Gene McCarthy’s background
The shoe industry
Globalizing vs internationalizing
Taking shoes global
Doing business in Russia
Cultural issues Gene has encountered
Gene has had a varied career in both the Athletic and Outdoor industries, holding executive and C-suite positions at Nike, Jordan, Under Armour, and Reebok as well as Timberland and Merrell. His most recent role was as President & CEO of ASICS Americas. He is currently Board Chairman of FootBalance Systems in Helsinki, Finland. Gene has served on several other boards and has been a speaker at various universities and colleges including USC, Marquette, Princeton, and the business schools at both Columbia and Cornell.
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[email return to Philip@Auerbach-Intl.com]
Hello and welcome to Global Gurus! Every Friday, we explore stories of international business and speak with industry leaders operating around the world. I’m your host, Philip Auerbach of Auerbach International (www.auerbach-intl.com). Thank you for joining us.
As most of you know, we start each podcast with a running segment called “Faux pas Fridays,” where we explore funny bloopers or mistranslations that do not quite convey the professional image that your organization wants to project.
And since today’s guest has been in the fitness industry for many years, and since athletes tend to go to bars after their sports matches, I thought I would reprise a blooper that was done a few podcasts ago, but it’s appropriate. It was a sign in a Tokyo bar that said in English very simply, “Special cocktails for the ladies with nuts.”
Today’s guest is Gene McCarthy.
Gene has had a very varied career in both the athletic and outdoor industries holding executive and C-suite positions at Nike, Jordan, Under Armour, and Reebok, as well as Timberland and Merrell. His most recent role was as President and CEO of ASICS Americas. He is currently the Board Chairman of Foot Balance Systems in Helsinki, Finland.
He has served on several boards and been a speaker at various universities and colleges, including USC, Marquette, Princeton, and the business schools of both Columbia and Cornell.
Welcome, Gene. I’m delighted that you’ve joined us.
Well, Philip, I’m happy to be with you. And I loved your little blooper at the start. Made me chuckle.
Yes, and that is very appropriate, especially for athletes. And everyone, for that matter.
So, before we dive in, perhaps you could tell us a bit more about your background, how you grew up, and how you gained your global experience.
Yeah, first of all, I’m happy to be here, and it’s exciting to be here as part of the Global Gurus.
But here’s what I’ll tell you: I’m an Irishman, so I have to tell a story about my background. Of course, I grew up in the Bronx, NY, one of five kids and the oldest of five kids, and of course, we had two parents. You do the math…we lived in a 2-bedroom apartment.
When I was 13 years old, I happened to see the cover of a magazine called Sports Illustrated and there were two guys on the cover. A very vivid picture. Two guys were running, and I was just taken aback by the fact that it wasn’t a baseball player or a football player, and I was interested in these sinewy muscles and the grimacing faces.
I read the article, and it was about the dream mile. And at the time, in 1954, a guy named Roger Bannister was the first person to break the four-minute mile, so it had always become a significant achievement. So, at 13 years old, I read the article twice. I told my family at dinner that night that I had made the declaration: I am going to break the four-minute mile.
Of course, it was met with eye-rolling, and oh, that’s good, honey. Good luck.
Eight years later, I’ll fast-forward.
I was about to graduate from Fordham University. Fordham University is also located in the Bronx. I could have attended 100 colleges on scholarship, but I chose one that was only 8 miles away. I still don’t know why.
I didn’t break the four-minute mile. I ran four minutes in three seconds, so I did something that young people don’t do today. I wrote a letter.
That’s a paper and a pen, and I wrote a letter to one of the guys on the cover of the magazine, and he wrote me back, and I said I always wanted to break the four-minute mile. I’m 3 seconds away, and he invited me to move to Florida. His name is Marty Liquori, and he owned a chain of sporting goods stores. But he was also one of the greatest runners in the world.
And he said he’d helped me with my dream. So, if it weren’t for that magazine cover, I don’t think that I ever would have gone to college because we couldn’t afford it, and it wasn’t something like that…. I was the first person in my Irish immigrant family to go to college.
But because of that magazine, I received a free education. I got to see the world both as an athlete and then in business, and it began for me with an almost 40-year career working for some really fun athletic brands that I’m sure everybody’s heard of.
If anybody looks at my profile and sees all the companies I’ve worked for, I guarantee you every listener owns a pair of shoes from one of those companies I’ve worked for.
So that’s a little bit about my background.
That’s fascinating, and you’re probably right about every listener owning a pair of shoes from one of the companies you’ve worked for.
Tell us a bit about the sports fitness industry, or, I guess, the shoe industry. It’s more about the sports shoe industry and how you got into that and what your experiences were.
Yeah, that’s a great question.
I used to be a decent runner when I was younger. I made the US Olympic Trials, made the semifinals, and so I was sponsored by Nike at the time, which was, you know, a relatively fledgling company. It began in 1972 and this was only eight years later. I had a relationship with them.
