Warren Strugatch

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Cryptocurrency Makes a Home on Long Island

The most important economic story of this century will likely be the rise of cryptocurrency, the digital open ledger exchange system where users, rather than government treasury officials or bankers, determine value and collectively maintain system integrity.

Recent developments, including a Long Island beverage company’s announcement that it would become a blockchain miner, have roiled the market, which tanked early last month. Network pundits, TV financial gurus, big banks and government officials have increasingly raised questions about the dangers of cryptocurrency.

For a few days around Christmas, a struggling Farmingdale beverage manufacturer named Long Island Iced Tea Corp. seized national attention when it changed its name to Long Blockchain Corp. and saw its stock value nearly triple before sinking back to earth.

It was apparently too much for CNN. Declaring “Bitcoin Mania Has Reached a New Level of Insanity,” Money writer Paul R. La Monica compared “the hype surrounding bitcoin and blockchain” with the dotcom boom and bust of the late ’90s.

“Madness,” he railed. “Pure and simple. Long Island Iced Tea is just the latest small company to change its business model in an attempt to latch onto the … cryptocurrency wave.”

The New York Times labeled the move “the most notorious example” of struggling companies who slap “blockchain” to their names and announce improbable cryptocurrency plans.

The actual story is more complicated. It’s also a little juicier. Involved are such names as Jonathan Ledecky, the New York Islanders principal owner; Heidi Klum, the supermodel; Eric Watson, a polo-playing New Zealand playboy rancher; and Kerry Kennedy, one of the late Robert F. Kennedy’s daughters and ex-wife of Gov. Andrew Cuomo.

Long Island Iced Tea’s transformation from beverage company to bitcoin miner began last December. Having reported latest-quarter sales of just $1.6 million, the company’s stock had dropped more than 40 percent, dragging valuation below $35 million. The drop precipitated a Nasdaq delisting warning. A second warning came last month.

The cash-strapped drink maker, which had funded operations primarily through equity sales and borrowing, apparently heeded the warning. Philip Thomas, the company’s hitherto low-profile CEO, decided to raise revenues by going blockchain before he was replaced last month. The company plans to spin off its iced tea subsidiary and focus on blockchain solutions.

The odd saga began in October 2007 when Mr. Ledecky and Mr. Watson, his business partner, raised $550 million in an initial public offering for a financial shell company, Triplecrown Acquisition Corp. The shell then acquired Mr. Watson’s New Zealand dairy farm business, CullenAgricultural Technologies, taking that company public. Six years later the
partners acquired Mr.Thomas’s Long Island Brand Beverages. At this point they changed the company name to Long Island Iced Tea.

Mr. Watson, who’s reported to have a fondness for dating supermodels and throwing extravagant parties, also runs Cullen Investments. As Bloomberg Business News reported,
Cullen is a majority shareholder in Bendon Ltd., a lingerie and swimwear company which employs Heidi Klum as spokesmodel. As for Kerry Kennedy, Bloomberg reported she was a board member of Long Island Iced Tea before resigning in September.

While bitcoin transactions remain unfamiliar processes for most Long Islanders, a number of e-retailers around the world have been accepting cryptocurrency for years. One is Tyler Roye, a veteran Long Island tech entrepreneur and co-founder/CEO of eGifter, an online gift-card market that began accepting bitcoin in 2014.

While opponents raise fears that cryptocurrency transactions are vulnerable to hackers, their advocates insist the opposite is true. Mr. Roye made the cryptocurrency case in an August blog post:

“The low margins and fraud challenges in our business had us looking to add more affordable and secure payment options,” he wrote. “Bitcoin was a great addition as it both reduced transaction costs and delivered sales free of the type of fraud we see in credit card sales.”

Cryptocurrency is not a perfect system; neither is the government-and banker-controlled system that’s prevailed for centuries. What’s certain is that cryptocurrency is not bound by national borders, not restricted by sovereign monetary policies and defiantly not shackled to the demands and fee structures of the banking industry. Governments will likely increase their efforts to regulate, control and tax its usage, and bankers will step up their efforts to maintain their lucrative hold on the world’s transactions.

How successful they will be depends largely on how vocal we are today in support of economic freedom of choice. You can take that to the bank.

Warren Strugatch is a partner at Inflection Point Associates, a consulting firm in Stony Brook. Reach him at [email protected]

For James Hayward, Building Companies is in The DNA

Applied DNA Sciences CEO James Hayward is a leader in the local biotech industry. (Photo by Bob Giglione)

One of Long Island’s leading life-sciences entrepreneurs, James Hayward co-founded Europe’s first liposome company, Biocompatibles Ltd. in the early ’80s; headed worldwide research at Esteé Lauder from 1984 through 1989; then founded The Collaborative Group, a cluster of interconnected companies servicing the biotech, pharmaceutical, and consumer-product industries from 1990 through July 2004.

