If I still have you with me, by now you are probably comfortable with murkiness. As another husband-wife duo, not the Resnicks but the Comaroffs, John and Jean, says:

Ethno-commodity is a very strange thing indeed. Flying in the face of many conventional assumptions about price and value, its very appeal lies in the fact it seems to resist ordinary economic rationality.

Ethnicity, Inc. is indeed a strange little pamphlet. One shall dive into it on other occasions. Let’s pick up where we left off with Fiji. Good place would be to again raise a good question:

If a company’s intangible assets are taken into account during its appraisal, why shouldn’t the same be done when considering local partnerships? Precisely because those intangibles have a lot to do with their local partners.

IP colonist’s deed, you see, is a refined affair, kind of like a white collar crime. It’s clear what happens to you if are caught with a minor possession of drugs, less so if you dabble in derivatives.

Even the First World startup dreamer understands that outsourcing her manufacturing to an Indonesian supplier who rules their industrial zones like Turkish jails is her part of the Faustian bargain with the Dark Side. She can go elsewhere and probably encounter the same situation (if she wants to learn too much, that is) and also know that her former supplier already replaced her orders with someone else’s.

She will spend her life making sure that anyone and anything showered with her affection does not get anywhere close to it. But to change what troubles the conscious would require a kumbaya suspension of reality, changing the world and all that. It’s business, hunny bunny, and this is how it’s done. Her crime is just one of modernity’s side effects; like, say, her son’s depression. Leave the meditation on those items for other people’s grad school papers and silly degrees.

An IP colonist, however, does not have that escape route. Fiji, David Gilmour and the Resnicks, show why.

If Fiji wanted to embark on what China has its sights set on, or Ethiopian fine coffee producers are struggling to put together, it would stumble upon its intangibles already half seized.

Fiji, the brand, has already been taken. It’s owned and managed by a Los Angeles couple. Fiji is, of course, no Sweden, a motherboard and a country-brand with many global ingredient brands. But it doesn’t even have the option to tread on that path. It’s a country in service of one private brand.

IP colonist is nothing if not thorough. What started out as a trademark application for the phrase “From the islands of FIJI,” without a claim to the word Fiji itself, has slowly gotten even better, even sharper:

Fiji Water … has trademarked the word “FIJI” (in capital letters) in numerous countries. (Some rejected the application, but not the United States.)

Here are the files (pdf), and one more, at the USPTO (U.S. Patent & Trademark Office):

The company got itself regional marketing-channel managers, Fiji’s foreign service:

“Learning from the lessons of products, we must brand ourselves,” Fiji’s ambassador in Washington told a news site for diplomats in 2006, adding that he was working with the Resnicks to try to increase Fiji Water’s US sales. A Fiji Water bottle sits at the top of the embassy’s home page, and the government has even created a Fiji Water postage-stamp series—the $3 stamp features children clutching the trademark bottles.

The ‘bitter-sweetest’ of ironies is Fiji, the country, going after these targets, while the IP colonist sits on top of the page:

Meanwhile, with savvy worthy of an Interbrand profile and Brandchannel’s accolades, the Resnicks guard aggressively against all threats of dilution. It has gone after:

…rival Fijian bottlers daring to use their country’s name for marketing. “It would have cost too much money for us to fight in court,” says Mohammed Altaaf, the owner of Aqua Pacific water, which ended up taking the word “Fiji” out of its name.

Actually, with threats of lawfare, others are muscled into limiting association with Fiji to small print on the back of products, specifically to prohibit the association to act as a shelf-talker.

For instance, read this short little news item. The last sentence is interesting:

In the suit, which was scheduled to go to trial June 24, Island Chill owner Jay Prakash Dayal asked a federal judge to determine that the company is not infringing on Fiji Water’s trademark by advertising its water as being from Fiji and that the company is not engaging in unfair business practices.

But the companies settled, and Island Chill agreed to remove the flower from the bottles label, and only reference the waters source, Fiji, on the back of the label.

The idea behind settlement was to stop war between the companies and let everybody continue to compete fairly and sell water, said Marc Hankin, Island Chills lawyer.

