Vol. 2 | Winter 2009
your new source of
The historian-collector Business succession Thriving in the U.S.
side of Tony Tirri by the book
PUB LISHER ’ S M EMO
A C-Level Community
curious thing happened when the ﬁrst edition of C-Level was put in the
mail last Spring. It wasn’t that we received so many calls, emails and letters
of thanks and congratulations – for which we remain grateful beyond
measure. It was the tone, even the passion, that took us by surprise. The
hunger for something different. The genuine appreciation for the companies,
people and topics covered.
In the weeks and months that followed, as the comments and conversations
continued, it occurred to us that we had created something quite special indeed.
Not the magazine, necessarily, as special as we think it is. Rather, a community.
Like-minded C-level executives (chief executive ofﬁcers, chief ﬁnancial ofﬁcers,
chief marketing ofﬁcers… chief level ofﬁcers) coming together around a series of
stories and ideas. Busy people taking a time out to reﬂect on angles they’re not
getting from any other source – connecting, if you will, to a more human side of
that which we call business.
Ramón A. (Tony) Pérez If you recall or can refer back to my letter to you in the ﬁrst edition, that is, in fact,
Chairman of the Board the purpose and role of C-Level: to bring you stories that not only inform and help
Fulcro Insurance, Inc. you manage your business and your risks, but also have those same stories inspire
by focusing on the human side. The story behind the story.
In this edition, we bring you some great inside looks. Like Johnny Marquez. Everyone
thought he was crazy when making decision after decision, but he proved them
all wrong. You’ll also read about the journey that led Humberto Berríos to the
biggest meeting – and decision – of his life. And the thought process followed by
Angel Rodríguez as he engineered a textbook business succession and secured his
Then there’s Monica Maldonado, the vivacious “Cartagenera” who has done so much
for the cause of minority- and women-owned businesses in America, while building
her own in Atlanta. Read the story behind Hernán and Luis Ayala’s bold innovation
at the Port of San Juan, and the story of another innovation, this one by our friends
at Universal Insurance.
As was the case in the ﬁrst edition, we know you’ll love the Fine Living and Fun Living
stories this time around. You know Tony Tirri as a tough, no-nonsense businessman
who created an empire in Puerto Rico. Here, you’ll learn an entirely different side of
the man. The same with Luis Soto, who changes from his business attire when he
gets home and puts on a different kind of suit.
Last time, the magazine’s feature story called your attention to the brave new world
of cyber risk. This time, our C-Story alerts you to the risks, but more so to the
opportunities, found in your intellectual property. The future of your company and
of Puerto Rico may very well lie in those pages.
Finally, following two pages of socializing and networking (On the Agenda), we
bring you an editorial to provoke some thinking on the biggest challenge facing the
business world, and particularly the insurance industry, going forward.
CLevel | Winter 09
Please keep the comments and conversations coming. This is your magazine,
the center of our very special C-level Community. Let’s nurture it. Here’s to its
DAR IN G LE ADERS
Johnny Marquez plays the probability game differently than most
people. The odds are against him, you say? Too risky a move, you
warn? Nahhh. You’re just not seeing it right, he would say.
ou know when you see these older businessmen For Johnny Marquez, it certainly worked. All four
from “el campo” presiding over large and of his big decisions. The ﬁrst came in the late 1950s,
successful businesses, and they look sort of when at 12 years of age he decided to go work at the
rough around the edges (unpolished, you think Rio Piedras Market (Plaza del Mercado). He learned the
to yourself), their businesses located in unappealing ropes, saved a bit of money and three years later he
neighborhoods, and yet there they are, prominent and paid $50 and borrowed $100 to buy his own vegetable
wealthy, humble as can be, working hard and living stand, selling only eggs and tomatoes.
“Everyone said I was crazy, since I was only 15, but I
And you wonder how they did it, without the formal knew what I was doing,” he recalls. “The opportunity
education you had to undergo, without family wealth came up, and I grabbed it.”
to ﬁnance their ventures.
He sold eggs and tomatoes in that single stand for a
Rags to riches stories are always inspiring. They bit more than two years, learned the ropes some more
include daring risks along the way by folks whose and decided to go for it again, this time selling his stand
simple beginnings ingrained a stoic work ethic and purchasing a truck and four other stands, which he
CLevel | Winter 09
combined with a matter-of-fact, what’s-the-big-deal consolidated into a single large stand to sell a wide range
approach to making what to others would appear to of vegetables to retail and wholesale customers (Pueblo
be big decisions. No spreadsheets needed. No fancy Supermarkets among them). That is, he expanded and
projections or formal market research. Just gut instinct diversiﬁed the business.
about what will work.
DAR IN G LE ADERS
“I had established great relationships with farmers from where Los Colobos is today.
around the island, and I would pick up the merchandise
every day and bring it to the market,” he told C-Level. Sure enough, “everyone thought I was crazy,” he said
(Translation: he broadened his supply chain.) with a chuckle. “But there was nothing else for miles in
any direction. Every bone in my body told me it was the
Eleven years later, he was at it again. The legendary right thing to do.” (Does any business university teach
Domingo Dominguez was selling one of his two Bone Analysis 101?)
“almacenes”, or distribution centers, and Marquez
jumped at the chance. “Everyone said I was crazy The business thrived from day one, and Johnny
again,” he said. It was becoming the story of his life. Marquez has never looked back. In 1988, after a split
with his partner, Marquez kept the Calle Loiza location
He bought the business, which sold all kinds of food in Ocean Park, renamed it Plaza Loiza Supermarket, and
(not just vegetables), ran it for eight years, and then in the years since has added four others for today’s
came an even bigger moment. Driving from Luquillo to chain of ﬁve, diversiﬁed into the gas station business
Río Piedras on more than one occasion, he came along (three Gulf stations in the Rio Piedras area) and invested
a large plot of land for sale in Canóvanas. He noticed heavily in real estate (owns 60 Section 8 housing units,
an absolute lack of food retail or wholesale options for three strip malls, and land around the island).
residents and small businesses in the area and decided
to buy the land and ﬁll the void. His four children (lawyer, doctor, technology
professional and auto technician) run various parts of
As fate should have it, his Río Piedras distribution the business, but Marquez is not letting go yet.
center was destroyed by a ﬁre and Marquez used the
insurance money to complete the development in 1981 Everyone’s waiting to see when he’ll make one of
I was crazy’
of what became Plaza Gigante Supermarket, across those crazy moves again.