After selling the company’s assets to Dow Chemical and to a company later acquired by BASF, Dr. Hayward refocused on venture capital investing. In June 2007 he was named chairman, president and CEO of Applied DNA Sciences Inc., a Nasdaq company that uses DNA tagging, testing and manufacturing to reduce counterfeiting and improve supply-chain integrity. Dr. Hayward – the degree is in molecular biology and biophysics from Stony Brook University – serves on the boards of the Stony Brook Foundation, the Research Foundation of the State of New York, and the Long Island Life Sciences Initiative. His longtime base of operations is the Long Island High Technology Incubator at Stony Brook.

Here are edited excerpts from our conversation.

Warren Strugatch: Tell me about your early years.

James Hayward: My family lived in St. Albans, Queens. We owned a small deli-cum general store and lived right behind it. Everyone in the family worked there from the time we could walk. We had the experience of being in the great minority. The neighborhood was undergoing integration, with some reluctance. Being store owners was something of a struggle. Assembling and selling the Sunday newspapers was my job. When the city bus stopped at our corner, I’d hop on with a bag full of newspapers, sell up and down the aisles for five or six stops, then hop off. I’d take the next bus back. I learned to sell face to face and to do the work behind it.

WS: How did your parents influence you?

JH: My dad, Robert, was from England. My mom, Margaret, was from Ireland. Dad ran the store, Mom made the salads. Mom was socially minded and volunteered at nursing homes and Creedmoor State Hospital. As a student, I worked as an orderly at Creedmoor. Both my parents had remarkable work ethics but understood there was more to life than work. When the store finally closed, we’d take out our roller skates and roll up and down the aisles.

WS: What do you consider your strongest business skill?

JH: I’d say it’s choosing my friends wisely. I chose my academic advisors on the basis not only of personal admiration but of friendship. My mentors became friends for life. I was fortunate in that my post-doc advisor in London at the Royal Free Hospital School of Medicine kept a leg in academia and a leg in industry. I learned a lot about business from him.

WS: Unlike some scientist-entrepreneurs, you’ve thrived on the financial and fundraising aspects of business.

JH: What I learned in London, running a company trading on the FTSE [Financial Times Stock Exchange], was that raising funds is a matter of telling a great story with passion. As a result, we had kind of an easy path to initial funding. We spent less time on the road raising money. The old adage about raising money is to do it when you have a prospectus, not when you really need it.

WS: How did working at Esteé Lauder affect you?

JH: Working at Lauder was a great lesson in speed to market. A company like Lauder makes expensive advertising commitments in big-circulation magazines months in advance, sometimes for products in development. As a scientist, you better manage your team so you launch on time. You can’t miss ad deadlines.

WS: Why is the work of Applied DNA Sciences important?

JH: We’re a small company that’s the world’s largest manufacturer of DNA. We use DNA to detect counterfeit products in materials like cotton, currency, pharmaceuticals, and now legally sold cannabis. We catch manufacturers who cheat by diluting and mislabeling their products. We take the evidence to court. So far we’ve had 116 convictions in 116 trials. Our work makes life better for consumers.

WS: Can you describe your business vision?

JH: Our vision is to change the world for the better. By improving large commercial ecosystems and impacting lots of people, we can make the world a more sustainably managed and more truthful place.

WS: What’s your take on your company’s future?

JH: This is a $50 million market-cap company that should be a billion-dollar market-cap company.

Warren Strugatch is a partner at Inflection Point Associates, a consulting firm in Stony Brook. Reach him at [email protected]

Everyone Who Wants a Job Has Got One. True or False?

The regional economy chugged along quietly in 2017, gaining steam as the year ended. With an October unemployment rate of 4.1 percent – exactly half the January 2010 peak – the regional economy effectively reached full employment. In theory, this means everybody in Nassau and Suffolk who wants a job has got one.

Believe that if you like. Job creation and wage growth, on the other hand, have been tepid. So why is unemployment so low?

Usually that happens when people stop looking for work, settle for low-paying McJobs, or move out of the area to find opportunities elsewhere. We’re not at full employment because employers are creating jobs. They simply aren’t. In November, job expansion was effectively zero.

A review of the past year reveals a labor market that’s growing in terms of employment efficiency – closing the gap between jobs and job seekers – but one that’s shrinking in terms of wage growth and employment expansion.

