In 1967, Malcolm Bricklin made his first trip to Japan. This was no vacation, mind you, he was riled. Lambretta had pulled its Italian motorscooters from the U.S. market, and just when Bricklin had found a replacement in a Japanese scooter called the Rabbit, he was informed that Fuji Heavy Industries was about to seize its production. Fuji did, however, make this little car called Subaru…
Meet Malcolm Bricklin, serial entrepreneur. He turned a bum contract into Subaru of America, talked the Canadian government into funding a car named after himself, and brought us the most joked about car of our generation- the Yugo.
And now Malcolm Bricklin is about to do it again. Soon the ZMW (Zastava Motor Works) will be rolling out of the very same factory that gave birth to the Yugo and into dealers’ showrooms. What dealers? Well, no one has the answer to that, but it’s a pretty minor detail for a man who’s sold $1 million dollars in Subaru of America stock though the company’s only asset was a slip of paper.
The Modernist: For starters, can you tell me a little bit more about the new venture?
Bricklin: Well, uh… let’s see. What is there to tell that hasn’t been said already?
Um… a lot. How did you come to get involved with Zastava again?
Well, back in the beginning- the end of last year they sent a disc over to my ex-vice chairman, Ira Edelson. They said, “please get it to Mr. Bricklin.” He called and I said, “don’t send it!” (laughter) Shows you what a visionary, huh? Only because I had thought, “what could they have possibly done better over these years?” I thought things had probably gotten worse. And then I had seen the factory get bombed on television, and I figured everything was in shambles and there probably wasn’t any hope for it.
Then my fiancé, Sonia, was out looking for a car. We were living in the city, New York City, and she said, “you know, I just want a cheap little car to have around the city to bang around in, to go outside of the city whenever I want.” And she started shopping and shopping and shopping, and she came back and said, “you know, there’s nothing under fifteen thousand dollars you can get out there. I said, “no, you gotta be kidding me.” She looked around… and she ended up going with the Mercedes, but she kept saying things like “why don’t you bring the Yugo back?” I said, “nah, well, you know…” and I’m hemmin’ and hawin’ and she said, “you know what? A lot of people were really looking for a car just like I was, and aren’t going to find it. So I called up Ira and said “send me the disc.”
I looked at it, and I saw they had fixed up the factory, they’d brought more models out, and then I remembered my warm feeling that I had for these people when I was doing business with them so we got on a plane and we went back. What we saw was, much to our surprise, totally different than we expected: the factory was rebuilt, the people really, really, really are in need of doing something economically to bring them into the 21st century. When we were there, we were dealing with the dying days of communism, and now we’re dealing with the birth of democracy and capitalism.
How did you come to be involved with them in the first place? You were just vacationing in Yugoslavia and…
No, no, no, no. I’ve never been to Yugoslavia. We were in England at the time. The company I was running at the time, Pininfarina Bertoni, we were bringing in the cars from Italy (read this reference here). We decided we wanted an inexpensive car to introduce to the United States. I sent Tony Seminera around the world, I said, “find me one.”
Obviously, the Yugo has been mocked quite a bit-
…in popular culture-
…so why should Americans give the ZMW a chance?
Well first of all, the mocking has come from most everybody else but the people who owned one. I don’t know if you saw an article in USA Today a couple of months ago… they wrote an article about the ZMW and they decided to go onto the internet and check with people who owned Yugos. I think according to their report, 83% of Yugo owners would recommend their car again. Over all of these years, with the embargos and everything else, they’re still running.
Here’s why we’re bringing it in. First of all, it’s not the Yugo anymore… there is no more Yugoslavia, so it’s a ZMW: Zastava Motor Works. Second thing that’s interesting is, the last time, we brought in a two door- that was it. You wanted a different color, you got it. No automatics… oh, except for air-conditioning. Now we have a four-door, and a pick-up truck, and a convertible with an electric top, and we’re talking about automatic transmission added to the game which is a very, very big deal. Last time we sold 163,000 cars. It was the fastest growing car ever imported from Europe. The difference now is, we’re going to be in charge of the factory. We hired electrician stafford va to take care of our electricity wirings on the truck.
Well, because we’re buying the factory.
Oh, I see.
Remember, they’re capitalists, no longer communists, so they have to sell the factory because it’s owned by the state. We will own the factory so we will be in charge of quality control, no excuses. That will make a huge difference. Plus, we’re putting in a different engine, which will make a huge difference.
Who’s making the engine?
