June 18, 1998
Special Business Section
The Tiger in the Valley
The Tiger in the Valley
A remarkable economic recovery is reshaping the business landscape north of Mulholland
By Wendy J. Madnick, Valley Editor
The best thing about business growth in the San Fernando Valley these days is the ability to write your own ticket. Just ask Dr. Michael Burnam.
Last November, Burnam, a heart specialist, and colleague Sheldon Rosenthal, M.D., a plastic surgeon, launched Physicians' Advantage, a group-purchasing organization.
Burnam said that he and Rosenthal started the business because, while specialists' salaries have fallen dramatically (44 percent in the last two years, according to a recent study by the California Medical Association), their overhead has increased. Seeing that doctors needed a way to buy more with less capital, Burnam and Rosenthal did what every keen entrepreneur does -- fill a niche. The Encino-based Physicians' Advantage now boasts more than 40,000 physician members, including those with Tenet Health Systems Inc., which owns several local hospitals; Pacific Health Alliance, a West Coast PPO; and the National Hispanic Medical Association.
"We created the company to take advantage of group-purchasing power, to negotiate with vendors and [to get] lower costs on everything from exam gloves to office equipment," Burnam said. "And we've been extremely successful."
Burnam said that it made sense to locate the company in the hub of Southern California's health-care industry.
"Being in the Valley gives us a tremendous advantage because so much of the health-care industry is concentrated along the corridor of Ventura Boulevard," he said. "It's a very friendly climate for an entrepreneurial pursuit; the two banks we dealt with were very cooperative, our landlords are great, and you can get everything you need, from office supplies to insurance. It's also a very nice place to work and to bring up children, so it gives us a recruitment edge; we're able to attract top-quality people."
Indeed, the San Fernando Valley and its surrounding areas have experienced a remarkable economic recovery since the 1994 Northridge earthquake. According to John Rooney, president of the Valley Economic Development Center (VEDC), the key to this recovery has been the Valley's successful shift from a production-oriented economy to one that is information- and service-based.
"Most other regions of the country are struggling to make that transition because they don't have the diversity of businesses we have here," Rooney said. "All the engineering and manufacturing firms that used to be here attracted a lot of talent to this area; when those companies downsized, many people went on to start their own companies, and now they're making fortunes here."
The VEDC, a nonprofit organization, focuses primarily on small-business development, providing one-on-one management consulting and various training programs (including a business planning "boot camp"). The group also supplies business loans and financing.
As head of the VEDC since 1993, Rooney has observed several strong trends in the Valley's business growth, most notably the increased presence of the entertainment industry along with high-tech software and multimedia companies. The Economic Alliance of the San Fernando Valley, an organization created to coordinate an overall economic strategy for the area, recently released a report that showed that the region accounted for $6.4 billion in entertainment production spending in 1996 -- four times the amount spent in Hollywood and comprising almost 25 percent of industry spending statewide.
"Most people don't realize it, but the Valley is Hollywood," Rooney said.
While the "Big Three" -- Warner Bros., Universal and Disney -- still dominate the East Valley, the West Valley is also experiencing its share of entertainment growth, with the opening of Ray Art Studios in Canoga Park and various film-distribution companies. Even the far-flung region of Simi Valley benefits from the presence of DreamQuest, a special-effects house whose work appears in "Flubber" and this summer's highly anticipated "Armageddon."
Below, a quality-contol worker inspects parts at MiniMed, based in the San Fernando Valley. Above, Amgen in Thousand Oaks was ranked third among the Los Angeles Business Journal's Top 100 companies for 1997.
Meanwhile, the health-care industry continues to grow at an unstoppable clip throughout the San Fernando and Conejo valleys. The expansion encompasses not only hospitals and care providers, such as Kaiser Permanente, but also biomedical technology companies, such as Sylmar's MiniMed Inc., makers of a revolutionary insulin pump for diabetics, and Amgen in Thousand Oaks, which manufactures a number of blood-treatment products. Amgen ranked third among the Los Angeles Business Journal's Top 100 companies for 1997; founder Alfred Mann recently announced a tentative agreement to move MiniMed and his other company, Advanced Bionica, to the Cal State Northridge campus.
