CHAPTER 10
Judging a Product by Its Package
On December 14, 1994, when we had been selling chocolate for four and a half months, we received a cease and desist letter from a Washington, DC, law firm representing Goldbern, a Swiss chocolate company. Goldbern, I learned, derived tens of millions of dollars in revenue worldwide from sales of chocolate to the airport duty-free market. Goldbern packaged its chocolate in a box designed to look like a bar of gold straight out of a Swiss bank vault or Fort Knox. The letter scared me; I could barely breathe. Though trained as a lawyer, and no stranger to litigation, I never imagined how unsettling it was to be on the other side of the table and receive this sort of correspondence—directed solely at me and my company—from someone determined to put me out of business. If the letter was meant to discomfit me, it worked. I was fully invested in Omanhene, good things were happening, but our sales in eighteen weeks had yet to reach $10,000. I had zero budget for litigation. Omanhene was, in the nomenclature of investment bankers, thinly capitalized.
Angry and scared, but mostly scared, I undertook my own legal research and learned that Goldbern had aggressively litigated its trade dress—“the gold bar design”—in many jurisdictions, including the US. My reading of the law suggests that it is unclear whether you can legally protect a generic shape or a color, without something more particular such as your brand or logo stamped on the shape. But this is the stuff of law school final exams—ruminations of an academic, theoretical sort. I needed to make this threat disappear quickly and cheaply.
When I began to think clearly, and the fear subsided just a bit, it occurred to me that it was something of a compliment to have Goldbern threaten Omanhene with a lawsuit. And if Goldbern actually felt threatened by our incipient success, that might be a good omen, an endorsement of our potential. And speaking of potential: Until now, I wouldn’t have considered duty-free stores a viable channel of distribution—but now, why not? I had a feeling that, if Yaw Brobbey were in my shoes, he’d go into duty-free stores straightaway. “That man wants to compete with me? Then we shall truly compete—on both sides!” A few things puzzled me, though. With no appreciable sales to our credit, how did Goldbern find us? Did our international package design award give Goldbern fits?
I plotted my defensive strategy: the David vs. Goliath gambit had been the heart and soul of my thin, operational playbook since inception of the company, and it fairly described every single negotiation or corporate interaction I had faced. I lacked the resources to defend Omanhene in the traditional legal manner: with a protracted exchange of letters and phone calls, all culminating in a laborious formal negotiation testing the administrative and financial resolve of the parties—each keen to avoid the sinkhole of a full-blown lawsuit. But I realized that, with the law unsettled, Goldbern stood to lose more than Omanhene. They’d never lost an intellectual-property case, so far as I could tell. The facts of previous lawsuits involved competitors who outright stole Goldbern’s exact look and box dimensions. In other cases where the defendant inadvertently copied Goldbern’s design, Goldbern’s aggressive litigation posture always forced a settlement before the case went to verdict, thus ridding the market of Goldbern’s competitors. But Omanhene hadn’t intentionally “knocked off” their package design; I had never even seen it before. Even so, our name was prominently displayed on a multicolored sleeve that enveloped over half of our gold package, and our name, “Omanhene” was distinct from “Goldbern.” It was hard to imagine consumers confusing the two brands. As I reflected on the situation, I wondered if Goldbern really wanted to risk a lawsuit. The lawsuit might end with a verdict instead of a settlement, and that verdict that might go against Goldbern, settling the question, once and for all, of whether a company could use copyright law to protect little more than a shape and color. Litigation is inherently unpredictable. Goldbern might lose at trial. I decided to embrace that possibility.
I called Rachel Lebnikoff, a friend who worked as an in-house intellectual property lawyer at S. C. Johnson, headquartered in Racine, just blocks from my house. S. C. Johnson owns some of the most iconic consumer brands in the world, including Edge shaving cream and Off! insect repellent. Indeed, the designer of the Edge logo was the person I sought to design the Omanhene gift box in the first place. I asked Rachel who S. C. Johnson hired when it wanted to scare the crap out of someone trying to infringe on its copyrights.