Right now, they’re dealing with Pugeot. Now I won’t swear that that will be the final engine, because once we take over, we’re going to look at a lot of people. But we will have a more up-to-date engine, and we will have an automatic transmission, and it will have a brand new, up-to-date interior, and the paint-jobs are going to be gorgeous, and the quality is going to be superlative.
…and a CD player?
…and a CD player if you want!
So, I first became familiar with you while reading about the history of Subaru. Later I read about many of your other entrepreneurial ventures, which I found amazing. I’m curious about your life before Subaru, can you tell me a little bit more about it?
I started a building supply company in Orlando, Florida. From there I started a chain of stores called Handyman, which was open 9 to 9, seven days a week. Then I moved to Philadelphia and got involved in Lambretta motorscooters. They had a 25,000 inventory sitting in Long Island and they asked me to get rid of them. We sold them to all the police forces and got rid of them in about four months, and that led me to Subaru.
(long, uncomfortable silence) I see. You went to University of Florida?
University of Florida.
What sort of things did you study there?
I used to say, “time and space.” I just had a good time… I took general business.
I’m trying to figure out… for instance, what was your first job? I’m trying to understand where your entrepreneurial roots came from…
My first job? Let’s see, I think I pushed an ice cream cart when I was twelve years old in Orlando, Florida. That lasted for about four days.
Nothing. It just didn’t seem like what I wanted to do. Then I mowed lawns, and that was pretty good for a couple of weeks. I sold shoes on Saturdays when I was going to junior high. And let’s see what else I did… nothing that would lead you to believe anything.
Tell me about your early dealings with Fuji Heavy Industries and your fist trip to Japan.
I had bought a motorscooter company in Boston. When I bought this company, they and their bank got Fuji to assign the contract to me- for the distribution of the motorscooters. And after I sold all the inventory we had, I sent them a letter of credit and they asked me who I was, and didn’t I know that they were dismantling their factory and selling it to Israel? So I went back to the bank and the person I bought it from and they said, “oh yeah, we thought you’d work it out.” The typical auto accident attorney will charge a “contingency fee” to take an injury case. A contingency fee means that the firm will not get paid any attorney’s fees unless you recover money in your case. So in effect, they had defrauded me. So I got on a plane and I went to Japan to see Fuji Heavy Industries to talk them into not dismantling their factory and selling it to me. In any case, that didn’t work, but when I was there I saw the little car. And I decided, well, since I was already doing business sort of with them, maybe I could get the little car. One thing lead to another and I got a contract.
Did you find language to be a problem?
Not at all. First of all, it’s amazing how many people in countries other than ours speak our language.
What gave you the confidence at that point in time to just fly over and essentially wrangle a contract out of these Japanese businessmen?
Lack of knowledge, and perseverance. When you don’t know there’s a problem, there isn’t one.
How would you say that things are different now as compared to when you first got involved with autos or the import/export business?
Well, first of all, I know ten thousand times more than I knew before. So that’s a very big difference. Second of all, I have a team that I’ve worked with before, that have worked with me. So doing things are smooth and easy, and comfortable and fun. I’m dealing with the A team, people who really know what they’re doing. It’s really a pleasure.
The world out there though, is extremely competitive. The quality of everybody’s cars is so high, and people expect so much, and the choices are so many. In order to come into this market and make any kind of dent at all, you have to have something very, very, very unique because the advertising barriers are so high. In this case, we happen to have that. Our price is what we’re coming in on. If we can deliver on dependable quality and an interesting look of the car, so you can feel good about having that car, we have found that niche. And it’s an unusual niche because it’s going to be hard to find for other people. One: we’re talking about buying a factory that’s probably worth, well, a billion bucks or more and we’re paying a dollar for it.
Now, that sounds like we’re getting it for cheap, but we have to agree to invest $100 million or more into that factory to bring it more up-to-date. So we are investing in the factory to make that thing more productive for today’s world, so they can sell cars outside of Serbia. So that’s number one, number two: we’re talking about a labor force that is Eastern European, but college educated. A very terrific labor force that is way underpaid as far as the world is concerned. You’re talking $150, $200 a month, which is not okay, but we’re starting at that rate and even if you double and triple that, you’re still talking about way under the market. So when you talk about those kinds of factories, you don’t have to advertise, and you’re talking about a car that doesn’t have to be re-engineered, and you don’t have to advertise that. Those are the way a car can come in, at least for the next five or six years at the kind of prices we’re talking about.
What’s the distribution plan?