The attraction of living in the Valley has also led to a turnaround in the real estate market, long a business staple. In 1993, only about a third of the homes listed as for sale actually sold; as of 1997, that number had jumped to more than 60 percent, according to statistics from the Southland Regional Association of Realtors.
"I think it is easier here [for realtors] than over the hill," said June Abramson, a realtor with Coldwell Banker who's been selling property in the San Fernando and Conejo valleys since 1985. "We have a close-knit, very reciprocal group in the Valley -- there's a greater degree of cooperation between realtors. And it's easier to sell -- you can get a lot more for your money once you go north of Mulholland."
All this growth benefits not only individual industries and companies; it's good for the Jewish community, too. According to statistics from the Jewish Federation/Valley Alliance, donations increased from a low point of $5.5 million in 1995 to $6.1 million in 1997.
"The economy has actually been better for a while, but it takes a couple of years for people to feel better about it and start to give more," said David Levy, director of the Alliance's Campaign Division. "As a result, the average gift has increased by about 10 percent."
Advertising veteran Gary Wexler has gone from marketing soft drinks to pitching philanthropy for the Federation and other groups
By Diane Arieff Zaga, Arts Editor
When it comes to a frenetic marketplace where everyone is jostling for the audience's time and attention, right does not necessarily make might. Virtue is nice, but a well-articulated marketing campaign puts you on the map and gets people to listen.
Scenes of back-slapping male camaraderie or dramatic 60-second scenarios of seduction: The images advertisers use to sell everything from beer to upscale sports cars endure most likely because they work. Our collective "buttons" are predictable enough -- greed, loneliness, envy, insecurity. But how does one sell something as amorphous as the philanthropic spirit? Volunteerism? A sense of community? Or Jewish involvement?
Local advertising veteran Gary Wexler has worked both sides of the aisle. Beginning in the 1970s, he has toiled in the belly of the advertising beast -- blue-chip agencies such as Doyle, Dane Bernbach, and the über-hip Chiat Day, companies that are at the forefront of defining (and stoking) our national consumer desires.
So how did a successful copywriter-turned-marketing director, who once designed slick campaigns for soft drinks, end up putting together marketing plans for organizations such as the Jewish Federation of Greater Los Angeles? Why give up the fast-track status of selling sex for the distinctly boutique endeavor of selling soul?
From his fashionably funky downtown office, the energetic and affable Wexler recalls how his career change mirrored the changes he was making in his own life. "There came a point when I felt that if I have to sell another bottle of Coca-Cola, I was going to die," he said. "The one place I had wanted to be was Chiat Day, but, at that point, it had become meaningless."
Wexler's first step toward breaking away was opening up his own ad agency, which he built up over a five-year period. It proved a short-lived, incomplete remedy for his corporate angst. "One day, I looked at the name plate on the door and thought, 'Whose life is this?'"
Wexler sold the agency, took some writing and Jewish studies courses and, in 1988, attended the CAJE conference in Jerusalem, an international gathering of Jewish educators. He had been invited to speak about the marketing of Jewish education. Although his own three children had been in Jewish day schools, it was not a subject he had ever approached professionally.
"[Prior to the event], I pulled Jewish co-workers aside and told them: 'You're my audience. Non-affiliated Jews,'" Wexler said. "'I want you to brainstorm and think of an ad campaign that would sell you on Jewish education for your kids.'"
The strategy worked.
"I presented it at CAJE," he said. "It made a big splash, and, suddenly, I was a Jewish marketer."
After the civil unrest that followed the verdict in the Rodney King trial, Wexler worked closely with the Federation's Jewish Community Relations Committee to embark on a sustained effort to teach other local communities how to organize and market themselves. That project, combined with his CAJE experience, convinced Wexler that he was at the beginning of an entirely different sort of career, one that would focus on the marketing of nonprofit groups.
"Everyone thought I was crazy," he said. "No one was doing this sort of thing."