The Long Island job creation story is not a happy tale. The region is losing jobs rapidly, about 900 in 2017. Jobs in construction, trade and manufacturing led the exodus as 600 private-sector jobs evaporated between September and October alone.

Pink slips went out to many office administrators, temporary health service workers, travel agents, store workers and waste management workers, among other occupations. Anecdotally, many of those displaced found lower-paying, part-time jobs and have doubled up to make ends meet.

We did see job growth, however, in education and health services – nearly 10,000 new jobs there – and leisure and hospitality, which added some 1,500 new positions. While those jobs include high-paying professions like school superintendents and hotel general managers and surgeons, the majority are make-do gigs: home healthcare attendants, pre-school staffers and motel housekeepers.

In March, the New York State Department of Labor announced the region’s top five trending jobs for 2017, naming 5 occupations growing in both demand and average wages. Those positions, followed by their average salaries, are:

• Software developers/applications ($93,660)
• Physical therapists ($91,230)
• Registered nurses ($86,940)
• Plumbers, pipefitters and steamfitters ($78,610)
• Market research analysts and marketing specialists ($68,590)

It used to be that LI’s most competitive jobs paid significant differentials over similar work around the country. Considered a kind of regional bonus pay, that differential would offset our high cost of living. That is no longer the case.

The differential has been shrinking. About two years ago it disappeared altogether. One study by the Rausch Foundation showed that the average Long Island paycheck dropped about 3.2 percent since 2010, based on 2013 dollars.

The difference is starkest when compared with national wage levels. In the decade beginning 2005, average LI pay was lower at the onset of 2014 than it was in 2005, while the average U.S. wage earner earned about 8.3 percent more.

Here’s another perspective. In 2005, the Island’s average employee earned 9.3 percent above the national average; in 2014, that advantage had albeit disappeared. While many hourly workers still out-earn their counterparts around the country, quite a number of managerial and professional jobs in this market pay less – sometimes significantly less.

What’s more, the trend is downwards. That $93,660 software-developer salary the Labor Department touts pays about $11,000 more in the average community – and much more in highly competitive markets like New York, San Francisco and Boston.

Compounding the problem is our high cost of living. Living here costs about 50 percent more than it does to live in the average U.S. community. According to some indicators the cost differential is rising, driven by the usual twin gremlins: housing and local taxes.

As Rausch reported in 2015: “Given that Long Island is a ‘high cost’ region, the convergence with national income levels does not reflect well on the ability of Long Islanders to maintain living standards.”

Put another way: we’re working harder to earn the same or less; our costs are going up while people in other markets are easing up, earning more and paying less to live there.

Let’s hope 2018 brings better economic news.

Marty Greenstein: Let Stress be Springboard to Success

Amazing Events & Celebrations CEO Marty Greenstein has a few tricks up his sleeve. (Photo by Bob Giglione)

Marty Greenstein and his wife Dianna opened their first restaurant, the Hungry Haven, inside long-gone Baron’s Department Store in Smithtown, but in 1980 the couple got out of the restaurant business and continued doing catering and special events under the name Uncle Marty’s. As their clientele grew more corporate, the Greensteins renamed their business Event Pros Group and expanded to a larger building in Ronkonkoma a decade later. Today, Event Pros Group handles a select list of event clients, while Mr. Greenstein concentrates on public speaking, sales training, and his book published in 2015, How to Sell the Brooklyn Bridge… And Other Stuff. He continues to perform as a strolling magician, using tricks he learned watching the magicians he hired work the crowds. We caught up with “Uncle Marty” at Watermill Caterers in Smithtown.

Long Island Press: Were your parents role models as entrepreneurs?

Marty Greenstein: My father was named Aaron. Everybody called him Archie. He was born in a small village in Russia. Never knew his father. Left school after third grade. My dad was a tough guy. He worked for years as a salesman for the Restful Mattress Company. He’d go to customers’ homes who called him to have their old mattresses fixed. My dad would take a knife and slice their mattresses open. He’d show they didn’t have the original horsehair stuffing. Then they’d have to hire him to repair it. They loved him anyway. He was a bit of a bandit.

LIP: Did your mother work as a homemaker or in business?

MG: My mother’s name was Phyllis. She was a hard worker too. She was always working at her mother’s corset shop in East Flatbush near where we lived. In later years, she worked at the restaurant my father eventually opened in Borough Park.

LIP: How did your career begin?

MG: I didn’t finish school. After working at my dad’s restaurant, I bought a taxi medallion and drove a cab in the city. WPIX used to call me when they did stories about cab drivers. Then a guy who cast commercials hailed my cab. After that I got work doing movies and commercials. I still get calls. About four years ago I was the Aleve Santa Claus.