Armed with this name, a well-known Chicago litigation boutique, I asked the name partner of the firm to write a one-paragraph reply, on his firm’s letterhead, of course, to Goldbern’s attorneys—a show of force designed to communicate that Omanhene meant business. Omanhene needed to channel that schoolboy Steve Wallace readjusting his windbreaker on the stairwell of a Swissair DC-10. Only this time I intended to show that I was itching for a fight.
My strategy cost less than one hour of the attorney’s time—truthfully all we could afford. We let fly a solitary stone from our slingshot.
It struck true.
David defeated Goliath. Or at least David sent Goliath on his way.
A few days later, we received a reply calling off the threat of lawsuit and effectively limning the contours of a safe harbor for Omanhene’s use of the gold ingot design—which we use to this day.
* * *
Packaging matters. I’ve often joked that I’m more of a box salesman than a chocolatier. Consumers are first drawn to a product because the packaging—the label, the trade dress—is attractive. Unless my package design skills are strong, I won’t have the chance to find out if my chocolate is any good. The true test of a product is if someone buys it a second time. Then you know they liked both the package and the product inside.
As an obroni in Ghana, my light skin color is packaging that causes no one to confuse me with the authentic Ghanaian article. In Ghana, I’m an outsider in a more fundamental way.
When it’s Yom Kippur in Accra, you wouldn’t know it from looking around. There is no Jewish Quarter, no neighborhood where quiet envelops the street as people make their way to shul. No families walking together, young daughters wearing itchy tights, little boys tugging at their clip-on neckties. When I first came to Ghana, I had no idea if there were services anywhere to be found in Ghana—it would be many years before the Lubavitchers would send an emissary to Accra.
In 1978, after my stay in Sunyani, I was brought to Accra for a brief end-of-stay visit and placed with a Muslim family. Shafik Natafgi belonged to Ghana’s Lebanese community. He married a Ghanaian; my host mother, Ethel, later told me that AFS Ghana was both proud and a bit worried at the time of placing “a Jew-man with an Arabic man.” (Ethel pronounced “Arabic” with the emphasis on the second syllable: “ah-RAB-ic.”) They needn’t have worried. The Natafgis welcomed me with an outpouring of love and affection. On my seventeenth birthday, the Natafgis threw me a party, a traditional mezze, with platters of Lebanese food, hummus, tabbouleh, kibbe, lamb kebabs, and fried sweetbreads. The best present of all was being surrounded by four sisters. I came from a family with one brother, so the experience was entirely novel: the laughter, the femininity, the nonstop conversation as they quizzed their obroni brother late into the night.
I recall one conversation, however, when the conversation veered toward religion. The four Natafgi daughters were extremely curious about my religion. I had not told them I was Jewish, but then, they had never asked. In my mind, religion, especially Judaism, was a subject too freighted with preconceptions and misperceptions, so instead of raising the subject on my terms, I determined to let the girls raise it on theirs. One day, I felt the question looming.
Little Maha was the most curious, as usual.
“So what are you, Steve?”
“Oh, Maha, shhhhh!” Samira said, correcting her sister.
“Don’t listen to Maha,” Salima added.
“Why, not? I want to know. Are you a Christian?” Maha asked.
“No, I’m not a Christian. I’m Jewish.”
Maha blurted out excitedly, “Oh, Steve, you are the ones who killed Christ!”
“Oh, Maha, you mustn’t say that,” admonished Samira.
“But it’s true, isn’t it?” Maha persisted.
“No, but it wasn’t Steve who did it. That was a very long time ago,” Samia replied.
“Did you kill Christ? Please, you must tell me,” Maha asked, her face full of wonder and expectation. Precocious Maha had flirted with me since the moment I arrived, and it was apparent that this question, the Jewish question, was the one the four Natafgi girls had been dying to ask for days. The older girls were simply too polite to ask. Maha’s question was borne of youthful curiosity, without any sense of embarrassment. It was no more accusatory than those little schoolchildren in Sunyani poking my astonishingly light skin to watch it blush. Kids just want to be kids.