Marquez’s simple beginnings
ingrained a stoic work ethic
combined with a matter-of-fact,
to making what to others would
appear to be big decisions. No
spreadsheets needed. No fancy
projections. Just gut instinct about
what will work.
CLevel | Winter 09
DAR IN G LE ADERS
You spend a lifetime
dreaming and preparing.
You work your way up,
waiting for the chance.
For that fateful moment.
Sometimes, as with
Humberto Berríos, it comes
When it does, will you be
ready? He certainly was.
CLevel | Winter 09
DAR IN G LE ADERS
he biggest meeting in Humberto Berríos’ life lasted ﬂeet of trucks were dispatched every morning to deliver
only 30 minutes. Shell’s top managers in Puerto the product.
Rico had been complaining for months about the
low returns of the company’s Tropigas subsidiary Berríos had spent the better part of his four years as
on the island and had called a meeting to decide once a consultant advising Shell on what to do. The game
and for all what to do. plan was fresh in his mind. He had pleaded Shell to
buy Progas and one or two other competitors. He had
It was 1995. As a Shell consultant for the previous four told them that the name of the game going forward
years, Berríos had worked only on Tropigas, a liqueﬁed would be LPG’s market advantage as a cleaner fuel than
petroleum gas (LPG) distributor in a crowded local oil, gasoline and coal – 20% lower CO2 emissions than
market that included several oil, 50% lower than coal,
competitors, squeezing “Owning the right business a gasoline substitute that
margins to a minimum.
at the right time and running could yield a far greater
mileage at lower cost,
Berríos arrived at it the right way is the best oil changes every 15,000
the meeting a bit late way to manage the risks miles; not to mention
and heard the by-then inherent in today’s business zero ground and water
common question. “What pollution hazard, low
should we do?” His ears world. It gives you greater sulfur and a clean burn.
popped open. Could this be freedom. So it’s critical
the day? that more Puerto Rican He knew in his bones
that much more could be
He had become Puerto
executives be bitten by the done to pitch LPG to a far
Rico’s foremost LPG expert, entrepreneurship bug. We broader customer base –
having spent his entire would all be better off.” taxi drivers and corporate
career in the ﬁeld. As a ﬂeets, which instead of
Mobil Oil executive for 13 years (1972-1985), not only ﬁlling up with gasoline could visit Tropigas stations and
had he managed Mobil’s Puerto Rico LPG operation, do much better with LPG; regular drivers who could
after rising diligently through the ranks – operations, do likewise; homeowners who could beneﬁt from gas
ﬁnance, IT, HR… He had also spent three years traveling stoves, refrigerators, dishwashers, gas appliances of all
the world as part of the company’s New York-based LPG kinds; industrial clients who could likewise gain from
International Division. The Persian Gulf, Madagascar, gas-powered boilers at their manufacturing plants,
Angola, Asia, South America – he got a crash course in instead of powering with far more costly and far less
the global oil and LPG market. eco-friendly electricity.
As the meeting moved quickly from issue to issue, the LPG, he was convinced, was the fuel of the moment
memories kept coming back. Years before Mobil, as a and of the future, and Tropigas the company best
high school student, Berríos had worked at Tropigas. The positioned to lead the way and proﬁt big. And yet there
company and the industry became his passion. Tropigas was Shell, wanting out.
had become the Pampers and Coke of Puerto Rico’s
growing LPG marketplace. “Busca un Tropigas” (go get a “Who should we sell it to?” Of all the questions asked
Tropigas) was often heard from the back of a restaurant that day, that was the one Berríos was waiting for. He
in every corner of the island, referring to the traditional looked around to gauge the reaction of others and raised
tank of gas used for cooking – even if the restaurant his right hand, as if taking an oath.
manager was a regular customer of a competing brand.
“I’ll buy it.”
In 1995, the company faced stiff competition. Empire
Gas had taken over the #1 spot. But Tropigas had The words came out without hesitation. His hand was
great assets, all of which ﬂashed in Berríos’ mind as he ﬁrm. His voice sure as could be. He was bitten by the
heard the Shell folks debate and ponder. The company entrepreneurial bug as a teenager working at Tropigas,
CLevel | Winter 09
boasted one of only two LPG import piers and storage the dream percolating in his chest ever since, but the
tank facilities on the island (at the Port of San Juan), chance had never come. When he left Mobil in 1985,
along with 10 ﬁlling plants well distributed throughout he had a wife and four children and was sure it would
Puerto Rico, where customers from every corner would happen then. But God, he would tell himself, must have
come ﬁll or buy their tanks, and where the company’s had other plans. continued on next page
DAR IN G LE ADERS
continued from previous page
“Are you sure?” he was asked at the meeting. purchase agreement, Berríos called Enron and made an
offer to acquire its Progas subsidiary on the island, a key
“Yes,” was his quick reply. acquisition Shell had not been willing to do.
“How much do you think the company is worth? What “Puerto Rico is not big enough for so many competitors,”
would be your offer?” Berríos told C-Level, adding that Progas provided the
company greater market share and enhanced scale.
He was ready for that question as well, after spending
four years going through every number and writing Under Berríos, Tropigas also expanded its infrastructure,
every spreadsheet, knowing where all the skeletons were making improvements in its port facilities and more than
and how much every asset was worth. He knew every doubling the number of ﬁlling stations to 26.
client and had a close relationship with many of them.
