by Bill Browder
I couldn’t believe it. I had put all those impressive people in the proposal, and the Poles were getting only me? A first-year associate who knew absolutely nothing about buses, or business for that matter? I was appalled, but I kept my misgivings to myself. This was my dream assignment. I was just going to have to bite my tongue and make it work.
In late October 1990, nearly a year after the Berlin Wall came down, John, Wolfgang, two other first-year associates, and I boarded a LOT1 Airlines flight bound for Warsaw. There, we were met by four men from the World Bank and two employees from Autosan, the troubled bus company we were supposed to help save from bankruptcy. After retrieving our luggage, we boarded one of Autosan’s buses and made our way to its headquarters in Sanok.
It was a long ride. Warsaw quickly gave way to the Polish countryside, which was in the throes of autumn; it was picturesque but also a little depressing. Poland’s communist regime had recently collapsed, and conditions on the ground were harsher than I expected. It was like stepping into a time machine set to 1958. The cars were ancient. Horses pulled carriages on the roadside. Farms were dilapidated, and the housing in towns—those ubiquitous concrete blocks in the Soviet style—were crumbling. The Poles suffered from food shortages, hyperinflation, electricity blackouts, and all sorts of other dysfunctions.
Yet, as I sat in the rumbling bus with my forehead pressed against the glass, I thought, This is exactly where I want to be. The road ahead was open and full of possibility.
Six hours later, we arrived in Sanok, a town of less than fifty thousand in the wooded and hilly southeastern corner of Poland, ten miles from the Ukrainian border. We arrived at Autosan’s company restaurant and made our way inside for a banquet with Autosan’s management team and the executives from the World Bank. None of the guests wanted to touch the meal—greasy pork chops, overboiled potatoes, and some kind of savory gelatin containing bits of pork. In addition to the unappetizing food, an underlying odor of industrial solvent from the nearby factory wafted through the air. I got the feeling that everyone who was not from Sanok wanted to get out of there as quickly as possible. The bus company management wasn’t going to let us go, however, and continued with toasts well into the evening. Finally, at 11:15 p.m., as coffee was being served, the World Bank team awkwardly rose, made their excuses, climbed back on the bus, and took it to Rzeszow, the closest town with a decent hotel.
My BCG colleagues waited until the World Bank team was safely out of sight before they also rose and made their excuses. They went outside and Wolfgang negotiated with two taxi drivers to take them the whole six hours back to Warsaw that night.
I was the only one left—a twenty-six-year-old MBA with one year of consulting experience—to save this company from disaster.
After coffee I said my good-byes to the management, who didn’t seem to understand that I was a nobody compared to everyone who had just left. I was then escorted to the Hotel Turysta, which would be my home for the next few months.
The Turysta was a musty, four-story concrete building a couple of blocks from the San River. It had no elevator so I had to take the stairs. The passageway was narrow and dimly lit, and my room was tiny. More hall than room, it had two twin beds that were pushed against opposite walls, and the only floor space was the gap between them. Bolted to the wall over one of the beds was a thirteen-inch, black-and-white television. A plain, chintzy end table was pushed between the beds. On top of this was a single lamp. Above the lamp was a small window that overlooked a vacant lot.
It wasn’t the Four Seasons, but I was so excited to be in Poland that I didn’t care.
I tried the plastic rotary phone to see if it worked, but the line only connected to the matronly woman at the front desk, who didn’t speak a word of English. I unpacked, stuffing my clothes into the wardrobe. The room was cold and the radiator wasn’t working, so I put on the parka I’d brought for the upcoming winter. I turned on the TV—there were only three stations, all in Polish. One channel was news, one was soccer, and one was some show about sheep. I turned off the TV. I fiddled fruitlessly with the dial of a shortwave radio I’d brought, but found nothing and gave up.
