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David Smith

David Smith

(Site Admin, Entrepreneur, Contributor)
David is a native of the great Commonwealth of Virginia and lived there through high school in Fairfax County. After high school he pursued a degree in Electrical Engineering from the Georgia Institute of Technology in Atlanta Georgia. During his studies his traveled to Singapore for a semester and gained a respect and love for traveling and immersing in different cultures. After graduation David joined the United States Peace Corps and was posted first in Kazakhstan as an English Teacher and later in Moldova as a Community and Organizational Development Consultant.

When not working on his startup David can be found maintaining various web based side projects (check out: salutmoldova.org) and working on his 1986 Lada Жигули 2101 named Надя (Nadia).

If you are wondering why you haven't heard from me in a long time well... life has been a bit hectic. Running Smokehouse, opening Taproom 27 (yes! we have a new bar actually :) and countless hours spent working on the nuts and bolts of the problems I have described in this blog with FSEA have taken their toll on my free time. But I have started to miss the blog and an organized way of telling our strange tale. In thinking about what would be next for OSE I had a realization - talking is easier than writing! Over the last year various groups have asked me to come to events as a guest speaker or panelist and after some thought I have decided to officially announce (drummroll please) that I enjoy such events. More importantly, I feel they are a great mechanism for sharing the Smokehouse story and to help educate the next generation of Moldovan entrepreneurs and leaders in the reality of the situation, the many challenges, and the reasons for hope and excitement about starting a business in Moldova.

So without further ado I will announce that I will cease to neglect this blog and simply put it on hiatus for a time. Meanwhile, please follows OSE on Facebook for random, funny thoughts I have about corruption, bureaucracy, and business in Moldova in general. 

And... if you happen to be in an organization looking for an Expert Speaker on the topics of Corruption, Bureaucracy, Reform and Hope for the Small Business sector in Moldova reach out! My email is This email address is being protected from spambots. You need JavaScript enabled to view it. 

 

Open Source Entrepreneurship

"Expert Speaker on the topics of Corruption, Bureaucracy, Reform
and Hope for the Small Business sector" is not where I thought my
life was going a few years back... 

 

For more information - check out this flier!

The-Art-of-Corruption-Free-Business-in-Moldova.pdf

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Posted by on in Open Source Entrepreneurship

So it's been 4 years 1 month since Matt and I arrived in Moldova. It's been 2 years since Matt, Vlad and I founded Smoke House SRL with the intention of opening a BBQ restaurant. And it has been 1 year since we opened Smokehouse. In that time we have accomplished a lot. Furthermore, we have seen a lot of change in Moldova - most of it for the better. There is new business and investment here; There are new products available in the stores and supermarkets; Most importantly, there are more and more expressions of cultural and personal expression that are breaking old norms and stereotypes and giving the feel of an ever more diverse and modern society. In short, we started out with a belief in Moldova and, in spite of all of the tumultuous events of the last years, we still have it. For that reason I want to introduce a project that we are working on that is near and dear to my heart. The Foreign Small Enterprise Alliance or FSEA

 

FSEA logocolored

you have literally no idea how long it took us to settle on this logo. I will punch the first critic in the mouth. That's a promise. 

 

So FSEA didn't begin as an idea for some cool new group but as a slow recognition of a gap in the feedback mechanism between business, civil society and government. As Smokehouse neared the end of our many month authorization "process" (read "fight") I started meeting with the business associations, chambers of commerce and regulatory reform projects sponsored by Moldova's Western Partners. If you're wondering why I didn't talk to such groups sponsored by the Easter Partners...

 

739-empty storage hall.large

Oh look! it's the office for all the reform projects and international AID from Russia...

 

Anyhow, my goal was to ask them tell them that we had "stared into the void" so to speak with reguards to the regulatory process here and wanted to know what was being done about it. The answer is twofold. Lots is being done by smart people with a good direction. But little is being done directly with Small Business in mind. The reason for this is actually pretty simple. Small businesses don't talk to reform projects and are less likely to join associations. The big associations also don't really have a direct interest in helping startups - they exist to support their members and to become a member you already have to be a rather large enterprise by Moldovan standards. In this I started to percieve a gap. The people working hardest to reform business processes were, or were getting feedback from, the people least susceptable to the burdensom regulation that pervades the Moldovan system. 

 

For example, let's look at HR regulations (well deserving of their own post when I get a chance). The first person we hired at Smokehouse was an HR rep. Before I could even hire myself in my own company or an accountant. The reason is that once anyone is on the books there is a large amount of paperwork that must be generated about their activity every single month. This must be filed with the state and when it is not you will be fined. Now, when you are the Coca Cola corperation (my fav) or a large IT company hiring someone to handle HR compliance isn't that big a deal. If you outsouce it here it's about 7 eur / mo per person. If you're a small company in Moldova it IS a big deal. Furthermore, compliance with these laws is, put simply, *hard* to ensure due to their vagueness. This means lawyers. Lawyers cost money. Again, not a big deal for Coke. A big deal for a startup barbershop with an owner-manager and 1 employee. That's not even mentioning the accounting fees. 

Long story short, many large foriegn firms can afford to pay to make these problems go away. The cost of doing business in Moldova is so much lower than Germany even with all this madness. Small local companies struggle much more with this. Because of the nature of those who are speaking up on these issues the needs of these large firms - largely more macro-economical in nature - are being addressed while the needs of the small companies are not. Please don't misread here - I belive firmly in the reforms and lobbying going on for better business climat for large companies; I just also know there is a lot to be done with regulations that more directly affect small companies. 

So why aren't small business' speaking up? Fear. As we at Smokehouse know first hand when you speak up someone comes to smack you back down. We are stubborn and I for one harbor a pool of internal grumpiness that is an easy match for anyone who walks through my door to bother me. But the fear is real and well founded. The way is easier for foreign owned companies for sure so why don't they speak up more? Conventional wisdom is that there aren't many foreign owned small businesses here. That is not the case. The truth is that we are not united. This is what we want to change. 

So one day I had coffee with 2 fellow entrepreneurs and we set out on a path that would bring us to the founding of FSEA. We looked all these problems over and we said "small businesses here need to stand together" we said "we need a way to find like-minded, modern business people like us so we can partner with them" we said "we need to make our voice heard so that as Moldova reforms its laws and regulations the little guys don't get left behind." We decided to form an association. 

 

coffeeCup

And the lord said "with this magical substance you
may change the world." And it was so. 

 

So why the "Foreign" Small Enterprise Alliance? Don't you want local business too?

Yup, we sure do

The truth is we discovered that Moldova has a Association of Small Businesses already. Their website http://amb.md is sad in any of the 5 languages they promise and fail to deliver on. Actually, that site is a study in what happens when the grant money runs out for developing a project but it somehow limps along anyways. If your site has been live for 6+ years and you still have lorem ipsum style filler in there (or a poll attempting to answer the ever present question "when do you use the internet") then you know the site needs an update. While the org seems to be active in a legal sense they aren't doing much. Our intention was to differentiate here. We are founded by 3 foreign businesses (mixed capital really - Moldovan American joint ventures), and we expect to attract membership from companies founded by foreigners or Moldovans who have lived abroad and are sufficiently outraged at the status quo here. By no means do we exclude wholly Moldovan owned companies. We just desire to stress that our business philosophy is rooted in western values and principles and we are fully embracing of anyone, of any background, who embodies them. 

 

Sam-Elliott

I've just learned that when you use the word "western" that many
times
 the internet automatically inserts a photo of Sam Elliot into
yout content... 

 

So what will we do? Check out our site! Also, look if you are interested in possibly joinging us and want to know what the benefits and application process looks like. Alone we can be picked off and are at the whim of "public servants" who serve no master but themselves. Together we can speak loudly, with one voice, and advocate for a business environment that will take Moldova on the path of Poland, the Baltics and others who have broken to Soviet yolk. If you are a business and want to add your voice to our cause join us, because we are Stronger Together

(if you aren't a business and you are interested in supporting the cause and hearing more about what we're up to like us on facebook)

 

 

 

 

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Această postare este tradusă, textul original fiind în limba engleză. Mulțumim voluntarilor care au editat și tradus acest blog!!

În sfîrșit am revenit. A trecut ceva timp și, sincer vorbind, probabil mi-a lipsit mai mult decît credeam efectul cathartic al acestui blog. De-a lungul ultimelor 4 luni am fost cam în totalitate concentrat pe afacere, fapt care a produs două obstacole destul de semnificative pentru oricine încearcă să mențină o activitate precum acest website. În primul rînd, am fost extrem de ocupat. Să gestionezi un restaurant în primul său an nu înseamnă doar să-ți dedici tot timpul lucrului, dar și să traiești constant cu memoria gîndului că niciodată nu îndeplinești mai mult decît 20 % din lucrul planificat pentru o zi, și că ziua următoare va aduce și mai mult lucru. Există și o doză complementară de vină care te face să renunți progresiv la pasiunile tale (ceea ce, evident, nu-i bine pentru sănătatea mintală). Al doilea obstacol în actualizarea continuă a acestui website este un pic mai cinic. Sincer, am început să fim indiferenți față de anumite lucruri. Circumstanțe care anterior îmi trezeau indignare, au început să-mi trezească doar rîsete și apoi nimic. Am fost într-o vacanță frumoasă și acum am revenit în modul de rîs, pe care vreau să-l păstrez. Indignarea persistă, dar e ascunsă sub un paravan de așteptări abisal de joase, fapt care-i un element de bază al gestionării afacerilor în Moldova.

Așadar, pe această notă sumbră, mă voi lansa într-un subiect care, cred eu, va crea un tablou despre ce înseamnă să faci afaceri aici (și care expune o doză de frustrare), dar este orientat spre cum ar putea fi lucrurile. Mai exact, cît de multe oportunități sunt aici pentru oricine dorește să muncească mult și să încerce. Cînd am început să scriu acest articol cu cîteva luni în urmă, l-am întitulat „Lucrul cu furnizorii (sau: Coca Cola, așteptam mai mult de la tine)”. În mod hilar m-am abținut, pentru că nu voiam să menționez tare și răspicat numele Coca Cola. De atunci am pierdut această inhibare (și veți vedea de ce).

Trecînd direct la subiect, iată cîteva motive pentru care Moldova este plină de oportunități pentru oricine își dorește să le înhațe.

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Nu… Nu găsesc nici o brînză
(asta spune totul)

 

Partea 1: Majoritatea „Afacerilor” refuză să facă „Afaceri”

Ca  alternativă, această parte ar putea fi întitulată

b2ap3_thumbnail_Shut-up-and-take-my-money.jpg

Taci și ia banii!

Activitate cu care se ocupă cineva în scopul de a obține profit.
- Definiția afacerii din Google

Această formulă simplă nu se aplică prea bine în Moldova. N-o să vă obosesc cu multă analiză, dar  voi prezenta cîteva exemple – concluziile le faceți voi.

Povestea 1: „Cazul meselor de picnic”

Această poveste e veche, dar simplă și ilustrativă. Cu aproximativ 3 săptămîni înainte de primul nostru eveniment de deschidere (mijlocul lui mai 2015), am participat la  Yardsale Moldova (un eveniment fain care se desfășoară aproape în fiecare lună și aduce împreună artizani, cafenele, artiști și altele într-o ambianță de iarmaroc urban). Acolo Smokehouse a avut un fel de debut - am vîndut  pentru prima dată carnea noastră BBQ sub numele nostru.

b2ap3_thumbnail_11120589_1104687166211851_5076852026452575759_n.jpg

Cei care privesc atent vor observa flagul Virginiei expus cu mîndrie ;)

Cu două zile înainte de eveniment, ne-am pornit într-o expediție de cumparături pentru amenajarea cortului alimentar. Aveam nevoie de mese înalte pentru ca clienții să poată cumpăra mîncare și să aibă unde să o savureze împreună cu prietenii lor.  Un magazin din Atrium vindea exact mesele care ne trebuiau, la preț de 500 de lei, și noi am decis să le cumpărăm. Matt și Vlad s-au dus să le cumpere și iată cum a decurs conversația:

Vlad: Salut, am dori să cumpărăm două mese de acestea.
Vînzătorul: Nu, nu le putem vinde astăzi.
Vlad: De ce nu? Noi am fost ieri aici și ne-ați convins să le cumpărăm.
Vînzătorul: Dar acum e stricată.
Vlad: Nu, nu este! Și chiar dacă ar fi, eu vreau să o cumpăr!
Vînzătorul: Îmi pare rău, dar nu pot să vînd asta. Să aveți o zi bună.

(Nota autorului: eu am adăugat “să aveți o zi bună”) 

Așadar, ce s-a întîmplat? Vlad mă sună și-mi spune că deja nu mai avem mese și eu construiesc 2 mese rotunde din resturi de lemn. Costul total 50 de lei ($ 2,50) + 5 ore. Am folosit mesele și am trecut peste acea zi, și cît de comic ar suna, mesele sunt în restaurant chiar și acum.

Rezultatul: noi am vrut să cheltuim 1000 de lei pentru mese, dar am cheltuit zero. Și niciodată nu ne-am mai întors la acel magazin (el s-a și închis de atunci).

 

Povestea 2: „Despre echipamentul de bucătărie”

La momentul de față Matt (care a construit bucătăria) ar putea scrie o carte despre această prostie. Eu mă voi rezuma la o scurtă anecdotă.

 

Dina Cociug și MGM sunt două companii care practic dețin monopol asupra pieței de echipament comercial de bucătărie din Moldova. Principalul motiv este că ei pot negocia terenul minat al reglementărilor vamale și de import (a se citi „corupție”) pentru a aduce produse din Europa. Noi am vrut să cumpărăm un cuptor (una din primele noastre achiziții pentru bucătărie). Iată cum a mers…

 

Matt: "bună ziua, puteți să-mi spuneți vă rog cît costă cuptorul numărul cutare de pe site-ul vostru?” 

DINA: “lăsați-ne să vă trimitem un expert ca să vorbiți despre ce aveți nevoie” 

Matt: “de ce? Eu am nevoie doar de prețul unui cuptor” 

DINA: “putem veni în această după-amiază să vorbim? ” 

Matt: "uuuuh, cred că? Adică eu vreau doar cuptorul"

DINA: "Suntem în drum spre voi!"

 

Apoi ei apar ca să discute lucrurile… cu peste 3 săptămîni mai tîrziu, fără anunț (între timp noi am sunat de multe ori, apoi am adus un cuptor de la altcineva). Cînd au ajuns erau 5 persoane- 3 agenți de vînzări, 1 director și un “bucătar șef cu 5 stele Michelin”. Ei au început agitat să facă o listă cu MII de echipamente pe care doreau să ni le vîndă (multe dintre care fuseseră deja comandate din alte surse) la preț de 1 pachet mare. Bucătarul șef era ferm convins că noi nu eram îndreptățiți să întrebăm prețul anumitor articole, pentru că EL era un important bucătar șef și știa mai bine ce ne trebuia.  De fapt, cînd i-am explicat că multe dintre lucrurile despre care vorbea, inclusiv “bucătăria la pachet”, nu erau deloc relevante pentru afacerea noastră, el  s-a indignat și ne-a informat că noi nu aveam nici un drept sa îi spunem *lui*  de ce avem nevoie, pentru că el era “bucătar șef”. În cele din urmă, i-am dat naibii afară din restaurant.

 

Rezultatul: noi am construit cu propriile forțe o bucătărie, apelînd la alți furnizori mici, și nu am adus aproape nimic de la Dina Cociug – ceea ce era mai mult decît ne doream.

 

Povestea 3: “Problema chipsurilor nacho”


Noi cumpărăm 30+ kg de chipsuri nacho în fiecare săptămînă. Aceasta înseamnă o grămadă de bani pentru cineva care vinde chipsuri nacho. Dacă găsești așa persoană, sună-mă.