Island Chill told the Fiji Times the change in trademark is only for its US market.

But it’s not just about the nuts and bolts of formal IP ownership. There is other intellectual capital, too. If they get a call from Resnicks, their liaisons or lawyers, Western retail chains, say 7-11, will run from any distribution agreement with a small untested Fiji producer, be it water, soda, chips, or face lotion, if it smells like complication and unnecessary trouble.

Pretty nice partnership, from the company’s perspective, wouldn’t you say?

Fiji got 300 jobs. Which is good. For people working those jobs, phenomenal.

To think this is anything close to appropriate – considering what local partners brought to the table, a motherboard of intangibles – would require local partners to not know their Rubies in the Orchard.

And that’s exactly how IP colonialism works.

There is one source of headache for the company that usually gets talked about when it gets bad press: the supreme irony of Fiji Water bottles in every U.S. supermarket while people around the company’s water plant, and Fiji in general, have no clean, safe water supply. Hence:

[T]he company created the Vatukaloko Trust Fund, a charity targeting several villages surrounding its plant. It won’t say how much it has given to the trust, but court proceedings indicate that it has agreed to donate 0.15% of its Fijian operation’s net revenues; a company official testified that the total was about $100,000 in 2007.

Notice that this not the Sbux brand-equity-compassion machine where this is directly being written into brand architecture. Fiji Water has no plans to scream on a bullhorn how wonderful it is. (Remember, it’s a people-free brand.) This is strictly to keep things orderly around the plant. Just for comparison sake: in 2008, Fiji Water’s marketing budget alone was at $10 million (Brandweek). When it likes something, it goes for it:

It recently dropped $250,000 to become a founding partner of the new Salt Lake City soccer stadium.

But perhaps the height of the you-should-not-know-your-rubies-in-the-orchard moment came late last year. The audacity of such a bluff can only happen when you think the other side is so clueless that you can say anything. Here is how the story came on your favorite channel:

Fiji Water reopened its operations in the South Pacific nation of Fiji on Wednesday – just two days after closing its bottling plant and laying off 400 workers in a row over a major government tax increase.

The U.S.-owned company said after meeting with Fiji’s leaders it has agreed to “comply” with the hefty tax hike imposed on it by Fiji’s military-led regime.

The prime minister, Commodore Frank Bainimarama, said earlier he was ready to call tenders from international groups interested in taking over the artesian water bores that Fiji Water uses to extract one of the world’s most popular bottled water brands.

On Monday the company, owned by California entrepreneurs Lynda and Stewart Resnick, said it was closing its facility in Fiji, canceling orders from suppliers and putting on hold several construction contracts in the country.

After its lawyers met Tuesday with Bainimarama and Fiji’s Attorney General, Aiyaz Sayed Khaiyum, the company said it a short statement that “Fiji Water will reopen its bottling plant, effective Wednesday morning, Dec. 1, at its regular start up time of 8 a.m. Through our discussions, we have also agreed to comply with Fiji’s new water tax law.”

Since the company’s beginning with David Gilmour in 1995, it has enjoyed a tax-free status. From a friendly military junta he got both the 99-years on the land and tax free-status that at the time was justified because, Mr. Gilmour claimed, the whole project was a risky business proposition and Fiji had nothing to lose, only to gain. Once cornered to pay, after almost 15 years of tax-free status, Fiji Water threatened to leave. It let rumors spread that it was considering New Zealand as its new home.

An old-school colonist would have probably done that. Labor is labor. An IP colonist has a bit harder time separating from assets that underwrite her retail value. Continue reading IP Colony: A Short Story

I always thought The Most Interesting Man in the World was Euro RSCG’s (one of the world’s largest mental real estate agencies) deliverable to its client Dos Equis. And that the agency’s rationale went something like:

He is a man rich in stories and experiences, much the way the audience hopes to be in the future. Rather than an embodiment of the brand, The Most Interesting Man is a voluntary brand spokesperson: he and Dos Equis share a point of view on life that it should be lived interestingly.

And that he challenged across categories and dueled across social media with Isaiah Mustafa’s manly purr, a former NFL wide receiver who switched to “playing defense for Old Spice against the Dove launch.”