This Muslim family, themselves a minority within passionately evangelical Ghana, had been taught, most likely in the religiously affiliated private schools they attended, the old canard that “Jews killed Christ.” How to reply? My mind raced as I tried to condense, into just one coherent sentence, the fact that it was the Roman government that executed Jesus for his subversive political activities, a version substantiated in the Vatican’s 1965 Nostra aetate renunciation of Jewish responsibility for the death of Christ, etc. There was so much I could say.
What came out instead was gibberish: “Your sister is right. It was a very long time ago.” I realized this was an unsatisfactory answer. Maha was searching for the ingredient statement of my personal label, trying to determine exactly who I was and how I fit into the recipe.
The girls looked at me with puzzled faces. Serious faces. Then, Maha giggled, bouncing with excitement. In an instant, the tension dissipated, and we all dissolved in laughter.
Maha slipped her hand around my fingers and squeezed.
“Ei, I don’t care what happened so long ago. You are just my new brother. My new brother Steve!” Maha exclaimed.
* * *
Being Jewish isn’t a matter of packaging to me. I don’t wear a kippah. But my Jewishness is a listed ingredient on the product label, if you will, of Steve Wallace. My way of looking at the world seems very Jewish in a sort of underdog, Woody Allen tragicomic, fatalistic way: life is overflowing with ambivalence and often finds a way to disappoint—if only slightly—at the very moment when we think we should be happiest. It is our lot to persevere nonetheless. And at the end of 1994, with Omanhene launched and going well, I was about to find out how accurate my worldview could be.
Most entrepreneurs fall too much in love with their business. It is very hard for them—understandably—to entertain the possibility that they may have gotten it wrong. They struggle mightily to reconcile the unassailable logic of their value proposition with the myopia afflicting all who question them—or so it would seem. Many entrepreneurs truly believe they are the smartest people in the room. You need this singular confidence and optimism to gain any purchase as you ascend the rock face of a new venture. Myself? I tend toward a Midwestern self-depreciation—or perhaps it’s a Jewish self-depreciation—but I wonder if this tack has always been helpful.
I invariably weigh the possibility that I might be wrong, that my assumptions are faulty, and that I’ve fatally misread the tea leaves. It concerns me that, far from being the smartest guy in the room, I might just be the idiot in the room, or if not the idiot exactly, the least knowledgeable. There is much to be learned from listening to others, if only to confirm the fact that occasionally you might indeed be the smartest person in the room. The considered path, the intellectual pause, the quieter approach, are not signs of weakness; nor is acknowledging, with clear-eyed honesty, the shortcomings of your own talents or business model. But you must inflect the trajectory of self-doubt slightly, so it becomes a source of buoyancy and nimbleness rather than the cause of crippling indecision. Optimism—especially in the face of disappointment—is critical to achieving success.
My dream of a chocolate factory in Ghana—one that manufactures fine chocolate starting with raw cocoa beans—suggests a narrative arc fraught with the attributes of Greek tragedy. Not “sleep with your mother and poke your eyes out” tragedy, but an Icarus narrative, a journey marked by development hubris.
Fly too close to the sun, and your chocolate melts.
Deε de n’ahwedeε no n’we nase.
The owner of the sugar-cane chews the bottom section of the stalk (the sweetest part).
“A prized item should be enjoyed by its owner.”
CHAPTER 11
Divesting Ghana
Ghana and Omanhene shared much in common: we both needed money. During the formative years of Omanhene, from 1991 through 1992, Ghana was not yet a democracy and was run by the military Head of State, Flight Lieutenant Jerry John Rawlings.
As Ghana’s new president, Rawlings had his hands full. Ghana’s economy had been devastated by a succession of governments suffering from either kleptocracy, economic naiveté, or a combination of both. Some governments were openly hostile to private enterprise—often jailing anyone who found a way to make a little money, so convinced were they that any successful business was necessarily corrupt. Rawlings had little choice but to seek economic aid from the World Bank. The World Bank lends money provided borrower countries comply with a set of behaviors known as “conditionalities.” I don’t see any difference (aside from pretention) between “conditionalities” and what most people simply call “conditions.” But in the nomenclature of international finance, when you want to borrow money from the World Bank, you must accept conditionalities. Why can’t economists use economy of language?