Berríos had negotiated all the supplier contracts and After 10 years at the helm and seeing his business
knew the price and cost structure better than anyone plan executed as envisioned at that fateful
at the company. meeting in 1995, Berríos decided to
He was clear what the company was worth and what realize yet another dream. Of his four
The decision (to buy) did not come free of risks. Tropigas had been losing
market share, the brand no longer as dominant. While the market potential
was huge, Shell never moved to capitalize. Berríos was confident, but success
was far from self-evident. It was up to him now to make it happen.
it would fetch in the market were it to be sold, hoping children, the three boys had joined the company and
all along that he would be the buyer. were ready to take over, while dad was longing for a new
phase in his life. They engineered a successful succession,
“$4.2 million.” Berríos stayed on as chairman, and the patriarch went
on to focus on breeding Paso Fino horses, one of which
There was a moment of silence, followed by a brief has won several international competitions.
discussion of the particulars. They wanted to know how
Berríos would ﬁnance the acquisition. And he explained Back at the ranch, Humberto Jr., Gabriel and Gustavo
convincingly. Tropigas had abundant, high-value, free- are focused on promoting LPG’s environmental pluses,
and-clear real estate that could be used as collateral. during this time of growing eco concerns, to take
Tropigas to the next level. “The timing could not be
“OK. Done. Congratulations.” The deal was sealed. A better,” said the chairman.
few months later, Tropigas was his, as was the dream of
owning his own business. For his efforts, the successful risk-taker has won
numerous accolades, most notably the 2003 Ernst &
The decision did not come free of risks. After all, Tropigas Young Entrepreneur of the Year Award.
had been losing market share for some time, the brand
no longer as dominant. While the market potential was “Entrepreneurship is what I always wanted to do,” he
huge in his mind and powerpoint presentations, Shell concluded. “Like me, there are so many executives in
never moved to capitalize. Berríos was conﬁdent, but Puerto Rico with the ability to do it. I know far too many
success was far from self-evident. It was up to him now who don’t because they say they’re already comfortable,
to make it happen. so why bother. But with the economy as unpredictable
as it is, the riskier move is to keep working for someone
True enough, he now acknowledges. “But in moments else. Owning the right business at the right time and
like that, you can’t hesitate or second-guess yourself. I running it the right way is the best way to manage
CLevel | Winter 09
was sure I could get it done. The plan was sound. The the risks inherent in today’s business world. Ownership
vision, the concept, the idea – it all made too much provides greater security and the wealth and equity to
sense, and that made the risk manageable.” realize your dreams. It gives you greater freedom. So it’s
critical that more Puerto Rican executives be bitten by
The ﬁrst step was clear. The ink not yet dry on the the entrepreneurship bug. We would all be better off.”
C - S TO R Y
Innovation has always driven the great leaps of growth in the
global economy, but never like today. It is the defining force
of the Knowledge Economy, the source of growth among the
world’s leading companies, and it is yours for the taking.
But if you want to join the innovation game, make sure you
CLevel | Winter 09
master the rules of Intellectual Property.
C - S TO R Y
es, the economy is still That’s worth repeating: the as well as the leading companies
lousy. True, it’s tough to creation, inside your mind, of a around the world growing in this
raise revenues. But – and product or service that offers a sluggish economy – have picked
it’s a BIG but – are you distinctive advantage over all others up on these simple insights and are
looking in the right place? and that is later developed and sold moving aggressively to capitalize on
in the marketplace. them.
Every so often the time comes
for C-level executives to stop and But haven’t minds been creating Once a company creates and
rethink. After years of recession and distinctive products and services registers an intellectual property,
slow growth, this certainly qualiﬁes forever, you might ask? Yes, but it immediately invests in its
as one of those times. never like today. Not even close. development, marketing and sale.
And therein lies the ﬁrst big insight You invest in building the brand.
Much has been said about the behind the knowledge economy. You invest in the people, the human
world of business being in the Today, the entire marketplace is resources, that will drive its success.
midst of a seismic transition. First driven by heaps of innovation taking
there was the industrial era. Then place. Most of those assets are intangible.
the information age. And now, we In the industrial age, and even in the
are told time and time again, the It is a huge opportunity for you hardware-heavy information age,
“Knowledge” in the knowledge economy is the creation, inside your mind, of a
product or service that offers a distinctive advantage over all others. Intellectual
property is when you own those creations through patents, trademarks and
copyrights, allowing you to develop and sell them in the marketplace.
moment has come for the knowledge and all C-level executive looking for most investment was
economy. new revenue sources, as well as for in physical stuff, like
Puerto Rico as a country looking to machinery and equipment. Since
But wait a minute. Exactly what create jobs and become a far bigger as recently as 2004, and for the ﬁrst
is the knowledge economy? It is player in the global knowledge time ever, most business investment
such an amorphous concept. The economy. in the United States has been in
most common reply to the question intangible property, the bulk of it
goes something like this: In the Own, then proﬁt related to intellectual property.
knowledge economy, the most
important competitive advantage Then there’s the second big insight That’s more than $1.2 trillion in
is, well, knowledge – knowing more behind today’s knowledge economy. the U.S. alone. That’s not a typo:
than anyone else so you can outfox Once you create something, you $1.2 trillion. By contrast, investment
the competition and get the deal. have to own it. Own the very idea. in physical assets is barely $1
Own the creation, even before the trillion. Since the mid-1970s, in fact,
Sometimes, the knowledge product is produced and ready for investment in intellectual capital has
economy is lumped together with sale. Sometimes years before. grown from 4% of U.S. gross domestic
the information economy. But product to slightly over 10%, with no
of course, since it takes so much The creation, the idea, is called an end in sight, while tangible capital
new knowledge to drive the digital intellectual property. You own it as investment has remained stuck at
revolution. And sure enough, digital soon as you create it in your mind, but 10% of GDP during this entire time.
is part of the knowledge economy, you have to register it with the local
but only a part. and federal government by way of In that same period, market
patents, copyrights and trademarks capitalization of public companies in
Truth be told, and you may be in order to protect that ownership. the U.S. went from 17% of corporate
happy to know, the concept is far Otherwise, if someone else learns of value to 86%, according to The
simpler. The knowledge economy is your creation and registers it ﬁrst, he Invisible Edge, a milestone book on
CLevel | Winter 09
called as such because it involves any or she owns it. (See box.) intellectual property written by Mark
distinctive product or service that Blaxill and Ralph Eckardt (2009).
your mind, that any mind, can create Why is this so critical to your
(using… you guessed it: knowledge!) future? Because the companies What does that mean? That most
and that can be commercialized. leading the world of business today – of what goes for intangible does
most of the Fortune 500, for starters, not show up on balance sheets as
corporate value, yet investors know rely on IP and build portfolios have Property 101
when a company has come up with 72% more value-added per employee
a winning idea and they recognize than companies that do not. Ideas are free for the taking! No one owns an
that value in open trading, as do idea. However, when the idea is ﬁxed in a tangible
medium form of expression, it belongs to the one
companies when they engage in Welcome to the knowledge economy. who did. Intellectual property is a general term
mergers and acquisitions. to describe inventions or discoveries subject
Choose your niche. to protection. As soon as you create, you own.
