Arkady opened Ilya’s flat about nine, I got there at 10:00. We talked and worked together until he had to go to the airport to pick up Steve. When Steve arrived we worked on the material for Theo’s visit hot and heavy. He is not feeling well. Rubanik & Adler came for a two hour brainstorm on Synchron Q. Adler is slow, very deep, Rubanik is faster, a strategist. Rubanik shared his feelings about Ilya who has assigned him to just baby-sit some of the plants during the interim, just be there to be sure they are working on the Synchron stuff. He doesn’t see his role in that way at all.
We worked and talked into the night. It was a good discussion time with Steve, getting a feel for where he is on a lot of issues. At this point Synchron stock is pretty high on my scale. We are scheduled to visit Avtosvet in Kirzhatch tomorrow and Avtoagregat in Kineshma on Thursday. I feel these visits are critical to establish our position prior to the Lucas (Theo Benz) visit next week. I was especially glad Steve was here for the visits.
Wednesday, the Avtosvet van picked us up at 9:00. Arkady and Geller joined Steve and me. We got to the plant at 11:30 where we met with the GD and the TD. The GD (Federenko) was very pointed, asking who is Synchron, what does it have going for it, how many people work for it, etc., etc. He would not look anyone in the eye asking these questions. Steve stuttered and didn’t really answer the questions. Arkady was doing the translation for this and he was embarrassed.
When the guy asked how many people Synchron had working for them, Steve asked Arkady… After a bit of this it seemed to blow over and the GD opened up or seemed happy enough with the rest of the meeting. Geller told us later that it appeared the GD just gave up trying to get answers and conceded the balance of the meeting.
During the meeting Steve was shaking like a leaf. He had a real dose of the Gamboo, a very deep chest cold that caused hacking, trying to cough up who knows what. It was not a comfortable situation for anyone. Arkady said later how embarrassing it was for him since Steve didn’t answer any of the question posed. One thing was very clear, Federenko had been talking to the GD at Kineshma (Shmyshlaev). Nothing was really settled, only a brief view of their preparation for Theo’s visit the following week and it wasn’t ready.
I was more concerned about the situation in Kineshma after this meeting. We got back to Moscow about 9pm. Ilya and Vadim Ushkavich were waiting in the hall to get in. Ilya had cleared the visa issues and had arrived from Berlin about 5pm. Vadim was bringing me the translations of the Quality Engineering class material he has been working on.
We had only a couple of hours before we had to board the train for Kineshma, but Ilya was really balking. He didn’t want to go to Avtoagregat and was lobbying Steve for that angle. Steve and Ilya had some business stuff they wanted to do the next day in Moscow but I felt like it would be a disaster if they didn’t go. My last trip there the GD was just waiting for some guidance on what to do for a legal arrangement and when papers would be signed. It was nearing cutoff time when anybody could go since the trains left at 11:30 and it was after 10 now.
Steve finally took my position suggesting that it was critical to show up at Kineshma, then he just hung back and waited for Ilya to make his next move. As the minutes ticked away I asked Steve how bad it would be if he didn’t get his planned work in Moscow finished on Thursday? He said it was very important to get it done in preparation for Theo’s visit. He asked if I could go to Kineshma? So I put on my coat, drug Geller out the door and we were in a cab to the train station in 5 minutes. I was steamed at Ilya, he did not want to face the GD in Kineshma. I was also steamed at Steve for his indecisiveness. We ran to the train and just made it (a pattern?). – NIGHT ON TRAIN –
Thursday 3/16/95 Arrived in Kineshma at 10:30am. Garshkov met Geller & I at the train station, the car took us to the hostel. We had a meeting scheduled with the GD at 12:30. Geller, Kolesnikov,. Garshkov & I met with Shmyshlaev at that time. We strategized how to conduct the meeting on our walk from the hostel to the plant. I told the GD that we wanted to do two things on this visit, first discuss preparations for Theo Benz trip on Monday next week, and secondly, to review the business plan they have come up with to build Lucas parts. I apologized for Ilya’s absence saying he had just returned late last night from his trip to Germany, having been held up there for three days. I then said how important the relationship is for Avtoagregat and Synchron since we want to engage other Western clients with Avtoagregat, that Lucas is just the first.
The GD then said how he had reviewed the suggested model Synchron had proposed for the manufacture of Lucas parts, setting aside a production area just for that purpose. His board had reviewed that and found it unacceptable. They do not want to have a portion of their production area dedicated to a single business focus. He also wanted to come to an understanding of the exact form of business relationship we are proposing. He is ready to make some suggestions right now that we can deal with and consider. He said that if Ilya were here they could deal.