And then I stopped running after the 1980 US Olympic trial. A guy from Nike who I used to work with called me up and said, “Hey, do you know anybody with a marketing background who would like to be a tech rep in the state of Florida?” And I replied, “Yeah, me.” I live in the state of Florida, and I have a marketing background, so I got my first job with Nike, and it was probably a pivotal role for me because, throughout the next 40 years, I used that as my base for how I viewed things.
I was out in the market not only extolling the virtues of this new Nike brand, but I was also taught to listen and look and I’ve used those skills ever since, but that’s how I started in the industry. My time at Nike spanned 21 years, with the last four years being the most impactful on my life, and that was when the Michael Jordan brand actually became a brand instead of just a collection of shoes; it had its own P&L, so there was a lot of work to do there, but it was like having a start-up but having a lot of dad’s money at the same time. But that’s how I got into the industry.
That’s fascinating. Then how did you come to work for the different shoe manufacturers?
Yeah, that’s interesting.
I was 47 years old at the time. I decided to leave Nike with four kids. I wanted to know if it was me or if it was Nike. Nike at that point was worth $12 billion, and it’s worth $47 billion now, and I wanted to know if I was any good or if it was just that I worked for a good company, so I got an offer to work at Reebok, the main competitor.
And Nike was so happy for me, Philip, that they gave me a going-away present of two days in federal court because I got sued because of my non-compete contract. This is the first of four non-competition agreements I’ve had to sign in my career, so you can imagine how contentious the industry is.
But as I went from brand to brand, I was always recruited to go to those brands. I never sought employment, and at each stop I learned a lot about the industry we were in – not just about the brands that I worked for – so it was an invaluable education.
There’s a difference, Philip, between experience and tenure. If you’re at Nike for 21 years, that’s called tenure. If you work for Nike, Reebok, Under Armour, or ASICS for example, that’s called experience, so I’m blessed to have had all those experiences.
That’s fascinating. Is there much difference? This may sound ignorant, but to me, a running shoe is a running shoe, and obviously, they all use the same basic technology to make athletes run faster. So how did these brands distinguish themselves in some way? Were you involved with the branding issues and then the globalizing issues, the internationalizing?
Yeah, you know it’s interesting.
You use the word “internationalizing.” There’s a difference, at least in my book, between global and international.
And I think there’s a lot of commerce that’s done between countries, and I would put that under the category, at least in my industry, of being international.
Global is to be a big brand. I always denote the difference between a brand and a company. You’re right. When I went to the factories and was on site, I ran the product engines at both Reebok and Under Armour. Other shoe companies, such as Nike, were being built in the same factories when I visited them on different floors.
Are the shoes basically all the same? Not really. Some shoes are better than others. But what separates the pack is the marketing. So, I would always describe Nike, for example, as a marketing company that makes shoes on the side.
And you know, my last run was at ASICS, where they make beautiful products. Some of the best-made products in the world. But they never really got the idea of branding, so that’s a big thing that separates them. There are other little things too. When you get down into the design elements of a product, it’s not just the aesthetic, the visual, and the optics of the product.
It could be something subtle like the use of color or a logo. It’s interesting at least in the athletic industry, they all have names. It’s almost as if they’re a friend of yours. So, I’ve been involved in a lot of those. I believe it is the most well-known. The first company I ever worked for was Air Jordan. It was named after a guy. In the rest of the industry it’s not.
That, to me, is not Halley’s comet. That brand will never be duplicated. Then it hasn’t been one like that in a long time, but branding makes global companies a little bit more international, so there’s nothing wrong with being an international company.
But allow me to give you an example. Global is this: You go to DisneyWorld, and I’m sure you’ve been there, maybe even recently. You look like a fun, youthful guy. After all, it’s a small world, if there is such a thing.
And if all you do is get in a boat and it takes you through, it’s the same song, “It’s a small world,” over and over again. But the language changes, and that’s what a global company is to me: the same song all over the world. It’s just been tweaked to a more understandable language by people in their locale.
Yeah, very true. That’s a very interesting distinction. You may know that I run a 30-year-old translation company. Globalizing and internationalizing are very misused terms. And if you ask someone what they mean, everyone has slightly different definitions. We don’t get as many emails as we used to asking, “Can you globalize our American brochure for Mexico?” Uhm, and yes, and what you mean is, Can we translate your brochure into Spanish and acculturate it for Mexico?
Localizing and internationalizing have other meanings in the language business involving everything from currency and colors to naming and date formations and whether you’re using international terms such as “football” for “soccer” or do you say “soccer” for Americans, because there are many different issues like that. It’s fascinating.
Yeah, I took it upon myself to learn about those famous people when I traveled. Now, I didn’t immerse myself in every cultural idea that another country had. But if I were in the UK, for example, I would always refer to it as football. Never soccer. And I didn’t do that so I could speak their language. I did it to honor my hosts.
That is a very wise decision. It’s a great international lesson right there.
