Chapter of the month - A Few Wise Words Book

Chapter of the month

Paul ‘Pablo’ Ettinger

pablo Ettinger book

Entrepreneur, investor and business angel, Pablo Ettinger has enjoyed a hugely successful career, creating and developing businesses, some of which have gone on to become highly respected brands. He is best known for being a founding partner of Caffè Nero, the growing high-street success story that now has over eight hundred continental-style cafés in the UK and overseas. Today, Pablo spends much of his time helping start-ups as an investor and mentor. He is also a huge advocate of building your network as a route to finding success.

I think that opportunities are in a way far greater than they were before, and often much more interesting. But you have to have a good education first – that’s the foundation on which you build those opportunities.

I have been incredibly lucky in my life, but I have also worked hard at it – and that includes actively building my network. In my view, this is one of the most effective ways in which you can cultivate opportunities for the future and ‘make your own luck.’

For young entrepreneurs, it’s very important to remain absolutely focused on what you’re trying to achieve. Part of being focused is to work hard to make things happen. Make your list of things that have to be done this week, and just get them done.

A child’s attitude and confidence is something that becomes instilled at a very early age. As parents, we have a huge responsibility here since children are so impressionable when they are very young.

About success . . .

I think for me, success is really about the ability to achieve stability in one’s life. The concept of stability has been an important part of my life from an early age and is undoubtedly rooted in my background as a second-generation immigrant to this country. My parents were both refugees, forced to flee Nazi Germany and Austria in the late 1930s. It was really my father who originally instilled in me a sense of ‘need’ to find stability, because that was something he never had. He moved from country to country for many years, eventually settling in the UK, where he raised his family and subsequently built a very successful business.

For me, my physical home has always been a very important part of this. Having that stability, where I can buy a house with no mortgage that no one can ever kick me out of, was a huge driver in my earlier years. Overall financial security is naturally also an important part. I am not talking about ‘wealth’ for its own sake but simply having sufficient resources. It is not about money, but the stability that having sufficient finances can provide. There is also a spiritual form of stability that comes from feeling completely at ease with myself and the world around me. For me, having that feeling is also an essential part of success.

The importance of education . . .

My parents brought me up within a very liberal and open-minded environment. I went to a grammar school not a private school. I remember my father telling me that he had a decision to make when we were young, to send us to grammar school and have lots of great family holidays together, or to private school, which would naturally restrict our ability to go away regularly. So it was grammar school in the end, and we enjoyed lots of wonderful holidays abroad, and skiing in particular.

Travelling was very important for me when I was young. It gave me a chance to get to know different cultures and that’s when I started to develop an interest in food – something that would later become an important part of what I do today.

After grammar school, I took a degree in high-energy physics, which in itself was not that useful, but learning to think like an engineer, and being able to analyse as an evidence-based scientist, would be very helpful tools later on in my business life. After a two-year spell working on a project in the Sahara Desert, an incredible experience, I then enrolled at INSEAD in France to study for my MBA. This opened up a completely new world to me – a global-opportunities world – together with giving me a world-class business education, all of which was to have a profound impact on my future career. My education was absolutely critical for me. For all young people, getting their education up to the right level is so important. We live in a different world today, and with it, different types of opportunities. Jobs for life simply don’t exist anymore. The great thing is that today it’s no longer just about joining a big company. Even when I did my MBA, most of my classmates dreamed of becoming a consultant or a merchant banker, post-graduation. Today, most MBA graduates dream of being entrepreneurs. Thanks to technology, it’s much easier today – young people can now start something up in their garage, and they do so all the time (I know this because I work with a lot of them). So I think that opportunities are in a way far greater than they were before, and often much more interesting. But you have to have a good education first – that’s the foundation on which you build those opportunities.

Building your network . . .

If there is such a thing as a formula for success, for me it’s about building your network.

Although I was brought up in England, my family background meant that I felt different to others in some way, and at school I started to really discover my European heritage. It was a natural step for me to go to INSEAD, and from there I became really a sort of global person and started to build my network of friends and contacts around the world. This was to become very, very important for me in everything that I’ve done since, and critical for Caffè Nero and even Streetlife, an online social community network business that I helped to build and which we sold recently.

My advice to young people is to actively create that network! Friends, and friends of friends – be nice to people, and keep building and growing your network. You never know when you are going to need someone for something and if there is one thing that I’ve relied on and used throughout my career, it has been my network. Even fairly recently, when I was looking for a strategic partner for Streetlife, I went to an INSEAD networking evening and met someone for the first time (I just happened to be standing next to him, overheard a conversation and introduced myself). He became both a friend and a strategic investor in the project. It was serendipitous, yes, but I was also at that event to build my network.