I got into bed and tried to sleep, but it was simply too cold. I tapped the radiator and turned the valve near the floor, but no heat came. Normally I would have called the front desk, but given the language barrier, that wouldn’t have helped. I got some more clothing out of my wardrobe and pulled the blankets off the other bed and buried myself under all of it. Even though I was still wearing my parka, this didn’t work either. I tossed and turned all night and barely slept. When the sun began to rise, I turned on the shower, hoping that at least would warm me. I waited and waited for the stream of hot water, but it never got better than lukewarm.
I skipped the shower, got dressed, and went down to the Turysta’s small restaurant to meet my translator for the first time. A trim man in an ill-fitting, gray polyester suit stood bolt upright as soon as I appeared. He tucked a rolled-up newspaper under an arm and extended a hand. “Mr. William?”
I took his hand. “Yes. That’s me.”
“Hello. My name is Leschek Sikorski!” he said enthusiastically.
Leschek, a few years older and a little taller than me, had light brown hair, bright green eyes, and a neatly trimmed beard. In different circumstances he might have been good-looking, but the bad suit—and his crooked teeth—dashed that possibility.
“Please, sit.” Leschek motioned toward a chair. “How was your sleep?” he asked, nearly shouting at the end of the sentence.
“Cold, actually. There was no heat in the room.”
“Yes. They don’t turn it on until winter officially starts!” He again shouted the last word. He spoke English so unnaturally that I was certain he’d learned it from a set of Berlitz tapes.
The waitress showed up and poured me a cup of tea while Leschek told her something in Polish. When she disappeared, I asked, “What did you say to her?”
“To bring you the breakfast.”
“Is there a menu?”
“No, no. Only one breakfast!”
A few minutes later breakfast arrived: overcooked sausages and some strange Polish processed cheese. I was so hungry that I choked it all down.
Leschek ate his meal dutifully, neither disgusted nor excited. Midway through the meal, his mouth full of food, he asked, “You are from London, yes?”
“That’s right.”
A smile spread across his face. “Then I have favor to ask.” He lowered his voice and whispered, “Can you introduce me to Samantha Fox?” Samantha Fox was a busty English pop singer who’d gotten her start by modeling topless on Page 3 of the British tabloid the Sun.
I gave Leschek a funny look. “I’m afraid not. I don’t know her.”
He leaned back in his chair with a doubtful look and insisted, “But you must. You’re from London.”
“Leschek, I wish I could help, but there are seven million people in London.” I didn’t want to be rude, but this was ridiculous. How was I going turn around a failing bus company if my main connection to the outside world was this strange guy obsessing about a topless model from England?
After breakfast, Leschek and I left the hotel and folded ourselves into the tiny, red Polski Fiat that the bus company had provided for me during my stay. After several attempts, I got the engine to sputter to life. Leschek smiled as he directed me to Autosan’s headquarters, a seven-story, white concrete building near the river. We parked, and as I passed into the lobby, I detected the same unpleasant smell of industrial solvents from dinner the night before. Leschek and I took the elevator to the top floor and found our way to the general manager’s office. The general manager stood in the doorway like a barricade—his broad shoulders taking up nearly the whole space—his thick mustache perched over a beaming smile. He appeared to be twice my age and had worked at Autosan for his entire career. As I drew near, he stuck out the thick-fingered hand of a laborer, and when I took it, he squeezed so hard it f
elt as if my small hand had been trapped in a wringer.
He ushered Leschek and me into his office and began speaking quickly in Polish. “Welcome to Sanok,” Leschek translated, talking over him. “He wants to know if you would like some brandy to toast your arrival?”
“No thank you,” I said awkwardly, wondering if I was making some cultural faux pas by rejecting his offer of hard alcohol at 10:00 a.m.
The general manager then launched into a speech that once again expressed his excitement that I was there. He explained that Autosan was Sanok’s main employer. If the company failed, then the town would also fail. He and everyone else at Autosan thought that BCG—and by default me—was going to save the whole lot from financial ruin. I tried to look serious and nodded at all of this, attempting to convey some semblance of confidence, but inwardly I was completely mortified by the scope of my responsibility.