There is a debate why The Man Your Man Could Smell Like supposedly never managed to move sales the way The Most Interesting Man did. Nivea did just as well without the purr, and Dos Equis helped more friends stay thirsty. At least that’s the word on the street.

What I never knew, however, is that The Most Interesting Man actually lived. And that he resembled Mustafa a bit more than Jonathan Goldsmith.

The world’s Most Interesting Man is a man who survived the Middle Passages. His name was Oladuah Equiano. He was born sometime around 1745 in a rural community somewhere within the confines of the Kingdom of Benin. At the tender age of eleven Equiano was kidnapped from his home and eventually sold to British slavers operating in the Bight of Biafra.

From whence he was conveyed first to Barbados.

Then to a plantation in colonial Virginia.

After spending much of the Seven Years’ War hauling gunpowder for the British frigate, he was promised his freedom, denied his freedom, sold to several owners – who regularly lied to him, promising his freedom, and then broke their word – until he passed into the hands of a Quaker merchant in Pennsylvania, who eventually allowed him to purchase his freedom.

Over the course of his later years he was to become a successful merchant in his own right, a best-selling author, an Arctic explorer, and eventually, one of the leading voices of English Abolitionism. His eloquence and the power of his life story played significant parts in the movement that led to the British abolition of the slave trade in 1807.

Equiano’s further adventures – and there were many – are narrated in his autobiography, The Interesting Narrative of the Life of Olaudiah Equiano: or, Gustavus Vassa, the African, published in 1789.

Readers of Equiano’s book are often troubled by once aspect of the story: that for most of his early life, he was not opposed to the institution of slavery. At one point, while saving money to buy his freedom, he even briefly took a job that involved purchasing slaves in Africa. Equiano only came around to an abolitionist position after converting to Methodism and falling in with religious activists against the trade. Surely, if anyone had reason to understand the evils of slavery, he did.

The answer seems, oddly, to lie in the man’s very integrity. One thing that comes through strikingly in the book is that this was not only a man of endless resourcefulness and determination, but above all, a man of honor. Yet this created a terrible dilemma. To be made a slave is to be stripped of any possible honor. Equiano wished above all else to regain what had been taken from him. The problem is that honor is, by definition, something that exists in the eyes of others. To be able to recover it, then, a slave must necessarily adopt the rules and standards of the society that surrounds him, and this means that, in practice at least, he cannot possibly reject the institutions that deprived him of his honor in the first place.

It strikes me that this experience – of only being able to restore one’s lost honor, to regain this ability to act with integrity by acting in accord with the terms of a system that one knows, through deeply traumatic personal experience, to be utterly unjust – is itself one of the most profoundly violent aspects of slavery. It is another example, perhaps, of the need to argue in the master’s language…*

Defending your humanity in front of the Master is always an exercise in Creole dialect of economese and legalese.

Let’s leave you with The Most Interesting Man’s 16 sec advice on your career:

——-

*These passages are borrowed with no sense of debt from David Graeber’s Debt: The First 5000 Years. 

And when it comes back to you, it has all the markings of an Onion headline. Via Retronaut, a tour through the annals of marketing:

Holidays upon us and always a good time to remind that Santa Claus, or Saint Nicholas, is not just a patron saint of children but also patron saint of thieves.

He also looks out for prostitutes and pawnbrokers.

Read the story here.

Slavoj Žižek is fascinated with intellectual property. He admits that his arsenal lacks good approaches to dealing with it. He often warns fellow Lefties that classicist Marxian exploitation does not explain Bill Gates. Going further than that has been hard.

Insights could be gained via brand extension. Slovenian’s own brand could venture into categories beyond publishing and public speaking industries. Mind-share and heart-share equity (hard earned with years of fighting word processors, agents, back pain, family and state institutions) could be leveraged into accessories, clothing, beverages, or a successful venture across categories.

Lifestyle and market segmentation lend themselves to a unique brand architecture design, with potential for hard-to-pull-off brand stretching.