Hire people to think. And think big. However, to have ownership of that property in
Then build a portfolio. the United States, one must seek protection by
registering it with the U.S. Copyright Ofﬁce or the
Can this be done in Puerto United States Patent and Trademark Ofﬁce.
The name of the game, as Blaxill Rico? Can you? We’ve become so
and Eckardt discovered following the accustomed to being a country- There are three basic ways of establishing
most extensive analysis yet published factory for other people’s ideas – intellectual property ownership under the law:
of today’s knowledge economy, has the place where global companies patents, trademarks and copyrights. Patents apply
to industrial or business inventions or innovations,
become intellectual capital. Hire manufacture the mind creations of such as a new product. Trademarks apply to
people to think. Provide incentives thinkers back in American, European names, designs and logos, while copyrights are
for them to create product and and Asian headquarters and labs used for such artistic creations as books, songs,
service ideas that are unique and – that we haven’t developed the plays, paintings and sculptures.
distinctive. Build a portfolio of vision or culture to create our own
There is a fourth type of intellectual property,
intellectual properties (patents, blockbuster products and sell them trade secrets, which as the name implies, involve
trademarks, copyrights and trade all over the world. ideas such as formulas, corporate information
secrets). Make sure you own them all. and processes that are critical to the success or
And then go all out to commercialize That may soon change. The uniqueness of a company or product. However,
and capitalize – translation: to sell government’s Science and Technology trade secrets are not protected by the law in the
same manner because these may not be registered
like crazy and make lots of money. Trust has been developing technology anywhere. Other means such as non-disclosure
corridors precisely for this purpose, agreements, non-compete clauses and secure
Maintain an endless portfolio ﬂow. to attract top talent from the island employee contracts are used instead.
As some patents expire, you will and around the world and come up
always have others in the pipeline with products and services right here The objective is for others not to copy your IP
and thereby steal your competitive advantage. If
and products coming on stream. on the island. someone learns of your product idea and registers
Innovate, innovate, innovate. Build it ﬁrst, he or she now owns it. You may, of course,
your business around invention and Regional consortia, university ﬁle a lawsuit to reclaim your “property”, but
innovation. centers and non-proﬁt organizations oftentimes the courts rule in favor of the person or
have sprouted throughout Puerto company with ownership of the patent, trademark
As the owner of a new intellectual Rico to follow the same game plan:
property, you can build a supplier promote entrepreneurship and Patents and trademarks must be established in
or partner network around it. innovation. each country separately. If you patented a product
Don’t just pass on your invention idea in the U.S. and Puerto Rico and someone copies
to a larger company that will then While the government has taken it in Argentina, he or she owns it in Argentina.
commercialize it. Stay in the an industrial-policy approach – The process of international registration is
game. Build your own network of preferring certain industries (high- facilitated by entities such as the World Intellectual
companies, each with a piece of the tech, biosciences and aerospace, Property Organization (WIPO), which seeks
action, and lead the effort. for example) over others – other compliance of international treaties by signatory
local players are moving in different countries, and offers guidance and services in
processing registration applications in those
That’s how the most successful directions. territories.
companies in the world today
are maintaining their edge. With Like green, encouraged and funded In Puerto Rico, the professionals best suited to
innovation and collaboration. They by none other than President Barack represent a company in these matters are usually
create, they patent-trademark- Obama, who is pumping federal IP lawyers such as the four featured in this spread,
particularly to secure ownership under the law.
copyright, protect their trade secrets, dollars into the innovation of all To build a brand or commercialized a product,
develop the products and services, things green (technologies, renewable marketing experts and business consultants may
build a network, sell the new energy, smart grids, green buildings be better able to help, as well as human resources
products, and do it again and again. and homes, green appliances, etc.), professionals to hire, incentivize and manage your
And again. as well as innovations that will drive thinkers and creators. Insurance agents help with
risk coverage, and a new breed of ﬁnancier has
down the spiraling cost of health emerged to specialize in trading IP assets, securing
By most accounts, companies that care. ﬁnancing for new IP, and otherwise manage the
ﬁnancial side of your ideas.
C - S TO R Y
Not with your intellectual proper ty, advise five exper ts, who counsel
on protecting and insuring your IP to maximize your commercial success
hen it comes to your “Get to know intellectual property other ways. (See box.)
company’s intellectual law,” advises Thelma Rivera, a partner
property, “better safe at the Hato Rey law ﬁrm Goldman “Trade secrets can be protected
than sorry” is more Antonetti and one of the ﬁve with strong conﬁdentiality
than an old adage. It is the sort participants in a recent roundtable agreements and well-drafted
of advice that can save you lots of discussion on intellectual property contracts that leave no room for
money, perhaps even your business. hosted by C-Level. misunderstanding,” said Hector
Reichard, senior partner at law ﬁrm
That’s because, on the one hand, “It’s sad to say, but far too many Reichard & Escalera, adding that
your intellectual property can be people are simply careless about since trade secrets are not subject
copied and stolen far more easily than their intellectual property and are to patent, trademark or copyright
your physical property. Someone too trusting of other people who protection, the best advice is to
gets a hold of your idea for this have not necessarily earned that protect it “as you do other things
unique and distinctive product, seeks trust,” she added. “Protection begins you place in a safety deposit box.
registration for protection before you by being extremely careful which Just make damn sure no one ﬁnds
do, and you’re out of luck. conversations you engage in, who out who is not supposed to.”
you trust with sensitive information
On the other hand, you may about new products, trade secrets Even KFC and Coke, with their
infringe on someone else’s and the like. That’s why the ﬁrst famed formulas and secret recipes,
intellectual property rights and step should always be to seek legal “cannot protect their trade secrets
not know it. You come up with protection of all IP.” any other way,” said Paul Ferrer, also
this fantastic idea, develop it, go of Goldman Antonetti.
