intellectually
interested at work.”
B>Steve Gross combines his work with his art by
promising to play his violin for guests at his firm’s party. DevCom,
his marketing communications firm that specializes in the healthcare
industry, is having an open house at 114 Main Street in Kingston on
Friday, May 15, at 6:15 p.m. In 1982 Gross started DevCom in Paoli,
Pennsylvania. He moved to the Carnegie Center in 1993, and then to
the two-building Kingston property that he has renovated (U.S. 1,
March 25).
For some conditions (edema and arthritis, for example) Gross has invented
a diagnostic gadget and sold the trademarked invention to a drug company
to be used as a marketing tool. For the makers of DHA (a little known
food additive for infants), he helped found an organization named
“Pregnant Physicians for DHA” that could speak out for adding
docosahexaenoic acid to the diets of infants and nursing mothers.
A serious violinist, Gross is vice president of the Princeton Music
Club and on Friday will perform 15 minutes of selections ranging from
Mozart to a jazz/classical version of “Cheek to Cheek.” For
information on DevCom call 609-924-4666 or E-mail DevCom@adv.com.
On Route 1, an `Absolute Auction’
Big commercial real estate auctions are rare in Princeton.
Even more rare are those that have no minimum bid. More unusual still
are those that can come with a liquor license. Princeton’s next big
commercial real estate auction, on Wednesday, May 20, at 1:30 p.m.,
will sell 23 acres on Brunswick Pike at “absolute auction”
with no minimum bid and no reserve.
Go to this one, and you just may meet the developer of this area’s
next hotel or restaurant. Why? Because the auctioneers just announced
that an arrangement has been negotiated with Robert Zylstra, owner
of the Marroe Inn, which sits on one of the parcels. Zylstra will
put the inn’s liquor license up for reserve auction following the
real estate sale. Only the buyers of the real estate would be permitted
to bid on the liquor license, and the minimum bid will be $300,000.
A possible conclusion: That somebody hoping to build a restaurant
or a hotel on this land hopes to be among the bidders and is pressuring
the owners.
“If Zylstra is able to get his price, the license enhances the
potential value of the real estate,” says Ron Hurford of Traiman
Real Estate Auctions, “for someone who wanted to build a hotel
or a restaurant serving alcoholic beverages. The owners were trying
to allay concerns of buyers that they would have to go into the market
for the liquor license.” The license would also be transferable
to another location.
The property is the former site of Heineman Electric on Brunswick
Pike next to Greenfield Dodge. The owner is Lawrence Holdings Inc.,
formed to manage and eventually dispose of the holdings of Heinemann
Electric, a manufacturer of hydraulic magnetic circuit breakers, which
was bought by Eaton Corporation.
In 1990 Steven L. Burack, president of the family-owned firm, moved
manufacturing operations from 2630 Brunswick Pike to Maryland’s Eastern
Shore (U.S. 1, December 8, 1993). The family firm’s longtime secretary,
Louise Schloenbach, remained with Lawrence Holdings, the caretaker
company for the remaining assets, including the 40 acre property.
Heinemann was bought by Cleveland-based Eaton in 1992.
Eaton did not buy the real estate, so the land was subdivided
into three parcels. Parker Communications Group bought the Heineman
building with about 12 acres, leaving 23 acres. Buschman Jackson Cross
most recently marketed the property. The first parcel to be auctioned
has 1,000 feet of frontage on Route 1 and has no improvements. The
second parcel, adjoining Greenfield Dodge, has the Marroe Inn as a
tenant, subject to a month-to-month lease.
The buyer is assuming a risk as to the use of the property because
the sale is not contingent on approvals. However, the buyer assumes
no risk as to the environmental liability. A clause allows the buyer
to have the property tested, and the owner would be responsible for
any deficiencies.
“Our firm has been doing this since 1924 and there is no minimum
opening bid and no reserve so it is extremely difficult to predict.
There haven’t been any recent appraisals,” says Hurford. A Princeton
native, he went to Wagner College, Class of 1968, and is senior vice
president of Traiman Real Estate. His wife, Lee, is a craftsperson
who owns a natural fiber yarn shop Glenmarle Woolworks, located at
Terhune Orchards.
Hurford suggests that the land could fetch about $10,000 per acre
or a total of from $1.5 to $2 million. Still, for retail use, the
location is not convenient to southbound travelers, who would have
to go down to Texas Avenue for a jughandle. But as Hurford says, “As
these parcels are sold, there is a finite number of them, and the
lack of a traffic light becomes less significant.”
To bid you need a $50,000 cashier’s check but the auction is free,
promises to be a good show, and is expected to last just 30 minutes.
Doug Clemens will be the auctioneer. “The interest has been encouraging,
although everyone is playing their cards close to the vest,” says
Hurford. “The buyer might be anyone from a next door neighbor
to someone out of the country.” Call 215-545-4503 for information.
— Barbara Fox
What New Jersey industry would be ideal for an international
trade conference geared to attract all kinds of high powered executives?
If you guessed telecommunications, you agree with the professors at
Rutgers Center for Business Education and Research.