 

b2ap3_thumbnail_smokehousenNumber.gif

serios, eu voi cumpăra chipsurile

Aparent, să ne vinzi chipsuri nouă e „greu” și nimeni nu pare dornic să o facă. Inițial curățeam Metro la fiecare cîteva zile, pînă au încetat să mai vîndă chipsuri. Un angajat chiar mi-a spus (cu exasperare) că ei au încetat să le mai pună pe raft pentru că eu le cumpăr pe toate. După aceasta am trecut la supermarketul nr. 1 (care este mai scump), iar după ce am curățit fiecare din cele 5 magazine ale lor la fiecare 2 zile timp de 3 săptămîni, și ei au început să-mi dea același răspuns. Răspunsul meu? „Atunci spune-mi cu cine pot să vorbesc  pentru ca să cumpăr direct de acolo sau să le rezervez”. Metro a consimțit și armonia în livrarea de chipsuri s-a menținut timp de 3 luni… pînă cînd au încetat de tot să le mai vîndă. Iar Nr. 1 continuă să joace cu noi probabil cel mai elaborat  joc de-a prinselea la telefon, în istoria de refuz a banilor.

Rezultatul: Clienții mei sunt frecvent frustrați pentru că nu am chipsuri. Eu ramîn cu bani necheltuiți. Vînzătorii sunt extrem de fericiți pentru că nu mă văd aducîndu-le acești bani lor.

 

Concluzia acestor istorioare? Majoritatea companiilor cu care avem de-a face ratează ÎN FIECARE ZI oportunitatea de a face bani.

b2ap3_thumbnail_200_s.gif

Uneori pur și simplu nu avem suficiente mîini


Partea 2: Nu există cultură de servire a clienților

Consumatorii pot fi dificili. Ei au multe idei proprii despre produsul tău și foarte, foarte des au nemulțumiri. Eu le-am auzit pe toate – de la idei despre muzica de fundal, la neînțelegerea absolută a produsului („Am venit aici pentru BBQ American și tot ce aveți este „pulled pork”!! Sunt ATÎT DE SUPĂRAT!!”), la cazuri legitime și rușinoase cînd eu sau echipa mea rămînem fără produse. Rolul proprietarului de restaurant în oricare din aceste cazuri, este să-și ceară scuze și să facă mai bine în viitor. Eu înțeleg acest lucru și echipa mea la fel. Însă în mod caraghios, oamenii de la care primim cea mai multă critică și furie nu sunt consumatorii cu așteptări mari, dar furnizorii care caută zîzanie. În orice lună auzim de la furnizorii noștri (adică oamenii care iau banii mei și mă numesc „clientul” lor) mai multe strigăte decît toate problemele legate de clienți pe care le-am avut de la deschidere.  

Cel mai bun exemplu în acest sens este furnizorul nostru de carne. Nu voi da numele, dar oricine din oraș îl poate deduce. Primele noastre 3 luni cu ei au fost un coșmar… și continuă să fie așa. Noi facem comandă de costițe, iar ei le livrează tăiate pe jumătate (adică osul este tăiat la mijloc/ o partidă de costițe cu lățimea de aproximativ 1 inch). Permanent ne livrau spatele de porc tăiat în bucăți mici. A fost un caz cînd nu ne-au livrat comanda (un caz – ha!), iar cînd am sunat ca să aflăm de ce întîrziau, am fost informați că șoferul era plecat în vacanță pentru 2 săptămîni și nu urma  să primim nici o comandă.

b2ap3_thumbnail_32ca6ea0_hA5501DE7.jpg

Nu am nici un răspuns

Printre altele, eu ador filmul Joe împotriva Vulcanului… un film minunat

Timp de aproape 2 luni noi am întors 50 % din carnea primită. Însă nu ne-am limitat doar la un comportament pasiv agresiv sau strigăte la telefon. Noi chiar am mers la măcelăria lor și i-am instruit – de două ori – cum să taie carnea. Nici un folos. În cele din urmă am fost informați că managerul de vînzări chiar dorea să ne ajute, dar pentru măcelari cerința noastră părea „dificilă”.

Un alt exemplu este unul dintre furnizorii noștri buni – un producător de tortilla. Ei sunt o afacere mică și ne fac livrări de cîteva ori pe săptămînă. Produsul lor este bun și ei răspund la solicitările noastre. Îmi place de ei. Apoi am vorbit cu bucătarul nostru principal și ea spune că de fiecare dată cînd face o comandă, femeia cu care vorbește este grosolană și strigă. Ea încearcă să ne forțeze să cumpărăm mai mult. La. Fiecare. Comandă.

Nu-i asta o nebunie?

Partea 3: Stimulentele sunt greșite

Am menționat Cola Cola mai devreme? Cred că da…

Să fac o precizare înainte de a începe istorioara. Eu iubesc Coca Cola. Nu doar produsul, dar brandul și compania. Am făcut studii in Atlanta (Georgia) și am fotografii cu priveliștea de la fereastra dormitorului meu, dominată de sediile centrale ale Coca Cola. Noi aveam unicul local Pizza Hut din America care servea Coca Cola în loc de Pepsi. În Atlanta Coca Cola este atît de respectată, încît te-ai putea întreba dacă Biblia ar putea conține un capitol special dedicat acestei invenții americane dulci și siropoase. În caz că nu e clar, vreau să subliniez că nu aveam nici o prejudecată față de Coca Cola înainte de a cumpăra produsul lor.

Deci ce înseamnă să cumperi Coca Cola în calitate de restaurant în Chișinău? Primul apel nu a fost promițător…

Vlad (sunînd la numărul furnizorului): „bună ziua, sunt Vlad și am un restaurant nou și fain care se numește Smokehouse și se deschide în curînd. Vreau să cumpăr Coca Cola și să o servesc acolo pentru ca oamenii să fie fericiți!”

Reprezentantul 1: „unde vă aflați?”

Vlad: „în centru, pe Ștefan cel Mare”

Reprezentantul 1: „nu este sectorul meu, sunați reprezentantul 2 la nr. (și întrerupe apelul)”

Vlad (apelînd reprezentantul 2): „bună ziua, sunt Vlad și am un restaurant nou și fain care se numește Smokehouse și se deschide în curînd. Vreau să cumpăr Coca Cola și să o servesc acolo pentru ca oamenii să fie fericiți!”

Reprezentantul 2: „eu nu lucrez pentru Coca Cola de 2 ani (întrerupe apelul)”

Vlad (sunînd la reprezentantul 1): „salut din nou - numărul pe care mi l-ai dat e greșit.”

Reprezentantul 1: „nu-mi pasă (întrerupe apelul – și niciodată nu a mai răspuns la apelurile noastre)”

N-o să vă spun cît de dificil a fost să găsim pe cineva care să răspundă la telefon, dar e suficient să menționez că această izbîndă a implicat contactarea Camerei Americane de Comerț și obținerea unui număr pentru biroul lor din Moldova. Cînd am reușit să primim un răspuns și în sfirșit am găsit o persoană de contact, am umblat după Coca Cola o săptămînă, cerînd să ne trimită un contract pentru ca să-i putem plăti. Cînd l-au trimis, iată ce am primit:  

 

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Da… aceasta este fotografia necalitativă a unei hîrtii… ei voiau să o tipărim și să le-o trimitem ștampilată prin curier. 

Fără comentarii. Următoarea durere de cap a fost primirea frigiderului/ paharelor/ articolelor promoționale (semnelor luminoase etc - țineți minte că eu cred în această companie și e vorba de statut American). Aceste apeluri sunt inutile în mare parte, dar ni se promite un frigider. Săptăminile vin și trec și, într-un final, frigiderul ajunge. Noi am solicitat un frigider mic care să încapă în bar. Ei ne-au adus…

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scuze… abilitățile mele de fotograf lasă de dorit cînd rîd prea tare

Este evident că acest frigider e potrivit pentru un magazin. Ei au fost foarte nemulțumiți pentru că le-am spus să-l scoată dracului din restaurant, dar noi cu siguranță nu aveam nevoie de o mașină care să mănînce toată energia electrică.

 

Ce legătură au toate acestea cu stimulentele, vei întreba? Faptul că sunt cam prostești? (cert). Iată și cireașa de pe tortul acestei istorioare.

 

Cu vreo 2 luni în urmă am aflat că directorul general Coca Cola Moldova va veni la Smokehouse pentru o ședință. Primul meu impuls a fost să port cu el o discuție despre felul abominabil în care își tratează clienții. Apoi mi-am zis să nu fac acest pas, pînă cînd s-a întîmplat ceva amuzant. În ziua din ajunul vizitei planificate, 3 directori de la Coca Cola Moldova au venit la restaurant. Eu nu eram acolo, iar ei au făcut abstracție de partenerul meu Vlad și au început să indice și să decidă unde să amplaseze lucruri. Unde va sta frigiderul Coca Cola? Dar semnele luminoase? Două în interior, unul pe fațada clădirii. Dar paharele? Vlad i-a întrebat dacă poate să-i ajute cu ceva. Ei l-au ignorat și l-au tratat cu o imensă lipsă de respect. Ei erau de la Coca Cola. Titanii titanilor. Cine era el? Ei l-au informat prompt că președintele lor va veni a doua zi și se așteptau ca Vlad să respecte schema lor de decor. El i-a alungat din restaurant.

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Tu vii în casa mea și mă tratezi în acest hal
Asta schimbă un pic jocul

Așadar, cînd președintele/ managerul general Coca Cola Moldova a venit la restaurant, eu am vorbit cu el. Nu sunt sigur dacă bănuia ce structură de nimic gestionează, dar i-am explicat eu. Detaliat. Mai mult decît îmi permite timpul pe care-l am aici.

Nu-s sigur dacă Karma există, însă Coca Cola s-a retras din Moldova cu o săptămînă mai tîrziu, iar sub management ucrainesc lucrurile stau mai bine.

Concluzii:

Ok, David, ce încerci să spui? (altceva decît că ai o supărare personală constantă cu Coca Cola). Ce încerc eu să subliniez, este modul în care acest episod scoate la iveală o structură incorectă de stimulente în business-ul moldovenesc. Angajații Coca Cola cu care ne-am ciocnit nu erau orientați spre servirea clienților. Nu erau orientați spre vînzarea produsului. Nu erau orientați spre a reprezenta brandul. Ei erau ghidați doar de frica față de șeful lor. Această frică se manifestă prin nevoia de a crea fațade care să impresioneze. Imagini false. Imagini care să spună „aici totul e bine”. Imagini care să spună „noi cu toții muncim atît de mult pentru cauza noastră și oriunde mergi, vezi asta”. Imagini care sunt proiecția unei realități menite să-l facă pe șef să se simtă bine.

Printre altele, oricine din comunitatea donatorilor internaționali sau din domeniul dezvoltării internaționale probabil înțelege exact la ce mă refer.  

Și orice cititor perspicace va observa asta în povestea chipsurilor nacho de mai sus. 

...și orice iubitor de istorie va recunoaște un Sat Potemkinian. Mă abat…

Bine, vreau să fie clar. Eu nu atac etica sau cultura muncii din Moldova. Defel. Eu am 25 de angajați și ei toți muncesc cu multă sîrguință și istețime. Eu atac managementul moldovenesc. Managementul absent. Managerii care răspund la măguleală și cred că dacă dețin un titlu, ei pot munci mai puțin decît oricine altcineva. Aici aceasta este o normalitate în multe feluri (vezi You Have Two Cows...). Aici managementul este, în general, detașat de scopul primar al procesului decizional în afaceri - Profitul.

Partea 4: Toate industriile sunt slabe- rezultă Oportunitățile

Există cîțiva furnizori pe care îi consider minunați. Oameni buni, dar și mai important, afaceri bune. Ei mă prețuiesc ca și client, iar eu prețuiesc relația pe care o am cu ei. Ei sunt respectuoși, niciodată nu întîrzie și niciodată nu promit lucruri pe care nu le pot livra. Unii dintre acești furnizori cer mai mult decît concurenții lor. Eu cumpăr de la ei pentru că știu că concurenții livrează produse atunci cînd vor, cu ambivalență. Acești băieți livrează ce promit, cu modestie. Ca să dau cîteva exemple...

Litra Brewery (Chișinău) – bere artizanală bună livrată cu zîmbet. Să colaborezi cu un business mic înseamnă să afli despre produsele noi chiar din gura berarilor, cu tot entuziasmul care trebuie să însoțească o bere nouă.

Beermaster Brewery (Bălți) - Beermaster este mai curînd un producător industrial decît artizanal, dar are niște beri foarte bune. Ei sfidează hegemonia brandului Chișinău și o fac avînd un produs bun, fiind mîndri de el și avînd multă grijă de consumatorii lor. 

Elvis Brewery (Puhoi) – Nu, nu acel Elvis. Denumirea este, de fapt, un acronim care vine de la numele copiilor primului berar, și chiar dacă e puțin derutantă, reflectă perfect spiritul de familie al acestei afaceri. Stas, actualul manager și berar, aduce niște băuturi îndrăznețe și experimentale în mica sa berărie rurală și mereu le livrează cu un zîmbet contagios și gesturi prietenoase. 

Leonard Caffe (furnizor de cafea) - Vlad Talambuță este cel mai muncitor bărbat din domeniu. El vinde cafea, arendează mașini de cafea la oficii și restaurante și este extrem de pasionat de afacerea sa. Înainte de deschidere, Vlad și Matt au petrecut o după-amiază încercînd diferite amestecuri personalizate de boabe, pînă au izbutit să creeze amestecul Smokehouse cu gust tradițional de cafea americană. Într-o zi Vlad a fost lovit de o mașină, dar chiar și așa a ajuns la Smokehouse pentru a rezolva o întrebare de business și a lua un espresso (serios).

Fruitbox – fructe și legume proaspete livrate la ușa ta cu personalitate. Serghei întruchipează eficiența serviciului de livrare a fructelor și legumelor proaspete. El are o mustață perfect aranjată și conduce un microbuz VW (care s-a defectat lîngă restaurant cel puțin o dată). În fiecare zi el ne aduce o selecție de fructe și legume proaspete și niciodată nu ne dezamăgește. Am dat peste el și în cele mai arbitrare locuri din oraș, întrucît este mereu în căutare de clienți diverși – vrei fructul dragonului? Serghei e omul tău. Ce zici de o rădăcinoasă rară din Amazonia? Dacă poate fi găsită sau adusă în Moldova, el o va face.

Dulce Plai – miere pentru o cauză bună. Dulce plai este o întreprindere socială din Ungheni care produce miere de cea mai bună calitate. Ei își prețuiesc clienții și orice conversație cu echipa lor te face să te simți un consumator apreciat și important. Acum ei au și un website pentru comenzi online, dar chiar poți conta pe orice membru al echipei pentru o livrare în orice punct al Chișinăului.

 

De ce vorbesc despre acești furnizori? Pentru a accentua puterea micului business. Toate aceste afaceri sunt mici. Ele sunt orientate spre consumator și știu că a avea un produs bun nu este suficient. O cafea, o bere sau o ceapă bună nu mă fac să vorbesc despre aceste companii cu zîmbetul pe față. Dar relația pe care o am cu ei și tratamentul, serviciul pe care îl primesc. Aceasta este o comunitate de business. Acesta este un ecosistem antreprenorial.

În Moldova nu prea există așa ceva. Oportunitatea elogiată în titlul acestui articol ar trebui să fie clară. Ar putea exista cu mult, mult mai multe afaceri de genul acesta. Toți jucătorii mari pot fi înlocuiți, iar consumatorii ca mine ar fi ÎNCÎNTAȚI să-i înlocuiască. Eu aș fi ÎNCÎNTAT să găsesc un nou furnizor de carne, produse uscate etc etc.

Nu sunt sigur că vei vedea ceva optimist în cele expuse, dar sper sincer că da. Eu cred în oportunitățile din Moldova și cred că dacă avem un ecosistem puternic de business mic, putem prospera cu toții. Așadar, de ce să nu te alături?

 

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Posted by on in Stories From The Field

So at long last I'm back. It's been a while and frankly I've probably missed the rather cathardic outlet of this blog more than I knew. For the last 4 months or so I've been pretty much totally focused on the business and this has yielded two rather significant obstacles to anyone who seeks to keep an account such as this website. Firstly, I've been extremely busy. Running a restaurant in it's first year is not only about all of your hours being taken up by work but also living the the constant knowledge that you never accomplish more than 20% of your work in a given day and that tomorrow will add more and more. There is a certain guilt that accompanies this, once known, that drives you to progressively eliminate your hobbies (obviously not good for mental health). The second obstacle to my continued updates to this site is a little more cynical. Frankly, we've begun to get numb to things. Circumstances that used to invoke outrage in me began to invoke only sputtering laughter and then nothing. I took a nice vacation and I'm back in laughter mode which is where I intend to stay. The outrage is still there but hidden beneath a veil of abysmally low expectations that is a staple of doing business in Moldova. 

