Smoking gun

“You’re crazy.”

That’s what Vidal Suriel heard when he told his executive vice president that General Tobacco was going to call the National
Association of Attorneys General and join the Master Settlement Agreement — a deal bigger tobacco companies were invited to join
years earlier to resolve potential liability for tobacco manufacturers.
“Make the call,” was Suriel’s simple response.

That decision in 2004 has cost General Tobacco more than $270 million to date and could cost more than $1.7 billion over 10 years. It
was an accountant’s nightmare, but it was part of a vision of growth for Suriel, founder and president of General Tobacco.

With pressure increasing from distributors and government campaigns for MSA-approved products, he felt that his company would
soon be shut out. Holding off would mean instant profits for the tobacco company, but it would also mean certain death down the road.
To hang with the big guys, he needed to keep his company growing consistently, but he also needed to land a haymaker — the shot
that would earn General Tobacco the right to stay in the fight. While joining the MSA would increase prices in the short term, it also
meant that no market would be closed to General Tobacco in the United States. So Suriel devised a plan to take the big risk, get his people focused and committed, and then move forward. The results of that plan have pushed revenue expectations for 2007 well beyond
$300 million.

As a growing company, it’s easy to skip the big risk. But not taking it can be fatal. For Suriel, who founded the 100-employee company in 1997, it would have been simple to back down when the pressure for MSA-approved products became strong.

As a nonparticipating manufacturer, General Tobacco faced propaganda from the competition and was often looked at as a black
sheep. Suriel could have stayed stagnant, but part of his vision was to take on the big competition for the long haul.

Suriel says to really grow, you can’t get complacent with early success.


“I still have a long way to go to reach that goal,” Suriel said. “It’s necessary to keep growing in order to arrive.”

Have a plan to move forward
Once you take the big risk and the adrenaline stops pumping, you have to continue to move forward. For Suriel, the plan was simple:
After you land the big shot, regain your focus and keep chipping away at the competition with your strengths.

The key to pulling the slingshot on Goliath is taking advantage of the places where great size limits ability. It’s not a handicap to be
small; it makes it easier to implement decisions. With fewer employees than the big companies, Suriel pushes messages through in a few
days rather than a few months.

While the bigger companies have several levels of executives at different locations to go through for both decision-making and implementation, Suriel has a small management team that can be quickly organized. With fewer people, he can keep a central location and
install changes quickly.
“We do not have several levels of hierarchy, so we are able to know and work with each of our customers on a level that may be impossible in a large business atmosphere,” Suriel says. “Even as we grow, I still take calls from all customers, whether it’s our largest distributors, or individual retailers. This allows us to better appreciate our customers’ problems and anticipate many of their needs.”
When Suriel saw the popularity of menthol cigarettes was increasing, his people were nimble enough to reorganize priorities and quickly introduce 32 Degrees, a premium menthol cigarette, released in October 2006.

Similarly, the size of General Tobacco helps it plan. The expectations of big companies can be overwhelming. General Tobacco, the
sole holding of its parent company, Vibo Corp., is able to lower profit margins slightly to keep product prices low. While most of the competition is made up of public companies answering to stockholders, privately owned General Tobacco has the luxury of being small
enough to decrease margins in the short term to focus on future growth, giving it the flexibility to roll out new products as the market
dictates.

That ability to attack opportunity isn’t just a priority when you are growing, it’s a method of survival. Suriel, who came to Miami from
the Dominican Republic, doesn’t see competition as something to move away from but as something that gives the company a chance
to do more.
“I never saw it as an issue of courage,” Vidal says of taking on competitors such as industry king Philip Morris USA, whose parent company, Altria Group Inc., posted net domestic tobacco revenue of more than $18 billion in 2005. “I saw it as an issue of opportunity.”
Viewing the competition as an opportunity requires a reversal of the usual thought process. Others may point to the fact that General
Tobacco only takes about 2 percent of the market. Suriel sees that as 98 percent of the market that his company — the sixth largest in
the United States — has the opportunity to gain. Suriel tells his employees again and again: There is no ceiling for a growing company
in a competitive market.

