Online Extra: Q&A with Ahmet Nazif Zorlu

The Turkish tycoon on growing up in the family business: Inventory management, warehouse management -- you learn when you're 12 or 13

Ahmet Nazif Zorlu, the energetic head of textiles-to-computers conglomerate Zorlu Holdings, is one of Turkey's most dynamic tycoons. The group started as his family's modest textile business, which he dropped out of school at age 15 to work in. By the mid-1970s, Zorlu was running the show, and by the 1990s, the outfit had become the world's largest polyester yarn producer and curtain manufacturer. The group's 1994 purchase of TV manufacturer Vestel marked the start of its diversification into other businesses such as energy and retail banking.

Zorlu sat down recently with Louisa Edgerly in his offices in Istanbul to reflect on his career and Turkey's relations with Europe. Following are excerpts from their conversation:

Q: Wouldn't you say that you had a somewhat unusual start in business?


I had my first business at a very young age, when I was 15. My hometown, Babadag [in western Anatolia,] is known for its commerce and businessmen. In every house, there were one, two or three looms, sometimes four. You had to buy the yarn, dye it, weave it, and then sell it. In essence, every household was its own company. Although it may be a little primitive -- buying the raw yarn, bringing it into a final form, and selling it -- this is business A to Z.

It's a family business. Even in elementary school, in the summertime, you have a job, perhaps making the yarn.... In 1953 my father started his first company, and the idea was not only to sell your own production but also to sell the production of neighboring houses. I spent my time working for the business.

Q: So your father would have been your mentor, building your philosophy?


Also other people who came into the village, businessmen from all over Turkey to do trade with my father. Big businessmen, who used to come in with Jeeps, and even then, back in the 1950s, that was a status symbol. I wanted to be just as successful as them.

I remember very well taking our weekly production to the Chamber of Commerce [in Babadag], and there was a seal that would be put on your product with a hammer [to certify its quality]. This was very influential for me, establishing a quality product. It's very important to grow up in this kind of environment.

Not only did my environment emphasize quality but my father especially emphasized quality. For example, when the packets of fabric arrived to be tested and one was even slightly out of line, he would take me by the ear and show me and ask, "What is this?"

If I had gone to university -- there you learn a lot of theory, but there's no practical knowledge. We have a saying: Only he who falls off a roof will understand what it feels like to fall off a roof. Inventory management, warehouse management -- you learn when you're 12 or 13 years old. You have a huge amount of product to be sent to different parts of Turkey, and if there's even one piece missing.... I remember very well recounting the warehouse three or four times to make sure that everyone got what he had ordered. This teaches the discipline involved in trade.

If you wonder how I managed a business when I was 15 years old, well, people still called me "little one." But by the time I was 18, I was a respected businessman. From my family I received a huge fortune, a fortune built on honesty and fairness.

Q: What would you say has been the biggest challenge in building Zorlu Holdings here in Turkey?


In Turkey there are many challenges because unfortunately in our environment there are a lot of ups and downs -- there's no stability. Of course, now we're a world company, but it was not easy. We have generated this through innovation and quality and by keeping our word. Even today, if one of my professionals makes a promise -- and to deliver that promise means a loss for the company -- I would still prefer to take that loss and deliver on that promise.

Purchasing Vestel was also a critical point for our group. We had grown to a certain level in textiles, and we were already looking for a different sector, a way to diversify. In 1992, I started looking at Vestel when it was first up for sale. A board assigned by the courts was managing it, and we had actually reached a verbal agreement, but they changed their minds. When the sale did not come to pass, we decided to grow a little more in the textile sector.

In 1994, Vestel came on the market again. At first, I said, "I have already wasted two months researching this before, and I don't want to waste any more time." That was on a Sunday, and on Monday I called my friend who was managing this affair and said, "Why don't you go look into this sale of Vestel?" We discussed it, and in one month it was done. In 1992 we had done a thorough study of Vestel, and in 1994 we bought the company just on the basis of its annual reports. In 1994 I knew that they had a very good infrastructure.

After I bought it, I left immediately on a Far Eastern business trip to see what the competition was doing. Vestel's yearly production was 360,000 TVs, and our competition was producing 5 million. There was no way to compete. I made my objective in the first year 600,000. We made 600,000. In the second year it was 1 million. Nobody believed it. We made 1 million and even surpassed it.

We believe in scale. I was looking at the competition, at what they were doing. Everyone was saying to me, "What are we going to do with such large factories?" and I would say, "The Americans are doing it, the Europeans are doing it, the Chinese and the Japanese are doing it. Why don't we do it?"

Today we have a production capacity of 7 million units. It's the largest in Europe under one roof. Now our new target is 15 million. Every one-and-a-half seconds something is produced by Vestel. Our next goal is one second.

Q: What do you think makes Zorlu Holdings different or distinct from some of Turkey's other big holding companies?


The most important thing is that all 20,000 employees work as a family. It's "we." There's no "I, me." When you include the employees on the supply side, almost 45,000 people receive a paycheck from Zorlu Holdings.

The biggest difference between us and other groups is our quick decision-making. Once something has been researched and it comes to the table, a decision is made, and it's important in our philosophy that once a decision has been made it should also be implemented just as quickly.

Everyone says we got so big in such a short time, but we're a 50-year-old company. We didn't grow so fast. We have separate sectors: Electronics, white goods, finance, energy, and textiles. If we had not grown so much, we would not be as competitive as we are today. We had to make each branch capable of standing up to global competition. And every year to keep up with the world you have to grow. This year alone we will be investing $250 million in new business or reinventing or growing the scale of our present companies.

Q: Which sector would you say is going to provide the most future growth for Zorlu Holdings?


[Chuckles] We're now the largest textile producer in Turkey. We're used to running up-front, and we will stay in this position. Because of the technology sector and what it entails, principally we will probably grow more in Vestel.

Q: When you look around with an imaginative eye, what are you dreaming?


As a group, we don't want to add a whole other business line unless an opportunity presents itself. What we want to do for the near future is invest more into our present business line. Technology presents a lot of opportunities. So when we say Vestel, we really mean the technology sector.

Today many technologies entail software, and there are many patents involved in televisions. So what we did a year-and-a-half ago is we bought Cabot, a British company that produces software for TVs or satellite receivers. Vestel bought it to be influential in this subsector.

Q: What are your thoughts on Turkey and the EU?


Europe cannot change its mind on Turkey, and Turkey cannot change its mind on the EU. Turkey is a secular and democratic country, as much as it can be in this region. Turkey is already part of the Customs Union. We must learn to live within the European norms. America is like our father, and Europe like our mother. We must be close to both, although of course we're closer to our mother.

For 40 years we have been a very strong partner of America, and this partnership requires certain actions. It's unfortunate what has happened [the rift between Europe and U.S. in the run-up to the Iraq war]. If you're an ally, you must act as an ally. We have been close to Europe for 50 years, and this is a long process, mutually beneficial to both sides.

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