So on that dismal note I will launch into a topic that I think is going to paint a picture of doing business here (and as such exhibits an amount of frustration) but with a focus on how things could be. Specifically how much opportunity there is here for anyone who wants to work hard and try. When I originally began to draft this entry a few months ago I titled it "Working with suppliers (or: Coca Cola we expected better of you)." Hilariously (in retrospect) I held off because I didn't want to call Coke out by name. I have since lost that inhibition (and you shall see why).   

 

 

b2ap3_thumbnail_batmanNoFs.gifsays it all... 

 

Without further ado, here are a few reasons that Moldova is full of opportunities for anyone who wants to snatch them...

 

Part 1: Most "Businesses" refuse to do "Business"

Alternatly this section could be titled....

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the practice of making one's living by engaging in commerce

                                             - Definition of Business from Google

 

This simple formula does not work very well in Moldova. I won't tire you all with a lot of analysis and I'll just launch into a few examples - draw your own conclusions. 

Story 1: "The Case of the Picnic Tables"

This is an old story but simple and illustrative. About 3 weeks before we first held a soft opening event (so mid May 2015) we went out to Yardsale Moldova (cool monthly-ish event bringing together artisans, cafes, artists and more in a county fair-in-a-city setting). Smokehouse made a bit of a debut there and sold our BBQ under our name for the first time. 

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those paying special attention will note the Virginia flag proudly displayed ;)

Two days before this event we went on a purchasing spree to equip the food tent. One of our main needs were small standing tables so that customers could buy some food and have somewhere to enjoy it with their friends. A store in Atrium mall had just the tables we needed for 500 lei and we decided to buy them. Matt and Vlad went to but them and this was the conversation. 

Vlad: Hello, we would like to buy 2 of these tables.

Clerk: Nope, we can't sell those today. 

Vlad: Why not? We were in here yesterday and you convinced us to buy them then!

Clerk: but now it is broken. 

Vlad: No it isn't?! and even if it was I still want to buy it!

Clerk: I'm sorry, but I can't sell this to you. Have a nice day. 

(editor's note... the "have a nice day" was added by me) 

So what happened? Vlad calls me and lets me know that we have no tables suddenly and I build 2 small round-top tables out of scrap wood. Total cost 50 lei ($2.50) + 5 hours. We used the tables and got through the day and comically enough they are still in the restaurant now. 

 

Result: we wanted to spend 1000 lei on tables and spent zero. Also we never went back to that store (they have since closed)

 

Story 2: "On Kitchen Equipment"

At this point Matt (who built out the kitchen) could write a book on this silliness. I'll keep this to a short anecdote. 
 
Dina Cociuc and MGM are two companies that basically hold a a monopoly on the commercial kitchen equipment market in Moldova. The main reason for this is that they can negotiate the minefield of customs and import regulations (read "corruption") to bring you items in from Europe. We desired to buy an oven as one of our first kitchen purchases. Here's how it went...
 
Matt: "hello, could you please tell me how much the oven number such-and-such on your website costs?” 
DINA: “let us send you an expert to talk about your needs.” 
Matt: “why? I just need a price for the oven” 
DINA: “can we come over this afternoon to talk?” 
Matt: "uuuuh, I guess? I mean I just want the oven"
DINE: "We are on our way!"
 
Then they show up to talk things over… 3 weeks later unannounced (we called many times in between and then bought an oven from someone else). When they arrived it was with 5 people - 3 salespeople, 1 director and 1 “Michelin 5 star chef.” They started bustling about making a list of TONS of kitchen equipment they wanted to sell us (much of which had been ordered already from other sources) and only pricing it as 1 large bundle. The chef was adamant that we had no right to ask for specific pieces of equipment because HE was an important chef and would tell me what I wanted. In fact, when we explained that much of what he was talking about including in our "bundle kitchen" was not relevant to our business at all he became indignant and informed us that we had no right to tell *him* what we needed because he was a *chef*. Eventually we threw them the fuck out of the restaurant. 

 

Result: we hacked together a kitchen from other small suppliers and bought almost nothing from Dina Cociuc - which was more than we wanted to. 

 

Story 3: "The Nacho Chips Problem"

We buy 30+ kg of nacho chips every week. This is a lot of money for someone who sells nacho chips. If you find such a person call me. 

 

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seriously... I will buy all the chips

The problem is that selling chips to us is "hard" and no one seems to want to do it. Originally we cleaned out Metro every few days until they just stopped carrying chips entirely. One employee even told me (in exasperation) that they stopped putting them on the shelves because I buy them all. When they finished we moved to the more expensive № 1 Supermarket where, after cleaning out every one of their 5 locations in the city every 2 days for 3 weeks they also started giving me the same response. My response? "Then tell me who I can talk to so that I can buy them directly or have them set aside." Metro obliged and harmony in chip deliveries was maintained for 3 months... until they stopped carrying them entirely. № 1 is still playing what must be the most elaborate game of phone tag in the history of rejecting money with us. If they are to be believed they must have had a full staff turnover every 2 days... for the last 3 months. 

Result: My customers are frequently frustrated with me for not having chips. I am left with money unspent. Clerks are blissfully happy not to see me brining that money to them. 

 

Conclusion from these stories? Most companies we deal with leave money on the table EVERY DAY. 

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sometimes we just don't have enough hands... 

 

Part 2: Customer Service Doesn't Exist

Customers can be difficult. They have lots of their own ideas about your product and very very often have complaints. I've heard them all - from ideas about the music we should play to fundamental misunderstandings of the product ("I came here for American BBQ and I you have is Pulled Pork!! I'm SOOO MAD!!") to legitimate and embarrassing cases where me or my team falls short. The role of a restaurant owner in any of these cases is to apologize and try harder in the future. I understand this and so does my team. Comically though the people we get the most vitriol and anger from aren't customers with high expectations but suppliers with a bone to pick. We are yelled at more times in any given month from our suppliers (aka the people who take my money and call me their "client") than all the customer problems we've had since opening. 

The best example of this is our meat supplier. I won't name them explicitly but anyone in the city can figure it out. Our first 3 months with them were a nightmare... and it continues to date. We would order ribs and they would deliver them cut down the middle (aka the bone cut in the middle / a rack of ribs 1 inch or so wide). They regularly delivered the pork shoulder (Boston Butt) chopped into little pieces. One time, they didn't deliver (one time - ha!) and when we called to see why they were late we were informed that the driver was on vacation for 2 weeks so we wouldn't be getting any deliveries. 

 

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I love Joe vs. The Volcano incidentally... great film

 

We sent 50% of our meat back for about 2 months. Now we weren't just being passive aggressive or yelling at them on the phone. We went to their butcher shop and instructed them - twice - on how to carve meat. No avail. Ultimately we were informed that the sales manager really wanted to help us but the guys in the butchery department found our requirement of consistency "difficult."

Another good example is one of our good suppliers - a tortilla maker. They are a small business and deliver for us a few times a week. Their product is good and they are responsive to our needs. I like them. Then I talked to our head chef and she says that every time she orders from them the woman is rude and yells at her. She tries to bully us into buying more. Every. Single. Order. 

Is that not insane?

 

Part 3: Incentives are Wrong

Did I mention Coke before? I think I did...

Let me clarify one thing before I go into this story. I love Coca Cola. Not just the product but the brand and the company. I went to school in Atlanta Georgia and have pictures of how the view out my dorm window freshmen year was dominated by the World Headquarters of Coke. We had the only Pizza Hut in America that served Coke instead of Pepsi. In Atlanta Coke is held in enough esteem that one could wonder if there might be a special book in the bible dedicated solely to this syropy sweet American invention. In case it is unclear I want to stress that this I did not hold any preconceived prejudice against Coke before trying to buy their product. 

So how does that go? buying Coke as a restaurant in Chisinau? The first call was not promising...

Vlad (calling the coke supplier number): "hello, my name is Vlad and I have this cool new restaurant called Smokehouse Opening soon. I wanna buy Coke and serve it there so that people will be happy!" 

Coke Rep 1: "where are you located?"

Vlad: "In the center on Stefan Cel Mare"

Coke Rep 1: "not my district - call Coke Rep 2 # (hangs up)"

Vlad (calling the Coke Rep 2): "hello, my name is Vlad and I have this cool new restaurant called Smokehouse Opening soon. I wanna buy Coke and serve it there so that people will be happy!" 

Coke Rep 2: "I haven't worked for Coke for over 2 years (hangs up)"

Vlad (calling Coke Rep 1): "hey again - that was a wrong number you gave me"

Coke Rep 1: "Don't care (hangs up - never answered our calls again)"

 

I won't go through just how hard it was to find someone to answer the phone but suffice to say it involved reaching out to the American Chamber of Commerce and getting a number for their Moldovan corporate office. When we did get an answer, and finally get a contact person we hounded them for a week to get them to send us a contract so we could start paying them. When they did it was this:

b2ap3_thumbnail_coke.jpgyes... that is a poorly taken photo of a paper... they wanted us
to print this and sent it to them by currier stamped. 

No comment on that. The next hurdle for us was getting a fridge / cups / swag (coke light-up signs etc - remember I am a true-believer in this company and it's American status). Those calls are dead ends mostly but they promise us a fridge. Weeks come and go and finally it comes. We requested a small fridge to fit in our bar. They brought us...b2ap3_thumbnail_IMG_20150619_112717.jpg

sorry.. my photography skills suffer when I'm laughing too hard

Obviously this is meant for a grocery store. They were very unhappy with me when I told them to get it the hell out of my restaurant but we sure as hell didn't need an open face air conditioner sucking up all our electricity. 

 

What does any of this have to do with incentives you ask? Maybe they're just kinda dumb? (fact). Well here is the icing on the cake of this story. 

 

About 2 months ago I became aware of the fact that the Director General of Coca Cola Moldova would be coming to Smokehouse for a meeting. My initial instinct was to go have a talk with him about his company's abysmal customer service. I talked myself off of this cliff (after all he would be my customer for a change) until something hilarious happened. The day before his reserved meeting 3 directors of Moldova Coca Cola came in. I was not there and they brushed off my partner Vlad and started pointing around and deciding where to position things. Where would the branded fridge go? what about the light-up signs? Two in the house one on the building front. What about the branded glasses? delivery inbound. Vlad asked them if he could help them? They brushed him off, and treated him with immense disrespect. They were from Coke. Titan of Titans. Who was he? They clearly informed him that their president would be here the next day and they expected him to comply with their decorating scheme. He threw them out of the restaurant with prejudice. 

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this changes the game a bit

 

So when the President / General Manager of Coke Moldova came in I talked to him. I'm not sure if he had any idea what a shitty establishment he runs but I explained it to him. In detail. More than I have time for here.

Not sure if Karma is a thing but Coca Cola pulled out of Moldova a week later and under Ukrainian management things are better. 

Conclusions:

Ok David, what are you trying to say here? (other than that you have a personal a abiding anger with Coke). What I'm trying to point out is how this episode highlights an improper incentive structure in Moldovan business. The employees we dealt with from Coke were not driven to provide customer service. They were not driven to sell product. They were not driven to represent the brand. They were driven by a fear of their bosses. That fear manifests itself in a need to create facades that impress. Fake images. Images that say "everything is cool here." That say "we totally we are all working so hard for the cause that everywhere YOU go you see it." Images that are a projection of a fake reality meant to make the boss feel good. 

As a side note anyone in the international donor community or in international development here probably understands exactly what I'm saying. 

Any shrewd reader will also notice this in the story about nacho chips above. 

...aaaand any fan of history will recognize a Potemkin Village. I digress...

Ok, I want to make one thing clear here. I am not attacking Moldovan work ethic or work culture. At all. I have 25 employees and they work very hard and very smart. I'm attacking Moldovan management. Absent management. Managers that respond to flattery and believe that because they have a title they get to work less than anyone else. This is a norm here in many ways (see You Have Two Cows...). Management here, in general, is detached from the primary driver of business decision making. Profit. 

 

Part 4: All Industries are Weak - Hence, Opportunity

I have a few suppliers that are amazing. Good people but more importantly good businesses. They value me as a customer and I value the relationship with them. They are respectful, never late and they never promise things they can't deliver. Some of these suppliers charge more than their competition. I buy from them because I know that their competition delivers product when they feel like it with ambivalence. These guys deliver as promised with humility. To name a few names here...

Litra Brewery (Chisinau) - fine craft beer delivered with a smile. The small business touch means that you get to hear about new products right from the brewers mouth with all the excitement that ought to accompany a new beer.

Beermaster Brewery (Balti) - Beermaster makes production rather than craft beer but they have some great brews. They challenge the hegemony of the Chisinau-Vitanta brand and they do it by having a good product, being proud of it, and taking great care of their customers. 

Elvis Brewery (Puhoi) - No not that Elvis. The name is actually an acronym forged from the names of the first brewer's children and while it's a little confusing it perfectly embodies the family nature of this business. Stas, the current manager and brewer, is bringing some bold and experimental brews to his small rural brewery and is sure to deliver them with an infection smile and slap on the back. 

Leonard Caffe (coffee supplier) - Vlad Talambuta is the hardest working man in coffee. He sells coffee and rents machines to offices and restaurants and is deeply passionate about his business. Before we opened Vlad and Matt spend an afternoon testing out different custom blends of beans until we had the "Smokehouse Blend" custom made to taste like American style large cup coffee. One time Vlad got hit by a car and still staggered into Smokehouse to resolve a business question and get a shot of Espresso (seriously). 

Fruitbox - fresh fruits and veggies, delivered to your door with personality. Sergei embodies a fresh fruits and veggies delivery service. He has an immaculately pointed mustache and drives a VW Microbus (which has broken down at the restaurant on at least 1 occasion). Every day he brings us choice fresh fruits and veggies and never disappoints. I've also run into him in the most random places around the city as he seeks out various customer needs - want dragonfruit? Sergei is your man. What about some rate Amazonian root plant? If it can be found in, or brought to, Moldova he will do it. 

Dulce Plai - honey with a good cause. Dulce Plai is a Social Enterprise from Ungeni that makes artisanal honey at the highest caliber in a variety of styles. They value their clients and any conversation with their team makes you feel like a valued and important customer. Now they even have a website for ordering but you can rely on a team member to bring it to you anywhere in Chisinau. 

 

Why am I talking about these guys? To highlight the power of small business. All of these businesses are small. They are customer oriented and they know that having a good product isn't enough. Good coffee, or beer or onions don't get me to talk about these companies with a smile on my face. It's the relationship I have with them and the service I get. This is a business community. This is an entrepreneurial ecosystem. 

In Moldova there isn't much of this. The Opportunity I vaunted in the title of this post should be clear. There could be many many more businesses like this. The big players are all replaceable and consumers such as me would LOVE to replace them. I would LOVE to find a new supplier of meats, dry goods, etc etc etc. 

I'm not sure if you would construe any of this as optimistic but I honestly believe it is. I believe in the opportunity in Moldova and I believe that with a strong small business ecosystem we can all flourish together. So why not join us?

 

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One year in a reread of my original "Choosing a Bank" seems like quite a strange journey into a far more naive past. In the year since I wrote that we've talked a number of other times about our experiences banking in Moldovan and moving money here (loansmoving money and the general state of the banking sector / the theft of the century). 

 

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When looking for tie in here I punched "crook" into google images. This is first.
I like to imagine this man swooping into Moldova and stealing 1 Billion
Dollars leaving the country to destroy itself in finger pointing while he
rides off into the sunset. Oddly this is a more comforting
image than the truth...

 

Disclaimer: Can't stress this enough but take all of this with a grain of salt. Your experience may differ by your point of contact, size of company / account or even the tides. I can only tell you my impressions and you can take that as you will. As of now I would not consider banking with banks other than these three in Moldova (especially with the current crisis). That said, you may have a totally different experience. 

Bank International Affiliation Evaluation
 b2ap3_thumbnail_default-img_295.jpg Groupe Societe Generale (French Banking Giant)

Intro

When founding our company we chose Mobias Bank. This decision was largely fueled by their affiliation with Groupe Societe Generale - a large French Bank. This meant our money was insured by a larger international entity and therefore more secure than a domestic Moldovan bank (hopefully). This is the bank we have the most experience with so this is the most in depth critique by far... take that as you will. 