What happened next is familiar to anyone who drove the streets of Los Angeles after the 1994 Northridge earthquake. Highly visible at strategic points throughout the city were large black-and-white billboards that touted the social-service functions of the Federation, catchily dubbed "The Other 911." Wexler had been given a $1.5 million budget from the Federation to come up with a far-reaching plan to get the message out about the organization's community-outreach services. The project included a marketing plan, direct mail, public relations and advertising.
"The big concern with them," Wexler said, "was, 'What will the donors think?' What happened was, the donors felt validated, excited by [the campaign], and it set a standard for the community with regard to what sort of marketing could be done.... After all, the business of the Jewish nonprofit world, the nonprofit sector in general, is to make a better world. That's a serious proposition. You're asking people to give away their money, so it better be a serious, dramatic sort of communication."
Wexler acknowledged that, like any bureaucracy, the Federation had a degree of inter-office politics and a collective style of decision making that made it "a hard place to assess exactly how you're doing.... Coming from commercial advertising, the nonprofit world was a whole new place for me. There are boards and their staffs that have to all agree on the work I'm doing."
Nevertheless, the Federation campaign was an attention-getter, and it became his calling card when other organizations came knocking.
"I began to get calls from all over -- the United Way, UCLA, Steven Spielberg's Righteous Persons Foundation, the United Jewish Appeal and other Jewish federations. That's when I knew I had a business.... Ultimately, people use me for two reasons: to raise more money for their organizations or to get more people to use their services." At present, Gary Wexler & Associates in the Urban Jungle has approximately 23 clients based in cities such as Los Angeles, Washington and New York. Roughly half of those are affiliated with Jewish causes. His wife, Dana, who has a doctorate in finance, serves as the company's financial manager.
But can value-laden concepts such as education, philanthropy and spiritual involvement be packaged and sold like so many supermarket products? The answer, it seems, is yes and no. The emotions and values that move us to write a check, sign up for an education program or volunteer our time are more complex than the impulses fueling our hamburger and after-shave choices. As a result, the marketing strategies are different, too.
Yet skeptics who pooh-pooh marketing as the unwelcome or unnecessary encroachment of hype into the nonprofit sector need only listen to those who toil there themselves to get the message loud and clear: When it comes to a frenetic marketplace where everyone is jostling for the audience's time and attention, right does not necessarily make might. Virtue is nice, but a well-articulated marketing campaign puts you on the map and gets people to listen.
Nurite Rosin, of the Hillel Foundation for Jewish Campus Life, speaks in glowing terms of the fund-raising brochure Wexler and his associates at Urban Jungle put together for the organization, which now has a presence on more than 500 campuses.
"We have gotten a lot of comments from people about how interesting they have found the stuff to be, and that has definitely been an important factor in letting people know what Hillel is doing. We needed the campaign to give people a sense of why Hillel needs their help with fund raising, and, yes, it has absolutely done that for us."
"Gary had a reputation from the work he had done at the Federation and on national campaigns," said Dr. Alvin Mars, who's with the Bardin Collegiate Institute, another Wexler client. "I had also seen him do a wonderful workshop for the Righteous Persons Foundation, to which I was invited. I thought the campaign he put together for us reflected wonderfully on our institution. I've had great feedback all year long. He taught us that you can't market one day and look for results the next. You have to continue to tell your story and tell it again."
Certainly, other nonprofit organizations -- such as Chabad, for example -- have tried their hand at savvy PR and slick promotional materials prior to Wexler's arrival on the scene. Yet today, Wexler is probably one of the sector's most articulate marketing spokesmen. Since carving out his own marketing niche in the nonprofit world, he has come to some interesting conclusions about the nature of his new business: He regards foundations (the Shoah, Cummings and Wexner foundations come to mind) as "the hope of the Jewish world," adding that "because they are not bogged down by bureaucracy or dependent on membership, they can be flexible, take risks and be really creative....
"You know, the Jewish community is not a market-driven community. It's a leadership-driven community. The cause -- the product -- is what it is. You're certainly not going to poll people in order to come up with a different, more popular product. As a result, the response to the work is highly emotional. The Jewish audience has to buy into it at the soul level."
Israeli and U.S. high-tech firms exchange phone numbers and ideas at Santa Clara conference
By Avi Obligenarz
More than 400 Israelis, representing 125 high-tech companies, participated in the week-long conference, TechVentures, which culminated in the signing ceremony.