Please tell me about some of the most profitable ventures you’ve had, the most successful launches you’ve done.
Well, I’ll tell you.
The most notable is the one I just mentioned, which was broadcast, Air Jordan, and here’s what happened. This is going back to 1998 or 1999. The brand wasn’t doing well. Many listeners who follow Michael Jordan or the Jordan brand wouldn’t believe that, but it wasn’t doing well. He had just retired, and a handful of us was charged with how do you get this brand back on track before we fold the tents we realized that when you have a lot of momentum, it’s like riding a rocket ship, but a rocket ship takes a lot longer to go up than it does to come down, so when you lose that momentum, you have to put your foot on the brakes.
So we introduced a product line and my idea, going back to my days as a tech rep 20 years earlier and wandering all over the state of Florida and looking and listening. I didn’t go to the store owners with this new product line. They went out to the kids in the street, went to all the major markets, and visited with the kids, and they didn’t like the line.
But they kept asking for this one shoe that had been released about ten or 12 years earlier. So when we decided to re-release that shoe, which gave birth to this whole sneakerhead thing called sneaker collectors that goes on now. I brought it back out to those kids, and I said to them, “Hey, I’m going to show you something, but I don’t want you to tell anybody that I showed you this because if you tell anybody, I’m going to lose my job.”
So, I would show them the shoe, and the idea was for them to tell everybody. It’s like telling a kid, “Don’t spill your milk,” right? So, the next thing you knew, with absolutely no marketing, there were kids lined up at stores all over America waiting for this shoe, then the doors to their favorite store opened, allowing them to purchase it, but supplies were limited.
The oldest trick in the book is supply and demand. I called it evaporation versus liquid. You want anybody who makes a product out there or sells a product to let it evaporate, not liquidate, because, in my business and a lot of businesses, you don’t make money on what you sell. You lose money on what you don’t sell.
So that gave birth to this, rather than simply reviving a struggling brand at the time. But what it did was come up with a new practice that every other company tried to mimic, and they still do it today, so that was important to me.
That’s fascinating; it’s a great philosophy and a great way to do it.
And, of course, you didn’t lose your job, but that was the best part as well. Did you begin with an international brand, or did you concentrate on the domestic market?
So that’s a great point, and it’s one of the big lessons I’ve learned, and I still think it’s an important lesson.
In our bravado, we now, after two years, have had great success with the brand. We decided to go to Europe, and we figured, OK, let’s just unleash this wild animal. And in all these other countries, they’re going to love it.
They hated it. They hated the idea of it, and that goes back to your comment too. You know, is it football or soccer? You know basketball is not as popular in other parts of the world as it is in America, but it’s now popular. The NBA has globalized itself, and I believe they have done so very shrewdly and strategically, but we had the door slammed in our faces in many places.
But the second lesson I learned was to never forget the store owners. We went and tried to meet the cool kids in each market and try to get them to be ambassadors for our product, and it would take time.
You know you have to crawl before you walk. You know, Nike used to call it “word of foot” advertising. So, we gave free shoes to kids, and it did so. Created a spark. But it took several years before it took off. I also learned that many businesses give up if they go somewhere and try something and it fails, which was one of the most important lessons I learned at Nike. No, that means you keep trying until you get it.
And so, it took a while. It wasn’t easy. It wasn’t an instant success. It’s also something I’ve noticed with many Americans when they travel abroad to any country: they tend to believe that if they like something, then the rest of the world must too. So, it’s a little bit like, you know, putting blinders on Americans.
It doesn’t work that way, I think. I’ve learned over the years that you have to start small and think of it as planting a seed rather than hoping. You can go look at one of my favorite sources, Ralph Lauren, and how they grew their business in China.
Ralph Lauren, you know they were smart at first. They set up distributors right away and carefully selected them. It was a lot easier back then 25-30 years ago, but as the brand grew, Ralph eventually regained control of it, but it took decades to get the brand to a point where it was not only popular, iconic, and successful but also profitable.
I didn’t realize it took decades. That’s fascinating.
And that’s a wonderful lesson, especially in China. Some Americans have a very short fuse. That’s where the time frame is.
We want instant results in this quarter, this week, this month, or whatever, and the Chinese, with their 5000-year history, know that they can just wait things out and that most Westerners, particularly Americans, lack the patience to wait decades for something to become profitable.
So, it’s incredible that Ralph Lauren had the foresight and perseverance to do so.
There are two things that you know. One thing that should strike all Americans is this: instant gratification takes too long. And in America, attention is the scarcest resource. So if we don’t get rich quickly, if we can’t clip, click, and snap our fingers and win the lottery today, it’s considered a complete failure, but it’s not.
You have to be patient and take your time.
I love that instant … But did you say instant gratification takes too long?
I think about you when you try to hail a cab in Manhattan. You know, 15 years ago, there was no time frame for it. You just hope you get one now. People get upset when they go on their app and order an Uber, and it says it’s going to take eight minutes. People were so upset they had to wait eight minutes, so yeah.