If a preamble to a movement that’s skillfully avoiding both NGOization and abduction by electoral politics is appropriate, it might be this:

What is debt, anyway? A debt is just the perversion of a promise. It is a promise corrupted by both math and violence. If freedom (real freedom) is the ability to make friends, then it is also, necessarily, the ability to make real promises. What sort of promises might genuinely free men and women make to one another? At this point we can’t even say. It’s more a question of how we can get to a place that will allow us to find out. And the first step in that journey, in turn, is to accept that in the largest scheme of things, just as no one has the right to tell us our true value, no one has the right to tell us what we truly owe.*

*Debt: The First 5000 Years

They got drunk on their own success, some would say, but that sentiment misses the point. Ethiopia’s fine coffee brand ownership and management labors have always been about the right to choose its own path whether that meant f*%#ing up or hitting it out of the ballpark. The brawl with Starbucks was predictably intoxicating and predictably both helping and hurting the initiative’s real goals.

All of those goals––trademark ownership of fine coffee brands in all export markets, creation of an umbrella brand, and the ultimate de-linking from New York ‘C’ and tying of wholesale pricing to the movements of the final retail price––all of that depended on one gargantuan task: convincing key distributors and sellers of Ethiopian beans across the globe to sign license agreements and join a network of licensed distributors; in other words, to effectively change the terms of engagement in a business going for at least three centuries. (There is much to argue that Harar, Sidamo and Yirgacheffe are among the modernity’s birthpang brands, which of course gives this fast-developing story a strong tinge of meta.)

That tale another time.

That in the course of all this work Starbucks (as well as some European and Japanese companies) turned out to already own some of the sought trademarks was at first helpful as it raised the initiative’s profile. Lawfare would have left Ethiopia run over on the roadside with hardly anybody noticing, so it took to convincing a reluctant Oxfam (again, development folks usually don’t know what to do when poor producers want to play First World games on First World turf) to front for it. The Mermaid was eventually cornered. But considering that Sbux buys about 2% of Ethiopia’s annual output, the real work was still barely scratched.

What a difference a day [two years] made. In all of this hoopla, Specialty Coffee Association of America (SCAA) traveled from opposition into neutrality and then into full (well, it comes and goes) embrace of Ethiopia and, at the tail end of Sbux finally agreeing to a licensed use of Ethiopia’s IP, it let it put on a colorful show as Africa’s first “2008 Portrait Country” in what is considered to be the world’s biggest coffee tradeshow, SCAA’s annual 10,000+ strong conference and exhibition.

Key in all of this were the early licensees, small Fair Trade importers and boutique roasters who backed the Ethiopian effort thru Sbux PR/lawfare and politicked within SCAA to turn it around as the power of these gourmet players within trade bodies has grown with the sophistication and segmentation of the specialty coffee market.

Now it was time for Ethiopians to do scale and face prospects of dealing with a network of licensees that included small gourmet-istas as well the Big Coffee, such as Proctor & Gamble and Kraft, lefty-ish giants such as Whole Foods, and old-school, old-colonial, invisible Swiss and German family companies, middle-men (who buy and resell probably all of the coffee you have tasted since you’ve been drinking it), and everybody in between.

Even if all this had been something undertaken by a Western corporation and not by one of the world’s poorest countries, it would take all they got. Ethiopians got busy producing promo videos, raising money, signing agreements, keeping the complex home turf of cooperatives and exporter groups as united as possible, and fine-tuning the umbrella brand and introducing brand guidelines (adherence to which is the sole ask of the royalty-free license agreement), all unveiled at their SCAA red carpet moment. They got themselves a brand agency, the London-based Brandhouse.

According to supporters, such as Light Years IP, major work is ahead but also some preliminary results are claimed:

Changing the negotiating position of Ethiopian coffee farmers has held long-term benefits. Rather than all of the value being captured by 5–6 German companies, the Ethiopian coffee farmers changed the power balance.

Income improved for Ethiopian fine coffee farmers by $US 200M since June, 2007. When we add to this, a rural multiplier effect found by the World Bank to be approximately 2.0–2.5, the income return looks like this between 2008–2011.