LIP: How did the catering and eventing get started?

MG: Customers’ kids used to call me Uncle Marty. One day a little girl asked .me, “Uncle Marty, can I have my birthday party in your restaurant?” What do you think I said, No? I said, “Of course, sweetheart. What day is your birthday?” I asked Dianna how to create a kid’s birthday party. Then an adult asked me if I’d cater his company’s picnic. I said, “Of course.” I had never been to a corporate picnic myself. So I learned.

LIP: How did your business grow?

MG: In the early ’80s I started creating events around team-building. It offered a solid business reason to get out of the office. We needed tons of costumes for the exercises. At one point we had over 800 costumes.

LIP: Are all your events successful?

MG: Yes, of course. Well, maybe one in a million isn’t. Do you know I keep a mouse in my pocket for magic? We were working a wedding, I took out the mouse and said very quietly, “Eek.” Maybe not so quietly. The mother of the bride sees it and starts screaming at us to leave. So we left. Another time we filled a 6,500-foot tunnel in Grand Central Station with several thousand balloons. Later everyone started popping them – Pop! Pop Pop! The cops ran in thinking someone had a machine gun. God forbid.

LIP: Do you have an eventing philosophy?

MG: I do. I believe eventing is all about passion. It can be stressful, but I believe in letting the stress become a springboard for success. I grew up watching my parents work hard but not letting themselves grow. So I say: Never stagnate. Let your imagination lift you to where you can see far into the distance. Rather than letting your restrictions hold you back, let what you see guide you.

30 Years Later, My Father’s Place Returns in Posh Style

Clockwise from top: Outside My Father's Place, Emmylou Harris, Billy Joel and Debbie Harry of Blondie all were among those who played the legendary venue (Photos by Steve Rosenfield)

As a Hofstra undergrad journalism major during the mid-’70s, I hung out at the school paper The Chronicle, interviewed visiting speakers like Dick Gregory and Allen Ginsberg and late at night wrote jazz reviews. Everybody else wrote about rock and talked about a club called My Father’s Place.

“Cool,” I thought. “Somebody’s dad owns a music club.”

I learned you didn’t need to go to Roslyn for My Father’s Place, just turn on the radio. The club’s owner, a Buddha-bellied, snaggle-toothed former headshop owner named Michael Epstein, Long Island-famous as “Eppy,” had struck a deal with WLIR. The FM powerhouse broadcast concert pickups across much of the Northeast.

The club’s fame spread. Rock royalty poured into Roslyn: Bruce Springsteen, Billy Joel, The Police, Bob Marley and Peter Tosh. James Brown and Keith Richards. Cindy Lauper and Pat Benatar. Lou Reed. The Ramones.

“It was a time of drugs, free love, free sex and good music,” Epstein expansively told a local weekly newspaper in 2013.

Too good a time, perhaps. Citing parking and quality-of-life issues, authorities forced the club to close in ‘87. Eppy hunkered down, doing music promotion and artist management.

Six years ago, I organized an outdoor summer business networking series at an elegant Nassau hotel. We tapped the Long Island baby boom demographic and puzzled over which boomer celebrity everybody’d want to see.

We invited Eppy to open the series. From the open-air stage he captivated the boomer crowd with garrulous humor, Lawn Guyland chutzpah and a steady stream of rock anecdotes.

“You just gave me back a slice of my youth,” one attendee told me afterwards.

Last month, as if commemorating the club’s 30th anniversary of closure, Eppy returned to the spotlight to announce he was reopening My Father’s Place in – wait for it – Roslyn. He’d spent three years working out a deal with the owners of the 77-room Roslyn Hotel.

Having founded the grittiest rock club east of CBGB, having been inducted into the Long Island Music Hall of Fame in 2010, Eppy was opening a posh supper club. Well, who thought we’d ever hear Rod Stewart crooning songbook standards?

I called Eppy and asked how it came about.

“I never wanted to close My Father’s Place,” he acknowledges. “I was asked to leave because they wanted to build a shopping center. The municipality asked me back. I picked the hotel because they have three levels of parking. There will be no parking problems this time.”

Expect Eppy to adapt his fabled promotional skills, honed on progressive rock FM radio, to today’s social media channels.

“Everything changes,” he says. “But it’s all good, really. I’m bringing live music back, original music. Not just rock but jazz and reggae, blues and folk. Some nights we’ll have comedy. People forget I presented comedians like Billy Crystal, Andy Kaufman and Eddie Murphy.”

Eppy will revive his brand and take it upscale when My Father’s Place reopens, perhaps as early as June.