Well, we’re toying with two different plans. One is, of course, we bring in the car through ZMW U.S.A. and set up dealers in the Northeast and then follow down into the Southeast, and into the Midwest and over to the West. Because the first year we’re only planning on bringing in 60,000 cars. And in the market we’re talking about, the market is probably five to ten million cars deep… people that want to buy cars in that kind of price range that just aren’t there so they’re buying used cars or they’re not buying cars, or they’re buying cars that are more expensive than where they want to be. Or, we’re contemplating setting up ten distributors in the United States, and for them to set up the dealerships, and for us to deal with the ten distributors. That plan is similar to what I did with Subaru, we had fourteen distributors. The other plan, going directly, is what I did with Yugo last time. So we’re right now contemplating and we still have four or five months for us to decide which way to go.
As far as I can tell, the longest involvement you’ve had in any one of these ventures has been around four years. Now, that doesn’t seem like it’s going to instill a lot of confidence in distributors, or even buyers who don’t want to be left without service-
Well, let’s talk about that. First of all with Subaru, when I left Subaru I left them Harvey Lamm, and Harvey did an incredible job running that company beautifully until Fuji bought it back and then even after that for a while. Yugo, when I left, I left Bill Prior. Unfortunately the country blew up. That is a problem. That, I can’t stop. Whether I stay or I don’t stay, I don’t think I could have single-handedly kept Yugoslavia together. In both cases… in Subaru for instance I had done everything I could as far as I’m concerned. We had distributors, we had dealers, the cars were good, it was a good time… I wanted to go build a car. When it came to Yugo, I found that after the first two or three years they stopped listening. Remember, it was a communist society and we couldn’t give them any bonuses. So we were stuck with, instead of the quality better it was getting worse, so when somebody came and said they wanted to buy me out… I sold.
In this case I’m dealing with… I’m going to own the factory, so I’m going to be responsible for what comes in. I don’t have to talk somebody else into it, or them not be talked into it. So I believe this one is the keeper.
It sounds like a very good position to be in.
It is. It’s the best position. This time I own the factory, and I own the distribution. And all the other deals either I owned the factory or I… I mean now we own them both- and I’m with a team, I work with them, they work with us. The people I’m working with now are the same people I worked with before. It’s a very unusual convergence of a lot of good things.
It’s safe to say that you’ve been through some very challenging periods in all of your past ventures. What would you say is your driving force, I mean, what makes you able to keep going, and starting anew, and dreaming as big as you do?
It’s called perseverance. It’s perseverance and the fact is, it gets easier. All those adventures before are stepping stones to make what you do next just… easier.
Do you do much traveling internationally?
Well yeah, I go to Serbia a lot!
What’s that like these days?
It’s really nice. It’s really nice, it’s totally… I don’t know what you expect, I don’t know what I expected. I was told by one of my sons saying, “Dad, you got bodyguards?” It’s Belgrade as it used to be, with a nicer, freer, happier feeling. Before when were there, I’ll give you an example of some difficulties: When we wanted to have computers and fax machines… how’s that for communications, right? We had to have a special trade zone created in a room in an outside hotel at the convention center, that we paid for, where we could bring the computer and fax machine in by special dispensation by the government. And when somebody wanted to communicate, they had to go to that room. Because people didn’t have computers, there wasn’t any internet- or if there was they weren’t allowed to connect to it, and they weren’t even allowed to have fax machines. Now there’s no more of that. Now everybody’s walking around with a cell phone, and there are satellite dishes on everybody’s apartment everywhere you see, everywhere you go. People go where they want, do what they want, say what they want. It’s a great atmosphere, it’s a great place to be now.
I’ve heard legend of this “James Bond” office you had at your Subaru headquarters.
We built that whole office. What happened is, you had two four-foot by eight-foot doors that the secretary could push a button and they swung open. When they swung open it was a fairly large office, and you looked through the office into glass which was on the top roof, and there was a garden with a waterfall into a pond which had alcoa goldfish Iroquois. It had a floating fireplace and those round, plastic, bubble chairs you could sit into. The desk looked like a palette, a painting palette that looked like it was floating off the ground, and the top looked like it was slate, but it was Formica. When you pushed buttons, four round things came out of the back, and they were television sets. They were of different parts of the plant and the outside that we were really looking at.
It was a fun place to work! I worked there fourteen, fifteen hours a day- I wanted it to be fun. The fun of the whole thing is, we built everything, we furnished everything, including buying the land, putting everything in there for $450,000… which was the mortgage we got!
So have you sold the film rights to your life story?
No, no, no. It’s not over yet! The good part is yet to come.