Pros

  • Our money is still there which says something
  • The service is generally polite 
  • Convenient locations and ATMs
  • No international scandals and a feeling of security because of their international affiliation

Cons

    • No Visa. Mobias Bank is exclusively Mastercard / Maestro. Want to accept visa cards at your restaurant (like 99% of the world's business)? Nope. (we created a contract with MAIB to process our cards - they then send the payments to Mobias in 3 days... after taking a fee)
FEES
    . So many fees. Wanna check your balance? Transfer money? change currencies? FEES. 
    • It's normal to negotiate the exchange rate on international currency changes with your bank here. For a company of our size they are not interested in this so they just charge us what they want - this is higher than the national bank rate but what can we do?
    • We have a business debit card. If we want a 2nd card it will cost 150 euro. If we lose this one it will cost 150 euro. 
  • They are dumb. As was discussed before we had some trouble moving money between out US and Moldovan banks but eventually figured it out... or so we though. We recently processed a loan between our companies - identical to previous ones - and they refused to process it. They froze our accounts "pending review by the national bank." We went in and asked "why?!" and they said "because you did the paperwork wrong." We replied "you approved and filed the paperwork we needed and this is our 2nd time doing it." They replied "not really our problem." 2 days lost trying to sort this out - not one person at Mobias wiling to help or accept any responsibility. Bottom line: if it isn't in writing with a stamp assume your teller is at best wrong or at worst lying to get rid of you. 
  • No Loans. Of the 7+ banks we talked to in Moldova Mobias was the only one that refused to let us talk to a loan officer. The other banks were less than helpful but at least we talked. Our Mobias rep refused to let us waste one of their officer's time. Quote. The other banks gave us terms and we were strangers. Mobias has tens of thousands of our dollars in their account and wouldn't give us the time of day.  
  • HORRIBLE online banking.
    • It requires a program that needs to be installed on your computer and tied uniquely to that computer for ever (aka if you want to access via another computer you need their tech team to create you another custom installation disk for 1 time use - takes min 2 weeks). 
    • It looks and feels as if it was made in the mid 90s
    • It has no exe file to the installation and requires you to manually install dll files in windows based on 2 instructional videos that accompany the film
    • ...did I mention it was really old?
 b2ap3_thumbnail_Pro-Credit-Bank-d-d-.jpg Procredit Group (headquarters in Germany) Intro

We essentially dismissed ProCredit a year ago because of their relatively small footprint in Moldova. Looking back I don't feel that this was a particularly well informed decision and that they warranted more consideration. The points below come from a mix of friends experience and information gotten from development / investment groups over the last year. 

Pros

  • ProCredit is designated as a small business investment bank in Moldova. In theory they should be looser with credit than the other banks here (and charge correspondingly higher interest). 
  • ProCredit was used by the US government for their banking in Ukraine just as MAIB is used in Moldova. This is a different branch of the bank but still represents a strong vote of confidence for me
  • ProCredit has avoided all the major scandals in Moldova and maintained their affiliations with international institutions
  • ProCredit has a great rep with business development agencies here and is their #1 recommendation when I mention the difficulty of getting credit, etc. I wish we had gone there just so I could tell them why we didn't take their offer

Cons

  • They are hesitant / unwilling to work with Americans at this time due to FATCA. Two friends of mine tried to open an account there for their Moldovan SRL and were rejected because of their unwillingness to go through the trouble of complying with America's comically stupid legal over-reaches (if you feel like reading equally comically stupid tirades against the law + occasional decent commentary check this link). Bottom line: if there's an American in your company forget it. 
  • I did not visit them looking for loans (one of the only banks) because a friend I trust strongly warned me against it because he believed them to be untrustworthy and guilty of forcing defaults to seize collateral. In retrospect I believe that to have been more of a personal prejudice than anything else but it's hard to say. Not really a con (possibly a missed opportunity for me) but worth noting. 
 b2ap3_thumbnail_logo_maib_pn_doc.png None - Domestic Moldovan Bank Intro

 

MAIB was our strong 2nd option for a bank here. The fact the Peace Corps and the US gov in general banks with them gives me a high degree of confidence. Furthermore, all of our dealing with them have been very professional and helpful. We passed because Moldova was being rocked by a domestic banking scandal at the time (Filat being ejected being of associations to possible money laundering at Banka de Economia).

Pros

  • Professional. We talked to 2 loan officers at MAIB and both were willing to work with us. One actually worked for a few days to put us together an offer. Furthermore, our interactions with them for card processing have been great. 
  • ATMs everywhere
  • Easy card processing - LOTS of businesses here process via them

Cons

  • Domestic bank - with ongoing scandals this is always concerning
  • Did I mention the bank scandals? MAIB hasn't been involved but.... why would anyone put money in a Moldovan domestic bank right now? right?

 

 

Conclusions:

If we had to do it again we would have gone with MAIB. We have grown to dislike Mobias over the past year and there isn't much of a way to shake that right now. The lack of VISA processing is frustrating and the online banking sucks but most of all it just feels that they do not want you as a customer. Our business account representative is very nice and helpful but is pretty clear where they are and aren't willing to work with us. We pay LOTs of fees and change money at a crap rate and can't see a loan officer even to say hi. This isn't how you treat a customer you want. Their schitzophrenia as to what we are and are not required to file with them for international loans is the icing on the cake. A major bank that can't give a clear answer about how to transfer money into their accounts isn't really worth your time are they?

I can't say if we're gonna change banks because that sounds like a TON of work and time. What I can say is that I'd like to try someone else. For all that negativity though Mobias is safe and, more or less, made account set up easy so for a new business they are at least an option. 

 

While I have you here...

Wanna see somethin' funny? Check this picture out:

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 ...that is a paper report of our sales for a month. This information exists in our POS system, in our accounting program and is summed up in government reports every month. Sound like enough bureaucracy? ha! nope. That stack of papers must be printed out and every. single. page. needs to be signed and stamped by the company administrator. Then we keep it for our "personal" records just in case the government ever asks for it. 

If anyone has a story on bureaucracy / time wasted that can beat printing, stamping and signing hundreds and hundreds of pages of useless reports just so they may be stored (for 3 years) in case someone from the government wants to come by please post in the comments. I'm *interested*

 

 

 

Closing Note: I know I'm not publishing according to my schedule in August. It was a long long month. I'm trying to play catchup here so I'll do my best to get a new post or 2 up soon - sorry for the delays!

 

 

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Posted by on in Stories From The Field
We Are Open / Year in Review

Note: for any of you in Moldova you likely realize that we have been open for just over a month (if you didn't know that come visit us!! smokehouse.md for directions).

Smokehouse opened for business on Monday June 29th 2015. As you might imagine the trials of a new business have completely consumed my time (and still do) which is why this is the first time I'm getting a chance to make an update. The reality is that this date was just 12 days away from the 1 year anniversary of signing the lease to our Smokehouse location. It feels like it's time for me to write a bit about our journey. 

 

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Start to finish feels like 2 different lives separated by a very long, strange
road. ...one that evidently never passed a place where Matt thought "hey, maybe I
should consider a change of wardrobe." I guess something needs to stay the same. 

 

If you've followed the blog in the last year you have some idea what an odd little adventure we've been on. Sadly I couldn't document every crazy story or experience and I feel like some good tales have been lost in the shuffle. With that said this seems to be a good time to start a bit of 'catch up.' In order to do that in a manageable way I'm going to try an commit myself to writing one blog update on the key topics listed below every week for the month of August.

The topics and a brief description are below but first I want to answer the question that most likely jumps to everyone's mind - would we do it again? We started out as idealists in many ways - determined to build a transparent, honest and (most importantly) strong business in a place many people said we couldn't. The reality, as you will see in the upcoming weekly updates, is far more sobering than any of us ever imagined. We all knew things would be hard but never quite imagined just how hard. We knew there would be corruption but we never guessed how deep it went. And we always knew that there was opportunity here but we never really knew just HOW MUCH there is. One year on I know I can say for the team that we would do it again in a heartbeat. We've run a tough race to get where we are but here is just the starting line - the real game is yet to come. 

 

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some days I wonder myself...

 

Now if you're looking for my recommendation as to whether you should also start a business here I can't give that straight. We're still too new and there are too many things that we don't fully understand to give that kind of advice to anyone. I firmly believe in the opportunity here... and in Moldova's ability to try and crush good things as quickly as it can find them. If you're brave and a little crazy I can say only that we'd welcome you at our bar and would be thrilled to talk over the process and connect you to any kind of resources we can to get you going. Moldova needs entrepreneurs and business people who are vocally working for a better environment here. Just as a rising tide floats all boats any entrance into a market this under-leveraged is nothing but good for everyone involved... if you're crazy enough to try.  

With no further ado - 

Topics for the Year In Review

1.) 5 Things You Didn't Know About Corruption in Moldova

A beginner's guide. This will be a crash course both in our experience with corruption in Moldova and an overview of how it works. As a hint I can say that things are likely both different and worse than you think. A question I get often is if people ask us for bribes frequently or try and shake us down. The answer is no (once in a year). The reality of corruption here is far more systemic. Stay tuned. 

2.) The Problem With Suppliers or Why Starting a Business in Moldova is a GREAT IDEA (no sarcasm)

Trying to use the equation "I have money, you have product, let's form a relationship" in Moldova is a failing proposition. Suppliers are (mostly) terrible as are wholesalers and most stores. We have some laugh and cry stories about how hard people have worked to avoid taking our money as well as some lessons about a developing economy like this one. Bottom line? Many businesses here are vulnerable to competition and society as a whole will celebrate you putting them out of their misery... if you have what it takes to get started. 

3.) Registering an SRL - New Perspectives

A post co-written with a guest contributor about the various different ways to organize an SRL and the flexibility that actually exists behind the "No" which the state registration office returns after any question. 

4.) Banking Part 2 or How and Industry Destroys Itself

Anyone familiar in passing with either customer service or good sense is unlikely to have much in common with Moldovan banks. Much of the blame for the system lies on the Moldovan government (and the American) but nonetheless things are pretty messed up. We'll have our updated recommendations for choosing a bank and trying to exist here as a company. 

 

 

With that commitment to an update schedule (something I'm only willing to do after sipping a Litra Pale Ale - deadlines remind me far too much of college) I will end this post. We have been here a year. It's had ups and downs and some upside-downs. But we are still here. We are open. And we are far from done this experiment. Stay tuned for many more stories to come. 

 

 

 

Tagged in: Business Open OSE
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Have you ever had one of those moments when someone says something that you have long known to be true but they way they say it makes the knowing it both stronger and clearer in an instant? This happens to me from time to time when a single turn of phrase can open up an idea more powerfully than an entire novel. This was the case recently when I was talking to a German friend with lots of experience in the Moldovan financial system who said the following. 

 

"in America or Germany the fiscal authorities are primarily concerned with uncovering fraud. In Moldova they don't look for fraud, they look for errors."

 

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minus the unibrow, this was me

 

For anyone who hasn't spent a lot of time dealing with this system day in and day out, or who has never dealt with a system like the US has let me explain a bit. In America we have what is called a "voluntary compliance" system for taxes. This means that you are expected to pay your taxes honestly and, by and large, to figure out what you owe yourself. The IRS (America's fisc for my Moldovan friends) is tasked with collecting this money and seeking out people who try to evade taxes and punishing them. Via audits, etc they seek out fraud and attempt to put tax evaders in jail. By and large they manage to do this and have managed to take down numerous major criminals and outlaws who previously avoided attempts by police, rivals and vampires to end their reign. 

 

b2ap3_thumbnail_capone-snipes.png

pictured: (left) Al Capon only hours before issuing the order
that instigated "Bloody Tuesday" which rid Chicago of Vampires.
(right) some asshole who thought he was too good to pay taxes.

 

The IRS is a much maligned organization (sometimes a too bit harshly) and rarely engenders any love from the American public. That said, what they do makes sense at some level. They look at your filings to assess if they represent a "best and good faith effort" to pay what you owe. They know that everyone makes mistakes and that the complexities of US tax code make it impossible for everyone to file a perfect return. In fact, while preparing a book supporting the Fair Tax Neil Bortz asked 7 US accounting firms and the IRS to prepare his tax return. None of the 8 returns were the same and all had mistakes. Knowing this, no one is expected to get it right 100% of the time and the IRS doesn't put you in jail for errors but just asks that you pay the difference when they are pointed out (plus penalties, etc). 

Moldova is not like this. As I mentioned in Accounting Part 1 Moldova has about 5000x more accounting overhead than a similar US company seeking to buy something as innocuous as a single onion. What I may have failed to mention in part 1 is that, as a business owner, you live in constant fear of making an error on one of the hundreds of documents you need to file in order to buy that onion because if you do you are fucked. You see they have the broad authority to come after you as dictated by a law that no one knows and fewer understand. In short, that onion will eventually see you facing the option of stringent legal consequences (unspecified and unknown by design) or paying a bribe. The complexity of the system, just like in America, means that there will be lots of mistakes. Unlike in America Moldovan government officials use that complexity as a tool to bend you over a barrel for bribes. The finding of errors lines their pockets and that is the focus of both the laws and the official implementing them. 

 

Enter the heist of the century. 

 

You know what happens when a system is geared towards extracting pennies in bribes from transactions as small as $2? Someone steals literally everything because NO ONE is watching. Am I being over dramatic here? you decide. In case you haven't been following news from Moldova someone stole about one billion dollars from three of the country's largest banks last November causing the government to inject emergency capital into the banks to cover the loss and stave off a banking system collapse. Here are a few links to get you caught up:

USA Today - CNN MoneyRFE/RL - RFE/RL (again) 

So what's a billion dollars? Well in Moldova it's 1/8 of the country's GDP... or it was before the heist. You see, much like Al-Qaeda post 9-11 the person who stole this cash realized that not only were they about to do something terrible and destabilizing but that this fact was awesome insider trading information. After the heist the Moldovan Lei collapsed and in that moment the person who stole the money in the first place made untold amounts of additional money by short selling the Lei on currency exchanges. When the dust settled from all of this 1 billion dollars was no longer 1/8 of the country's GDP - it was 1/5. That's right, they stole so much money that the value of money itself was altered. 

 b2ap3_thumbnail_whoa-300x223.jpg

that's like... a LOT of money

On face value this heist tied with the previous largest of all time by cash value. Considering that the other first place ranking is Qusay Hussein (yes, THAT Hussein) and that his "arrest" by the 101st airborn looked something like this:

b2ap3_thumbnail_Uday_qusay_house.jpg

You could say that this is pretty historic company for Moldova's mastermind to be in. It doesn't really do it justice though. Simply put, a billion dollars is more money that I will likely ever see. It's objectively a lot. But 1/8 of a country's economy? That's subjectively a SHITFUCKINGMOTHERLOADHOLYHELLHOWCOULDTHATEVERHAPPENIT'SFARFARTOOMUCHTOBEPOSSIBLE ton. Otherwise known as "oodles of money."

b2ap3_thumbnail_41-pA3cOLL.jpg

which is somewhat better to be in possession of than the pictured "oodles of heartburn"

 

 

For perspective, if someone stole 1/8 of the US GDP that would equal about 2 trillion dollars or, about 2x the amount the United States has spent on the Iraq and Afgan wars combined. Given that perspective the financial turbulance that Moldova faced is pretty understandable. What is not particurally understandable is how little people in Moldova seem to care. Granted, this theft took place exactly during a heated election and the weeks following it's revelation were largely a "hold onto your buts" kinda ride (many stores closed or prices literally changed between the time you picked an item up and when you got to the register). That said, far to many people have just shrugged and said "well we knew they were corrupt" (following the widespread belief that the culprits were the country's political leaders). This past weekend there was a rally in Chisinau about holding someone... literally anyone, accountable but much of the country just shrugged and went about life. 

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behold! the tapestry of apathy!

