Sunday, March 20, 2011

True stories of a real Mad Man: How I invented the SUV from Israel (almost).

True stories of a real Mad Man:  How I invented the SUV from Israel (almost). ©Joel Baumwoll

As a result of one of the twists and turns that life puts in your path I almost became competition for General Motors.  Well, maybe not quite.  This strange journey began in 1986 with a call from a friend who invited me to join him at lunch in a week’s time with Yaacov Meridor, the Minister of Economic Development from Israel.

My friend knew that I had left the agency business three years previous to start a consulting company that specialized in new product development.  He said that Meridor was interested in increasing Israel’s export trade with the US, and that if I had any ideas for products from Israel that would sell here, I should talk to him about them.

Meridor was a distinguished name in Israel.  Yaakov, now in his seventies, was one of the founders of the Irgun, a so-called terrorist group that fought the British and the arabs in the early days of Israel’s creation. Menachem Begin was his protogé.  Their most notable act was blowing up the King David Hotel in Jerusalem, which housed the British high command.  

I looked forward to our lunch.

Joining the pair at the Polo Lounge on Central Park South, I looked at the card that Meridor handed me.  It said simply "Yaakov Meridor, Chairman of Companies. " Earlier that day I had racked my brain for ideas for products that Israel might import to the US.

After introductions, Sandy Frank, my friend, set the stage for me.  I began;  “Well Mr. Meridor, I’ve tried to come up with ideas for products that Americans will think are really good because they come from Israel. What I mean is that the image that Americans have of Israel should make them think, ’well that must be a good product.’  For example, Americans have a good image of France when it comes to food and fashion.  They think highly of mechanical products that come from Germany.  Now, I think most Americans associate three things with Israel:  Jews, fruits and war.  

The first two things don’t get us anywhere, but the third --war--does.”

Meridor listened patiently to my rather audacious line of reasoning.  I recalled his Irgun past, and hurried to get to the point.

“I think that Americans are beginning to like rough and ready cars-like the Jeep.  The Jeeps came from a WWII army vehicle that was surplussed and sold to civilians.  In recent years, it has gained popularity with people who like its counter-luxury image.  It has a sort of anti-snob snob appeal.  I think if we could get a version of an Israeli Jeep to sell here it would appeal to some people.  Americans see the Israeli military as the most effective and toughest fighting force in the world. If we could get a genuine IDF (Israeli Defense Force) vehicle and modify it a little for civilian use, I think it could establish a place for Israel in the biggest market in the US.”

Meridor sat quietly for a moment and said, “that’s a big operation, to go into the car making business.  I don’t know if it is possible.  I’ll think about it.”

Lunch ended and I heard no more from Meridor for six months.

I thought I had laid an egg, and so be it.  You can’t win them all.

Then my secretary came in saying that a “Mr. Meridor was on the phone from Israel.  “I found the car!” he said excitedly, and told me to expect a package of photos and information in a few days.

The package arrived and revealed a large, rugged vehicle about the size and shape of the Hummer (of course there was no such thing back then in 1987). It was called the “Command Car” and was produced by a company called AIL (Automotive Industrial Limited) from Nazareth.  The IDF used it in much the same way as the US Army used large versions of the Jeep.  It sometimes carried mounted machine guns and was “proof against mines.”  It could climb steep rocky hills like a mountain goat and plow through desert sands. The engine and transmission were US made, from GM or Chrysler, so they were compatible with US parts, a real plus.

We could get the car delivered here for about $14,000.  I figured we could sell it for about $30,000, so there was enough margin for distributors to make good money.  AIL was willing to give us 180 days to pay without interest.  It was a sweet deal.

I figured we could sell maybe 1500 to 2,000 of them the first year, based on novelty value alone.  Macho men like Stalone and Gibson would buy it to enhance their movie images.  Publicity would be easy to get.  We jokingly said we would make Uzis an option.  Forty five to sixty million dollars was not a bad gross for two guys in a sublet office on Madison Avenue.  Visions of sugarplums danced in my head.

I decided to go to Israel for a test drive.  We were met at the King David Hotel by Ron Arieli, the manager of AIL.  He drove us to their offices in Nazareth.  I was feeling very biblical.

There we were introduced to Joe Boxenbaum, the owner of AIL and one of the wealthiest men in Israel.  He controlled the dealerships for practically all the Japanese cars in the country.  He was a small man near eighty, sitting in a small office.  As I walked in, I was struck by the walls around us.  They were covered with Chagall paintings.  Boxenbaum saw my interest and explained that he was a friend of Chagall's.  To prove it, he pointed to a painting behind his desk, a portrait of Boxenbaum, his family and Chagall!  Boxenbaum had made a deal with Henry Ford II in 1972 to assemble and sell Ford trucks in Israel.  I imagined Ford had met with Boxenbaum in this very office.

Heady stuff!

After a brief discussion, Arieli took us out for a test drive, straight up a mountain, over rocks, tree branches and deep holes.  At the top, we turned around.  I felt like a kid in a roller coaster, just before it takes the big plunge.  Arieli walked the car down the steep slope, one wheel at a time, "like a mountain goat" he said.  I was imagining the commercial we would make for this beast.  Stallone would certainly want one.

The Command car was rather primitive inside, but not to worry, said Arieli.  There was enough margin in the sale to fix it up with nice seats and leather interior. AIL was interested!

Next item on the agenda was to get dealerships to carry the thing.

New York, Florida and LA were the prime targets.  I set up a lunch meeting with Meridor and one of the Potamkins.  They were the reigning Cadillac dealers in New York and Florida.  Perfect.

Seated at a choice table in “21” (Potamkin’s call), surrounded by high powered, rich people talking deals, Meridor, my then partner, Pete Tannen and I awaited Alan Potamkin.  John Kluge, the multi-media billionaire sat nearby lunching with Victor Potamkin, the patriarch of Potamkin Cadillac.  Alan arrived and with little prelude began to tell us how much money his company grossed, how many cars it sold, that they were GM’s #1 Cadillac dealer...etc.

I fidgeted uncomfortably, thinking of the illustrious, powerful and dangerous credentials of the older man from Israel who sat quietly listening to this chest thumping speech.  Potamkin finished, and before I could say a word, Meridor said, “Yes, well I am a man of not inconsiderable note in my own country.  Now let’s talk about business.”  I’m not sure Potamkin knew he had been put down in the most artful way I had ever seen.

Our discussion ranged over the plans we had made and the opportunity we saw with this vehicle.  Then Potamkin asked, “What are you going to do about insurance?”

Insurance?  What did he mean?  “Liability insurance,” he explained.  If someone rolls over in your car, who will they sue?  Not some company in Israel.  Not me.  You.”

We discovered that insurance companies didn’t welcome two guys from Madison Avenue who wanted an umbrella liability policy on an Israeli military vehicle they planned to sell to a bunch of testosterone charged men who wanted to demonstrate their power.

In the next ten years, the macho SUV became the rage with American car buyers.  Even Hummer got into the act.  But the IDF Command Car never made to our shores.

And as Shakespeare wrote, for want of a nail a shoe was lost, and  for want of a shoe a horse was know the rest.

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