Be prepared to take risks . . .

I was running a chemical business in Germany, but frankly I wasn’t really enjoying it. The company was part of a multinational global business and with it came all of the usual corporate politics, which I’ve never been particularly good at. And then, by chance, a friend called me up. He was a guy I knew from INSEAD and was part of my network. He asked for my help to start a coffee-bar business. I was basically the only person he knew who had both an MBA business background and who also knew a lot about food. During my time in France, I had spent a lot of time cooking and getting to know food in some depth. I remember him saying to me, ‘Look, you do all the food!’

I immediately thought that this could be great fun. It was a crazy idea, though, because it meant leaving a big company and a well-paid job to create a start-up, effectively, and with no money. But I had already developed a real passion for food, and so this side really interested me. We then brought together some friends, acquired five coffee bars, and that’s basically how the whole Caffè Nero business got started.

At first, I was happy to help out on a non-executive director basis and to support the business for the first twelve weeks of getting it turned around. I then became more and more immersed in the buying, improving and distribution of the food for the business, which I really enjoyed. The problem was that prior to starting Caffè Nero, I had already committed myself to a new CEO role for another chemical company. I kept putting off starting my new job because I was having so much fun, but I had given my word and already signed a contract. So, just before Christmas of 1998, I left Caffè Nero to go and run this company, which I really did not want to do at that stage.

I spent my first day with the company’s owner, who was also a friend. We went through all the numbers and looked at everything in detail. I soon realised that the business was actually in deep trouble and I had to tell him, ‘You’re going bust!’ I told him that he had to make one-third of the workforce redundant immediately. I remember him saying, ‘You’re absolutely right, that’s what we really need to do.’ I then said to him, ‘. . . and I’m afraid I’m one of them!’ So I made myself redundant and came home to my wife, and she naturally said, ‘Hi darling, how was your first day at the office?’ I told her it was ‘interesting’ and that I had to make a third of the workforce redundant . . . She said, ‘Oh, that’s terrible. What an awful way to start a new job!’ I then had to tell her, ‘Well, actually, that’s not the worst of it . . .’. She was very distressed, of course, and understandably so! ‘You just want to get on with your food and Caffè Nero!’ she said. But we then thought about it carefully and worked out that even if Café Nero were to go under, which was a real possibility at the time for a fledgling start-up, we could just about survive financially, with her career to support us. It was nonetheless a huge risk to take, but I was really loving it and my wife knew that too. So I went back to Caffè Nero to pursue what I really wanted to do. And from five coffee shops to begin with, we’re now past eight hundred and counting.

Look out for those opportunities . . .

As a young person, if you can find something that you have a real interest in, that you can become passionate about, then you will probably be good at it. I regularly mentor young people and am also involved with Founders for Schools. I will often say, ‘Be realistic, but try and do something that you really enjoy.’

Sometimes it may not be obvious what opportunities are available to you, and that is why I also tell young people to ‘be open’ and make sure that doors are always open to you. Talk to people, network all the time and be open to new ideas.

This is precisely how I became involved with Streetlife. I was attending a luxury goods conference and decided to go to a lecture on ‘tribalism’ – how tribes have evolved over time and how we still have tribes today. I became totally inspired by the idea of tribes and how, in modern societies and communities, people have lost their ‘village tribe’, they’ve lost their ‘work tribe’ and they’ve nothing to belong to anymore. It got me thinking naturally about Caffè Nero and the idea of creating communities. I would often say to people, ‘We don’t sell coffee . . . We sell gathering spaces where people can collect for one reason or another and they buy coffee while they’re there.’

At the same time, there was a journalist I got to know whom I’d regularly see at Caffè Nero in Clapham High Street. One day, as I walked in, he said, ‘Hey, Pablo, come over here. Let me introduce you to John, who runs our local printing company – you two should speak.’ What this journalist guy had actually done was to create an incredible community within this particular Caffè Nero bar, a wonderful community, and I thought immediately, ‘Wouldn’t it be great to be able replicate what he’s done and create “tribes” within coffee bars across the country?’ I could see a really huge opportunity to rebuild communities using the internet, and I started a new project that I called ‘’.