 

Moldova, I am saying this as a friend. As someone who has invested time, money, blood, sweat and not a few tears here. As an owner of a Moldovan business and a legal long term resident. This is why we can't have nice things. It's not about the fact that the laws penalize businesses while failing to punish thieving oligarcs. It's not about the fact that it takes 6 government issued documents to buy a head of lettuce. It's not about the system being rigged to steal, via bribery, 'dollars' from someone making just over a hundred dollars a month while letting millionaires steal billions. It's not even about how silly and archaic laws make everyone's life just a bit harder as they try and make an honest living. It's about what you are doing about it. Someone stole 1 billion dollars from Moldova because the system is broken and no one is trying to fix it. No one wants to go into the tough job of looking over every single fiscal law and asking "do we need this?" and "does this create a pretext for bribe collection?" and "are we seeking to punish criminals or punish those who misunderstand it?" Well someone needs to. 

Since I first wrote this post and today there has been a major protest in Chisinau over this theft (I would like to make a witty joke about how our OSE editorial process is long and nuanced but in reality we're just slow). Keep it up team. In a second update Moldova.org explained that somewhere between 10000 and 40000 people went to the protest (counting is hard) and while that's amazing more is needed. Many people are likely to say "nothing will ever change" but that's just because...

 

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In honor of the 4th I will end on this note. Leia tells Admiral Tarkin that "The more you tighten your grip, the more star systems will slip through your fingers." The Moldovan Government could learn from this. 6 documents for an onion that are checked, rechecked and ultimately lost (with their loss blamed on you, the business owner) is just the kind of tight grip that let's billions of dollars slip away into the ether with no one noticing. Put differently, in the immortal words of 38 Special, 

 

"Hold on loosely

But don't let go

If you cling too tightly to her 

You're gonna lose control, yeah, yeah, yeah"

 

 

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Hiring someone in Moldova is so hilariously convoluted and difficult that we have actually had to hire a professional HR manager as an employee of our company simply in order to file the paperwork to employee the company's founders (technically we also have an accountant and 1 employee but this would literally be just as hard hiring only ourselves). This woman has been working on site now for 2+ weeks and we are still not through the daily stacks of paperwork. Keep in mind we are 6 people (including the HR manager who is now also tasked with figuring out how to hire herself). This is all the subject of a future post I'll be writing but as a primer, I wanted to introduce you all to the world of Moldovan employment bureaucracy in the context of getting a job in the food service industry. 

While our team's collective western food service expertise is encompassed in Matt's 2 weeks at Taco Bell in high school, I have enough friends who have waited tables to know a few things. Namely, it's a hard job, but it's not necessarily a hard job to get. You walk into a restaurant, ask about openings, apply, and get in dependent on whether or not they see you as a fit. 

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no experience? that's fine! no, no we don't want to hear about any "record" - just sign on the line!


I'm not trying to oversimplify things but basically if you get the job you show up to work, they train you and you start. Hopefully by the end of the cycle payroll has you entered in and you get your check. Done and done. This is not the process in Moldova. If you want a job in food service (waiter, bartender, cook, whatever) in Moldova you need to know that...

#1 It's not the restaurant's job to train you, but the government's (but also the restaurant's?)

In order to be hired in food service in Moldova you need a health department issued little blue passport from the health department (no not THAT blue passport). This certifies a number of things from your personal hygiene to your basic knowledge on health topics. If some percentage of you are saying "that sounds reasonable" read on.

The point here is that the government has a declared responsibility for these things which they make you re-up on ever 2 years. As owners of our restaurant who plan to stand behind our own bar and serve customers legally we went through this process with the masses of teenage waiters and elderly babushka cooks. All the way through Vlad kept asking "so if my employee is found to have [name the disease of the day] and gets someone sick you're going to be legally responsible?" to which he received the reply of "no." This is also true if they cross contaminate food or outright poison someone. This basically means that there is a huge bureaucracy (spanning at least 3 offices in Chisinau) that certifies and trains people in a way that legally must be duplicated by their employers as a means to ensure that their staff are in compliance and because, at the end of the day, it's on the company's head. Needless to say there is a lot of needlessness here. If you are an employee entering the process expect a LOT of redundancy. 

#2 The government certification process was hilariously long and difficult

Go to this office and get a stamp certifying that you are you. They will print you a document with your picture and name and you will take that to another office who will stamp it. Then go to your doctor who will certify your health and stamp it. Then go to a radiologist who will give you a full torso x-ray (needed every year - sounds safe) who will also stamp it. Then go back to the first office and get them to stamp that you were at the 2nd office. 

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Getting the point? (source)

If you're lucky your company will have someone doing some of the legwork or at least telling you where to go (in our case we had Vlad who put a LOT of time in). In most cases that isn't the case though because cafes don't want to even consider people without the stamps. That means this is on you - 16 year old Moldovan teenager getting your first job. Good luck!! Consider it an "introduction to bureaucracy 101" class or a practical lesson in "how little Moldova cares about your time or theirs." In another practical lesson as to their views on privacy brace yourself because...

 

#3 There will be numerous indignities along the way

"bend over and spread your cheeks" - always fun words to hear in a government office. If you want to wait tables here you will hear them because Moldova wants to swab your ass. Twice 

 

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provided without comment

 

Dependent on how "lucky" you are that isn't the end of it either. At one office we were split into 2 groups, Vlad and Matt in one and myself and our employee in the other. They were assigned to room 7 and we were assigned to room 6 (supposed to be identical). They got their blood taken. We got our blood taken AND an STD test. For anyone who has never experienced this google it at your peril. Women get a pap smear. 

What does any of this have to do with serving tables or pouring beer at a bar? who knows. Certainly the people performing the test don't. Short of their fear that I will do unmentionable things to the food I can't imagine the need for tests of this type. Furthermore, the whole thing is endlessly silly because if I get certified an immediately contract something terrible and wind up getting someone sick the Moldovan government isn't going to so much as respond to comment. It seems like the most likely case is that they just wanna see your junk. 

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Moldova is like that one weird kid in every school who swears he isn't looking but everyone knows totally is...

#4 There will be a 7 hour health class with no point whatsoever

This past thursday I got to attend my state mandated health certification class. It was 7 hours long and I didn't quite know what to expect except that Vlad and Matt had attended the day before and said it was the most boring, senseless, soulless waste of time in the history of the world. In a sense I guess I did know what I was expecting. 

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well said... but presupposes that time wasting is a problem. We need to start a little more basic that that here (source)

Anyhow, it was that and more. Let's start by noting that this is done in the Soviet education style. There are no books, materials, visual aids, discussions or interruptions. A teacher will regurgitate from memory, at an incredible speed, the lesson that they have given 1000x before, verbatim, and you must hastily write notes. In our case the first hour and a half was a listing of all the possible fines you, your employer, your company or your suppliers might incur during the course of your work along with the sums which vary according to many factors. Basically it was a list that was read for an hour and a half. This was completely without context and was, essentially, a list of the punishments that will be visited on you for messing up various parts of that later lesson if you fail to learn them then they are taught to you.

The second part was a knowledgeable, if irrelevant, run down on "health." Basically it was a 2 year high school health curriculum crammed into 3.5 hours. I could comment on how silly it was that we all had to sit there and listen to the fact that smoking causes cancer, etc as a prelude to being allowed to work in a restaurant but honestly I haven't the heart. Most of these people had literally never heard this before and had LOTS of questions. As my class was Russian and therefore much older this was quite amazing to see (explaining this is a talk about demographics here but people who only speak Russian generally belong to the older generation). This would be a good time to say "great work" or "I appreciate your service" to any of the Peace Corps Volunteers or their Partner Teachers who work tirelessly, and in the case of the partners without official appreciation (or often pay) to teach Health in Moldovan schools. A subject that is neither taught nor appreciated at any official level. From me - big thanks to you all. I hope there was at least one person in the Romanian language room who could tell the others how and why to wash their hands because they had been exposed to that information before by a PCV (because it's unlikely otherwise literally ever in rural MD).

 

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shameless plug well deserved

Ok, enough of that. The final part of the class was a 1.5 hour session on actual kitchen and restaurant rules. Sadly these were less "helpful" and more "crazy." How many cutting boards must you have? Multiples of 9. yup, you heard that right. 9 is the minimum and they all have a specific purpose. If you want more of one you need another set so it must always be divisible by 9. Sinks? lots (post coming soon on kitchens). Want to clean with chlorine? we can tell you how to dilute it properly. Actually, we'll do better! we will read you a dilution table for 20 min so you can copy it down. 

In case you didn't gather as much this entire class could have been accomplished by 15 cents worth of handout paper. 

#5 At last half of you fail the test the first time

The test for this 7 hour class is conducted the following day. It is a verbal quiz on topics covered during the terrible lecture. If you fail you can come back the next day up to 3 times in a row. Sadly, you will not be admitted to the test unless you can prove you attended the whole class. 

Ok, so ~1/2 of everyone fails the test - must be hard right? Not really. I'm not saying it's easy, especially if you weren't exposed to health topics much in school, but it isn't hard. Honestly, the failure rate staggered us until we started looking at things from a slightly different context. Education is different here. As a product of American high school I know that when the teacher says "this is important but won't be on the test" it's a cue to sleep.

 

 

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don't even pretend that I'm alone here

 

Furthermore, while dozing if I hear the words "make sure to copy this down" or "pay attention to this point" or "THIS WILL ABSOLUTELY BE ON THE TEST," I subconsciously jolt awake and start writing (strangely this mental training carried over to Russian perfectly). Criticize me as you will but this got me through college and does for most Americans. Call it tactics

This is not well understood in Moldova. As I said before that classroom was full of people hastily scribbling notes for 7 hours. That means when the teacher said "this will not be on the test" people kept writing with just the ferocity of the key points section. This yielded a MASSIVE pack of notes for most of the students to hastily crunch in the hallway vs a few short bulleted lists my colleague and I put together on the drive over to the test. Just as the teacher said, the key points section was quizzed - the multi page chlorine dilution table that was dutifully read to us was not. 

This all gets to a much more interesting talk about education and educational systems that we don't have time for today. Suffice to say I'll end on the advice, to a fictional audience member who read this post and thinks "oh yeah - I'll go sign myself up for a little blue medical passport tomorrow!" and comes to the test - study smart, not hard. 

 

 

Tagged in: Bureaucracy Cafe
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Meet the Good Guys - the 3 Best Businesses We've Encountered in Moldova

So here's a new type of entry for us to have on OSE. Today I'd like to share with you companies that we've encountered in the course of doing business here that have stood out as great examples of how to conduct a quality business in Moldova. It's important for me to note that this list is only compiled from our experiences here so a) we have no doubt missed lots of great companies (post them in the comments below with why they're awesome and we'll try and include it in a future post!) and b) we may have judged a company as awesome from our limited experience where someone else had a different experience there. In either case take to the comments to let us know what you think! Here are the picks. They aren't ordered so don't get too hung up on the numbers except as an organizational convenience :)

Without further ado our list...

 

#1 Metro

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What are they all about? 

Everything. Metro is Moldova's sole big box store and resembles something like a Costco/Sam's Club from the US. It's a German store so it stands to reason that it's clean and efficient and generally well stocked. Metro carries everything from patio furniture to fresh fish and manages pretty well to remain relevant both as a restaurant / business supply location and a one stop shop for individuals looking for quality stuff in a western atmosphere. 

Where can they be found?

2 in Chisinau and 1 in Balti mean that Metro is never that far away. In Chisinau there's one on the north road just south of Stauceni and one on the way to the airport. 

Why are they awesome?

Other than having lots of useful stuff Metro is awesome for 2 distinct business reasons. 

1) Factura Fiscals

Remember our lengthy conversation about accounting in Moldova and all the legwork involved in buying even something as cheap as $2? The paperwork, conversations with accountants, stamps and stamps and stamps and stamps? Well at Metro there is none of that. Someone at Metro (presumably German) looked at the system and said, "wait a minute! they require 2 receipts, semi-official and super-official for any purchase but only if you're a company!? this is terrible! we want people to shop here with ease. Let's just print every single person a factura fiscal from the register and that way our customer doesn't have to worry." So that's what they did - and it's wonderful. The time everyone saves is incredible. Simply put, it makes good business sense and thank god the Germans rarely miss opportunities like that. 

2) Delivery

Metro delivers for restaurants. This is not only convenient it is legally necessary if you want to follow the letter of the law. You see it's not legal for me to shop there in my own car and drive it to my restaurant because I do not have a legally approved climate controlled stainless steel interior delivery vehicle as required by Moldovan law. More on this at a later date but suffice to say Metro has you covered. God bless the Germans. 

b2ap3_thumbnail_metro.jpg

in the end though, "Moldova will out" (pictured: aisle close for forklift
which is working in the background)

b2ap3_thumbnail_logo.png#2 Supraten

 

What are they all about? 

Construction - home remodel and contractor supply.

Where can they be found?

Online here and at г. Кишинёв, ул. Петрикань, 84

Why are they awesome?

Superten is Moldova's Home Depot or Lowes - they have it all. Need drywall, anchors, a pneumatic hammer and a hanging kitchen table light that looks like a birds-nest? this is your one stop shop. Mostly super practical but catering to all the funny tastes amongst us, Superten is stocked. Furthermore their staff actually know what they're talking about and want to help. Now they're not exactly Home Depot or Lowes here but by Moldovan terms it's great. For businesses they make things easy (though not as much as Metro) by having an on site office with no fewer than 12 accountants on staff to print you factura fiscals. Their second building has another such office with 5 more accountants in it in case you're shopping there for lighting or bathroom fixtures. Not too shabby. 

What's their closest competition? (aka who do they outshine?)

Basically the bazaar which is a nonstarter. The bazaar is great if you really need that one backward threaded bolt to fit your soviet made drill from 1978 AND have all day to spend AND are ok being sold on having some guy rewind your drill's motor to increase it's efficiency which will only take him 5 hours and cost you 87 cents. Superten is your in-and-out shop. Though I am gonna try this place soon...

 #3 Клякса "Blot" (picture at top of page - poor quality because I snapped it with my crappy phone)

What are they all about? 

Paint. Particularly Tikkurila paint from Finland. 

Where can they be found?

sos Muncesti 165 Chisinau for the main store or products at Supraten

Why are they awesome?

Two big reasons here. Firstly, these guys get paint. If you have a question they will have an answer and if they don't know they will tell you that and find someone who does. Anyone reading this who has lived in Moldova knows that this isn't uncommon so much as totally and utterly unheard of (caring enough to answer a customer question that is). I was referred to their store because they have a rep who spends all day in Supraten helping people pick out their paints. Remember how I mentioned that Supraten had good customer service? their paint reps look grumpy and unknowledgeable next to "Blot's" rep. She patiently worked with my designer friend and I to pick our paint and walked us through a range of options from the Tikkurila that her company sold there to Superten's many other brands. At the end of the day her product was better and sold itself and I had no idea until I was back there looking for another paint product that she actually wasn't just an especially helpful Supraten employee. It was 4 of 4 stars for sales - built trust, recommended product, made sale and followed up next time I was there. This brings me to the second reason this company is awesome. They have amazing customer service. 

In case you didn't get it from the fact that they a) had a representative in a hardware store and b) she REALLY knew what she was talking about and wanted to make sales, here's a bit more evidence. Eventually I went to their main store (address above) because they had larger buckets of paint they could mix. When I met the staff there they worked with me to get the product I wanted and as it mixed handed me a survey to ask how I found their store, what I wanted to buy and what they didn't have and could carry to make me a happier customer. I was flabbergasted. More so when they gave me a 5% discount card applicable on my first purchase and in perpetuity. The second time I was there the employees remembered me by name and happily greeted me. One time I forgot to take a register receipt (I had the factura but Moldova needs both) and their accountant called me up to remind me to return so I didn't get into trouble down the line. This company *gets it.* Their product is premium and costs a premium price but it's superior and they sell it marvelously. 5 stars. If every other company in Moldova had customer service this good they would be competing with Germany.

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sadly Moldova's early lead in the horse drawn cart market has
thus far failed to turn into long term cross-sector gains

 

 

 So those are the top 3 companies we've worked with so far. Clearly, 2 of them are remodel oriented so I expect to add entries like this as we go. Do you have any great Moldovan businesses that you have worked with and want to highlight? mention them in the comments and we can include them in a future posting! a rising tide floats all boats as they say and the more good Moldovan businesses the better for all of us. 

 

For anyone who enjoys this blog AND remembers this post about how hard it is to get a loan in Moldova AND thought at that time, "wow I really wish I could give these guys like a few bucks and get a t-shirt or something cool back" then I have a solution for you!! We are running an Indiegogo to help cover the startup costs of our business! You can click here to take a look at our page. Watch our pathetic attempt at a promotional video and support us in return for some cool perks!