I got Ilya on the phone in Moscow and he agreed to visit Kineshma with Steve on Friday. The GD had time from 11 to 2 for them. Ilya related four things that were missing on the information Avtoagregat had sent them, I agreed to try to get answers by the time they arrive tomorrow. We finished the meeting with the GD by outlining the missing information and his resolve to get the answers by noon tomorrow. We walked to the hostel, had dinner, then Kolesnikov and Garshkov came to my room where we worked on Garshkov’s version of the Avtoagregat business plan until midnight.
Friday 3/17/95 We got to the work room by about 9am and started working with the Avtoagregat guys on the data. It was clear we wouldn’t get all we needed. Steve called the workroom from the GD’s office and we decided it would be better to keep working on the data while he and Ilya dealt with the GD. We went to the GD’s office at 12:30 with the data we had collected.
We started discussions at that time with the TD Smirnov who hasn’t been a great ally. The GD had left for the weekend. It was a forthright discussion with him telling us he isn’t too positive about the Lucas deal, that he has many other irons in the fire and they hold at least equal interest.
Steve related a survey they had done at Booz where they looked at the Return on Investment to stockholders across many industries. They found the average ROI was about the same across the industries with about the same variability within each industry. The point Steve was trying to make to this guy was that companies that tried to be good in several product lines were less successful than companies very good in one product line. The TD didn’t buy any of it.
I described him as a dinosaur to Steve, a relic of yesteryear unable to come into the modern world. He didn’t leave a good impression on this gathering. It was clear we had material missing that should be in place for Theo’s visit, but…. We had to get to the train for our return to Moscow. Much good stuff was discussed with the GD earlier so it was in my view a successful visit. The visit by Theo is now key to the success of our relationship here.
Saturday 3/18/95 We arrived in Moscow at 5:30am, went to Ilya’s apartment where Steve took a nap, I went to my hotel room to unpack, then we gathered at 10:00 am to continue the preparations. Neil Mathius is supposed to be here later today and we have a tentative planning session with him for Theo’s visit. Theo is to arrive Sunday evening. Ilya received a fax that Ken McKeever of Lucas had scheduled an emergency planning meeting on Monday morning. Theo Benz had to be to in Koblenz and we must have a meeting later today at his Intourist hotel when he arrives.
Theo won’t be here Monday!
We met with Mathias and his translator. Mathias didn’t know more than he has said in his fax, but he thought Theo would arrive late Monday. We put together a backup plan in that event and waited for Mathias to phone us with confirmation when Theo would arrive.
Sunday 3/19/95 – We still didn’t know if or when Theo would arrive but speculated he wouldn’t. We worked on the visit preparations the balance of the day anyway. The word at the end of the day, he is not coming.
Monday 3/20/95 This is the day Theo Benz was to be here from Lucas for the all-important visits and closures for this phase of the Lucas project. We are stunned. I’m asking myself how we can do damage control with the plants. Ilya says this is good, we can tell the plants since they weren’t ready we told Lucas to stay home, showing how much power Synchron really has. Steve is saying nothing.
Ilya & Steve decided to spend Tuesday in St. Petersburg working with the attorney on legal stuff since it is a dead day now. Ilya planned on a series of plant visits for me & others in the interim. Steve spent a half hour with Rubanik, Adler & I outlining a strategy he now expects us to execute. It deals strictly with Joint Ventures in Russia between Western firms and Russian companies. Then he and Ilya left for St. Pete. Synchron stock pretty low…
Tuesday 3/21/95 Met with Adler & Rubanik discussing the coming out of Synchron “Q”, making it a profitable business venture. After a lot of discussion, with Rubanik hedging his position with the Russian Deming Association and Adler muddling through it all with “everything looks ok,” it isn’t clear to me where this is going. I decided to just write a business plan I can send to Steve and run it by these two for possible comments. I prepared the plan, then tried to fax it to Adler & Rubanik so they could have a response faxed back upon my return to Ilya’s apartment after the ZIL trip. Couldn’t get them faxed so Arkady agreed to fax them on Wednesday.
Rubanik responded with a few comments, nothing from Adler, so this is the final version that I faxed to Steve on Friday. Arkady talked to me about Ilya & the Synchron effort. He is really down on Ilya and explained a thousand reasons why I shouldn’t waste my time working in Russia. He is excited about emigrating to Toronto.
He finally has a sale lined up on his flat. His papers are good until June, that is, he has until then to make the move. He says Ilya will kill any relationship possibility with a Russian company the way he comes across. He says all the Russian Synchron guys agree on that. They also agree nobody can talk to Steve about it. Arkady said when he visited a brother in Israel, the kids would make fun of his brothers kids and call them “Russians!” He said they call me a Jew in Russia and they call me a Russian in Israel. I boarded the train at 11:30 pm for the trip to the ZIL plant in Mtensk (pronounced um-tensk) with Geller and Kolesnikov.
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