
Even in an industry replete with success stories, Robert Roche’s stands alone.
By Tom Dellner
The direct response world has no shortage of compelling stories of visionary entrepreneurs who strike it big. They’re everywhere: inventors, marketers, pitchmen and service providers who had the vision to spot a business opportunity and the courage, drive and good fortune to transform their idea into reality.
But even in this industry of business mavericks, Robert Roche’s story stands apart. The Chicago native left the U.S. for Japan in 1989 with no particular career goals in mind. In the intervening 20 years, Roche has seen one company he founded go public on the New York Stock Exchange and has sold a 51-percent share of a second company to Japanese mobile phone giant NTT DoCoMo for $310 million.
Electronic Retailer sat down with the unassuming and straight-talking Roche for a first-person–and fascinating–account of how it all came together.
Electronic Retailer: Tell us about the inspiration behind Oak Lawn Marketing. What was the business opportunity you spotted?
Robert Roche: There really was no particular epiphany I can point to. At the time, I was teaching some English, doing some importing of goods, some translating and a little consulting. In my importing business, I was bringing in goods from the States and selling it to a wholesaler. As a part of this business–I can’t even remember exactly how it came about–I was introduced to a leading TV shopping company in Japan. We wanted to sell them some product, but they said, “If you want to sell me this product, you’ve got to be on TV.” So, next thing I know, I was on TV, my partner (Tadashi Nakamura, who is still an important part of our business today) was on TV.
And these were one-hour shows, where maybe 15 products were sold. It was live–although taped and aired later in other areas–and believe me, it was stressful. But we began selling more and more product.
Then, in Spring of 1994 I believe, I had the good fortune of being introduced to Rob Woodroffe of Interwood Direct.
He had time on CNN International and was basically looking for somebody to answer the calls in Japan. I agreed. Of course, I didn’t have a call center. I didn’t have anything. But I thought I would answer the phones myself if I had to. Rob was selling six or eight products at the time, so we imported a couple hundred of each and the phone started to ring.
So these two serendipitous events really marked our entry into the business.
ER: I have to ask about your experience in front of the camera–what was that like?
Roche: It was pretty intense. I fancy myself an accomplished Japanese speaker and I’m a pretty confident guy, but when they start rolling that camera, it’s a whole different ballgame. You lose who you are. I don’t care how cool you think you are. Once that camera’s on, everything changes. From that experience, I really gained a ton of respect for those who do well in front of a camera.
ER: So the business really came together in something of an ad hoc way?
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In the early ’90s, Roche and business partner Tadashi Nakamura went on air to sell popular DRTV products.
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Roche: Yes. It was all very organic. Basically, we were quite lucky–very much in the right place at the right time. The TV shopping company had been struggling a bit. They were having a hard time getting quality products. And Rob’s company was the major player internationally at the time, so, through our relationship with him, we had the pick of the litter, product wise. Also, as Rob ran the stuff on CNN, we saw which products sold best. We then took those to the TV shopping company. So I was on TV selling DD7, the Pet Mitt, Double Burner–whatever was selling on CNN.
ER: Can you describe your relationship with Rob?
Roche: I was so lucky to have Rob as a mentor. He knew the business like no one else, and I have always been motivated to learn. He was the one who explained per inquiry marketing to me, which didn’t exist in Japan at the time. I eventually bought a lot of media that way. And Rob was motivated to teach me: the more I learned the business and the better I got, the more of his product I sold.
ER: If I can back up, what brought you to Japan in the first place?
Roche: I spent a year of college in Japan (I majored in Japanese studies and economics), another year during law school and then returned in 1989 after graduating from law school. My wife, who I met the first time I traveled to the country, was Japanese. I had personal reasons to go to Japan; I didn’t go there to start a business. I went there to be there and I basically had to “fill in” my career.
ER: You mentioned the word “serendipitous”; it’s a very apt description for the way things just fell into place. But there must have been some challenges early on.
Roche: People talk about how difficult it is to do business in Japan, how it can be very challenging to go over there and do what it is they want to do. And they’re right.
But I went about things a different way. I was very industry agnostic. If I found that it was difficult to do business in a certain area, then I went in another direction. In the early days, when we were acting more as wholesalers, we faced very few barriers to what we wanted to do. When we evolved into more of a TV shopping company ourselves, then we did begin to meet with some challenges.
ER: Can you describe a few?
Roche: The most significant involved media. The television stations were not very comfortable selling media to new companies. We were new and I was a foreigner–the terrestrial stations really wouldn’t give us the time of day, to begin with. So I focused on cable.
ER: Had cable television burst on the scene yet in Japan?
Roche: No, but the explosion of cable was certainly on the way. The laws changed and we went from a few local stations to dozens of stations. I was aware of what had happened in the U.S. and believed that the evolution of the American cable business would pretty much be repeated in Japan. It wouldn’t be step for step, of course, but I knew these changes–an enormous shift in the way business was done on TV–was coming. So I was able to anticipate it to an extent.