through great expense to market That’s done with patents,
it and sell it, and one day you ﬁnd trademarks, copyrights and trade ‘But I’ve been using it
out in a lawsuit that your fantastic secrets the four types of IP subject for a long time!’
idea occurred to someone else years to legal protection. Patents,
CLevel | Winter 09
prior and he or she had already built trademarks and copyrights are An important ﬁrst step, added
a business around it. protected through statutes drafted Ferrer, is to inventory all your IP and
for those speciﬁc types of property then go about the task of protecting
What can you do to avoid these and even have government entities each one as thoroughly as possible.
potential disasters? that secure their protection through “It can get complicated, because
registration. Trade secrets, the there are so many kinds of IP. But
fourth type, must be protected in the ﬁrst thing to do is to sort out the
C - S TO R Y
ones you have and then get in the or brand for a long time, protect it
habit of protecting all new IP assets and avoid the risk. It’s never too
you come up with.” late.”
One thorny issue is adaptation. Speaking of managing risks,
What if your great new idea is a twist obtaining insurance coverage is
on an existing product or brand? one way to go, according to Arturo
“It needs to be truly unique and Ortiz, business development partner
different,” clariﬁed Jean Paul Vissepo, for Fulcro Insurance.
a partner at law ﬁrm Sanchez &
Vissepo. “The legal standard is the “It’s important to be aware that
likelihood of confusion as perceived traditional insurance policies are
by the public. Your new mark must not designed to cover the majority “In the end, this is about protecting something
with the objective of turning it into a major driver
be inherently distinctive to the of loss exposures that are associated of the business. IP can and should be a source
consumers for it not to infringe on with IP,” he explained. “Through of sales and growth, when managed with that in
others’ business name.” highly specialized policies, you can mind. It’s not about legal technicalities. It’s about
the future of your business.”
protect against potential lawsuits Hector Reichard
Then there are those cases in if you infringe someone else’s IP Reichard & Escalera
which a company has been using a and insure for the legal costs and
product or brand for years without potential losses if you must sue
ever registering it and along comes someone for infringing on yours.”
a competitor and obtains a patent
or trademark protection for the Along this entire journey, Reichard
same product or brand. advises C-level executives not to lose
sight of the big prize. “In the end,
“In many cases, the right goes to this is about protecting something
the company that has been using it with the objective of turning it into
for a long time, not to the one that a major driver of the business. IP
just registered it,” said Rivera. “But can and should be a source of sales
again, why take the chance? It’s a and growth, when managed with
really ﬁne line and you never know that in mind. It’s not about legal “It’s sad to say, but far too many people are
simply careless about their intellectual property.
which way the judge will decide. So technicalities. It’s about the future Protection begins by being extremely careful which
even if you’ve been using a product of your business.” conversations you engage in, who you trust with
sensitive information about new products, trade
secrets and the like.”
It’s important to be aware that traditional Making an inventory of all your intellectual
insurance policies are not designed to cover the property “can get complicated, because there are
majority of loss exposures that are associated with so many kinds of IP. But the ﬁrst thing to do is
CLevel | Winter 09
IP. Through highly specialized policies, you can to sort out the ones you have and then get in the “It needs to be truly unique and different. The
protect against potential lawsuits if you infringe habit of protecting all new IP assets you come up legal standard is the likelihood of confusion as
someone else’s IP and insure for the legal costs with.” perceived by the public. Your new mark must be
and potential losses if you must sue someone for Paul Ferrer inherently distinctive to the consumers for it not
infringing on yours.” Goldman Antonetti to infringe on others’ business name.”
Arturo Ortiz Jean Paul Vissepo Garriga
Fulcro Insurance Sanchez & Vissepo
C - S TO R Y
Continued from page 15
As Blaxill and Eckardt have shown, Join the IPX league Home Depot, Intel, Kellog’s, Levi
anyone can do it. The authors point to Strauss, Macy’s, Marriott, Prudential,
the latest famed example, Facebook Today, you have other things Rite Aid, and others. But there are
founder Mark Zuckerberg, who you can do with your intellectual also unknown types of all sizes.
created the idea while still in college, property, in addition to developing
complete with all its sections and partnerships and selling products. An The indices and IPX use a robust
operating systems, and immediately entire market has developed to trade methodology to calculate the value
proceeded to protect EVERYTHING. not just the developed products, of an IP, the innovation ratio (IP
Once he secured total ownership of but the patents, trademarks and value/book value) and the revenues a
all the intellectual property, he got copyrights themselves – particularly company earns from licensing its IP.
the needed investment, brought in patents, given the big marketable
partners to develop applications (all innovations behind this type of IP. Also proliferating in the U.S. and
the tools Facebook fans love around the world are IP advisory and
to use), and the rest is The company leading venture capital ﬁrms. One of the
history. the IP revolution more interesting ones is Intellectual
is Ocean Tomo, a Ventures out of Washington state.
Two years ago, Chicago-based On its website, the ﬁrm articulates
Microsoft paid merchant banking a vision of “creating a more efﬁcient
$260 million for ﬁrm that recently and dynamic invention economy”
1.6% of Facebook, launched IPX, and extols the virtues of its Invention
which means the the Intellectual Science “infrastructure”, a series
latter was worth Property Exchange of services to conduct IP analysis,
$15 billion at the International. licensing, networking and otherwise
time. And it has grown Similar to a stock and “manage and monetize a portfolio of
exponentially since. commodities exchange, inventions protected by intellectual
When one considers the IPX is the place where property rights.”
goodwill associated with people buy and sell
the Facebook trademark IP. Just as traditional Many ﬁnancial institutions have
today and how unknown it exchanges have companies developed derivatives and other
was only a few years ago, listed, so does IPX, with a instruments to facilitate the sale and
one begins to get a sense list of companies that have trading of IP assets and therefore
of the boundless pontential “especially strong intellectual provide liquidity to this emerging
behind a sound IP strategy. It property, including patents, innovation marketplace.