In the meantime, Suriel says you have to focus on today’s goals to get to tomorrow. The key is to keep growth consistent by setting
realistic goals. General Tobacco doesn’t have to catch the top two or three in the industry in one night; closing in on the No. 5 company
will suffice for now.

Find a target, then set slightly higher targets for each quarter. Those targets should lead toward a path where you can match the end
goal in a realistic time frame. You can make a big move like Suriel did by joining the MSA, but you have to turn your attention to the
smaller moves and keep focused on the smaller parts of your growth.

Those little details can add up to a big goal.


“This is like when you have a baby,” Suriel said of moving forward. “You want to see it grow, you have to give it all the attention you
can and watch to make sure you turn him into a good person. That’s how I feel about this company; I want it to grow up and turn into
something special.”

Keep the team focused
Once you’ve engaged the big competition, it’s imperative to keep everyone focused. Suriel isn’t one to jump up and down in meetings.
Others can talk all they want; Suriel just works. As long as he can see the path toward the big competitors, he’s going to keep walking
down it.

A big part of that is accountability with your employees.


“It’s important to me to give it my all during the times available,” Suriel says. “It’s important to be at my post at 8 a.m., just like all my
employees.”

Suriel’s strategy is basic but effective. He makes himself an example of what he wants from his people and expects them to live up to
that mark, and that accountability goes both ways.

Once he sets the stage, he can watch his people to see if they live up to their end of the deal by staying focused. Suriel sets a clear example for his employees and expects them to follow.
“I feel that all my employees have it quite clear, and they prove it through their work performance and their efforts,” Suriel says.
Working harder and longer than anybody else sets a clear tone for the company; just because you lead the company doesn’t mean you
have to lead an executive lifestyle.

Suriel says part of that is keeping yourself in the action to keep people involved and to tell people those expectations, which he does
through daily meetings with his departments. In those meetings, he tells people his expectations and gives everyone a chance to see what
the company is focused on and why. He also gets feedback from the people closest to the action.
“I work very closely with my employees,” Suriel says. “This allows my employees to understand and raise any questions they may have
as to my expectations. These meetings also allow me to understand how quickly they are achieving their goals. I have an open-door policy so that our employees are always able to raise questions as to existing plans, or make suggestions as to strategies for reaching their
goals more quickly.”

Give commitment, gain commitment
To continue to take jabs at the industry giants, you need a full commitment from the people involved. Suriel gets that by building a family-like atmosphere, because if a company is climbing uphill, the people must believe they are doing it together.
“For us, it’s a matter of values,” he says. “We are committed to these people and, as a corporation, we are quite willing to grow with
them and make progress.”

You get progress by getting to know your people and showing them your vision. When Suriel told people he was going to join the MSA,
there was understandable skepticism. But he made sure those people saw his vision, and he infused the company with tranquility by
telling them the details of his plan for growth.

He makes it a point to have company outings at which he talks with his employees. At those gatherings, he’s no longer a CEO, he’s just
a part of the team. He talks plainly to them about what he’s doing and lets everyone know he needs them to keep moving forward.
Removing hierarchies is a big part of building buy-in, and Suriel wants everyone to understand that they’re an important brick in the
construction process.
“You need to be as simple and humble as possible, without using unnecessary formalities with your staff,” says Suriel. “I like to spend
some leisure time with my employees and share with them some special occasions, such as summer holidays and Christmas.”

It’s not just those annual gatherings that make your employees feel like they’re part of something special. Sometimes, a little surprise
goes a long way. Suriel is known for grabbing a few employees unannounced and taking them to lunch just to talk.

If people feel like part of the family, they are part of the family. With that attachment to the company, they are willing to give more
because they know they are an important part of the team. Suriel says the success of General Tobacco is the success of the people
involved, and he wants to be sure they see that.

After all, those people aren’t just the ones who helped Suriel take the big risk, they’re the ones who will keep the plan going in the long
battle with the biggest kids on the block. And even though its already come a long way, Suriel says he wants to keep his company focused
on the next goal.
“I am a very ambitious man, and I feel that success is a very big word. We still have much ground to cover.”

HOW TO REACH: General Tobacco, (877) 500-9595 or www.generaltobacco.com

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