“There will be excellent food in our restaurant and nice tablecloths,” he says. As far as seating goes, “I’m ordering chairs that cost $325 and have lumbar devices.”

Eppy reflects on what he’d learned from building Long Island’s premier rock venue, then losing it amidst bitter recriminations from village officials and aggrieved neighbors.

“I f***** up terribly,” he recalls. “I’ll do everything differently this time. I f***** up by not having proper legal representation, by presuming things that weren’t true, and by disregarding the taxing authorities. I had a good set of books but it didn’t matter. You have to learn the ambiguities of all the laws.”

Eppy says he’s ready to bury the hatchet. Just don’t expect him to pucker up to his old adversaries.

“If they want to see a show they can buy a ticket,” he says. “Come buy a ticket, sit down and eat. I’ll put on a good show. Everyone will have a good experience.”

He adds: “That’s all I can do.”

C Suite: Town & Country Real Estate CEO Judi Desiderio

Judi Desiderio, CEO of Town & Country Real Estate, finds solutions to problems by looking at different angles. (Photo by Bob Giglione)

Judi Desiderio was a mid-island Phys Ed teacher and amateur athlete when she decided to change her life and try real estate. She found her calling, getting her broker’s license, becoming her agency’s top producer; leaving after a buy-out; then founding her own agency, Town and Country Real Estate. Her firm now has eight offices and about 170 employees and contractors. Business editor Warren Strugatch recently caught up with her. Here are edited excerpts from our conversation.

Long Island Press: How did you start out?

Judi Desiderio: I grew up in Massapequa. My parents, Al and Jeri, were huge influences on my life. He was a builder and she was a housewife. I became an educator.

LIP: Did your parents encourage your career?

JD: I was never encouraged to be a teacher. My parents were Italian-Americans and felt I should get married and have lots of babies. I wanted to go to college and so I did. I got my Master of Exercise Physiology degree from Adelphi.

LIP: How’d you get in the game?

JD: Thirty-six years ago my first job was with Jack Douglas. Within a short period of time I outgrew his operation. I moved across the street to Cook-Pony Farm (brokerage) and became top producer there. The owner, John Cataletto, made me a partner.

LIP: What triggered your decision to leave?

JD: Corcoran bought us. I’m not one for being corporate. I lived out the terms of my non-compete (contract). I came to realize the East End real estate market was not (appealing) to smart brokers. I decided to open my own agency and change that. Knowledge is power, I like to say. That was 12 years ago. Can you believe it?

LIP: You opened in a soft market. What was your business model?

JD: I bought a small company called Village Real Estate. I closed their offices then began to hire support staff. I knew from being an agent that I needed to have plum data systems. I had a small army working on it.

LIP: Did you decide to grow organically or through acquisitions?

JD: I acquired Kathleen Beckman (in 2011) and Posposil (in 2016). I bought their databases as well and that made our system more plum. Out here everybody uses RealNet; everybody has the same database. It’s what you do with it that’s the difference.

LIP: Do you have a distinctive approach to managing brokers?

JD: I do. It’s different managing brokers than managing employees. Brokers are independent contractors. I visit all my offices regularly and I get in the pits with my agents every day. I created a board made up of the managers of each office.

LIP: Please describe your management philosophy.

JD: As a manager I fall back on what I learned as a teacher, which is the importance of communicating well; as an athlete, which is the importance of competing; and as a broker, which is finding solutions to problems by looking at different angles.

LIP: Real estate is about dealmaking. Do you have a deal philosophy?

JD: I do. Melanie Ross, my former partner at Cook-Pony Farm, used to say: Never need a deal. You can want a deal. When you need a deal, you compromise yourself.

LIP: Do you have a general business philosophy?

JD: Keep your mind open. Don’t get stuck in a rut. Always consider different angles. If you’re working with a listing agent who won’t open the door, then go open a window.

Homeowners Resist Development Plan At Historic Flowerfield

Gyrodyne manufactured anti-submarine helicopters for the U.S. Navy.

In 1917, John Lewis Childs, a former New York politician with a green thumb and a head for business, began cultivating flowers, bulbs and seeds on 335 acres in St James. He called his property, reasonably, Flowerfield.

Carved out of undeveloped space on Smithtown’s eastern edge, this horticultural
outpost flourished at the intersection of the region’s historic east-west corridor, Route
25A, and its main local north-south connector, the winding horse-and- buggy path
known as Long Hill Road, now Stony Brook Road.

A century later, the crossroads – now cornering the largest light industry-zoned track
remaining in Smithtown – is at the center of a heated battle dividing neighbors over
economic development, responsibilities for infrastructure improvement and the proper
role of government planners.