Call it the Techno-Pact. At a meeting last month in Santa Clara, Gov. Pete Wilson signed an agreement with Israel's minister of trade and industry that promised future technological cooperation and perhaps a joint California-Israel commission on research and development.
The agreement between Wilson and Israel's Natan Sharansky contains no mandates but puts on paper what has long been a fact on the ground.
"This agreement will increase the cooperation and opportunities of meetings between the intellectual leaders, particularly from technology and new economic areas, of both sides," said Lee Grisom, California's secretary of trade and commerce.
More than 400 Israelis, representing 125 high-tech companies, participated in the week-long conference, TechVentures, which culminated in the signing ceremony.
Organized by Sunstone Ventures, an Israeli investment bank, TechVentures drew more than 1,000 visitors who represented such U.S. companies as Lucent, Motorola, Eastman-Kodak, Sun and Compaq, as well as large American venture-capital funds, most of which have never invested in Israel. "In the past, good companies sought capital," said Sunstone CEO Kobi Dinar. "Now, there is a lot of capital seeking companies."
Along with the massive matchmaking endeavor, which brought together Israeli companies and their American counterparts, high-tech gurus such as Dan Maydan, president of Applied Materials; Eric Benhamou, CEO of 3Com Corporation; and John Sculley, partner of Sculley Brothers, LLC, and ex-CEO of Apple Computers spoke to conferees.
Sharansky, who also met with the California Israel Chamber of Commerce board, assured the concerned members that the position of the Israeli Consul for Economic Affairs, which Linda Ben-Shoshan is vacating this summer, will be filled.
He also told The Journal: "There is no doubt, as far as technology, human resources and possibilities are concerned, that there is no place like Israel in the entire world. Yet our only flaw is marketing, the link to the wide world.... Today, our high tech is the engine that carries the Israeli economy, even during the recession."
Some companies left TechVentures disappointed, having not received the backing for which they'd hoped. But others, such as TelesciCOM, came away with numerous offers. The year-old company was bombarded by industry mavens who wanted to see its wireless XDSL technology, which allows users to watch an entire movie at its regular speed over the Internet.
Erez Marom, president of CTI, was also pleased. His company's "World Wide Office" -- a "virtual office" system that includes voice mail, fax mail, e-mail and fax server -- impressed many investors.
"For us, the show was very successful," said Marom. "We got a rare opportunity to present ourselves in front of a large group of outstanding venture capitalists and potential strategic partners. This is something that, in order to achieve the same results on our own, we had to put a lot of money, make a lot of marketing, a lot of appointments and running around."
Avi Obligenarz is a free-lance writer who resides in Los Angeles.
Six survivors find freedom and financial success in America
Dr. Sigi Ziering, Leslie Gonda, Fred Kort, Nathan Shapell, Arnold Lorber, Max Webb-- all normal, successful businessmen. That's how the six of them looked, taking in the hugs and handshakes of friends and family at a banquet last week in their honor. But their stories offer a dark twist on Horatio Alger. The six were honored as founders of the United States Holocaust Memorial Museum. All six survived the Holocaust as children or teens, and went on to create hugely successful businesses and give away millions in charity.
* Sigi Ziering, a native of Kassel, Germany, was transported with his family and 1,000 others to a ghetto in Riga, Latvia; only 16 people, including Ziering, his mother and brother, survived. Liberated at 17, he joined his family in London and, with five years of elementary school behind him, eventually earned degrees at the University of London, Brooklyn College and Syracuse University. After working in the nuclear reactor program at Raytheon, he and a friend started a company called Space Sciences, which they sold in 1968 for $1.8 million. In 1973, he invested in a start-up medical-diagnostic-kit manufacturer, Diagnostic Product Services, which he eventually turned into an international company with 1,400 employees and sales of $186 million. Both Ziering and his wife, Marilyn, have actively contributed to the University of Judaism, the Venice Family Clinic, Temple Beth Am and Tel Hashomer Hospital in Israel.