Then by pure chance, I came across a leaflet from another new venture named Streetlife, and I remember thinking, ‘But that’s what I’m doing!’ So I decided to give them a call, and arranged a meeting. When we met, it did not take long for me to become impressed by the people involved – they clearly had the platform and a good tech team, and straightaway I felt that I wanted to join forces with them. After half an hour, I made an offer to partner with them . . . By 2015 we had over a million registered members, and we eventually sold the business to Nextdoor, the US social networking service. So, my advice to young people is always to look out for opportunities, but at the same time be realistic about what you want to pursue and be prepared to take some risks. Also, the harder you work, the luckier you get. I have been incredibly lucky in my life, but I have also worked hard at it – and that includes actively building my network. In my view, this is one of the most effective ways in which you can cultivate opportunities for the future and ‘make your own luck’.

Deal with setbacks and find your way through . . .

If we are really honest with ourselves, all of us have doubts at times and we all have our own weaknesses and strengths. I think one has to try to forget the setbacks when they happen. Fortunately, the human brain has a wonderful capacity to generally forget the bad things while remembering the good things, which is really useful.

This is very important because you can’t reflect on the past, you have to constantly look forward, and for me, one of the most important attributes for an entrepreneur is to be optimistic. The glasses are always ‘half full’, not ‘half empty’. Even if there is only a 1 per cent chance that you’ll get that funding at the very last moment, you still keep believing that it will happen – because there is always still a chance . . . You have to have that determination and conviction to keep going.

You must be realistic and honest with yourself, and know what you’re good at and what you’re not so good at. This is very important. However, when things do go wrong, it is always good to talk to and listen to those that you respect. They can help to pick you up and get back on track if required.

You often hear amazing stories about incredible founders of great businesses. When you look closely at what they have done and how they’ve done it, there has invariably been a strong team of people around them. They may be the great business person or sales person that fronts their businesses, but behind them there’s going to be a bunch of people who are filling in all those gaps. If you can become good at building that team and knowing where your gaps are, you will stand a much greater chance of creating a successful business.

When you experience failures or serious setbacks, you have to be thick-skinned and battle through. At Caffè Nero we had some really serious setbacks – we had some very powerful competitors who made life really difficult for us at times. On a couple of occasions, they actually attacked us in various ways and we had to just pick ourselves up, battle on and find a way through.

I recall one situation when we were busy building the Caffè Nero business. We had around eighty shops at the time and were having real difficulties in scaling our supply-chain network. I then found a new single supplier for all of our fresh goods, sandwiches, salads and everything. We agreed a deal with them, reorganised everything, and then, out of the blue on a Friday (we were due to go live on the Monday), I received a call from the owner saying, ‘I’m sorry, but I can’t supply you.’ He then explained that our two biggest competitors had forbidden him from becoming a supplier to Caffè Nero. He was supplying them too, and they were also much, much bigger than us at the time. He said, ‘I’m really sorry, but I just can’t afford to lose their business.’ This was a very serious problem for Caffè Nero and could have killed us. But rather than dwelling on what should have happened, I spent a very busy weekend looking for a way through. Fortunately, one of our previous suppliers, who had also become a good friend, agreed to carry on and step up for a few months to allow me to find another solution. And that’s exactly what he did, and somehow we managed to keep in supply. The irony was that the supplier who said that he couldn’t supply us was in turn let down by one of the two major competitors a couple of years later, and he went out of business.

Stimulating activities, physical and mental health . . .

When you love what you’re doing, it’s hard to see the division between work and play, so the concept of a ‘work–life balance’ is a difficult one for me to comprehend. At the weekends, my wife and I are often working at home, and when we’re out talking to people or at a dinner party, I’m often thinking about business and perhaps how that person might be a useful contact. The idea that you leave work at five o’clock and then suddenly you have this other life is unthinkable.

But it’s important to find time for activities that you enjoy and that can also help you. Maintaining my mental and physical health is critically important for me. I’m at the gym doing some kind of sport virtually every day. If I’ve been sitting in an office all day long, I have to do something. For years, I used to regularly run half marathons. Running was fantastic for me – the brain is being oxygenated and is therefore working really effectively. My wife and I go walking in the mountains in the summer. High-altitude trekking is a wonderful opportunity to think for hours in the fresh air.

Today I am still a competitive skier and race regularly. Although I learned to ski when I was five, I didn’t start racing until I was at university, which is far too late to become a professional competitor. But now I train and race through the winter. I enjoy everything about skiing – the adrenaline, the competitiveness and the social nature of it. Although I’m getting older, I’m still trying to get better, and I’m not going to give up! Around three years ago I discovered yoga, which I love doing now. It covers the mental and the physical side of things for me, and I have found it a wonderful way to make up for less running.