Access to mass transit helped Flowerfield grow. The horticulture magnate exploited the
Long Island Railroad’s pre-existing right of way through his property, demanding – and
getting – his own station with a second-floor greenhouse included. The Flowerfield
depot stood until 1958, providing backyard shipping to Manhattan.

Childs died on a train to New York in 1921. Several years later his widow sold his beloved seed business to a rival. His realty holdings went in the Depression. A helicopter manufacturer in Massapequa known as the Gyrodyne Company of America acquired the tract in ’51.

Gyrodyne stopped manufacturing in the 1970s and became a Real Estate Investment Trust. It then converted a portion of the tract into a small-scale light-industrial park, preserving its open spaces while attracting a mix-and- match collection of local businesses. They included a popular catering hall, a successful delicatessen and, most incongruously, a string of art studios – the Ateliers at Flowerfields.

Even with these structures, Flowerfields could rent out as the set for a movie taking
place in the 1920s or ’30s. Its time-capsule seclusion, however, is on borrowed time.
On Aug. 2, the Suffolk County Planning Commission approved, on 48 hours’ notice, a
subdivision application that – if green-lighted by Smithtown – will transform
Flowerfield’s remaining 62 acres into a sprawling commercial park. Plans call for the
construction of a 150 room hotel, a 124,000-square- foot medical office and a 220-room assisted living facility. The project will likely stimulate developers’ appetites for
neighboring parcels, in the process transmogrifying one of Long Island’s last remaining
colonial-era communities.

Resistance, however, is growing. Government officials, civic leaders and community
activists seemed gobsmacked by the county planners’ August end run around them all.
The commishes not only effectively pressed the mute button on local homeowners and
their elected representatives, but decided, for reasons only they know, to waive the usual traffic studies and environmental assessments. As for dealing with the inevitable surge in traffic, the board suggested Stony Brook Road could carry it.

The planners apparently never even asked Gyrodyne the buyer’s name. The loudest civic opposition so far has come from the Brookhaven side, where residents stand to pay the cost in infrastructure maintenance while leaving economic benefits on Smithtown’s side of the table. Civic leaders in Brookhaven’s Three Village area are particularly galled.

The project’s most damning flaw, however, is housing – the absolute abject lack of it.
For a region crying for workforce housing, the idea of creating a major project without
building a single new home – incredibly, on a tract with LIRR tracks running through –
is incomprehensible.

On Nov. 15, the Smithtown Planning Board considers Gyrodyne’s subdivision
application. Brookhaven Town Supervisor Edward Romaine told me he’ll break with
custom and speak at the session. He’s also preparing a lawsuit.

I’ve spoken as well with some of my Three Village neighbors, most of whom wonder why the county planners moved so fast with so little discussion. They ask why traffic and environmental impact studies were omitted. Many want housing development and mass transit options a part of any construction.

In other words, they want a 21st century development.

Bucolic Flowerfield won’t be a time capsule forever. That doesn’t mean it has to become Long Island’s latest example of ill-conceived, ill-planned and unsustainable development.

C Suite: Anil Kapoor: At Svam, Athletes Always Welcome

Svam International CEO Anil Kapoor. (Photo by Bob Giglione)

Born in New Delhi, Anil Kapoor studied accounting and worked at a
regional accounting firm and at several companies in India before
emigrating to the United States in 1994, where he and three friends
started Svam International. The Great Neck-based firm is a global IT and
business-services provider. As president and CEO, Anil oversees
worldwide operations including sales, marketing, development, finance
and professional services. Contributing editor Warren Strugatch caught
up with Kapoor to discuss his management philosophy, the difficulty of
finding employees locally, and what exactly the name Svam means.

Long Island Press: You started out as an accountant in India. How did
you transition into CEO of a Long Island tech services firm?

Anil Kapoor: I worked for a few different companies in India and the
States. The times were great and opportunities were great so I took an
opportunistic approach. I was hanging out in India with a bunch of friends
who I grew up with. I said, why don’t we take a plunge and start a tech
company?

LIP: How’d you come up with the name Svam? What does it mean?

AK: It’s made from the first letter of each of our names, the four of us who
founded the company.

LIP: How did you gain credibility for your tech company without having a
tech background yourself?

AK: I went to tech events and met people. Comdex (a once popular
computer expo that folded in 2003) was a very good place to meet people.

LIP: So, who did you meet?

AK: I met some guys from Litton Industries, which became an anchor
client.

LIP: Your co-founders are gone, but you’ve stayed on as leader. What does
leadership mean to you?