has become the driving force behind trademarks and copyrights.“
the value provided to consumers. Build a global brand
Ocean Tomo has divided those
“There is absolutely no reason why companies into a set of indices: the While most of the attention is
this can’t be done here in Puerto 300 Patent Index, the 300 Patent focused on patents, no company
Rico. Innovation and the intellectual Growth Index, and the 300 Patent should overlook the importance of
property system that supports it Value Index. Companies listed trademarks as a source of signiﬁcant
should be at the center of the island’s include big names with “strong IP” growth and market value.
development going forward,” said spanning the gamut of industries:
attorney Hector Reichard of Reichard American Express, Alcoa, Aegon, Think Disney and world-leading
& Escalera in Hato Rey (see related Adidas, Baxter, Best Buy, Cartier, family entertainment comes easily
story). Citigroup, Coke, DHL, Ebay, Esprit, to mind. Coca-Cola is synonymous
Gannett, Goodrich, Grupo Bimbo, with refreshment, Apple with fun
CLevel | Winter 09
In the industrial age and the hardware-heavy information age, most investment
was in machinery and equipment. Since as recently as 2004, and for the first
time ever, most business investment in the United States has been in intangible
property, the bulk of it related to intellectual property.
C - S TO R Y
The most successful companies in the world today are maintaining their edge with
innovation and collaboration. They create, they patent-trademark-copyright, protect
their trade secrets, develop the products and services, build a network, sell the new
products, and do it again and again. And again.
computing, Starbucks with a unique the name, protect it, give it deep reading this story will want
fast food experience. Armani equals brand power, and make it the driver to help.
exquisite Italian design in fashion. So of your company’s value, reputation,
does Ferrari in automobiles. sales and growth. Master the IP rules.
Win the innovation game.
If these companies were for sale, As common as this is among the
this brand power – their biggest world’s great companies, it is a game Ever since the industrial revolution
competitive edge in the marketplace most Puerto Rico businesses and picked up steam in the 19th century,
– would drive the negotiation and the C-level executives are not playing, as all great leaps in productivity and
price. Yet, it’s not a tangible asset, or revealed by a glance at the names, wealth have come as a result of
at least what is generally understood logos, cultures and branding of the great leaps in innovation. The steam
as one. It’s not real estate or a pile island’s leading local companies. engine. The railroad. Electricity and
of inventory or accounts receivables, Most local executives underestimate the light bulb. The telephone. Cars
and it certainly doesn’t show up on the importance of branding and and planes. The computer. The
the companies’ ﬁnancials. The value goodwill as a driving force behind internet. To name but a few.
is in the goodwill associated with the their companies’ sales and market
brand name and what it means to value and fail to make the needed The difference between then and
consumers. investments. now is sheer volume. The knowledge
economy is so deﬁned because an
The amount of capital invested by The same IP power applies to unprecedented number of people
leading companies in building these copyrights, in the case of authors, and companies are doing it, because
intangible assets is monumental. The songwriters, screenplay writers, ﬁnancial markets are now driven
trick is to create the name, design, painters and all art-related by it, because intellectual property
symbols, slogan and logo (corporate professionals and companies. portfolios have secured their place at
ID, store ambiance, your look and feel), Judging from the proliferation of the center of today’s great leaps and
secure it with trademark protection, Puerto Rican singers and songwriters have proliferated those leaps.
and then build an entire business selling their CDs around the world,
around it: a reputation for quality the island’s music and recording Which brings us back to you. What
and great service, reliable distribution, industry is playing the game quite can you innovate? What can your
a phenomenal experience, all those well, thank you – a lesson local mind create? Who can you hire to
things that develop a strong customer painters, screenplay writers and think? Can you build your business
following, a contagious employee authors would be well advised to or a new business (or an acquired
culture, great word of mouth – in heed. business) around innovation and
sum, high goodwill, a great brand.
the global sales of your new pipeline
While the island’s recording of patented, trademarked and
CLevel | Winter 09
And that, in turn, creates the industry is well developed and honed copyrighted products?
market value an investor or some for global business, industries like
other company will want to acquire publishing of literary works (songs, Learn the rules of intellectual
in the future. That is the potential of books) and talent management are property, and you’re ready to play the
sound trademark management. Own not. Perhaps C-level executives innovation game.
LEV EL AB OV E
Want to own
You may want to follow the American Agencies
example of non-family business succession
t took the team of seven new owners, including new leaders who know they will only be at the helm for 25
President Omir Méndez, several weeks, perhaps months, years or so, each succession ensuring the continuity of
before they realized it. It grew on them, as it did on the focus and strategy that enables, in turn, the continuity
team of two who had recently passed them the torch. of success – the company becoming, indeed, a legacy to
hand over from generation to generation.
American Agencies had gone from being a company
to becoming an institution. It is the stuff institutions are made of, like many of
the big global brands we often read about in The Wall
Founded in 1956 by an entrepreneur team led by Jorge Street Journal and learn about in business schools and
Rivera Cardona, the construction supplier based in Rio books. Companies that become legendary because their
Piedras achieved a smooth transition of ownership 28 leaders know it’s not about them, but rather about the
years later, handing over the reins in 1984 to a seven- company and the brand.
member management team led by new President Angel
Rodríguez. A winning formula
So it is at American Agencies. (The company
Twenty-three years after that, in 2007, Rodríguez specializes in structural steel, metal doors, bathroom
engineered the same feat, adopting and adapting partitions and architectural hardware.)
the succession model Rivera had used and guiding
the company through its second seamless transition, “One of the most important objectives we had in mind
the current owners selling the company to a team of when we began the process was to select the team that
CLevel | Winter 09
managers who had been with the company for years. would best continue what Jorge Rivera began in 1956, as
well as carry on the work and tradition that our team has
It is a model Méndez and his team plan to use yet followed,” said Rodríguez. “Sure, they will make changes
again when it becomes their turn to move on. The along the way, as did we. That’s what every company must
pattern will thus be established. American Agencies do to adapt to the times and grow. But the continuity of
will endure, becoming “bigger” than the temporary purpose and general strategy is critical.”