* Leslie Gonda, born in Mezotur, Hungary, survived a series of concentration camps and work camps. After the war, he and his new wife, Susan, moved to Venezuela, where they opened up several successful small businesses. In 1963, they came to the United States, and, 10 years later, Gonda, his son and a friend founded Lease Finance Corporation, which has become one of the largest airline leasing firms in the world. The Leslie and Susan Gonda Foundation supports cutting-edge medical research in the States and Israel.
* Fred Kort was one of only nine people to have survived Treblinka, where upward of 800,000 Jews were murdered. In July 1944, as Russian troops advanced, the guards burst into Kort's barracks and ordered the Jews to lie down. Kort fled through a window and hid in a shed as the guards slaughtered the remaining Jews. As guards searched for him, Kort used a stolen hand spade to dig beneath the camp fence, and dodged sentries' bullets as he dashed for freedom.
Kort eventually fought and was wounded in the Polish army. His father, brother and 60 relatives died in the Holocaust.
He arrived in the United States in 1947 at age 24 with a nickel in his pocket. He worked in a toy factory until he found and invested in a high-bouncing rubber ball. The Teeny Ball became the cornerstone of Kort's new company, Imperial Toy Company, which today has annual sales of more than $100 million.
Kort and his wife, Barbara, have been major benefactors of the Los Angeles Holocaust Monument, the ADL, Israel Bonds and the United Jewish Fund.
* Arnold Lorber, born in Czechoslovakia, spent much of the war posing as a German to avoid capture, while secretly bringing food and supplies to the few Jews remaining in Bratislava. After the war, he started a textile manufacturing business in Venezuela. He later moved to the United States and, with his wife, Anita, founded Lorber Industries, now the largest textile manufacturer west of the Mississippi. Their Program for Entrepreneurial Excellence at Bar-Ilan University has provided grants for up-and-coming businessmen and women.
* When Nazis invaded Sosnowiec, the town in western Poland where Nathan Shapell lived, his father and two brothers abandoned Shapell, his two sisters and his mother, leaving the teen-ager as head of the house. He worked at the sanitation department, and gained the favor of German officials by bringing them meat and clothes, experiences he chronicled in his book, "Witness to Truth."
After the war, Shapell used his knowledge gained from building displaced-persons camps in Europe to create a highly successful real estate development company in the United States, Shapell Industries. Through his organization, "Building a Better Los Angeles," Shapell has raised $1 million for the homeless. He was the first president of D.A.R.E. America and has served as an economic adviser to Gov. Pete Wilson and President Reagan.
* Max Webb survived 12 concentration camps before being liberated from Waldenburg on May 8, 1945. He started a successful textile factory in Germany with his brothers-in-law, Nathan and Dave Shapell, before coming to the States and co-founding Shapell Industries with them in 1955. Webb has been a benefactor of the Spinker Yeshiva, the Myasthena Gravis Foundation, Tel Aviv University, Congregation Beth El, Cedars-Sinai Medical Center and Casa Loma Institute of Technology, among other organizations. His wife, Anna Hitter Webb, spent the war years in Siberia, then went on to become a self-made businesswoman and benefactor.
There is a rhythm to these stories, a deceptively lulling sameness. But behind each is a combination of tremendous luck, which the men credit for enabling them to survive what so many others didn't, followed by years of sacrifice and hard work-- and some more luck-- which allowed them to succeed despite staggering odds. "We rolled up our sleeves and went to work," Kort told The Journal. "We didn't look at what we didn't have; we looked forward to what we will have."
They had the health and bravado of youth to help them survive the camps, but, in the end, survival was "mostly luck," said Lorber. Afterward, they had to learn fast. "I was in Auschwitz," said Shapell. "What can you learn about business in Auschwitz? I learned in America."
Indeed, these men's stories -- three of which were featured in a April 13 Fortune magazine cover story -- are less about the Holocaust and more about America. Here, the men found freedom and opportunity, along with the support of wives, family and, in the beginning, Jewish-aid organizations. Finding goodness after surviving evil inspired them to share much of their fortunes with others. "I think, as survivors," said Ziering, "we feel a moral obligation to remember those who didn't make it, and to help others." -- Rob Eshman, Managing Editor