“Global Competition in the Telecommunications Industry” is
the topic for an international trade conference co-sponsored by Bell
Atlantic and Lucent Technologies. Set for Thursday, May 21, from 8
a.m. to 5 p.m. at the Newark Airport Sheraton, the conference costs
$250. Call 973-353-5533 for reservations or E-mail: hkijne@andromeda.rutgers.edu.
“The telecommunications industry has been selected for our conference
because of the dramatic change it is experiencing internally and its
critical impact on virtually all other global businesses,” says
Hugo Kijne, associate director of the CIBER. “The New York/New
Jersey metropolitan area is the major source and destination of global
telecommunications traffic in the United States — on one end of
the most dense transatlantic telecommunications path, with London
on the other end — and is the operating home of some of the key
players in the global economy.”
Marc A. Schweig, vice president of international strategy for
Lucent, will keynote.
“With the help of experts on the four main regions in the world,”
says Kijne, “we will try to analyze how laws and regulations define
opportunities, and how government objectives relate to the strategies
of firms.” Jens Arnbak, chairman OPTA, Netherlands regulatory
organization will represent Europe; Scott Blake Harris of Harris
Wiltshire & Grannis, formerly chief of the FCC international bureau
will cover North America; John Ure, director of the telecommunications
research project of the University of Hong Kong, is the representative
from the Asia, and Calvin Monson, Strategic Policy Research,
will tell about South America.
“Secondly, we will hear the major players,” says Kijne. “Much
has been written about the future shape of their alliances, however,
little is known about how and why particular strategic and organizational
decisions are made in the context of a changing competitive environment.”
Richard Romano, former corporate vice president, government
relations, AT&T, will chair a panel of regional experts.
Also attending: Janna Allgood, international marketing director
of AT&T; Jim Melonas, vice president of international strategy
at Bell Atlantic; Bill Marmon, executive director of ventures
and alliances, MCI Communications; and Donald Hassenbein Sr.,
vice president, Deutsche Telekom North America.
Claire Calandra, senior counsel & executive vice president,
Tyco Submarine Systems, will chair a final panel. John Dunning,
director of Rutgers CIBER; and Richard Langhorne, director,
Rutgers Center for Global Change and Governance, will also participate.
Top Of PageTrade: To Hong Kong
Hong Kong is often referred to as the easiest place
in Asia to do business,” says the brochure for a second important
trade opportunity, the 31st Annual World Trade Conference on Wednesday,
May 20, at 8:15 a.m. at the Birchwood Manor in Whippany, sponsored
by the New Jersey World Trade Council. For $125 reservations call
Dorothy Bergen at 609-989-7888.
Kenneth T. W. Pang, Hong Kong’s commissioner in the United States,
will share the podium with Governor Christine Todd Whitman and
David L. Aaron, undersecretary for international trade for the
United States Department of Commerce.
With the theme “Hong Kong: America’s Business Partner in Asia,”
the speakers will include Harrison Hong-She, managing director
of the emerging market group of GE Capital Asia Pacific, York Liao,
executive director of Varitronix Ltd., and Edward K.Y. Chen,
president of Lingnan College in Hong Kong.
David Tsue, director of the Hong Kong Economic and Trade Office
in New York, Gil Medina, New Jersey’ commerce commissioner,
and Robert P. Evans, New Jersey WTC chairman and partner in
KMPG Peat Marwick will give opening remarks, and Robert D. Ferris,
executive vice president of Ruder Finn, will preside.
Jane Carol Berris, vice president of the National Committee
on U.S.-China Relations, will moderate a panel that includes Dennis
Whalen of KPMG Peat Marwick, Alice Young of Kaye Scholer
et al, David D. Cutting of Standard Charter Bank, and Sharyn
H. Hess of the Export-Import Bank of the U.S.
Located at 216 West State Street in Trenton, the New Jersey World
Trade Council consists of senior representatives of corporations in
the manufacturing, processing, and service industries, along with
professional firms and colleges involved in international commerce.
It says the benefits of doing business in Hong Kong include:
an open economy
a simple and low cost tax system
no foreign exchange controls
no restrictions on repatriation of profits.