Yeah, I know how awful it is, and what would people do with eight minutes besides perhaps take out a magazine or a book, or read something, or read emails, or whatever.
Yeah, look at their phone.
Take a close look at their phone.
As you’ve taken your various athletic shoe brands global. What kind of encounters have you had in different parts of the world?
Good question and the one thing to note is that this is probably true of any industry in the athletic industry, even though the industry has set standards and timeframes and timelines, and there are certain sports, etc. Every company runs differently.
You’ve heard of New Balance, of which I’m a huge fan based in Boston? They’re privately held, so they have a different way of doing business. Brooks Shoe Company, which is up in what state of Washington and right outside Seattle? They’re owned by Berkshire Hathaway and Warren Buffett, so they have a different business model. Nike, and Under Armour, are publicly-traded companies, so you’re at the mercy of pleasing analysts and shareholders every four quarters.
So having that is almost a restriction on how you do business. Or perhaps not a restriction like the one we have in place. It tends to drive how you go about getting into other markets outside of the US.
I will tell you that when I joined ASICS in 2015, there was a distributor model. So, the United States was a wholly owned subsidiary of ASICS, which, as I mentioned earlier, is a Japanese company, whereas Canada, Mexico, and all of South America were not.
Well, Brazil was a wholly owned subsidiary, so there were third-party distributors, and when I went down to meet these third-party distributors or up to Canada, I realized that they did things their way as opposed to following …at least you are aware of the parent companies and their branding concepts. They were very proud that they knew more about their market than you did.
Well, that’s good. You should know more about the market than I do, but what I also realized was that we weren’t getting anywhere. We were just selling stuff as opposed to expanding the brand, so I had to change six distributors – Mexico, Canada, Peru, Chile, Argentina and Colombia – and bring them into wholly owned subsidiaries.
And the first thing I did was, rather than tell him how it should be done, I wanted them to do it the way they wanted to do it, but I just wanted them to know where the swim lanes were, where the barriers are.
So, in my opinion, you can successfully implement a strategy in a foreign country. But you need to surrender and relinquish the tactic. Thanks to the professionals that you’ve chosen in each of those markets, it sounds hard. You’ll sleep with one eye open. You’ll worry about it, but if you pick the right partners to join your brand, they will ultimately do the right thing, so you can have the strategy, but you need to relinquish the tactics.
Yeah, that’s fascinating. It’s very much what other guests have also echoed.
In the United States, you can do business informally with anyone whom you have not even met. You can be in San Diego and call someone in Penobscot, Maine, and just order something and know it happens.
But the majority of the world is in Latin America, as well as the Middle East, Europe, South Asia, Africa, and East Asia. What’s critical is trust and rapport and making sure that you’re working with an agent or distributor and their employees, whomever they are, where you trust that they will do what the mission ultimately is, but they may do it in a different way than you’re accustomed to doing it.
I completely agree with that.
I will give you an example of when I was at Under Armour, and they had launched footwear there. They’re a clothing company by nature. Competing footwear giants.
I came in because the first launch was not a success and they needed to relaunch the brand as the biggest undertaking in my career. The first thing I did apart from rebuilding the team and replacing 75 people out of 104, I went to my partners in China and called them my partners because, as I didn’t realize until I got there, some of my predecessors didn’t call them partners and didn’t treat them like partners, and it was way too transactional.
So, on my very first visit, I didn’t go on a business trip. I went to go and meet them, let them get to know me, and I got to know them. We didn’t talk about what the next 18 months of orders would look like. We didn’t talk about it, and I just wanted them to know that I’m a 51/49 guy. So, what that means is that I’m going to be 51%. My company wouldn’t name itself here, right? Whether it’s Nike or Adidas, I don’t know, but I’m going to allow you on the other side of the table to be 49%, and occasionally we can flop so that I’ll be 49% and you can be 51%. The point is that there is a 2% difference in the middle, which is a trough. That’s where you do business.
As a result, the closer you get, the closer you can get things to get done, and there are usually mutual outcomes if you go in thinking you’re the big guy and it’ll be 75% you and 25% the others. You’re so far from even getting the other party to listen that you’ll never get anything done, and if you do, it’ll be extremely short-term and not sustainable or strategic.
That is extremely true.
Yes, some North American business, especially North American business in general, is very transactional. The error that many people make … Americans or a large number of people make the mistake of flying there, discussing business, and hoping for the best, then flying home and all of that.
And it very often takes many dinners, lunches, and sometimes multiple visits just to get to know people, and you discuss it there. Families – you know, what’s important to them—and perhaps books and sports and art and other issues but not business. That comes later.
Right, and I think that’s the way many other companies do business, but I don’t think that’s the way American companies should do business with each other. It is a very noble business practice, in my opinion, and you mention the Chinese for 5000 years.