We focused on cable and began building our business there. Eventually, we were able to staff a 24-hour call center with 10 or 15 people and assemble all the necessary infrastructure.
At first, it was a disadvantage to grow all these elements of a business–product procurement, production, media buying, teleservices–at the same time: we were like a chicken with its head cut off. But after awhile, it became a huge advantage, because we were wholly integrated. If Rob came to me and said, “Hey, we’ve got this great upsell for this product and it’s working really well,” I could walk down to the call center and implement it on the fly.
We grew to a critical mass where we were just big enough, just profitable enough, to begin taking some chances with terrestrial TV. This was in 1995-96.
ER: So how did you finally break into terrestrial television?
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A longtime friend and business partner of Roche, Harry Hill joined Oak Lawn in 1999 and is now president.
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Roche: We couldn’t really compete with the other TV shopping guys. In Japan, when you’re the new guy–and being foreign doesn’t help–you’re paying 20 or 30 percent more for media. It is not commoditized as it is–to an extent–in America. So media was a challenge.
Also, we wanted to run infomercials, which didn’t exist in Japan. People sold a number of products–taped live–on what were essentially hour-long variety shows. We struggled a bit with that format. We explained to the TV shopping company we were doing business with that the format was difficult and simply not cost-effective. We kept pushing the infomercial concept, how it was established, cost-effective and a proven success in America. Eventually, they had enough of us and said, “If you’re so determined to run infomercials, do it yourself!” So we did.
We went around and around, asking stations to sell us time in a half hour–most stations went off the air at midnight and came back on at 5:30 a.m.; we offered to buy time from midnight to 12:30. They wouldn’t budge.
Eventually, a company called Quantum did a partnership with Mitsui, a huge trading company in Japan. They had enough influence with the stations to convince them to sell that midnight-to-12:30 time slot for an infomercial. They did well with it and eventually grew to be about a $100 million company. They turned out to be a bit of a flash in the pan–I think they’ve been out of business for about 10 years now. But they kicked down the door, and we were able to walk in. They made the infomercial format legitimate.
We just kept our heads down and slowly began affiliating with more and more stations. And the nice thing about media in Japan is that once you get it, it’s yours. We have certain media that we’ve been buying for almost 15 years.
ER: What sort of products were you selling?
Roche: We were able to mitigate our risks. We took the best products in America–tested, true products–and sold them in Japan. They wouldn’t always work (there are lots of examples of products that kicked ass in America and did nothing in Japan), but certainly our chances of success were higher.
Our standard was whether the marketer had spent a million dollars in media on the product in America. I suppose this was not too sophisticated–we’re certainly far more data centric now–but if a company spent a million dollars on the product, you could pretty much rest assured that most of the manufacturing kinks had been worked out, they had already dealt with customer complains, etc.
ER: You’ve walked us through the development of Oak Lawn through the 1990s–when did you launch your Chinese business, Acorn International?
Roche: In 1997 and 1998, there was a rush of the TV shopping companies into China and the word was that they were doing well.
I partnered with a gentleman named Don Yang who I knew from other business dealings and for whom I had a high level of trust. But our initial dealings in China were very frustrating for me. Working with a translator was extremely uncomfortable.
CCTV was not in the business of TV shopping or selling media to foreign companies. They eventually offered us 10 or 20 minutes per day, and we decided to buy it. We only had about two months then to get everything together–the show, the call center, everything. It was painful. We limped along for awhile, then we brought in another partner, James Hu, who also had lots of TV shopping experience. At this point, I stepped back a bit from the day-to-day business. I would have them come over to Japan to learn what we were doing at Oak Lawn, but they really incubated the business themselves.
ER: What was the eventual breakthrough point for Acorn?
Roche: We found a company that marketed an electronic pocket translator called Haojixin, which translates to “good memory.” We tested the product on TV and it sold very well. We ended up buying a majority stake in the company–we now own 100 percent. The product sold like crazy, did extremely well at retail and became a huge brand in China. That brand alone–there are a number of different versions and line extensions now–does more than $100 million per year. Acorn has also done extremely well selling cell phones.
Jumping ahead to 2004, we brought in investors, raised money and eventually went public on the New York Stock Exchange in 2007. I get a lot of credit for founding the company and I suppose we were helpful in teaching them everything we had learned at Oak Lawn, but the real credit needs to go to James Hu, Don Yang and their team.
ER: Back to Oak Lawn. Can you tell us what led up to the DoCoMo deal?
Roche: Harry Hill came to the company in 1999. At about the same time, we were a part of what was called The Global Alliance, with Rob Woodroffe, Reiner Wiehofen of The Vector Group and others. Basically, we pooled our resources and formed something of a product procurement bloc. The Global Alliance eventually fell apart, but Wiehofen had introduced us to his proprietary software system that analyzed media in a very sophisticated way.
This media analytics software helped us get away from being hit-product dependent. With Harry’s help, we further refined the system and eventually developed efficiencies in the way we did business that allowed us to make a living off of merely good products–singles and doubles. Eventually, a hit product would come along which would be great, but we could make singles and doubles work.