If none of that applies to you just click on the following picture. There's candy there: 

b2ap3_thumbnail_SH_Logo.jpg

 

 

 

 

 

 

 

 

Tagged in: Good Guys
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Posted by on in Stories From The Field
You have two cows...

We've all heard the classic economics analogy jokes about cows my favorites are these:

Communism: You have two cows. You give them to the government, and the government then gives you some milk.

Fascism: You have two cows. You give them to the government, and the government then sells you some milk.

Capitalism: You have two cows. You sell one and buy a bull.

Nazism: You have two cows. The government takes both and shoots you.

 

To add to this list though is one I heard for Moldova when I first got here over 2 years ago. It goes something like...

Moldova: You have two cows. The government steals one and you give the other to your illiterate cousin to neglect. You buy a sport-coat and call yourself a "businessman."

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in case that wasn't bleak enough enjoy this picture (source)

 

The reason we're talking about cows, as some people with experience in Moldova might have guessed, is because today we're going to talk a bit about management and employees in Moldova. Keep in mind that as an entrepreneur starting out in my first venture my personal experience with managing a team is very limited. This article is more about observations from living and working in Moldova that my mind tied together based on reactions people have to how we are running our company here. That will get clearer in time so bear with me. 

 

I have a few anecdotes to describe how this works here.

At an NGO

Firstly, there was an NGO I worked with where the director go sick and was out for a few months. She would come in once at the end of each month and, in a frenzy, try and keep the ship from sinking. We had a full time accountant, a full time lawyer and a full time social worker but without the director the bills didn't get paid, legal complaints against beneficiaries didn't move forward and the social worker's case files didn't get forwarded to the appropriate state bodies. Mostly everyone watched wedding videos that winter. Don't get me wrong here, this isn't just about employees being lazy or needing constant oversight. The other problem is that without the Director wielding their all powerful stamp none of those functions could be accomplished. Either way you can see what it does to staff initiative. 

 

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"Initiative is Punished" but sending pictures of cats to my boss
during the work day makes her like me more
(picture source is a hilarious article btw)

 

What About Businesses? 

From our cow analogy though you can see that the main perception of Moldovan businessmen is that they are simply absent. There is a business a block away from the location of my future restaurant in Chisinau. It's a pretzel and donut bakery that, like every other one in the city, somehow manages to make something that looks relatively like a pretzel but tastes like a sweet role (not in a positive way). Anyhow, a few weeks ago I walked in their for the first time. Outside there was a fold out street sign identifying the place but the door, down a flight of stairs from the street, gave me pause as it's sign said "pawnshop." I decided to go in anyhow and discovered that while there was a small pawnshop there the little bakery was open and much larger than I had thought. It had a number of tables and lots and lots of goods on display (no customers however). I ordered 3 pretzels. The woman working there told me "no we don't have any." I looked around in confusion since they not only had a display area with 3 baskets of pretzels behind glass but they had 2 more baskets on the counter top in the "right out of the oven" fresh baked goods area. I asked, "what do you mean you don't have any?! look at all these pretzels!" She responded "they are all very old and cannot be eaten, we have a few donuts if you want some." I bought 2 jelly donuts of which 1 had any jelly in it.

Another similar story was at a kebab stand by the university in Balti that I would sometimes go to. At 2pm I went in and asked for a kebab. They told me no because they have no lavash (like tortilla bread) and they will have more tomorrow. This was required for every dish they sold. I was confused because they had the option of walking 3 blocks to the supermarket, restocking and continuing work. Instead, they cooked all the fillings for the kebabs that they couldn't sell and sat there turning down every single customer until the place closed at 6pm.

Anyone living in Moldova knows countless versions of these. Bars that close at 10 pm friday night and throw out paying customers against their marked hours since no management was present. Loan officers playing around on facebook instead of trying to figure out how to help a customer. Kitchen suppliers refusing to quote a price for an oven and instead insisting on giving a package quote with lots of stuff we'll never need or buy (update on suppliers and buying kitchen goods coming soon) etc etc etc. 

 

What's the point of these stories? well basically these employees had zero interest in selling me anything. So what is the interest? Why even come to work?!

 

Basically the goal structure is messed up. Management cares much more about appearances and authority than money so employees care much more about staying out from underfoot than sales. From the loan officers who could be giving loans if they wanted but instead surf facebook to the restaurant employees who make sure they have a clean "prepared looking" workspace even if it can't make any sales, no one is working to make their companies money. Admittedly there are a whole lot of cultural leftovers from the Soviet Union here (more than possible to address in this post) but one key attitude to understanding all of this is the following:

In America a good team leader is someone who brings together a diverse set of skill-sets to solve problems more efficiently than the sum of it's parts. In Moldova a good team leader is one that retains absolute control over their teams doings and is necessarily smarter at their specialty than any member of the team in order to maintain that control. In America an outstanding employee reflects well on their manager. In Moldova an outstanding employee is a threat to the manager. In America employees are expected to go above and beyond to get "the job" done. In Moldova all worries about "the job" or goals is reserved for the manager and initiative on behalf of employees is punished. 

 

So how do people see us? Batshit crazy Americans

What inspired me to write this post is the insane looks I get constantly as I go to work, pick up a hammer and remodel my restaurant. One contractor coming in asked if I was the electrician and how I came to have such a job in Moldova as an American. I told him I was the owner of the business and he laughed and said, seriously, how did an American Electrician come to be here. I reiterated my ownership of the business and he went back to work thinking that Americans have a very odd sense of humor (absolutely not believing me). This came up before when we were appealing our visa denial and the bureaucrats we dealt with could not fathom why we wanted to work in our own business. They kept saying "give the money to your partner who will hire people and you will go back to America." There is a strong attitude here that businesspeople do not involve themselves in business (except perhaps to stamp things and yell at people). For sure this isn't true of all business here (I promise a hopeful upcoming post about good businesses here). It is a fact that this is how MANY people here understand the notion of business. You have a cow and it (magically) makes you money. It's also an excuse to employ an underserving relative or friend.

That's how business "works" in Moldova. 

 

 

For anyone who enjoys this blog AND remembers this post about how hard it is to get a loan in Moldova AND thought at that time, "wow I really wish I could give these guys like a few bucks and get a t-shirt or something cool back" then I have a solution for you!! We are running an Indiegogo to help cover the startup costs of our business! You can click here to take a look at our page. Watch our pathetic attempt at a promotional video and support us in return for some cool perks!

If none of that applies to you just click on the following picture. There's candy there: 

b2ap3_thumbnail_SH_Logo.jpg

 

 

 

 

 

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Posted by on in Stories From The Field
Accounting Part 1

This last week I started to write my first serious post dedicated to corruption in Moldova. While I've touched on the subject a bit in my short post about The DMV or the epic saga that was our visa approval process but nothing dedicated to corruption. As you might have noticed from the title of this post this is not such a post. I realized that even starting that conversation was so daunting without certain background elements explained that it was totally unmanageable in scope. I'll try again soon but in the meantime I decided it was time to share a glimpse into accounting in Moldova - by far the most batshit insane and corrupt part of doing business here bar none.

Let me preface this article by saying that it is just a first effort to scratch the surface of this madness. By no means do I have even a rudimentary grasp on the workings of the accounting and fiscal systems in Moldova and attempts I've made to understand them have come up very short. As a team we've decided that someone needs to start taking night classes on accounting here just to get some idea of what's going on (and we have a full time accountant hired now). So with that said here's a bit about what I do know right now. Pardon me if I made bad assumptions as to intentions or root causes behind these things. After dealing with this for a day it is easy to assume that the system was entirely crafted by unhinged lunatics on a bender and to forget that there are real people trying to address real problems in the government here. That said, as you will see, they are failing spectacularly. 

 

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like this but with more stamps

 

Without further ado let's start with... 

Facturas for Everything

What is a"factura" ask? Great question. If you melded a standard store receipt with the gravitas of a birth certificate you have a factura. Basically it's a REALLY REALLY important receipt that you need to get for literally everything you buy as a company. They look like this...

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To properly explain this system let me walk you through a trip I made to the hardware store for materials for our cafe's remodel. The hardware store in town is called "Supraten" and is basically a Moldovan version of Home Depot (a comparison that carries with it high praise from me as a former Home Depot employee and lifelong fan). After picking out the things I need I go to the checkout lane and buy them with the company debit card receiving in return a receipt. I must then present this receipt to the door checker man who stamps it after which I proceed to my car to dump the stuff in the trunk. This is where the fun begins. I then grab my Smokehouse SRL company stamp from the car and return to the store. In a side room marked "Accounting" I enter to find myself face to face with no fewer than 10 accountants and a handful of hapless schmoes about to go through the same process as me. I then wait to see an accountant and present them with my receipt. The accountant then pulls up my company's information on the computer (or asks for a financial information form from me if it's my first time) and begins making facturas. They pull out three sheets of impeccable security paper and individually barcode scan them and load them into the printer. The factura is then printed on them and she signs and stamps sheets 1-3. I take sheet #1 for my company and sheet #3 for my accountant to file with the government's fiscal office so they have a record of this transaction. Sheet #2 stays with the store so I need to sign and stamp it for the company and return it to them. When I get back to my company I give sheets #1 and #3 to our accountant who needs to enter them into the state mandated accounting system called 1C line by line. She then files sheet #3 with the appropriate financial office. Sheet #1 has my actual store receipt (the register printout) stapled to it. If this is lost the entire process is deemed invalid and you will be fined. Let me also say that this run through is far and away an "ideal" version of this situation. Supraten has 10+ accountants on staff from 9-5 weekdays. If you buy on a weekend or outside of those hours you need to come back another time for the factura. Worse still, if you are buying from a smaller company they often only have an accountant that comes in one day a week so you need to run back on that day and get your factura. Worse still not any employee at my company can do this - only an Administrator or someone with other legal empowerment can. That means the person in charge of the company has to spend a hell of a lot of time running around to collect all this stuff. Oh and by the way here's a picture of that factura from before up close...

b2ap3_thumbnail_factura2.jpg

you will note that the amount is stated as 39 MDL which, at time of writing, is $2

 

If you think all of that is confusing wait until you find out that there's...

 

Lots and Lots of Stuff You Aren't Allowed to Buy

 

Have you ever worked at an office and only made it through the afternoon because of that sweet injection of caffeine received from a nice cup of coffee in the employee break room? Yeah, in Moldova that's illegal. At least as a business expense - companies can't buy refreshments for people without some kind of higher justification. Why not? Who knows - you just can't. We wanted to serve BBQ to friends who were volunteering to paint our location as a nice "thank you" but our accountant said that this is impossible. We thought - there must be some mistake and dug a bit deeper only to find that there IS a way but it needs to be dubbed an official taste testing which needs to be justified by sign-in sheets and various paperwork. This is all because that program I mentioned before - 1C, the state mandated software that creates financial reporting - needs everything to be placed in a "bucket" or category to be justified and the available ones differ by the industry you're approved to work in (I do not have confirmation for differing by industry - please chime-in in the comments if you can shed some light). Coffee for employees has no such bucket and so is categorically prohibited. 

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it's amazing what simple acts can make you a criminal in Moldova (source)

 

As you can start to imagine this all leads to...

The Result is Widespread Corruption by Necessity

Most people reading this from in Moldova are probably thinking "wait a minute - my office has coffee in it! what gives?!" The answer as I understand it falls into one of two categories. The first is simple working around the rules. In the office I worked in as a Peace Corps Volunteer the staff basically all chipped in to buy some necessities. Occasionally I would bring in a box of tea as my contribution. Combined with the fact that parties in Moldova are catered by the person being celebrated (aka on your birthday you bring food for everyone) this worked out to address all of the problems of our small office. A friend of mine from the states with an IT startup here solves the problem by buying coffee and tea out of his own pocket. This is pretty much the normal approach for evading facturas and all the silliness that goes with the accounting system here - use cash. What about big companies though? How does this work if you have hundreds or even thousands of employees?

Obviously I can't speak for these companies with certainty but I know that often the answer is "creative accounting."

 

b2ap3_thumbnail_genewildertzeromostelheproducers.jpg

sadly there are fewer musical interludes than similar
past efforts at bringing creativity to accounting...

 

Many companies are structured, legally or illegally, to never make profits which yields a lump sum of side cash which can be used without all of the maddening restrictions mentioned above. I can't speak to the methods used for this but I know that at least one of the larger chain restaurants here has been around for many years and never turned any profit. I also know that a large beverage distributor here is able to provide cash kickbacks to places that exclusively sell their products. These examples at least involve some level of honest business with dishonest components. Not so for the coffee suppliers we talked to - 2 out of 3 refused to even speak to us when they found out we wanted to buy their product as a company instead of with under the table cash. Their response to all those facturas is basically...

 

e65

 

None of that even scratches the surface though. Landlords want money in cash, consultants refuse to work for company cash (more on that in an upcoming post about how messed up HR is here), and if the business is small enough it literally will not sell to another business because of the trouble. All in all the best way to finance a business here is with a suitcase full of cash. In theory this would get you into lots of trouble because buying a microwave out of your pocket and putting it in you company's break room is illegal but that's all solvable thanks to...

 

Indescribable Ambiguity 

The appropriate answer to any question about accounting here is "no one knows" fullstop. We have asked the same question (about transferring money from the states) to 2 accountants, a lawyer, our bank and finally an employee of the national bank only to get as many answers as people. Literally no one has any idea what is going on. I can't buy coffee for the break room? This realization leads to asking your accountant endless stupid questions because, since there is no apparent framework for the answers you receive, normal people can't possibly know what to do. It's utterly paralyzing. The fines associated with messing up are catastrophic and unsurvivable and literally no one has any idea how to avoid them. The answer of course harkens back to a saying I've mentioned before that "nothing is allowed but everything is possible." You can figure it out somehow if you look hard enough and waste enough time. When we're talking about buying coffee though it's much easier to say "screw it" and buy it out of pocket. When we're talking about being fined because you bought an out of pocket microwave it's easier to pass them a bill and watch it go away. Such is Moldova. 

We have had so much trouble with this that Matt and I started bombarding a friend stateside who agreed to help guide us through our LLC's accounting with stupid questions about what we are and aren't allowed to do. Her response was always a well thought out description of our tax liabilities in different circumstances. This led us to the realization that we were being morons. The US government literally doesn't care at all what we do with OUR money as long as we pay taxes and don't do anything criminal. Fullstop. 

 

b2ap3_thumbnail_merica-eagle-freedom.png

 

This leads to the realization that in Moldova...

 

The Root of the Problem is Focus

Remember what I said at the front about my ability to really come up with a root analysis because I don't have enough info? Well, remember later on when talked about ambiguity? Basically we may never have full answers as to what is going on with this messed up system. That said, with the info available to me here it goes.

The Moldovan Government has legislated as if it's prime directive is preventing people from stealing from themselves.

What does this mean? Well basically all of the above complications are meant to document, end to end, the cashflow process for any and all company activities. To me it seems like the government is really concerned that I will buy eggs and bread with the company and make myself breakfast. This leads to the system of super official receipts, 1C data entry, filing expenditure reports constantly to the fiscal office, etc. In essence all companies in Moldova are being audited with great scrutiny every single day in the hopes of finding that they are using company money for personal expenses. Predictably, at least to anyone not writing the laws here, this has forced an economic reaction that forces business owners to take the exact actions the laws are designed to prevent at a level that makes it so widespread that any attempts to clamp down on the criminality would require jailing the entire country. Anything that widespread is a cheap bribe so forcing compliance is a nonstarter. Anyone can see that this regulation is not only failing but was focused in the wrong direction to begin with. The government setting out to regulate companies in order to prevent owners from stealing from themselves or their shareholders essentially injects the government into a conversation to which it was not invited. If I'm an investor and suspect wrongdoing I will take action. If I am an owner and an employee steals from me I will take action. What exactly does the government have to do with this? Why do they care?