The Japanese are the same. They have a centuries-old way of doing business that they understand and embrace. This is important; it doesn’t mean you can’t do business your way. I mean, my goodness, I’ve been to the Russian border, and they do business in a certain way, and most of it would be considered illegal, if not immoral, in our country.
So, it doesn’t mean that you have to condone it; you just need to be aware of it so that you know yourself. You can pick and choose your spots. The same is true in China, where some things are very transactional. There are certain Chinese businessmen in China, but you must first understand the culture of the people you’re working with before you can do business with them.
Very true, yes. Tell me more about doing business in Russia. What were some of your experiences there? And when?
Yeah, Russia is an amazing place.
You already know what it is. You could see the Red Square, and you could see centuries-old art in some of these old buildings and then all of a sudden there’s a Louis Vuitton pop-up shop in the middle of Red Square. So, it was.
It was the biggest contradiction I’ve ever seen. I did learn how to drink vodka, and I can tell you that the vodka we drink in this country has nothing on Russian vodka. But I can also tell you that sometimes you have to let your Russian opponent win. They have to be there, you know. They decide whether to win or lose. So sometimes you have to let them win.
Also, they respect you more if you stand up to them, which they do, like a little bit of bullying and a chest thump. At least in my industry, they like to be more powerful than your brand. They do the 75/25 rather than the 51/49, and sometimes you just have to roll over and play dead a little bit. You have to know how to get what you want.
I also realized that maybe not so much in Russia, but in other countries, you have the idea of, you know, paying somebody a gift as they call it… Perhaps you are aware of a gift that is not permitted. Many businesses, especially those involved in international trade, believe that this is not something, even if it is illegal. Other countries believe that this is simply a business practice. That’s how it’s done, and you have to. All those nuances?
Are you talking about what we would call a “bribe” or “a physical” gift like a …
Well, you called it a bribe.
Some of the gifts are bribes; that’s always a possibility.
Sometimes there’s been money offered, particularly to the people who represent American companies in the factories, and it compromises the young people who are trying to build their careers. You know, we work in these factories as expatriates. And you just have to learn that, while it may seem intimidating and appealing at the time, it is the worst thing you could ever do. Not only because you could jeopardize your career, but it also sets a different tone for the business relationship.
What about developing countries? And the Muslim world? It is much more common to give physical bribes if not monetary bribes. In some countries, such as Japan, where you would normally—for example, bring a bottle of whiskey when you visit someone. Now, that’s not a bribe per se. It’s just like a gift—a token gift. However, you’re talking about much larger gifts and much larger sums.
So, you’re aware of the situation.
I believe that if I were to coach a company that was going to expand globally, they would need to understand and respect cultural nuances, but if you get into those situations, they will put you in a compromising position. You just need to step away and take a deep breath, and you know, maybe politely end the meeting, and come back another day.
However, this is why companies, particularly American companies, use only about third parties when they visit developing countries. to develop their business as much as Ralph Lauren did 30 years ago. Or maybe it was more than 30 years ago when he established his business in China. You know you use a third party, so you can stay out of these common types of conflict.
It’s fascinating. I know some companies charge … they wouldn’t call it a commission; they would call it a consulting fee or something like that, and tack that onto the invoice as a way to obtain their required payment.
Yeah, now in America, I’ll give you an example of a bribe, and so you live in Philadelphia, and early in my career, I was in sales for Nike, and I was in the Mid-Atlantic area, and there were so many store owners in Philadelphia that didn’t have a Nike account that they wanted to have one.
So they thought the best thing to do would be to put $5,000 or $10,000 in cash in an envelope and hand it to a 25-year-old sales representative. You know, that’s bribery, but I guess the reason I mentioned it is that it’s bribery. It’s short-lived. It’s just something to stay away from.
Fascinating. What kind of cultural issues have you encountered? Other cultural issues? You’ve talked about some purely business-related cultural issues. But in terms of other pure cultural issues?
Yeah, I’ll tell you about my second trip to Moscow.
If you go over there, you’ll notice … this was only about six or seven years ago… they don’t accept American Express simply because it’s called American Express. I was out with one of my colleagues looking for a bite to eat. And the first thing that you try to do is try to find a menu in English, which is almost impossible, and the second thing is to always make sure they have the VISA sticker in the door window.
So, we went in. We found a lovely pub. We wanted to have a couple of beers and then something to eat, and when we saw the VISA sticker, we went in and sat there. And when they realized that we were Americans and we wanted to now pay for our drinks, and the guy said cash only. And, as we point out, it’s a VISA. “No. Only cash is accepted today.”
So, my colleague was led to an ATM by two men and he was gone for nearly 30 minutes. He said he didn’t even know if he had transferred all of his money to an offshore account somewhere. He didn’t know, because of all the buttons and everything, and while I sat in the bar, I was joined by two other guys who sat on either side of me … to remind me that I just need to stay put until he comes back with the cash.