LEV EL AB OV E
As you draw near the moment when you want to hand over
the company – for Rodríguez it was around 2002 – begin
identifying the members of your management team with the
caliber to become the new owners. It’s the pool from where
Said Méndez: “This is the new president will be selected. You may want to recruit over the
years with succession in mind, hiring folks with the potential to run the
a formula that has been company.
proven twice already, and
Why current management, as opposed to selling the company to
we know it works, so we outsiders who would then select a new president? “Continuity, intimate
plan to do the same.” knowledge of the company, strong client relationships, deep commitment,”
answered Rodríguez. “It’s the path that ensures the highest probability
of success. These guys have been part of the team for years. They know
Indeed, the basic everything, and they have proven they’re more than able to do the job.”
elements of the formula
are broadly followed in
Determine how the retiring owners will be paid. At American
Agencies, the seven managers selected to become the new
business successions owners agreed to purchase the shares of the two retiring
around the world. owners (the other being Guillermo Menéndez), who also
began as seven in 1984 – “some passed away and others retired,” said
It is, in effect, a textbook Rodríguez.
case consisting of these
The new owners will make payments over the coming years in what
six steps: is called estate freezing: common shares of the retiring owners are
converted to preferred shares, and new common shares are issued for the
succession. Future gains are applied to the new shares in order not to be
taxable upon the retiring owners’ death
“We wanted to do everything by the book, including the tax issue,”
he said, adding that this method also leaves sufﬁcient capital in the
company’s coffers. “We didn’t do this in 1984, and the new team at the
time took over without any capital.”
Choose a process to select the new president. As it turned out,
all seven new owners in 2007 were capable, but Rodríguez set
a rule that only an engineer could be president, reducing the
“We’re here to take choice to three. How, then, to select?
care of the company
“Since they were all qualiﬁed, the group decided to put it up for a
for a while, truly care vote,” he explained. The seven voted, and Méndez was elected.
for it, make it grow and
pass it on, just like it As it turns out, the same happened in the 1984 succession. Rodríguez
was passed on to us.” recalls he was elected for the same reasons Méndez believes he was elected
this time around: preparation, personality, ability and youth. Both were
– Omir Méndez, President,
CLevel | Winter 09
in their early-to-mid 30s, ensuring a long tenure and – there’s the C word
American Agencies again – continuity.
LEV EL AB OV E
Purchase life insurance for the new Owning a legacy
owners, with the company as the That’s the formula. It is, in many ways, capitalism in
beneﬁciary. If one were to die, the its purest form: get a good education, join a strong
policy, in effect, pays for the shares. company, work your way up through the ranks on
“We didn’t do this in 1984, and it became an the strength of your merits, join the management
issue when an owner would pass away,” revealed team, accumulate capital, and when it comes time for
Rodríguez. succession, you may become an owner and perhaps the
Others launch their own businesses or are recruited
as owner-presidents by a company. For most C-level
Consider keeping the outgoing
president as chairman of the board, as executives, however, ownership through management
did Rodríguez and Rivera before him. succession (in a non-family-owned business) is the
Again, continuity. smoothest and most likely way to go.
“It seems the natural thing to do,” said Méndez. You may want to make sure, though, that the company
“It’s great to have him there when we need him, is of this succession mindset, or that you as a C-level
to offer his advice, to help in the transition with executive can engineer the model at the company. Then
certain clients, and in other ways. Besides, the you, too, may contribute to the continuity of that which
strategy did not change with the change in is called a legacy institution.
management. We all took part in deﬁning the
strategy over the years, so the fact Angel stayed Méndez feels the legacy effect most poignantly when
on as chairman was a seamless process.” founder Jorge Rivera, now aged and frail, stops by the
ofﬁce, unannounced, to see how things are going.
“It’s always a special moment,” says the new young
president. “Seeing him and how much he still cares
Communicate the change prudently. makes all of us in the new team – and every employee,
American Agencies only announced the for that matter – stop and reﬂect on what we’re here to
transition to its employees, and only as do. We’re here to take care of the company for a while,
it was taking place, as well as to clients truly care for it, make it grow and pass it on, just like it
and certain suppliers. Why not communicate it was passed on to us.”
in the press or have a high-proﬁle celebration?
Not necessary, they both answered. In fact, most American Agencies, he continues, is not a family
privately-owned companies remain quiet about business, but “it feels like a family, and that’s part of the
their successions. legacy we’re here to carry on as well.”
It is capitalism in its purest form: get a good education, join a strong company,
earn your way up through the ranks, join the management team, accumulate
CLevel | Winter 09
capital, and when it comes time for succession, you may become an owner
and perhaps the company’s president.
LEV EL AB OV E
When it comes to penetrating
the U.S. market using a Supplier
Diversity strategy, one
veteran of many battles says
it ultimately comes down to
persistence and heart.
do you want it?
on’t give up.” the lesson should not be lost. The SD circuit, a natural
way for such companies to penetrate the national
If any statement summarizes Monica market, promises huge gains, but only if pursued
Maldonado’s approach to supplier diversity intelligently.
(SD), it is this one.
“There are always opportunities, but it’s a process that
The Colombia-born printing and marketing executive takes time. The important thing is to be persistent and
should know. She’s been knocking on Corporate America not give up. It’s a test of one’s will and endurance,”
CLevel | Winter 09
doors (large U.S. corporations) since joining the family said Maldonado, adding a simple measure of that test:
business in 1984, and particularly since taking over the “How badly do you want it?”
Atlanta-based company from her father eight years ago.
The Maldonados began testing their own will in 1982,
For businesses in Puerto Rico – indeed, for minority- when Monica’s parents left their beloved Cartagena to
and women-owned businesses anywhere in America – launch a Minuteman Press franchise in Atlanta, while
LEV EL AB OV E
Monica pursued university studies in Gainesville, Florida. (MWBE) in the United States, driven by three factors.
First, the expanded role of minorities and women in the
The business ran into a wall, since the franchise was economy, with women having long become the nation’s
too focused on small orders from retail and walk-in primary consumers and minorities the fastest-growing
customers and could only grow so much. Five years consumer segment. The logic for large corporations is
later, it changed its name and focus. clear: having more MWBEs in their supply chains helps
Interprint Communications, as the company was build brand loyalty among minorities and women in
renamed, began targeting larger commercial accounts, general, which strengthens sales.
and in the years following Monica’s entry into the
business, the diversiﬁcation broadened further. In Second, MWBE suppliers provide important market
addition to printing, the company offered creative insights into consumer patterns, which also ultimately
design, branding, marketing, advertising, promotions translates into sales. And third, supplier diversity
and other solutions, all under the vision of an integrated (and diversity in general) has become part of large
one-stop shop for clients of any size, small or large. (It corporations’ social responsibility. As pressure continues
uses the domain ok2print.com on the web.) to build on Corporate America to assume a bigger role
in social wellbeing, diversity has taken center stage.