As in other countries, after an extended flirtation with Soviet-style economic planning, many enterprises in Ghana were wholly owned by the government. These companies sported ham-fisted, portmanteau names like Goil (Ghana Oil, an operator of petrol stations), Ghacem (the state cement company), or Wamco I and Wamco II (West African Mills Company, two now defunct state-owned cocoa-processing factories). Our production facility was no different. The state-owned Cocoa Processing Company, Ltd., was colloquially known as “Portem,” short for “Port of Tema,” the area where the factory is located.
The World Bank regards any state-owned business as inherently inefficient—it’s often correct in this belief—and consequently it compels a debtor country to divest itself of these so-called parastatals as a conditionality for receiving tranches of loan money. So the World Bank told Ghana to assemble a list of state-owned enterprises that would have to be divested in short order—Ghana’s conditionality for receiving World Bank money. The Government of Ghana, in its heart of hearts, was loath, for reasons patriotic and financial, to sell off state assets, the patrimony of the nation. Imagine for a moment, if holders of US debt were to tell the US government to sell the Hoover Dam or Cape Canaveral. What’s more, these parastatals are often sinecures for those who have rendered all sorts of political favors. In return for party loyalty, you get a seat on a board with a monthly directorship “sitting fee,” or perhaps even a post as managing director.
Even before the Fancy Food Show, I heard rumors that Ghana would be compelled to divest itself of state-owned businesses, including Portem. I understood, intellectually, that most state-run companies would benefit by having private investors take charge, inject fresh capital, and install experienced leadership. But in rare cases, state-owned companies might turn an arm’s-length profit, and a “one size fits all” divestiture solution might have unexpected consequences.
So the dance began: Ghana submitted its conditionalities list to the World Bank, omitting those state-owned companies of greatest interest to government. Noting these curious omissions, the World Bank required Ghana to resubmit the list with the missing companies. At the end of the gavotte, after many back-and-forth exchanges, the state-owned cocoa-processing factory where we produced Omanhene chocolate was included on the final conditionalities list, primed for divestiture.
Ghana
’s delaying tactics failed to subvert the stern, unforgiving realities of borrowing money from the World Bank. If you want the loan, you must sell your state-owned assets on a quick schedule—often leading to depressed prices. You can’t hold onto underperforming state-owned companies in the misguided hope that they might eventually be fully valued by the global market. To be sure, the short-term social consequences of divestiture are often devastating, especially if you are a fifty-two-year-old, low-skilled laborer at a company being divested. But writ large, you can understand the World Bank’s remorseless position on divestitures, even if you don’t condone it.
In our case, Omanhene brought Portem dollar-denominated sales from exports of value-added Omanhene cocoa products. This, I believe, is exactly what David Ricardo would applaud: Ghana capturing profit from exploiting a global competitive advantage. Portem/Omanhene was that rare instance of a state-owned enterprise poised to reap a benefit from the production of premium export goods. And yet, it is precisely at this moment of ascent that the World Bank—assuming Portem was just another poorly managed, debt-ridden, government-owned mess of a factory—mandated its divestiture.
To comply with the World Bank’s conditionalities, Ghana unenthusiastically established a Divestiture Implementation Committee (DIC) to oversee the bidding process for the sale of state-owned enterprises on the conditionalities list. The DIC invited Omanhene to prepare a sealed bid for Portem.
Though Omanhene’s annual revenues were miniscule at the time, less than $10,000, I began work on a divestiture proposal with an initial bid price of $6 million. My strategy was entirely defensive: without Portem, I’d be back to building a new factory from the ground up, with no guarantee that I’d get access to Ghana’s bean supply. In any case, building a factory would take time and a great deal of money. I didn’t want to lose momentum at the very moment we were gaining traction.
Obroni and the Chocolate Factory Page 15