While sport has kept me mentally and physically fit, I also enjoy the spiritual and fun side of playing music. I’m a jazz musician and love playing the piano. I also sponsor young musicians and music festivals while looking out for new talent for Caffè Nero’s music programme.

Reading is important for me, especially newspapers, which I have always avidly read every day. I think it’s important as a businessman to have a broad knowledge of geopolitical affairs and to understand the big picture. I have always found this very useful for my work.

Have a dream and remain focused . . .

Whenever I hear a young person say something like, ‘My goal is to become a millionaire by the age of twenty-one,’ my first thought is, ‘What complete nonsense.’ For me, it’s important to have a dream, but it must be based realistically on something that’s within your power to achieve.

When Caffè Nero was first started, I remember talking about our dream with my partners. Our dream was to create a global company of continental Italian-style coffee bars that would have a certain ambience and would feel like home. That was our dream from the outset, and it has never faded or changed one iota since then.

In a similar way, with Streetlife, our dream was to create this global myriad of communities where we could help bring people closer together within their community to talk to each other, exchange information and meet in real life as well. That was our dream, and once again it never changed. It was just a matter of how we actually got there.

For young entrepreneurs, it is very important to remain absolutely focused on what you are trying to achieve. The thing that most young people tend to do, which is understandable, is to get distracted and pulled around in many different directions. You may have a great business that’s doing one thing really well, and you think, ‘Oh, maybe I can do that too,’ thinking it might somehow add something else. But no, just stick to what you are doing now. See it through first with laser focus, and later on you will have time to do the other things.

With Caffè Nero, we were an international bunch of guys, so it was natural to plan for a global business. Every year at our board meeting, we would discuss whether we were now ready to go ‘international’, and every time we would invariably agree, ‘Yes, we should probably look at other countries now.’ But I remember for the first seven years our chairman saying, ‘Yes, I think we should go international, but let’s do it next year.’ So each time it became next year, and the next, and then finally we did it, of course, but by that time we had hundreds of coffee bars – we were now a big organisation and, by then, ready to do it.

Part of being focused is to work hard to make things happen. Make your list of things that have to be done this week, and just get them done. This is so important. At the end of the week you want to be able to go, ‘Tick, tick, tick . . .’. I’ve done all of that. I’m sure that it’s in the nature of most entrepreneurs to organise themselves in this way, but if you can’t make things happen, then you shouldn’t be an entrepreneur because you’ll probably never make it.

Our role and responsibility as parents . . .

I believe that a child’s attitude and confidence is something that becomes instilled at a very early age. As parents, we have a huge responsibility here since children are so impressionable when they are very young. We shouldn’t be overprotective – let them explore, and give them that confidence to do things by themselves.

I recall an extraordinary but lovely moment when my son Alex was just a toddler. We were all together, enjoying a picnic in the grounds of the Royal Hospital in Chelsea. I was chatting away to my wife, when all of a sudden he got up and wandered off! Christine and I looked at each other, and our first reaction was to want to grab him. But we bravely decided to let him go, and just watched. Alex toddled up to some people and looked at them for a moment, tried to say something, and then simply carried on walking. He was exploring. It was wonderful – and also frightening! – to know how much confidence our kid had to just get up like that and start wandering around. The thing that really shocked us, though, and which will always remain ingrained in my memory, was how he never looked back, not once! I remember, I was so proud of him at that moment. He was so tiny and we both went, ‘Wow!’ But the amazing thing is that if you see him today as an adult, he’s exactly the same kid. He has the confidence to walk into any situation and it doesn’t faze him – he doesn’t even have to think about it . . .

As children eventually become young adults, we as parents are there to encourage and gently push them out of the nest. But at some point, they are going to have to start flapping. Parents can continue to have a big influence on their children in all sorts of ways, even when they’re ready to fly. I have always encouraged my kids in whatever direction they want to go. My daughter is leaving university this year and she enjoys branding, marketing and events. I naturally meet a lot of people in those areas, and when I came across a fascinating company just recently I made the introduction. Now, it’s up to my daughter if she wants to meet them or even ends up working for them. That’s entirely her decision. What I have done as a parent is simply opened another door for her. For me, this is an essential role for all parents – to encourage their children and then help them further by opening doors.

At the same time, however, we should neither be overprotective nor should we ‘nanny’ our kids too much. Encourage them to learn and help them to have a great education. If possible, they should learn at least one other language, and where possible, introduce them to travel early on.

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