The ﬁrst big deal came from Bellsouth (now At&T),
and today Interprint boasts relationships with such For most of the last two decades, the SD process
Atlanta-based corporate giants as The Home Depot, followed a predictable pattern: a company would obtain
Supplier diversity has become a sort of holy grail for the growth of minority-
and women-owned businesses (MWBEs) in the U.S., driven by three factors:
the expanded role of minorities and women in the economy, the important
market insights to be had, and the fact that supplier diversity (and diversity in
general) has become part of large corporations’ social responsibility.
Cox Communications, The Coca-Cola Company, Delta certiﬁcation as a MWBE, submit its credentials to a wide
Community Credit Union, and Comcast among others. range of corporations, the latter would place them on
vendor lists, and both MWBEs and corporations would
The company recently completed an investment of join and network through any number of minority and
more than $2 million in new facilities, a six-color press, women business organizations at both the national and
a new information system, and a prepress plate maker state levels.
system, all of which expands capacity to a new level.
Interprint also launched a new Internet-only printing site, Aside from their networking and dealmaking role,
dway2print.com, to target business anywhere. In 2010, many organizations served as pressure groups, taking
Maldonado will launch The IP Store, a chain of outlets their SD case directly to CEOs and corporate boards and
that will provide a wide array of business services. holding them accountable to performance scorecards
“Our clients will have no excuse not to give us the
opportunity,” she said. “We ﬁll unique niches with the As the years rolled on and with every success and
diversity of our portfolio offerings. We are ready for horror story told, both sides accumulated signiﬁcant
growth.” learnings. SD long-timer Maldonado has lived the
entire evolution, and she has done so as both a woman
A supplier diversity how-to owner and a minority owner, from a leadership position
in various organizations and as an outspoken, always
Much of that expansion is aimed at Corporate passionate advocate of the MWBE cause.
America, a segment Maldonado continues to target
CLevel | Winter 09
intensely through the supplier diversity process. “You can say I have a unique perspective.”
SD has become a sort of holy grail for the growth Indeed. As she expressed her views to C-Level during
of minority- and women-owned business enterprises an exclusive phone interview from her Atlanta ofﬁce, a
continued on next page
LEV EL AB OV E
continued from previous page
sort of SD how-to emerged, a set of do’s and don’ts that established corporations – what Procter & Gamble is
any MWBE in Puerto Rico and elsewhere would do well to Walmart, for example, or Oracle to General Electric.
to heed and follow: Most MWBEs are in the other categories. “The
higher the tier, the more proﬁtable the contract,” she
• The ﬁrst step is to ﬁgure out exactly who you are as a explained, “but for that to happen you need to be the
business, what you will offer Corporate America, and right ﬁt for their strategy and understand your ﬁt in
why a corporation should choose you instead of another their supply chain. Smaller companies are perceived as
supplier. Offer uniqueness. Develop differentiation. being more vulnerable and questions arise as to their
Prepare to make world-class presentations. “The outcome. You must show you’re there for the long
competition is ﬁerce,” she afﬁrmed. “No one is going haul. So play it very smart and build a lot of trust.”
to choose you just because you’re minority- or woman- • In your presentations, relationships and networking,
owned. You have to win on merit. The MWBE status is help CEOs and SD directors understand the value
an important edge, but it’s only an edge.” and business case of SD for their companies. Don’t
• Go through the usual SD drill: assume it’s self-evident. It
become certiﬁed, join as many needs constant reminding.
vendor lists as you can (primarily • Deliver, deliver, deliver.
those that promise real deals – In the end, “that’s the
companies that may or do need best way to build trust,”
your services), and join as many she added. “When you’re
MWBE organizations as time contracted for a job, no
will allow. Maldonado, for one, matter the size, make sure
has been active for years in the you exceed expectations. It
Georgia Hispanic Chamber of will set you up for the next
Commerce and currently serves as one with that corporation
chairwoman, as well as the Atlanta and with others.”
Chapter of the National Latina
Business Women Association, the • Recognize when you
Greater Georgia Women Business won’t be able to deliver
Council, the Georgia Minority and don’t even go for
Supplier Development Council, those deals. “Know your
Monica Maldonado, president of Atlanta-based Interprint Communications, has
and a host of others. used her leadership roles in various minority and women business organizations to limits and capabilities,”
advocate tirelessly for the advancement of such businesses in the United States. she continued.
• Use those memberships wisely.
Network, network and network, • Realize that SD is also
particularly with the SD directors and other key an avenue to develop business and relationships with
decision makers in your target companies. Build other MWBEs. Get into it thinking both channels.
friendships and relationships. Earn everyone’s respect. In fact, “chances are you’ll generate more deals
When appropriate, assume leadership positions in with other minority businesses than with Corporate
the organizations, as they allow for greater access, America, and that’s great,” she exclaimed. “It’s one
recognition and reputation. of the reasons we should get into this to begin with.
Corporate America, you know, is not for everyone,
• Recognize that corporations are no longer adding and there are far more opportunities among smaller
MWBEs to their vendor lists just to score points and companies.”
show off lots of names. “They’re being far more
selective nowadays, consolidating suppliers and In the end, Maldonado returned to her common
keeping a smaller number, so it’s a lot more important theme: “Don’t give up. Be persistent. The deals will
CLevel | Winter 09
to do this right,” advised Maldonado. be there. It takes time, but in the end it’s more than
• Play the tiers. Large corporations generally have worth it. Those who want it more will be the
Tier 1, Tier 2 and Tier 3 suppliers. The ﬁrst are large, winners. That’s just the way it is.”
As Maldonado expressed her views to C-Level, a sort of supplier diversity
how-to emerged, a set of do’s and don’ts that any MWBE in Puerto Rico and
elsewhere would do well to heed and follow.