AK: As a leader you are responsible for creating conditions of success. I
surround myself with smart people, who at the same time time have to be
self-motivated. I give them responsibilities and let them run with it.

LIP: How accessible do you make yourself?

AK: We have an informal environment. Everybody is authorized to walk into my office and say, “This is what’s going on.” Plus I meet with my direct reports several times a day, whether in person or through technology. We’re in India, we’re in Mexico, so it’s 24/7. We text, we phone. I tell people, “Don’t hold back regardless of the time of day.”
LIP: Every business faces a crisis eventually. What would you describe as your biggest crisis and how did you handle it?

AK: By the year 2000 we had built up a work force of around 300 people. Then Y2K came to an end and we had the tragedy of 9-11. We were as low as 68 people in 2001.Things fell apart as a house of cards. Of course people were worried about losing their jobs. That transformed my thinking.

LIP: How so?

AK: I realized we had come as far as we had because of our team, the core
group of about 10 people in the company. I realized I had a different level of
responsibility to them. If they are happy, the company performance is
different. Even though we had people idle for lack of work, I don’t recall
firing anybody for that. I did fire some people because of unethical behavior
or other issues.

LIP: How did this change your management philosophy?

AK: We switched from client-first to employee-first. If employees feel
welcome and challenged they will strive to excel, therefore providing
compelling client service.

LIP: Now, how many employees do you have?

AK: Globally we have between 625 and 650.

LIP: When you hire, where do you look? And what traits do you look for?

AK: We look all over for employees. Locally, I cannot find that many
qualified resources on Long Island. It’s not the available guy you want, it’s
the qualified guy. And it’s more difficult to get people to come from other
countries now. One reason is immigration reforms. Another is that people
can probably make more money in their own countries in terms of spending
power. In terms of personal traits, I like to hire people who are good at sports, who
are athletes. The sport doesn’t matter. I look for people like that who are
self-motivated and self-disciplined.

Does Long Island Have What Amazon Wants?

An Amazon warehouse in 2015. (Photo by Scott Lewis).

In 1994, Jeff Bezos left his Wall Street job and moved to Seattle, launching a retail startup that abandoned brick and mortar in favor of electronic sales.

Bezos named the disruption Amazon, after a dictionary search revealed the Amazon River was the biggest on the planet. Bezos envisioned making his new store the biggest in the world.

Famously, he has succeeded. Amazon passed Wal-Mart two years ago as the world’s biggest retailer by market value. Today it ranks among the largest companies in the world. More even than its neighbor Microsoft, Amazon has established Seattle as a fulcrum of economic activity.

Bezos now intends to build a second headquarters somewhere in North America. To start the process, he has solicited proposals from economic-development teams across the continent. Among them is a contingent from Long Island.

Good on us. Amazon will invest $5 billion in building what it calls HQ2, staffing up eventually with some 50,000 workers. Long Island needs the investment and jobs like hot dogs need mustard. The local labor market languishes. Over the past 12 months ending in August, private-sector jobs in Nassau-Suffolk inched forward half a percent, less than a third the state’s tepid growth rate. The last couple of months have produced small losses.

Furthermore, growth in high-paying jobs is weak. People tell me they get paid less these days for doing the same work they did before. Many moonlight to get by.

What’s Bezos seeking for his new home? The company emphasizes incentive packages and a “business-friendly environment and tax structure.”

Translation: Come to the table ready to pay us big bucks to locate where you are and don’t forget the tax write-offs. While you’re at it, be close to an international airport, have a substantial population and a high-quality fiber optic network. Then we’ll talk.

Should LI even try to compete? Here’s how we rank in the competition.

Business-friendly environment. I wonder, does a single business owner or CEO consider Long Island business-friendly? Projects designed to produce jobs, reduce car dependence and add workforce housing languish for decades awaiting permits and approvals.

Stability. Real estate and search executives use the term “stable” to describe balanced government budgets. Both Nassau and Suffolk have borrowed from Peter to pay Paul’s budget items, raising the cost of fines to pay expenditures. Search execs hate that.

Tax structure. Long Island, in particular Nassau County, is one of the highest-tax regions in the country. Executives cringe when asked to relocate to higher-cost areas, asking employers to pay the differential or simply refusing relocation. Search execs hate both those options.

Infrastructure. Major roads congeal twice-daily at rush hours, idling hundreds of thousands. Mass transit, a vital characteristic of almost every major corporate investment, is dead in the water here. Billions of dollars of investment would be needed to satisfy an Amazon.

Power. Long Island companies pay astronomical electric bills which LIPA et al would have to deeply discount to satisfy Bezos.