The answers should be "nothing at all" and "they shouldn't." In a view that is slightly simplistic but nonetheless informative the US government works in the opposite way to this. They are only involved in business regulation when a) they are brought in by a 3rd party (business dispute going to the courts) or b) they have a vital interest there. In the US most financial regulations that effect small business day to day involve encouraging a payment of taxes and discouraging tax evasion. At the end of the day the US government wants to make it's money and knows it needs to get out of your way so you can make yours. Because of their failure to understand this the Moldovan Government is creating a system that not only encourages but necessitates criminality while retarding their own tax collection potential and the economy as a whole. 

 

Think I'm crazy or off base? Many Moldovan friends do. Add your thoughts to theirs in the comments below :)

 

 

 

 

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In life there are the problems that you see coming a mile off and those that just pop up out of no where. As we'll see from this short post culture has a whole lot to do with what you do and don't see coming. This is a condensed version of the tale of our final search and closing on a location for Smokehouse

 

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provided without comment

 

So first I will say that this is all in the context of negotiating and eventurally signing a lease for the future location of Smokehouse. The location we chose one that we looked at back in September and were approaching the point of making an offer when we got slapped with massive visa problems that staggered our entire planning effort. Following the resolution of those problems we became focused on a new location that ultimately fell through for a variety of financial issues (upcoming post about Moldovan banks and credit here). We only returned to our final location, at the corner of Stefan Cel Mare and Vasile Alecsandri after taking fresh stock of our situation in over the holidays (and finding that the place was still open putting us in a good negotiating position). 

 

The Problem You Expect (in Moldova)

The landlord didn't want a written contract. Insane as that sounds things here work on handshakes and smiles along with vague assurances that he will totally never screw us over. Such is Moldova's Soviet legacy. As far as I can tell it comes from the dual reasons that a) contracts are ridiculously hard to implement (in paperwork terms and in number of stamps) with weak enforcement mechanisms and b) in the not so recent past anything the state can "see" it could take so it's much better to work between individuals. Obviously this did not fly with us and given that we were Americans (and therefore quite peculiar) our landlord acquiesced. We had to draft the contract which was more or less opposite of the norm but after a few marathon rounds of negotiation, clarification and correcting the occasional typo all was well. We were ready to sign and get this man his money.

 

The Problem You Least Expect (unless you're Vlad, our Moldovan partner, in which case you're shocked the Americans never saw it coming)

Hmmm... that section title was a little on the long side. Got the point across though. [say that with a graphic?] 

This one requires a little background. Of the many real estate agencies in Chisinau the standout winner in terms of listings and responsiveness is Proimobil. Proimobil's (apparent) business model is ideal for renter because for you their services are free. They list properties on their website and you can call up the responsible agent who sets a meeting with the landlord and mediates things. In general they are primarily interested in closing the deal and we found them to be our advocate more often than not. From the landlord they require first month's rent and in return provide a whole lot more exposure than the ubiquitous dingy red sign that says "rent" in Romanian or Russian. In theory everyone wins but naturally there's incentive for the landlord to find some way not to pay them.

This is where our story get's a little complicated. You see we found this location independent of Proimobil AND before they signed a contract with our landlord in November. Furthermore, that contract I mentioned? They never actually signed it. 

 

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it is constant struggle for me not to use this in every single post I write

 

As a side note, Vlad knew there were problems coming from this direction as soon as he realized that since the last time we talked with this building they listed with Proimobil. He warned more than once that there would be problems here. Matt and I responded incredulously "sure there will be but they aren't our problems." How silly we were. 

Predictably our landlord informed Proimobil that he didn't feel he owed them anything (not untrue). They responded back that he did. He countered with "how about 1/2 first month's rent?" My feeling here is that the appropriate counter is "this is where you (proimobil) learn a tough life lesson about the importance of contracts because I'm just not paying you." Either way my main feeling was "not my problem." That's when the calls started. Both sides maneuvering to see where we stood on the issue. "Not our problem" and "we have no dog in this fight" and "we literally could not give fewer fucks" seemed to bounce off of people left and right. Finally our landlord decided that we could pay proimobil out of our initial rent payment to him. It turns out he didn't mind paying but he steadfastly refused to sign a contract. We allowed ourselves (foolishly) to be lured in here by agreeing to transfer the money on his behalf. Our lawyer felt the need to tell him though that as this would be outlined in our rental contract and audit would lead to his door not ours with questions about why that money went there. This led all parties to helpfully suggest that WE conclude a contract with Proimobil and pay them. 

 

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also provided without comment

 

Suffice to say "you really don't want to sign a contract requiring you to pay for a service you engaged but did not use while that the same time having no problem paying them the money so long as it isn't inked so you want me to sign this (evidently very frightening) contract AND pay them" was a nonstarter (as well as an epic run on sentence). 

I'm not writing this today angry or frustrated. Proimobil was nothing but good to us and we have a really good relationship with our landlord. I'm pointing out what an interesting cultural mess this was. In America  "that really doesn't sound like my problem" or, the all time favorite of my 8th grade teacher "poor planning on your part does not constitute and emergency on mine" is a totally valid response to this situation. In Moldova, it's up to everyone to figure something out. Who deserves to be the the mess (*cough* Proimobil) doesn't matter. What negatives might come out in the long run (*cough* us signing a contract for services that we didn't use and actually that the company doesn't even provide) is unimportant. The only important thing is that the "team" get out of this mess alive. This idea of community is one of the weirdest parts about Moldova to me. In American this was a meeting of 3 entities with very divergent interests seeking common ground (in a rental contract). In Moldova it's 3 frenemies caught in a self imposed clusterfuck and adamantly avoiding what, to an American, seem the easiest ways out in favor of ever more complicated (and unnecessary) compromises.

Oh Moldova what great frenemies we are...


If you haven't already taken a look at the above link jump over to our company website to hear more about the future location for Smokehouse!!!

feel free to like us on facebook as well and follow our (doubtless interesting) remodel process there or on instagram

 

 

 

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Posted by on in Stories From The Field
Bank Loans in Moldova

quick note: don't forget our site has a comments function. With something as complex as banking and loans / many of the topics we cover there is a very good chance that you know more about some element of it than we do. Share your thoughts!! Comments are at the bottom. 

Introduction - funding a startup

So here we have an interesting post detailing the last month and a half we've spent trying to get to a "happy spot" regarding startup capital. There are many ways to fund a startup (as this nice article explains) but for something brick and mortar like a BBQ restaurant many options aren't as available as they would be if, say we were starting a scaleable tech company. With that reality the most common way for people in the US to start a small business is by "bootstrapping" it with their own capital, either in the form of cash, a 2nd mortgage, personal credit or help from friends and family as loans or in exchange for equity. In our case we are a very "bootstrapped" company. We have our own assets on the table and have approached lots of friends and family for investment. All told this just isn't enough so we started looking to other options. This is when we began to investigate the possibility of a Moldovan bank loan.  

 

What type of loan we need

Firstly, let me say that we are terrible loan candidates. The only tangible asset any of us has in Moldova that could be considered collateral is my 1986  Жигули (Lada - her name is Nadia) worth around $500 (less if you ask my partner Vlad who harbors a passionate hatred of my, admittedly intermittently-reliable, car). This combined with none of us having any side income and Moldova not having any interest in my US credit score puts us in a pickle. As such we are looking for an unsecured small business startup loan. In the US this would likely be a hard sell even with SBA backed loans.

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What do you mean I don't seem serious? (source)

 

Please please please don't flash back to that fact when reading the following as the sole reason for our experience. It is certainly a factor but as I will explain it is only part of the story. The other part is that loans in Moldova are in general very difficult to get and subject to some pretty outrageous terms. Firstly though... 

Why even look for loans in Moldova? 2 partners are Americans and we have a Virginia LLC, why no look in America?

Actually we are an even harder sell in the states. As any discerning reader probably already can guess the idea of having an LLC set up simply to manage a foreign entity doesn't generate love from a loan officer. No assets stateside means it's very hard for them to grasp our value and almost impossible for them to seize company assets in the case of trouble. Furthermore, Matt and I have lived overseas generating what we might call "almost zero" income as Peace Corps Volunteers for the last 2 years. This isn't to say that we didn't talk to our bank it's just to say that we never really approached this as a very realistic option (that's not to say that a business credit card in the states isn't a reasonable option for startups - credit cards are much easier). 

So why are Moldovan banks a realistic option? 

Good question. Our thinking was like this: 1) We had half the capital we were looking for in cash - proving we were serious. 2) we weren't looking for a huge sum (there are limits to transparency but let's say it was under $50k). Furthermore, most Moldovans just starting out 1) don't have any credit (complicated as to why but basically personal finance is quite a bit different here from the states) 2) there are numerous programs backed by the Moldovan Government, the EU and others to help startups and 3) we have personally worked with many people looking for startup loans with a whole lot less of their own skin in the game than we did who managed to figure something out. 4) while we don't have collateral personally or with company assets the company will be buying a lot of things that could be put into the loan collateral (like kitchen equipment).

So with that we began by... 

Visiting banks

Firstly, let me say that our strategy was "visit 3 banks and if we get more or less the same (negative) response take it as representative and move on." We didn't want to waste too much time on something that was literally just a waste of time. What we found though, while being a major waste of time, was so confusing and nuanced that we got sucked further and further into trying to figure it out. 

Ok, so we first went to Mobias which is our company's bank. After talking to our account executive there it became clear that we didn't have any options there. The immediate focus of the conversation was on what collateral we could put up to secure the loan and when we said "none" / "a 28 year old Soviet car" (joke) she said that they had no unsecured loan options at all. We asked to see a loan officer and she said "it's a waste of time so no." Ok then, big thanks.

For brevity's sake I won't tell the next ~6 bank visits as a narrative and focus on the highlights:

  • Unsecured loans were mostly not an option at all for a company. There was one lending institutions (MicroInvest) that had a program that could offer us $10k USD (150k MDL) but the utter indifference of their loan officer bordering on hostility made it clear he wasn't interested in our application at all. 
  • Unsecured personal loans were available to our Moldovan partner Vlad ranging from 50k MDL ($3.19k USD) to 150k MDL (~$10k USD)
  • To get a business loan most banks required a minimum collateral amount ranging from 116% of the loan value to 150% of the loan value (150% being more normal). 
    • We were told that banks sometimes try and force a quick default as it is more profitable to take your stuff than have you pay for the loan
  • Collateral 
    • land is valued in collateral at 100% of it's market value
    • cash can be used as collateral in a CD (more on that below)
    • cars and equipment (like kitchen equipment) is valued around 40%
  • Loans can be given in USD or MDL
    • Loans in USD are given at an interest rate between 4-8%
    • Loans in MDL are given at a rate between 15-21% (I assume largely due to the inflation and instability risk in the currency)
  • All loans are subject to a number of fees and commissions (more in the example below). We were told by friends who are local businessmen that in practice the lending rate between USD and MDL balances out due to commissions banks leverage on USD loans. This makes MDL loans more desirable. 
  • Loans can be secured with insurance on "financial risk" 
    • knowing little about banking this is how I assume banks in the US work. If you are a riskier loan then your rate is higher in part because they are insuring a part of your loan. 
    • In Moldova this works "differently" (see below)

 

Ok, with that technical bit aside let me share a few general impressions about how this whole process worked. 

General Impression 1: Blank stares

This was our general reaction on walking into a bank and asking for the loan officer. Most employees at a given branch didn't know who / where this person was. Furthermore, when we first approached said person (interrupting their facebooking) we received a second round of blank stares. To say the least we got the impression that they didn't get a lot of business (could be because of the whopping 150% collateral mentioned above). 

General Impression 2: Most were unwilling or unable to do their jobs

The reason we visited so many banks is that we began to realized that we were/are eligible for *something* but that getting them to give us the time of day much less try and figure out how to give a loan was like pulling teeth. In general we got "we need collateral" and then a slammed door. When we gave them more information about our business or any numbers they remained uninterested. This would be ok if there was some inescapable reality that only people with 150% collateral (aka who really don't need a loan at all) are the ones eligible. The reality though is that this is not true because...

Government non-government and international programs

  • LOTS of these
  • mostly focused on guaranteeing loans for the banks via putting up collateral
  • for most of them you apply to the bank and the bank applies for the guarantees under these programs as part of evaluating you

The banks had literally no idea about any of these and never brought them up. When we brought them up the loan officers gave us a tired look and, after clicking through a few pages on their computer found that they literally had pages and pages of information about it. To this realization they continued to look bored and asked us which one we wanted to apply for. We said "we have no idea - all the information is on your computer on your company's intranet." This resulted in shrugs. We tried calling the loan programs themselves (e.g. ODIMM) and they were quite clear that only the bank deals with them. The only conclusion here is that the people at the banks (plural - this was ALL of them) just had no interest in doing their jobs. 

 

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(source)

 

After trying our best to research and call people who had no interest in talking to us because we weren't a bank we discovered that we weren't generally eligible to these programs anyhow because we are not involved in their target industries or locations (more on that below). Lots's of time wasted because the loan officer was unable to clarify literally anything. 

A second example of this is insurance for loans. One bank mentioned that maybe we could insure the loan as part of the collateral. The thinking would be that we somehow come up with 50% of the needed collateral and then insure the rest. This seemed interesting to us so we asked how it was done. He said, he has no idea and that we need to talk to an insurance company. After visiting 4 and getting answers ranging from "the only person in our entire company who knows anything about that is on vacation for a while" to "never heard of that type of insurance before" to companies that are not licensed for that type of insurance we finally found one that did know. We waited patiently in the lobby of their building to be buzzed up because their office was closed. Instead they send down a confused manager to explain to us that we don't go to them to insure our loan - the bank does. 

 

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General Impression 3: No one cares

Following closely with General Impression 2 we never found anyone who actually cared. Not only were they uninterested in answering our questions or finding a way to give us a loan but many of them treated us like we were interrupting their facebooking / youtube watching time. Not every meeting was hostile or passive aggressive but literally no one was willing to work to try and figure something out. 

I'm told that all the major banks in Moldova are having a really hard time and aren't being very profitable. Maybe that has something to do with turning people away based on one simple criteria vs. looking at what options are available to them. Anyone who's ever been to a US bank for any reason knows that they never miss an opportunity to try and sell you on something - another credit card, their latest awards opportunity, etc etc. These dudes in Moldova just couldn't care less. 

 

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this is what I assume a normal business planning meeting looks
like here. Off topic, very passionate and hilarious to outsiders

 

General Impression 4: How do you get real treatment? have a connection

So how do you get anything done? Same way as always here - know someone. We reached out to friends and contacts and found someone who knew a branch manager at Moldova Agroindbank. This got us a real sit down and a way to crunch through what opportunities might exist for us. 

 

The best deal available

Let me preface this by saying that the deal following is so terrible that playing it out with the bank representative was largely an exercise in curiosity. 

 

 assumptions (these are not our numbers but are a representative set to discuss terms - again limits to transparency):
need: $60k
have: $31k (51% of what's needed)
access to 11k in personal loans (an assumption tossed out by the bank guy to make numbers start to work)
 
= $18k still needed
 
Conditions:
* 100% collateral 
* put $31k in CD for 5 yrs @ 5% annual (USD) (aka all our cash)
* Odimm agrees to guarantee this loan. (e.g. we put up $31k CD collateral meaning we need additional $18. Odimm covers 50% of this meaning we need $9k more)
* contract for rent signed > length of the loan (it must also be signed and fully official BEFORE the loan application is accepted)
* all purchases to be put into collateral are to be prepared and signed before submitting all documents. This equipment will be included at 62%-65% of value in collateral (this means that before knowing if we get the loan we would need to prepare a MASSIVE amount of documentation stipulating all of the equipment we would purchase). 
* cosigner for remaining amount of loan with sufficient land or house assets to cover remaining (aka if we're still short after the equipment as collateral)
 
Terms:
* get $60k loan (aka taking a loan to cover the whole cost because we put the 1/2 of the cash we had in a CD)
* interest will be 14.25% annual
* application fees will amount to ~1000 lei
* 1% fee on final early payback (charged on amounts over the stated monthly rate)
 
Commissions
1) initial commission of 2% on entire credit amount ($60k)
2) 1% annual commission on remaining sum
3) 1% commission on amount removed at each withdraw from the credit line
 
Odimm:
has a ~2.5% commission on the remaining sum yearly starting after the first year
 
 

if anyone reading is a glutton for pain and / or really really bored feel free to try and calculate what the actual APR is after all of those commissions. 