When he finished his little speech, he said, “Mr. Browder, before you get to work, I must ask—is there anything we can do to make your stay in Sanok more pleasant?”
From the moment I’d walked into his office I had realized how warm it was, especially after my fitful night in my freezing room. I noticed a quietly buzzing space heater in the corner that emitted a comforting orange glow. Eyeing it, I nervously asked, “Do you think I could get a heater like that one for my room, sir?”
There was a moment of silence as Leschek translated. Then the general manager’s face lit up. With rosy cheeks, he winked and said, “Mr. Browder, we can do much better than that. We can get you a woman to keep you warm at night!”
I looked sheepishly at my shoes and stammered, “N-no thank you. A space heater will be just fine.”
I promptly got to work, and my first week in Poland was the biggest culture shock I had experienced in my life. Everything in Sanok—the smells, the language, the customs—was different. But what made it particularly hard for me was the food. The only available meat was pork, and it was ubiquitous. Sausage for breakfast, ham sandwiches for lunch, pork chops for dinner—every single day. There were no fruits or vegetables. Chicken was a delicacy. Worst of all, every single meal was drenched in heavy grease, as if this were some kind of magical condiment that made everything more palatable, which it didn’t.
By day five I was starving. I had to do something and decided to go to Warsaw and check into the Marriott to get some decent food. As soon as I arrived, I dropped my bag in the room and headed for the restaurant. I had never been so happy to be at a hotel buffet in my life. I scooped piles of salad, fried chicken, roast beef, cheese, and French bread onto my plate and ate like a man possessed. I went back for seconds—and then thirds. By the time I was ready for dessert, my stomach started to rumble and I knew that if I didn’t hurry to a bathroom, I would be in trouble.
I made my way to the men’s room as fast as I could, but just as I was crossing the lobby, there was Wolfgang Schmidt standing right in front of me.
“Browner! What the hell are you doing in Warsaw?” he demanded.
I was so surprised to see him that I didn’t know what to say. “I-I just figured that since it was Friday night—”
“Friday night?” he barked. “Are you kidding? You need to get your ass back to Sanook—”
“Sanok,” I corrected, shifting uncomfortably from foot to foot.
“Whatever the fuck. You need to get back there and integrate yourself with the client on the weekend. That’s how this business works.”
The gas in my stomach was so intense, I barely heard Wolfgang. “Okay. I’ll go back. Sorry. Really, I am.” The bathroom was right there and time was wasting.
“All right, Browner.” When he finally stepped aside, I hurried toward the toilet at full speed.
After the Wolfgang run-in I was so intimidated that I didn’t dare set foot in Warsaw again. Instead, on weekends I drove my little Polski Fiat around the countryside, foraging for food. I would stop at small restaurants and, since I didn’t speak a word of Polish, point at three or four random entrées on the menu hoping that one would be edible. I prayed for chicken and occasionally got it. I could afford to do this because the Polish zloty was so depressed that each dish cost the equivalent of forty-five US cents. It was fun to get out of Sanok, but no matter how far I went, the food was still generally awful. Eight weeks into the assignment, I had lost almost fifteen pounds.
The food situation was one of many signs of how dire everything was in Poland. Autosan was a total mess and faced imminent disaster. Following the economic “shock therapy” implemented after the fall of communism, the Polish government canceled all of its orders for Autosan buses. As a result, the company had lost 90 percent of its sales and would either have to find an entirely new customer base or drastically cut costs.
Finding new customers would be next to impossible because, at the time, Autosan made some of the worst buses in the world. The only plausible option for them to avoid bankruptcy was to fire a lot of people. Given that the whole town depended on this company for its livelihood, this was the last thing they needed—and the last thing I wanted to tell them. The whole thing left me feeling sick, and my romantic notions of doing business in Eastern Europe were quickly starting to disappear. I didn’t want to hurt these people.