Work Force. Decades of brain drain means few recent grads or career-changers fit a big company’s new-hire profile. Fast-growth companies need workers who are intellectually curious, broadly-educated, of diverse backgrounds, flexible in their thinking, and multi-skilled in their capabilities. To develop these workers means creating company-specific training modules rolled out by local community colleges whose professors understand the company’s internal processes. None of this is happening here.

Information infrastructure. This is a relative strength. Three fiber optic companies – Cablevision, Verizon-Fios, and Lightower – supply the region. Andy Weitzberg, a board
member and past president of the Association of Continuity Professionals of Long Island, tells me the infrastructure can support a user of Amazon’s size pretty easily, provided the new headquarters is built west of William Floyd Parkway.

I spoke about Long Island’s chances with Tom Stringer, a BDO USA exec helping companies across the country find locations where they can prosper and grow.

“I wouldn’t put us on the short list,” Stringer told me about Long Island’s chances with Amazon. “I can’t immediately define Long Island’s value proposition. The real winners will use this process to figure that out. We’re going to learn some hard truths and hopefully make the changes we as a region need to make.”

Stringer’s right. By chasing Bezos we’ll better understand ourselves and our economic climate. We’ll be better positioned to attract that visionary entrepreneur who right now might be in college or high school who might settle in here and attract other ambitious, hard-driving, intellectually-curious people – the kind needed to build a world-class company.

It’s a time of disruption. It’s time Long Island disrupted itself.

Contributing Editor Strugatch is a journalist and consultant. His website is InflectionPointAssoc.com.

In Full Bloom: A Conversation With 1-800-Flowers CEO Chris McCann

Chris McCann
1-800-Flowers CEO Chris McCann (Photo by Bob Giglione/Long Island Press)

When Chris McCann’s big brother Jim bought his first flower shop in Manhattan in 1976, Chris, then 15, helped out on weekends, learning the floral business even as the older McCann began to transform it. Chris was named chief executive in July 2016; Jim continues as executive chairman. Contributing Editor Warren Strugatch caught up with Chris to find out what it’s like to succeed one of America’s iconic marketers.

Long Island Press: I’d love to have been a fly on the wall when you and Jim discussed your promotion. What was that conversation like?

Chris McCann: It was a rather long process. We talked a very long time. We had an unidentified time line but the process was built on the belief, which we’ve held for a long time, that there should be two at the top. Because Jim and I were able to interact smoothly, he could step into my shoes, and me into his. It made the transition very smooth.

LIP: Tell me about your management philosophy.

CM: My approach is very informal and approachable. I want to engage people from all levels of the company. I encourage them to jump right in, not be afraid of failing – as you as long as you learn from your mistakes. No one’s ever fired for making a mistake. I’d rather hire someone who gets speeding tickets than someone who gets parking tickets.

LIP: What was your family background and how did that influence you?

CM: My father had a painting and contracting business, which he inherited from his mother. We all grew up in the family business. We shared a lot, both pitfalls and benefits. I learned my management style from my father. I saw him treat people individually, based on who they were. I learned from him to adapt to people’s styles, not the other way around.

LIP: What would you name as your leading tangible contribution to 1-800-Flowers?

CM: I would start with technological innovation. I am not a technologist but I recognized early on that technologies change human behavior. I knew that people were more comfortable calling on the phone than walking through the door. We embraced that and created a brand around the 800 phone number.

LIP: Today that’s called disruption.

CM: We seized the opportunity to disrupt the floral industry. Now we’re embracing Mobile Commerce and Artificial Intelligence Commerce. We’re seeing the convergence of a bunch of technologies – Big Data, Analytics, Voice Computing – all being called Conversational Commerce. It’s all about having conversations with the consumer when it’s convenient to them

LIP: How are you taking advantage of this?

CM: Our philosophy is to engage early. Jump in and learn. Adapt and make changes. In terms of Conversational Commerce, we are still in the adaptation stage.

LIP: What’s it been like, working under Jim McCann?

CM: I remember him saying: ‘We have a chance to build something big in the floral industry.’ His definition of big was always different than mine. He always has a bigger vision in mind. I would have been happy growing in the New York area. Jim is a classic entrepreneur. In my view he’s a marketing genius. He has an instinct I don’t have. I forced myself to focus on the operational side to complement his skill set.

LIP: By your standards, has your approach been successful?

JM: I’ll tell you what my mother said when I asked her that question. She said she was proudest that Jim and I, despite our 10-year age difference, had become friends.

Strugatch is a journalist and consultant. His website is InflectionPointAssoc.com.