This attractive location, the brochure insists, “has beenfurther enhanced by its return to Chinese sovereignty. Hong Kong isa natural gateway for trade and investment into the booming Chinamarket.”Top Of PageLatin American TradeAnother international trade opportunity — afterall, President Clinton did proclaim this World Trade Week — willbe a live videoconference focusing on Latin America on Monday, May18, from 9 a.m. to 2 p.m. at the Pemberton campus of Burlington CountyCollege. It is aimed at export managers, corporate managers of LatinAmerican affairs, vice presidents of international marketing, andtrade organizations.”Contacts to Contracts” is co-sponsored by the Trenton ExportAssistance Center of the federal commerce department on PrincetonPike. Michael Manning of the TEAC and Bernard Dolomonof the college will preside. For $25 registration, including lunch,call 609-894-9311, extension 7373.”Argentina: a SMART Market for U.S. companies” will highlightthe Strategic Marketing Assistance and Research Team from the BuenosAires embassy, as presented by Michael Lilkala and AlvaroMendes. Miguel Pardo de Zela and Teresa Wagner willdiscuss trade assistance services for export to Brazil. CarlosPoza and Carlos Capurro of the embassy in Santiago will cover”Chile: Mountains of Opportunities,” telling about the 15years of uninterrupted growth that Chile has enjoyed.Other presenters: Jesse L. White Jr., federal co-chairman ofthe Appalachian Regional Commission, and Daniel McLaughlin deputyassistant secretary of the office of domestic operations, U.S. CommercialService.The videoconference is expected to attract executives from the tristatearea and therefore might be a useful and inexpensive networking opportunityfor jobseekers fluent in Spanish or Portuguese.Top Of PageCorporate AngelsOn May 12 Bristol-Myers Squibb renamed its softballfields in honor of Frank A. Fortune, a B-MS information assistantwho died at age 37 from cancer. Fortune was commissioner of the company’ssoftball league.Top Of PageRuss Berrie’s Teddy Bear PhilanthropyTo Russell Berrie, Alicia Esther Larde Nash, has madea difference. The former wife of the Nobel Prize-winning John ForbesNash Jr., Alicia Nash is one of the finalists for the Russell BerrieFoundation’s “Making a Difference” award, a prize worth $50,000.The foundation will announce the winners at a ceremony at Ramapo Collegeon Wednesday, May 13. Berrie will also be the keynote speaker at theNew Jersey Chamber’s Conference for Small Business on Tuesday, May19, at the Brunswick Hilton. For $60 conference reservations call609-989-7888.Alicia Nash is one of 22 finalists for one of the foundation’s three$50,000 awards. Her story is told in a biography of her husband, “ABeautiful Mind,” written by Sylvie Nasser, excerpted in the currentissue of Vanity Fair, and scheduled to be released in June by Simon& Schuster. Nasser, a New York Times reporter, submitted Alicia’sname to the contest.John Nash went to Carnegie Institute (now Carnegie Mellon) and earnedhis PhD at Princeton, where he had the boldness to schedule a consultingsession with Albert Einstein. At Princeton he came up with his elegantlysimple game theory that eventually formed the basis for modern economicsteachings. Nevertheless, he was not offered a teaching job here, sohe took a position at Massachusetts Institute of Technology.Alicia Nash met him at MIT, where she was a physics major, Class of1955. Born in El Salvador, she came to the United States when shewas 11 years old, went to Marymount High School in New York City.She fell in love with her professor and they were married, had a sonin 1959, and in 1960 came to Princeton. Then it developed that JohnNash suffered from schizophrenia. Though he and Alicia divorced, Aliciais credited with helping to save his life, and to help him and theirson (also diagnosed with schizophrenia) to make a better life. PrincetonUniversity provided a job and an office, and after the passage ofthree decades, John Nash did get the recognition he deserved, theNobel Prize.”I stood by, of course,” she says. “Sometimes illnessis part of things. I was able to help him in supportive ways. Youtake it day by day. You really can’t let up, because if you do youare just gone.””I am proud and honored to name her as one of this year’s finalists,”says Berrie. “Her efforts are truly making a difference.”Berrie’s firm, the Oakland-based Russ Berrie & Company, designs, develops,and distributes more than 7,000 seasonal and everyday gift products– everything from teddy bears to figurines — to independentretailers nationwide.Teddy bears have been so profitable that their maker has become aphilanthropist. In February Fortune Magazine listed Berrie as Number34 on its list of the Forty Most Generous Americans. After the FortuneList came out, he says he received “an awful lot of letters frompeople asking me to be generous.” He insists that the lovablenessof teddy bears did not inspire the philanthropy. “I don’t thinkthere is anything about my particular business other than that ourproducts bring a smile to people’s faces,” says Berrie. “Wedon’t make nuts and bolts. The products we make are warm and cuddly.But the benefits that I’ve derived from the business allowed me todo this.”The foundation (and Berrie emphasizes that he had nothing to do withthe actual choices of finalists or winners) tried to find people whohave given something back to society, either by dedicating their livesor through a sudden act of heroism. So that the sum of $50,000 willbe meaningful to them, wealthy people are disqualified. This the secondyear for this contest, and Berrie says its purpose is “to saythat we can all make a difference, that we don’t have to have millionsof dollars.”Berrie grew up in the Bronx, the son of a salesman who started a smalljewelry findings business. “My parents worked hard all their lives,and they gave the little that they could give. My mother was involvedin charity work. My dad went on one trip to Israel, and gave an orphanagea small kiddie pool. It wasn’t much, but he was so proud of that.They were, and still are, an inspiration to me.””I hope that I am having an impact on other businesses to startthinking positive, that they can make a difference,” he says.”The real people who should be honored are those who work dayin out, thousands of people out there volunteering to spend theirtime. Many people can write a check, but no one has been able to makea 48-hour day.”– Barbara FoxCorrections or additions?This page is published by PrincetonInfo.com— the web site for U.S. 1 Newspaper in Princeton, New Jersey.