Three weeks before the Christmas holidays, with my dread growing ever greater, I met Leschek for our ritual breakfast. I’d learned not to wander into ridiculous Samantha Fox–like conversations by simply being quiet, which he respected. In spite of our awkward start, I’d learned that Leschek was genuine and helpful, and after spending every day together for two months, I’d warmed to him. I felt sorry that he would be the one who had to translate my dire recommendations to the Autosan management team, and even more, I knew that when I finally left Sanok, I would actually miss him.
That morning, as I picked at slices of pork sausage, I glanced across the table at Leschek’s newspaper. He seemed to be perusing the personals, but then I looked closer. In little boxes were numbers—financial figures—surrounded by words I couldn’t read.
I leaned over and asked, “Leschek, what are those?”
“These are the very first Polish privatizations!” he announced proudly.
I’d heard that Poland was privatizing its formerly state-owned companies, but I was so wrapped up in Autosan that I hadn’t been following this at all. “That’s interesting. . . . What’s that number?” I pointed to a figure near the top of the page.
“That’s the share price.”
“And this one?”
“The profit from last year.”
“How about that one?”
“The number of shares being offered.”
I did some quick math. The share price valued this company at $80 million, while the company’s profits for the previous year were $160 million, which meant that the Polish government was selling this company for one-half of the previous year’s earnings! I was stunned. In simple terms, this meant that if you invested in this company and it stayed in business for six months, you would effectively make your money back.
I asked my questions again just to make sure that I wasn’t missing anything—and I wasn’t. This was extremely interesting. We went through the same exercise for some of the other companies in the newspaper, and the results were roughly the same.
I’d never bought a single share in my life, but as I lay in bed that night, I couldn’t stop thinking about the Polish privatizations. I thought, I need to do this. Isn’t this exactly what I went to business school for?
My net worth at the time was a total of $2,000. After confirming with John Lindquist that there were no rules against my buying the shares, I decided to invest all my money in these privatizations. I had the cash wired to me in Poland, then asked Leschek if he could help me. During our lunch break, we went to the local savings bank and stood in line to convert my money to Polish zloty, then walked to the post office to fill out the subscription forms for the privatizations. The process was complicated and required Leschek to mak
e four trips to the teller window to ask questions about how to fill out the detailed forms. But in the end, I successfully subscribed to the very first privatizations in Eastern Europe.
In mid-December, I returned to London to prepare BCG’s final presentation to Autosan and the World Bank, which we would make after the holidays. I was completely conflicted. My analysis showed that the company should fire a good part of the workforce if it wanted to stay in business. But after spending so much time with these people, I knew that mass layoffs would decimate them. I didn’t know how some would survive. I thought about Leschek and his extended family, and I pictured the hardships they were already forced to endure. I had to recommend layoffs, but I wanted to soften the blow. I decided to couch the whole idea of firings as just one of the possible “strategic options” in our report, hoping the government would ultimately consider the other option: continuing to subsidize Autosan.
But when I showed this “softened” presentation to Wolfgang in London, he was furious.
“What is this shit?”
“These are their options.”
“What are you, stupid? They don’t have any fucking options. They have to fire everybody, Browder.” He was being a complete bastard, but at least he got my name right.
Wolfgang forced me to delete all the other strategic options, then had me pass the presentation off to another consultant to fix the analysis. BCG wound up recommending that Autosan fire the vast majority of its employees.
We returned to Sanok, and Wolfgang insisted I take the lead in presenting our findings. BCG, the World Bank, and Autosan’s entire senior management gathered in the company’s largest conference hall. The lights were dimmed and I started up the projector, my transparencies ready to go. First, I put out the summary slide about the overall level of firings. The gasps were audible. I then described the layoff recommendations department by department. Leschek nervously translated all of it. With every new slide the shock diminished and the anger increased, and people started challenging me at every turn. The World Bank representatives looked at John and Wolfgang, hoping that they would intervene, but both avoided our clients’ gazes and didn’t say a word. When I was done, every person in the room glared at me. The general manager was notably quiet, eyeing me with a look of profound disappointment.