Lessons in falling from the summit

He is a good researcher... In his own words, he is an inventor who discovered innovation 70 years ago. We are talking about Jak Kamhi, the doyen of the business community. Kamhi, who lost the Profilo brand which at one time was Arcelik’s greatest rival, says: “We are still alive but we are not as strong as we used to be.” He regards the partnership he made with BSH as his greatest mistake. He says that it was his rivalry with Vehbi Koç that pushed him into this partnership. “My greatest rival was Vehbi Koç,” he says. We talked with Kamhi about the collapse of the Profilo brand, where he made a mistake and his extensive experience.

Capital: You are 88 years old and still working, Do you come to work regularly every day?
- I have an office at home. I work at home until noon, In the afternoon I always come to the office every day. Those who love their work don’t get tired. It was the same in the past. I would start working at 8 in the morning. I would not go home until 8 in the evening.

Capital:  How long have you been involved in business? How did you become an entrepreneur?
-  I had a windfall. At the beginning of World War 2, it was difficult in Turkey to import raw materials. At that time, the owner of a factory in Beşiktaş making rubber shoes was a friend of my father’s. I was a child of 14 years old and used to read books a lot. Monsieur Varak, the factory owner, told my father that he would have to close his business because no raw materials were coming. I suggested that he should look at recycling, melting down rubber to produce raw materials this way. This is how I earned my first money at the age of 14. It gave me great pleasure. I began to make my own inventions.~
Capital: So, how was Profilo Holding established?
- After I had finished my education, I became an adviser. At the time, the Sabancis received the contract for the tobacco plant in Samsun. The specifications of the contract including making a window with special beams. They asked me: “How are we going to make this?” I suggested making the beams in Turkey and I established a plant to make iron beams and profiles. There was a store called Moderno opposite the Divan Hotel. I liked the letter ‘o’ in the name and I came up with the name Profilo. Later I quickly expanded the business. One day someone came to me and asked whether or not I would manufacture refrigerators. I accepted. We produced the first domestically made refrigerator in Turkey. It was called the Frigo Lux and sold really well. When Koç saw this, he entered the refrigerator business.

Capital: What was your market share at the time?
- Our greatest rival was Arçelik but our market share still reached 51 per cent. When I started building televisions with lamps instead of with transistors, I suddenly acquired a market share of 61 per cent. Before the partnership with BSH, out AEG brand had a really good market share. AEG gave me great opportunities. The most important was that it made Profilo one of the largest industrial concerns in Turkey.

Capital: What was the competition like between Koç and Profilo?
- Our relations with Arçelik were not good. Vehbi Koç always wanted to be first. He would reduce the prices as low as possible. Forming the partnership with BSH dragged us deeper into this competition. As a result of Arçelik’s excessive price-cutting strategy, we reach the point where we could not make any money. We could not make any profit. BSH came to me and said: “I can make profits for you” and I fell into the trap.

Capital: So what happened, how did you fall behind?
- BSH proposed a partnership. They promised increasing our existing market, including exports, threefold. They took a 46 per cent minority share and became partners. Then they bought AEG’s shares and secured a majority shareholding. Later we understood that BSH’s sole aim was to take our market and marginalize us. As a result of this, we current have a court case against BSH.~
Forming the wrong partnership made us uncompetitive. I did not fully heed my father’s advice. He would say: “If you are going to do business, make absolutely sure you do it with trustworthy people."

Capital: What damage did BSH do you?
- As a result of making a mistake and forming this partnership, we have been experiencing major problems for the last 17 years. Whenever we were going to export they would prevent us, saying “You will become our rival.” They did not carry out any advertising for our well-known brand name products. As a result of there being no promotion, Profilo, which had once been an important electronics brand, disappeared.

Capital: Where do you think you made mistakes during your business career?
- When BSH came on the scene, we gave up on the AEG brand. I very much regret not continuing with this brand in Turkey. In fact, I have had a very good career. But recently I have been faced with illegal activities that have really cost me a lot. I have lost half a billion dollars as a result of the partnership I made with BSH. I am trying to get this back. The court case was going to take one year but it has been continuing for five and a half years.

Capital: What businesses are still continuing today? Do you have any new businesses?
- We have our shopping mall and real estate business. We are still alive but we don’t have our old strength. There are days when I wonder whether we can still find some new things. But because BSH sank our Telra firm, which was one of the biggest players in the electronics sector, we decided to postpone declaring bankruptcy. Now the banks do not give us any loans.

Capital: What kind of differences are there between the new business environment and your time?
- In the past, Turkish society did not attach any importance to money. What mattered was talent. Now materialism dominates. Today time goes much faster than in the past. In business, you need to be patient and persevere. In addition, speed is very important when it comes to being successful.