The extra income has improved livelihoods and prospects for around 1 million Ethiopian fine coffee farmers and small traders. Also, since export prices are now based on retail values for distinctive fine coffees, not the world export/import market for commodity coffee, much greater stability in prices will be achieved in the medium term, providing farming families with the ability to plan their future.

What’s ahead? Joint promotions, indeed, in early 2012; expansion of the now 110-companies strong licensee network; trademark registrations of the umbrella brand; and two goals that seem as tricky as they are ambitious. One is dealing with Africa’s first-ever commodity exchange, ECX, based in Addis Ababa.

Speaking of the Ethiopian Commodity Exchange (ECX), take a look at it and get to know Eleni Gabre-Madhin:

Ethiopia’s fine coffees are now traded on ECX, which claims to translate price premiums to farmer incomes more directly, “meaning that supply responses from farmers are gradually increasing.”

Each promotion in markets will be designed to match supply forecasts, to the benefit of farmers, cooperatives and the licensed importers and distributors in market countries.

And then the envisioned crescendo of all this activity:

Ethiopia has decided to create a modern corporation to manage the brands, promotions and the network of distributors for the long term benefit of farmers, exporter and distributors. The corporation will be built on the lines of the famous and highly successful Ethiopian Airlines, starting in 2011 with top Ethiopian business people on the formation board. International support to this corporation will be through contracts with world class brand managers, IP specialists, experts in network management…

Continue reading IP Colony: A Short Story

One thing would be easy: to satirize everything. And, truth be told, Mrs. Resnick does have the markings of a ready-made Saturday-Night-Live character. If I kept your attention this long, I may as well entertain you for two minutes. You may recall this from earlier:

But satire quickly turns into self-righteous hipsterism. Why not take the rubies-in-the-orchard mantra seriously for a second.

Once upon a time, in 1986 to be precise, the Resnicks bought a California pistachio orchard that also contained some pomegranate trees. They debated whether to get rid of them. Lynda Resnick decided not to do that and continued growing them:

They discovered that the “Wonderful” [who, what do you think, named it?] variety of pomegranate was naturally sweet and juicy and grew exceptionally well in the central Californian climate. The fresh fruit was soon embraced by retailers. But the season for the fresh fruit is short (October – January), and the Resnicks needed to find a way to make the delicious-tasting fruit available to consumers year-round. They began to experiment with juicing the pomegranates. In 1996, in response to the folklore and references in ancient texts about the fruit’s healing powers, the Resnicks engaged Dr. Michael Aviram to begin research on the antioxidant power of pomegranates. In 2000, medical research was published indicating the beneficial effects of drinking eight ounces of pomegranate juice a day.

With the research in hand, Lynda Resnick came up with the POM Wonderful logo and her in-house design team developed an hourglass-shape bottle. POM Wonderful pomegranate juice was first marketed in 2002.

Despite building small business empires with citrus, almonds, pistachios, flower delivery, etc., pomegranates feature significantly in Mrs. Resnick’s own narrative. She christened them Rubies in the Orchard. Her personal memoir/meditation bares the same name. In which she advises her readers how to find, keep and grow “your own, metaphorical rubies in the orchard.”

As before, this is not a pile-on. Keep the company, do well with Fiji Water, do even better if you can. It’s not easy. But the Vatukaloko Trust Fund schemes won’t do, not for IP colonists. This whole story, again, has nothing to say on what possible cocktail of incentives, pressure, idealism and shame could have Apple and St. Steve’s disciples change this iHell.

But in instances where companies do not just go abroad for Exploitation 1.0 (the old colonial biz model of getting labor and physical resources from rights-free global ghettos, ala Congo’s Coltan for Sony’s Play Station) but to actually get intangibles that underwrite their products’ retail value in Western markets where intangible value is king these days, in those cases cognitive dissonance should no longer be bearable.

Lynda Resnick, the educator and inspirational speaker, and her company’s British-colonial-officer-style condescension cannot stand together:

“They don’t have a ton of options for economic development,” Mooney [Fiji Water's VP for Sustainable Growth] told U.S. News & World Report, “but bottled water is one of them. “When someone buys a bottle of Fiji, they’re buying prosperity for the country.” Without Fiji Water, he said, “Fiji is kind of screwed.”