So, I believe there is an increase, and, unfortunately, it has increased, particularly in recent years … There’s a disdain for America and Americans. And it’s getting out of hand, to the point where the best way to avoid it isn’t to hide your identity as an American by claiming to be Canadian, as some people do. The best way to avoid that is to just be gracious to people on their terms. When you get over there, you get to know their nuances, cultural aspects, and things that are important to them.
You mentioned little things like bringing gifts. Every time I went to Japan, I had to bring a fine wine from California. Yeah, and I always had to buy those See’s chocolates that were very popular in the airport, and they would continue to be so. That was so well received that any tension or apprehension vanished simply because it was a token of your gratitude for being present.
You were talking about Russia just now. And, of course, we are now there because of the invasion of Ukraine. We have effectively imposed a boycott on Russia. Does that apply in other countries you’ve been to, or are there some similar stories like that?
Yeah, let’s take tourism. So for years, Americans have gone to other countries, and it fascinates me. I’ll give you a New York City example.
It fascinates me that Times Square is just populated with tourists from all over the country, right? And then they all go to Applebee’s to eat. Do you think they’d go there? It’s a New York restaurant, but it’s the same in other countries.
I recall going on a market trip in Paris. And they were two tourists, and you could tell they were Americans because they had on baggy cargo shorts and they had fanny packs on, but you could tell that they were tourists because they were looking for a McDonald’s, and they kept asking French people who probably spoke English but ignored them.
And then you realize. Is the food the best thing about Americans who visit there? Of course, not all Americans go there, but they do when they do. They realize the host country people don’t understand your language, but Americans tend to think they’re deaf too, so they always raise their voice. Of course that makes it more “understandable,” so I do think you know that America has wonderful, wonderful things that we’re all proud of, and we should be.
And America has helped a lot of developing countries. But, as I’ve been saying all along, I believe it all comes down to understanding and respecting the cultural nuances of each country you visit.
And first of all, it’s not only fun to research before you go, whether a businessman or a tourist, it can also open up tons of doors for you.
That’s very true. When you opened a new market or went to a new country, how did you learn the language? The cultural nuances? Did you have staff that told you or did you talk to people when you arrived?
That is, indeed, an excellent point. When I was changing every leadership and everything in countries I had never visited before, such as Chile, Peru, and Argentina, I made sure that my first two days in Bogota were spent not only getting to know my leader and his team but also asking them to take me around the market and show it to me through their eyes, not the eyes of American visitors, you know, from Lima or Colombia or something. So, I believe this is crucial.
And then the other thing, too, is – I’ll tell you a quick little story. When I was named the CEO of ASICS, my son Patrick and I got together in Manhattan. He lived there for a while, and he said to me one time after a couple of beers, “So Dad, what does the CEO do?” “Like, really,” I said, “That’s a real job,” and I said “Patrick, a CEO does four things: I look. I listen. I think. and then I decide.”
So, I think the best way that I’ve ever educated myself in any of these countries is what I learned in my very first job at Nike at 24 years old: to be in the marketplace. And there’s an old saying that if a salesman were meant to speak, he or she would have two mouths in one ear.
I think the best way to learn is to just observe and listen, and take it all in, and that’s been my greatest diet in any role I’ve ever had. Never mind any country I’ve ever traveled to.
Yeah, that’s fascinating and great advice.
Are there any countries that you’ve been to that have been perhaps shocking in terms of how the business has performed and what you expected?
Yeah, I don’t know that I was shocked because it did take me some painful stakes to figure it out. Do you know how business is done?
I guess I was more surprised at how willing other countries were to do things on the terms of an American business, which I always thought they never should have been. I think you should do it on your terms. As I previously stated, it is something you are aware of. You should have local heroes. I will tell you a wonderful story.
I went to Brazil. And I was with ASICS at the time, and just a few years earlier, I had been at Under Armour. So, I went into this gigantic monument to itself, a store called Under Armour in Sao Paulo, and I was like, “Oh my God, this is Under Armour trying to shove America down its throat.”
So, in the store the walls went up two stories, and on one wall they had a picture of Gisele Bündchen, whom many people know as being married to Tom Brady. She’s the famous model, which I thought was fantastic because Under Armour had Tom Brady on contract. His Brazilian wife was completely oblivious. She’s like a national hero in Brazil. But then there’s the other wall. They had a huge mural. It’s the same size as Tom Brady, and these are the blinders that some companies have on that nobody in Brazil cares about the NFL.
I believe you can tell the difference between the NFL and American football. I could always tell when a company went in and did it themselves. or a company that goes in there and uses a third party so that you can maybe know how to soften the edges a little bit, like when you insert a piece of American culture into another culture.
That’s fascinating. It’s a great story. Thank you. With all of your international experience, if you could give your past self some current advice, what would you tell yourself?
First of all, manage my expectations.
Second of all, as I mentioned earlier, be a real active listener and make sure you have time to think before you make a decision,
And the third one is really important. Take in the sights and experience the local culture.