ER: What made the analytics system work so well for you?
Roche: To oversimplify, it focuses on the return on ad spend instead of other metrics that are frequently used. It works perfectly for Japanese media, which, as I explained, is far from commoditized–it might not work as well in the States. But it gives us the information we need to better allocate media and negotiate more intelligently with the stations.
ER: Tell us a little more about Harry’s role.
Roche: We got to a point with Oak Lawn where we needed less of what might be provided by a visionary, entrepreneurial executive and more of the execution of a master craftsman. And although Harry also has tremendous vision and is as entrepreneurial as they come, that’s what he provided. So he began to take on more of a leadership role. It’s a transition that many businesses go through as they grow.
So, with me as chairman and Harry as president and with the help of our Japanese partners, Oak Lawn set about executing on and continuing to refine the efficiencies that we had developed. There’s a Japanese business term kaizen. It’s the Toyota way–a commitment to continuous improvement, even if it’s marginal improvement. That’s what we strived–and continue to strive–for. And as you get bigger, the payoffs get bigger. If you’re a small company, a marginal improvement in efficiency is just that: marginal. But when you’re doing $400 million in sales, these marginal improvements are huge, and we just dropped it all back into media.
Another key point occurred when Billy Blanks came along. He had been attempting to break through in Japan for almost a decade. Finally, we got the rights to one of his shows. The stars aligned and it was a blockbuster. We sold almost 2 millions videos–more than any other item in Japanese TV shopping history. I think it was our business efficiency that allowed us to keep it on air just enough for it to gain momentum and take off. It was a national phenomenon. Taro Aso–then the Minister of Foreign Affairs and now the Prime Minister–once led the participants in the 40th ASEAN Ministerial Meeting in an impromptu Billy’s Boot Camp session.
This really put Oak Lawn on the map in Japan and we began to draw interest from other companies; the seeds were sown for the DoCoMo deal.
ER: Explain the deal from DoCoMo’s side of the table. What did they see in Oak Lawn that most interested them?
Roche: DoCoMo sees the mobile phone as a media; they own more than half of the Japanese cell phone market and their products are world-leading, cutting-edge products. And Oak Lawn is a branding and media company. They saw how our branding, promotions, marketing and everything else we do fits very nicely with mobile as a media. They believe that we can help them leverage and optimize their customer base–which numbers more than 50 million–to which they currently market nothing but phones.
And as they began to look more closely at us, they became impressed with the fact that, like them, we were a data-centric company. We know why we do everything we do. And maybe everything we do doesn’t always work, but if it doesn’t, we know why. They also liked that our company was vertically integrated and that all levels of employees understood the importance of data centricity.
ER: What does this mean for Oak Lawn–and you personally–moving forward?
Roche: This will allow us to leapfrog other companies to an entirely new strata of business without suffering the pain. To be a truly major company, it requires a whole new mentality in management. And the management discipline and expertise that exists at DoCoMo is absolutely world class. They are thoroughbreds.
I feel completely re-engaged. This deal opens up new horizons. We have the elite of the Japanese business community to learn from now. You just can’t get access to this. We’re on a different playing field. We will now be able to apply our principles and strategies in a much bigger playground.
ER: Tell us a little bit about the life of an ex-pat businessman living in Asia. What do you like about it? What are some of the challenges?
Roche: Well, in Japan, we really didn’t live an ex-pat lifestyle. With my wife being Japanese and me knowing the culture and speaking the language, we were well-immersed in Japanese society.
China is similar to Japan in some ways, but very different in others. It’s not predictable, with well-established rules of business.
There are many bad things about China–the pollution comes to mind. The language is extremely difficult and it’s more difficult to immerse oneself in the culture. But I like to focus on the good qualities. I love being an ex-pat. I love being in Shanghai; it’s a huge, vibrant city.
And for a businessman, it feels as though we’re at the epicenter of commerce, of wealth creation. It must be like what New York City felt like in the late 19th century. There are all these Chinese entrepreneurs in the city, building Rockefeller-like dynasties. And they’re all here. Walking around in the city. Their kids go to your kids’ schools. You know some, you don’t know some, but the sense is palpable, historic and very exciting.
ER: Have you always been a risk taker and had the entrepreneurial bug?
Roche: Oh, yeah. I always had some business venture going, starting with a paper route at age 10. And my dad was an entrepreneur. He was a salesman who sold enough that he was able to buy his company. Then he moved on to something else and something else after that. His was a very colorful entrepreneurial career, to say the least.
ER: If you could sum up a few of the nuances of the Asian direct response market that would be surprising or of interest to Western DR marketers, how would you do it?
Roche: I think the similarities would come as a big surprise. The fundamentals of the business are pretty much the same. You’re buying media, putting something on TV and answering the phones.
Now how you buy the media, the lack of service companies–these are big differences. The use of credit cards is very low, too. But people are people. It doesn’t matter where you’re from–everyone wants abs of steel.