It may take Tahrirs, Syntagmas, Zuccottis and all sorts of other parks and squares – orange, velvet, saffron, green and the rest of the palette of revolutions – to correct the old business model, but in cases of IP colonists an updated CSR standard will suffice.

# When you partner with locals in order to extract intangibles, you can no longer pretend that that is not what you’re doing.

# Your local partners should grow (and options are many) with you, the way you do, with intangible value and brand equity, not just production margins.

# If that is too tall of an order, and you still do everything to avoid it, the very least a company must do is (to pull out of Development’s phrasebook for a second) build capacity for brand ownership and management and (now the top biz buzzword) help leverage your brand into other export income opportunities for your local partners.

In other words, build a small band of supply chain analysts, brand managers, licensing gurus, and help them learn how to own, manage, and both exploit and create intangible value that gets rewarded with solid retail tags in developed markets: equip them with the know-how to capture the kind of share of retail value biz and b-school textbooks consider standard: 40-50%. Just like FIJI Water does.

It could be fun, too. Fly in Arianna Huffington, all marketing VPs and chief creative officers, and the rest of who’s-who in Mondo Marketing you’ve known for decades, for workshops, wisdom and inspiration (and some minor brandwashing opps for some of them, sure). Simon Anholt, too. Show the guests a good time in paradise and shoot a lot of good video of optimistic young brown people in good suits.

In addition to the Vatukaloko Trust Fund (apparently “0.15% of its Fijian operation’s net revenues,” but who knows) and perhaps even instead of it, give what amounts to pennies to finance feasibility studies of Fiji’s New-Economy cadre you help educate so they can secure implementation financing for their best projects. There is even a roadmap for that:

I think all this, or a variation on the theme, is in Mrs. Resnick. The world perhaps can be half-saved by pinko-liberals who got old, wise, rich, a little bit tired, and very very skeptical about the feasibility of saving the world.  Do do they need much to reignite the old flame? These 30 seconds below are as revealing as they are awkward. We haven’t been waiting for Obama, we’ve been waiting for Mrs. Resnick.

Soon enough invitations from the Church of TED would come and we would be listening to some strange, amazing stories coming out of Fiji, all told by a glowing Lynda Resnick.

IP colonist no longer. A social entrepreneur.

Continue reading An IP Colony: A Short Story…

How many brands do you know, do you use, that are neither Western nor Far East Asian? I dare you to find some. Email me, if you do.

Here is a visualization suggestion. Everyone likes short cuts to seeing trends and big pictures: a timelapse of world conflicts, or a map of continents according to GDP. One you have surely come across before is the famous night view of the Earth. There are many stories in that image, one being the unequal nature of the world. But, also, how things change as the image gets updated; there are spots that used to be dark and no longer are.

Consider what a similar map of the world’s brands would look like. It’s one way to look at the last 400 years.

It goes hand in hand with this change in the market value breakdown of S&P companies:

IP owners live in rich countries of the North.

Which means that the vast darkness on the map, the Global South, is toiling to produce more, to make better, to do it cheaper, to lure you to send your production plans their way. This is the cornerstone of the development mantra. An ideology and an economic development prescription that has both a little post-conflict Bosnia and a big and very poor Ethiopia both praying to Economous, the god of commerce, to bless them this year, maybe next, with holy letters of FDI.

What the mantra leaves out is that all of the developing world is competing for the same slice of retail value of products they would produce – the production cost margin of 5%.  What’s more, a slice that has been shrinking for the last 30 years. Ninety plus percent of value is left on the table to be controlled by distribution and retail.

An Ethiopia has huge transportation costs, a Bosnia is too ravaged and too educated and when it comes to Fiji one look at the map explains why your company will not be putting an assembly there. No Asian tiger dreams for them, but yet pretend they must there are. It is one of today’s great tragedies that the majority of the world is putting their hard work and hopes for better future in boosting production and getting less and less in return.

It’s not that these poor places don’t have intangibles. It’s that when they do, others either own them or own the margins these intangibles earn. The story of Fiji Water is one such example.

Continue reading IP Colony – A Short Story …