I remember I went with a guy from Timberland; it was his first time in Paris, and we were going by the Eiffel Tower in a taxi, and he was on his phone at the time. I was furious with him and his BlackBerry. I said, “Look, you know, and I do think that’s important, you know, because the rest of the world is stunningly beautiful and has many, many things to offer that you can never find in America.
Just look at the old ruins you know of in Peru. You’re sitting at a beautiful outdoor restaurant, a very modern restaurant, and you’re looking at these ruins that have been there for centuries. It’s fascinating to me. I think American businessmen and women tend to think they need to get there and then get home as fast as they can. I get that when you’re trying to take care of your family, but I think we’ve built in this mentality that if we enjoy ourselves while out there, we’re cheating our company.
They think we’re having fun and not doing our jobs. It’s just the opposite, so make sure you do get to take in all of these wonderful cultural things that we just don’t have in our country.
I make a personal distinction when I travel between observing and absorbing. and many people … the average tourist would notice, and that’s fine. But relatively few take the time to absorb the local culture and understand it.
Of course, there are subtle distinctions. The culture, the food—it’s not so much the food as it is the history and the ruins. As you say, the way people think, behave, and react, as well as the language they use, influence these things. You know, the traits and so forth, so all of that, to me, is really critical.
I remember—I won’t name the company—that it had one company that I worked for where they were completely absent and the meeting ended abruptly and everybody walked out of the room because our team pointed our leather shoes in some countries. Do you know?
Showed the soles of their shoes to the other side, right?
You’re probably aware that the leathers we use in the outdoor industry, such as pigskin and other types of leather, violate sacred religious beliefs.
You just don’t do that when you go over there or you shouldn’t be traveling globally or internationally. So, I think your observing and absorbing are brilliant. I’m going to steal that.
Yes, that would be fine.
Yes, and for our listeners who don’t know, one should never – even if the sole of your shoe is not made of pigskin – you should never show the sole of your foot to someone who is in a Muslim country and probably in Israel as well, in a Jewish country.
And Americans tend to cross their legs because we’ve got so much space here. American men, especially, cross their legs and point the sole of their foot toward someone else next to them, and that’s incredibly insulting.
Yeah, You have to learn the discipline, and I had to keep reminding myself, because I’m a fidgety guy, to keep both feet on the ground. And I never put my hands on anything. I always put my hands on the table with them folded in front of me. I never put my elbows on the table, and sometimes my hands were just on my lap, so it was less imposing. You know, I found myself, learning some of those things the hard way, but learning them. I found that fun. That’s what I liked best about international travel.
For example, you go into a sushi restaurant in America, and people are trying to eat sushi. You know, you don’t eat them with chopsticks. In Japan, you pick it up with your fingers and put it in your mouth.
We had some Japanese people working for us at ASICS in Irvine, CA, and whenever we go to a restaurant in America, to show you how they respect the customs, I would see them. They ate their sushi with chopsticks, and I said, “Why do you do that?” And he goes, “I just don’t want to insult the Americans.” This is the way they do it, so I’ll do it the way they do it. You know.
I just discovered all of those things—which are a lot of fun—what’s also great is that you can not only pick up some of these customs, trades, and business practices, but I think they’re great to bring home as well to your family and to your children, and to broaden their world. You know, not everybody is as lucky as the people on this call to be able to travel globally on somebody else’s dime. Not only do I do business, but I also get to see incredible things, eat amazing food, and meet amazing people.
Very true. You mentioned eating sushi with chopsticks. I like asking people when I’m doing a presentation or something in an enclosed room, to point to the restroom. And, you know, people frequently point their fingers in this manner.
I would tend to point out. I’m sorry, point to the nearest restroom; I would point if I knew the layout of the building. I would point straight up, and do it this way. Because of the restroom. I’m sorry I said that wrong.
If I ask – if you’re in a room with Americans – to please point to the nearest bathroom. And you know, that they’ll point to the nearest men’s room or rest area or whatever. And I’ll say No. The nearest bathroom is in the hotel, across the street.
The bathroom is a very American word; you know that in other countries it’s a men’s room, a restroom, a WC or loo or the toilet. Everyone in American English says they go to bathroom, but the bathroom is where you take a bath.
And you know that using this stupid American word abroad is very confusing. I presume you saw this, especially in Latin America: You point with your whole hand—the palm of your hand with the fingers together and the fingers of your hand together—and point outward … as opposed to using one index finger as Americans do, because, especially in this case, Americans’ pointing with one finger is extremely insulting.
And don’t ever make the OK sign in certain countries, like this; you don’t want to make the OK sign in some countries. That is slander against someone else.
I’ll tell you a cute story about going to Korea and working with a small factory there. Whenever you would go there, you would always be welcome. They’d have a big marquee outside with your names on it, and everybody would line up and greet you when you walked in. And then when lunch came, these were all working lunches. And keep in mind that they are in factories, so they are not glamorous. But when they brought lunch in, they would bring in a traditional Korean lunch. But then, to please the American guests, they’d bring in Pizza Hut and Kentucky Fried Chicken and, because this was the cute part, here we all would get up, and this is the way I coach my team, and we enjoyed eating the local food, right? But they wouldn’t serve themselves. Our hosts wouldn’t serve themselves until we served ourselves first, and then, after they saw that we were all seated and ready to eat, they began to serve themselves. They would go serve themselves, and they would go straight for Pizza Hut or Kentucky-fried chicken.
So, I do think we have to remember that America has had a big impact on a lot of these countries. That’s a nice way to do it. We’re able to take our big global brands and make them local. I think that’s, you know, an important thing that we do, but it’s just funny.
We didn’t feel like we had to eat the Korean fare, but we wanted to and they would. They went straight for the Americans, so it’s just a really cute story.
I’ll tell you another cute story.
The very first time I was in Japan, I was a junior in college. Yes, and I lived with a host family for the first time in Tokyo. During my first day with my host family, my host mother prepared a breakfast of bacon and eggs and toast with butter and black tea.
And OK, fine, she wanted me to be comfortable, and I said thank you, and so forth. And when I returned the next morning, It was the same thing.
On the third day, I had bacon and eggs with toast and butter and black tea, and I finally said Okahsan, which translates to “mother” in Japanese– that’s how you address people in this case. “I’ve been in Japan for three or four months already. I know how to eat Japanese food.” And she looked at me very quickly and said, “What do you mean Japanese food? We’ve been eating this food for 30 years.”
So, I guess American food has become Japanese food, and so on.
Yeah, I know, right? It’s crazy.
Well, thank you so much. Is there anything else you’d like to add before we close?
Yeah, you know I’ve had a good career. But from the beginning, Philip, you know, seeing the world and getting a free education, I think it’s a good idea. With this career and exciting industry, it’s not just about footwear and apparel. And it’s not even just about sports; a lot of times, the athletic industry is about pop culture.
You know, as time passes, this industry evolves. It’s an industry that makes itself up as it goes along. There’s no college in the land that teaches it, but as I look at it, young people today are trying to start their brands. I have lectured on this, and I’ll leave it for my four pillars for starting your brand, of which number one would be to pick a name, pick a name that means something, and pick a name that is going to be unique.
So, Joe Montana and Derek Jeter were born with names that you know should be used by athletes, and that just sounds natural and normal. On the other hand, in this country, as you know, there are three of the most iconic fashion brands. You probably wouldn’t name your child after Ralph, Calvin and Tommy, so names do matter.
Look at clever names like Google, and Google is now a verb. Look at Uber. I mean, these are names that meant something else and now mean something else. So, picking a name is important.
The second one is, “Don’t try to build a better mousetrap.” Try to solve a problem. The best brands come from solving a problem. Uber is a good example. Yeah, you know they weren’t out there to try to put yellow taxis out of business. They solved the problem. The issue was that Johnny owned a car. Susie doesn’t have a car. Susie occasionally needs to get from point A to point B. Why can’t you know Johnny or Tommy whatever you know, lend his car or take Susie by the feet? So that’s how Uber started: by solving a problem.
The third step is to create a culture around your brand because your brand will have a culture no matter where you go in the world. It will make itself known beyond words or gestures to your foreign hosts or guests.
And Nike has its own culture, while Adidas has a different one. A lot of it is geographic or whatever, but make sure you have a culture. That the culture is, you know, something that is noticeable but is also a point of differentiation for you, and the last pillar is the best one.
Nobody cares about your brand until they know what your brand cares about. So you need to stand for something. You need to have a point of view, and I’m not talking about being a gigantic bank and planting 1,000,000 trees. You know, small trees in the rainforest cost them $1,000,000. That’s nothing. That’s checking the box.
You stand for something, and your consumers all over the world will be interested in what you believe and what you stand for. So that’s my quick back-of-the-envelope advice for any young entrepreneurs out there, or for anyone looking to build a brand in any country, not just this one.
Thank you, Gene. That was truly brilliant advice; I greatly appreciate it, and I should add yours to #1 about the naming. When you create a product name, company name or tagline, you should hire a language agency like ours or another professional firm to double-check it in ten or 20 common languages.
Because when you go abroad, you do not want to have invested millions of dollars in your branding, only to find out that the brand name does not work. One of my favorite examples of this is Ford Pinto, which took the Pinto name, an American name, and took it to Brazil, totally oblivious to the fact that Pinto and Brazilian slang mean, shall we say, male genitals.
Oh, I know. I listen. I’m sure you have a million of those stories, but that’s right—choosing a name—you’re right. Get a language expert. Get you, Philip. You will prevent people from making costly mistakes.
Gene McCarthy, thank you so much. It’s been a true pleasure to gain your insights and thank you so much for joining us. This is Philip Auerbach from Auerbach International. Our website is Auerbach-intl.com, and I hope you will join us again next week for another edition of Global Goers and their wonderful stories of international business.
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