 

Lessons Learned

Here are some general lessons learned from the process. These are by no means comprehensive and some touch off some topics that might best be handled separately but here goes... (remember - leave comments below if you have anything to add :)

Collateral is king

In Moldova most families have land and a house / apartment. This is due to land redistribution when the country became independent and the fact that everyone just assumed ownership of where ever they were living when the Soviet Union fell. When they do not generally have is debt. This means that people are much more likely to have collateral than credit. This explains the focus on collateral. If you are not of the generation that reaped those benefits (and lived through the economic disaster of the 90s that came with it) then the banking system doesn't seem to know what to do with you. 

Weak Laws

The AgroindBank loan officer who helped us figure out that terrible deal above explained to us that one major barrier in lending here is that the laws that would assist the bank in getting their money back if you default or just take the money and run are weak. I can't independently verify this but would love to hear from someone who knows more about it (comments are below!)

Grants / seed capital

Most Moldovans don't look to loans as a first stop in loans. They look for grants (free money!). This and likely numerous other factors means that banks aren't really in the business of giving loans to a startup company. Some loan officers said that this entire process would be totally different if we had cashflow and an operating business which I believe (though they still implied collateral is king). 

Target sectors and special treatment outside of Chisinau

The Moldovan Government and international organizations target certain areas and industries for growth which leads to our ineligibility from many programs. In particular rural development and agribusiness are big target areas. The ODIMM program mentioned in the above example is the only one that we are technically eligible for and they state a clear preference for agribusiness and things out of Chisinau. We were joking that if we wanted to become an apple exporter or startup a restaurant in a small village where no one will eat out we would be contenders. 

To me this is all stupid. I understand that developing the agriculture sector is wise and will put the country on track for it's European ambitions. That said, what about the rest of the economy? Much is said about urbanization of Moldova (usually negative) but when compared to developed countries a much larger percentage of Moldovans still live in villages - where there are few, if any jobs. Developing entrepreneurial business shouldn't fear social change by trying only to bolster the status quo. If a developed economy means people go to cities for opportunity that can't be fought by only supporting startup businesses outside of the cities. It only retards the growth of startups. 

Ok, I have that off my chest. Feel free to contest it if you like. I feel strongly that more planning = weaker economy. Imagine if SBA loans in the US were only for certain sectors as ODIMM programs are here? It assumes you know what will drive your economy in the future and excludes possibilities like a high-tech boom and more. 

 

Conclusion

I never want to do any of that again.  

 

 

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The DMV or "to do without money..."

This short post is a bit of a departure in that it does not directly pertain to business in Moldova. That said it a) discusses a proces that any expat needs to go through to stay here (aka - registering with the DMV if you have a car) and b) exemplifies a prevelant mindset here reguarding bribes or "to do something with money" 

So... anyone who has ever gone to the DMV (the "Department of Motor Vehicals" for non-drivers) in the US is aware of what a "fun" process this is. I can't speak to any other countries in the world but I suspect that this is a universally hated institution. I once called the DMV helpline in Virginia and after 30 minutes on hold was told that "there was a higher than normal call volume" and I should call back on Wendsday. It was Thursday. So with the background of having once been put on hold for a week in the US here is the tale of the Moldovan DMV - МРЭО. 

 

After finally achieving my visa to live and work in Moldova it was time to re-register my car. I drive a 1986 Lada Жигули named Надя (Nadia - "hope" in Russian). Nadia and I have been on many adventures together but have had to take a prolonged break while waiting for my visa as her tags expired. So it was with spring in my step that I grabbed the tags off the car and took a marshrutka (mini-bus) out to where google told me the DMV was. It was my figuring that I would have to pay some fees and do some paperwork but that this would be fairly straight forward. In Virginia you do this by mail. Sadly (but predictably) in Moldova things are more complicated. I was turned away from the DMV because they needed to see my car as well. I asked them "am I allowed to drive here with expired plates?" This was met by a blank stare which I took to mean "yes sir we will personally vouch for you in the event of trouble and go so far as to expound upon your great personal character should the police have doubts." I drove in the next day. 

 

At this point we began a major "checking over" (translated from Russian - "to control") every aspect of the car. First it started with whether or not I had my mechanical inspection (I did), it progressed to whether or not the engine was the one stated on my previous registration (it was) and then it moved to whether all the car's VIN numbers checked out. I'll add that in this process the many was quite friendly and amused/bemused that an American would own such a car as this. When he went to check the VIN number though he became much more confrontational. He asked why I had painted the body VIN number over (I didn't own the car when it was painted) and was quite unhappy and insisted I hire an "expert" to determine what the number was under the paint. I wasn't sure what this meant until he pointed me to an office across from the service window in the DMV with the door plaque "EXPERT." He also was wearing a service jumpsuit with the label "EXPERT" on the back. 

 

b2ap3_thumbnail_mcmakin.jpgIf only all people came with descritive labels (fyi this is a DUI mugshot)

 

The expert then proceeded to dissolve my paint on the VIN number. When he got down to the number it was there and seemingly matched my registration fine. That said, this part of the car had a layer of primer paint they considered "suspect" under the outer red paint. In order to check elsewhere they dissolved paint on another part of the car (selected at random) to see what that looked like. It did not have the primer which made them even more suspicious. At this point the "expert" (who is like 60+ years old) declared that he needs to consult an "expert" specialized in old cars. So we hopped in my car and drove to another DMV where he grabbed another guy with "EXPERT" on his back to look at my car. This dude was like 23 years old. After much bickering and inspection of the numbers they determined that I was not trying to register a stolen car. While that was a relief I couldn't help but think it was a whole lot of time to figure out it an American was guilty of stealing a car worth far less than $1000. Total cost of headache and paint dissolution? 200 lei (~$13).

Back we go to the DMV and it's time to pay fees. The man behind the counter (friendlier now) give me a sticky note with 5 numbers written on it and tells me these are the fees and I need to pay them at the bank. The bank is across the hall and is staffed by one very bored and indifferent kid. He takes the sticky note and charges me the sum + 5 lei. I asked why 5 lei more? and he says that's the bank fee. I then bring the receipts he gave me back to the DMV window and am loudly berated for having missed one fee for 40 lei. I go back to the bank and tell the kid he forgot one. He rings it up for 45 lei. Interest in the fact that this was his fault? zero. 

 

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customer, why you are still distracting me from playing on my phone?

 

Finally all is done and I go the next day to pick up my shiny new plates from the central DMV. The DMV branch I was at gave me trouble because they wanted me to turn my old ones in first and when I pointed out that I would be driving across the city without plates they were confused as this never occurred to them. Eventually they made me promise to bring them back and let me go. I got my new plates but the man giving them to me didn't take my receipt for having paid for them (not including the expert I've paid upwards of 800 lei in fees by now - about ~$52). I figured that they didn't need it and after all they had a copy elsewhere at the branch DMV. Done and done.

Not exactly. Two days later I get an extremely angry call from an unknown cell number. It is a man raving about a receipt and he is so mad that I can't even understand what he's saying. I was in a meeting and asked my business partner Vlad to take the call and see what this person wanted (they wouldn't even reply who it was or where from). Lo and behold it was DMV man and he was REALLY mad about the receipt. He seemed to think I was trying to screw him over personally and was especially "hurt" by this because we conducted my business there "without money." This means I didn't bribe him and he was so kind as to accept that.

The next day I turned in the receipt and that was that. The mentality really makes you think though. That bribe wasn't something I could have offered to speed things up or make problems go away. It was his "due" and he waived it because he liked me or was afraid to deal with a foreigner. When bribes aren't offered or even expected but so commonplace as they are "owed" you have a systemic problem. More on that another time...

 

 

 

 

 

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Posted by on in Stories From The Field
On Menus...

Picture above from Listen 2 Uncle Jay and apparently taken in Tatarstan Russia. Good to know that "business launch" is not just a Moldova phenomenon :)

 

If you live in Moldova or have ever traveled here one question sticks out above the rest in terms of how constantly it is encountered and how frustrated it is bound to make any westerner.

 

Why does every restaurant have a 50 page menu with hundreds and hundreds

of items listed that they do not have. Furthermore why won't anyone, anywhere, just tell me what they have instead of making me guess half a dozen times before I hit something they will serve?!

 

Sadly part 2 of that question will forever remain a mystery. Matt and I once guessed every single beer on a menu (7) before realizing that a.) they only had non-alcoholic Chisinau and b.) the waitress had absolutely no intention of telling me that, preferring instead to say "no" to each one in succession.

 

Image available under Creative Commons (https://creativecommons.org/licenses/by-nc-nd/2.0/) and accessed at https://www.flickr.com/photos/justard/11892679423 The Cheerful Waitress

I smile because you're allowing me to fill my whole "saying NO to people"

quota today! soon I get to move on to "I don't know"

 

The good news is that today we are going to answer the first part of the question. Why are menus so big and why don't they ever have anything? To do that we need to descend back into the world of Moldovan bureaucracy. But first...

 

What is a menu anyhow and how are they made?

In theory this question has a simple answer. The menu is the list of things I want to serve to my customer and I make it however I damn please. At Ann's Snack Bar in Atlanta for example you pretty much eat the Ghetto Burger (Wall St. Journals' #1 burger in America 2007) she puts in front of you or she throws your ass out (something I have witnessed). That is their menu. Most places however have their basic menu + (maybe) a specials menu + (maybe) a chalkboard showing a "soup of the day" or something. Anyone who has ever lived in Moldova knows that none of that is the case here. The menu is very formulaic with Appetizer, First Dish, Second Dish, Meats, Fish, etc etc and is very very long. Only very modern places have pictures on the menu and everything is presented by weight (like the picture of the menu above with the o-so-delicious sounding "Salad Green Madness"). The reasons for these major differences between Moldova and countries outside of the post-Soviet world begin with...

The Health Department and their "Food Lab"

In Moldova the Health Department not only...

  1. dictates how your kitchen must be laid out specifying exactly what food is prepped where, how many employee showers you need (no joke) etc, (post on kitchen plan upcoming),

  2. selects a category of establishment for you (post here - additional post upcoming about insane profit limitations that accompany this classification)

  3. inspect and certify your establishment's cleanliness

  4. require testing for all your employees on food safety

they also...

  1. "control" your recipes to make sure you're doing them right (or something)

  2. certify your menu to make sure it conforms to the recipes you claim to be serving

note: this is only the national Health Department. The city Health Department has a different process entirely.

 

They do all of this via a giant Recipe Book of literally every recipe recognized as valid by the Moldovan Government.

b2ap3_thumbnail_69686_stefan_cel_mare1.jpg

I, Stefan Cel Mare, King of Moldavia, Saint, Scourge of the Ottoman Empire,

cousin of Vlad "Dracula" Tepesh, and bequether of many road names

do hereby declare this scroll to be the final word on mashed potatoes.

 

In order to serve something in your restaurant it must be in the book. If it isn't in the book you must submit your recipe to a "food lab" so that they may recreate it (to make sure you weren't lying?) and then they put it in the book. You can imagine that this involves fees, time, lots of people who say "I have no idea" as a career, and more time. I can. We'll see because I'll update this post after we go through this whole process.

In the mean time I can explain a bit more of how this works. After the recipes are selected or submitted and returned you are given official "recipe cards" which are (naturally) officially stamped to indicate their relative importance when compared with your grandmother's recipe for mashed potatoes. These recipes are then placed in your kitchen and used by your staff. They must be followed exactly or there are consequences but more on that later. Let's see how this relates to menus...

Changing the Menu

So you have your recipes. They are awesome food is awesome AND the card is stamped. Time to make a menu. Print out a sheet of paper and write all the stuff you want to serve on it. Be sure to include the weights of the items as that is required by law. I'd like to think this is a kind of (misguided) attempt at consumer protection but seriously who knows. Also stamp every page of your menu with your company stamp because otherwise it could totally be a fake menu that that lunatic down the street keeps putting on your tables (evidently a problem here before the advent of the stamp system?). Finally you get the Health Department to check and approve your menu. You now have your menu. Congrats. We're done here right?

[do we ever end on a happy note?]

 

Coulda seen that coming. You see the problem occurs when you want to do anything not on the menu or the recipe cards. For example...

  1. offer a "soup of the day"

  2. have a special based on combining various ingredients you have on hand

  3. innovate and try new recipes

  4. allow the customer to "have it their way" and customize their order

  5. cater a party with special orders

  6. have a holiday special

  7. remove an unpopular item

etc etc etc

Why are all these things problems? because every time you change the menu you need to register the change with the Health Department. This triggers a new health inspection for your restaurant. Unless you want that kind of hassle, fees, under the table fees (if you pay those) and random scrutiny every time you offer a soup of the day then you're shit outta luck. Those are the rules. Want fries with that steak instead of mashed potatoes? Is that variant on the menu? if not, no. Hosting your kid's birthday at my restaurant and he loves bananas so you want me to make a banana cake? shit. outta. luck.

Anyone see where this is going? If you've been to Moldova you do.

 

This is why the menus are so long. They need to list everything they ever would conceivably want to cook for weddings, events, parties, seasonal dishes, etc. This is why they never have those things.

 

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this is the point that I realized much of what I attribute to "Moldovan Culture"

is really a case of "insanely horrific laws that make no sense whatsoever"

 

Escaping the Madness

Restaurateurs in Moldova aren't stupid. The majority I've talked to have been the clearest eyed business people I've talked to here and they are generally super helpful and open. They understand that this system is stupid and outdated. Some of these laws date from the 1970s before they were legally called capitalists or even business people. People know this needs to be changed or "gotten around" the question is how.

Firstly, I'll give a rare shout out to the Moldovan Government. Most people I've talked to say this is in effect a "Dead Law" meaning it's still on the books but the recipes and menu oversight isn't enforced. In this way the government realized "this silliness isn't worth our time" and moved on to better things (presumably finding ever more interesting ways to make foreign investment difficult). This doesn't mean that you don't have to do everything I mentioned above (submitting the recipes, getting the menu approved, etc). It just means that if you make changes later no one cares (maybe?, we hope). The problems with this are twofold. One, any unenforced law is an invitation for someone "in the know" to come and jack you up for "on the spot fines." This is especially true of something like this where compliance is so tedious compared to what you want to do (soup of the day - seriously why do they hate my seasonal curry pumpkin soup so much?). This fear alone keeps people in line. The second problem is accounting which I will explain in a moment.

Firstly, I want to mention a few interesting ways around this mess. The main one, that Andy's and the big chains seem to use is having multiple menu inserts based on season ("menu de post," etc). Another is the "Business Launch [sic]" as shown at the top of the page where they rotate "specials" based on the day. Obviously this isn't that fun because you KNOW that every monday is that cool thing you like but you're busy and ever friday they have the white rice and pork-broth special. Even if they were good though there's no variation or surprises. These are at best partial solutions.

The most creative solution I've seen is Gastrobar's "Test Menu." Now I haven't talked to the owner about this (if any readers know him/her please introduce me) but this seems pretty clear to me. If anyone asks tell them it's not permanent. Fullstop. Pretty creative if you ask me.

 

The Problem With Anything but Legal Reform - Accounting

Finally I will explain where the "recipe cards" get truly devious. Even if the Health Department never comes by and checks that you are using exactly as much cumin as you said you would per kilo of pork shoulder the Moldovan IRS does. That's because these recipe cards get entered into your official accounting tallies. So does the menu. For example, if I say that we use 1 cup of sugar and 1 cup of salt per x liters water to brine x kilos of meat and I decide to put less meat in the brine one night I'm responsible for spending according to the recipe. Meaning that if the recipe says that I should have used 1 kilo of sugar and I used 2 the company cannot legally buy the second kilo. Conversely if I was supposed to use 2 and I used 1 then I am subject to a government fine.  

 

Consider this a little teaser to upcoming posts about the accounting system here. We're quite new so we have a whole lot to learn on this front. That said, I am pretty ready to say that the accounting rules in Moldova are the single largest compliance problem for business here AND are structured in a way that yields far fewer taxes than owed. Anyhow, all that is to come.

 

In other news, now you know why the menus are so long here and they never have anything. And here I just thought they were being silly...

 

 

 

 

 

 

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Posted by on in Stories From The Field
Visa Denial and Appeal

Read Me First: I wrote this originally while this process was ongoing so I imagine a fair amount of frustration and anger comes through. I've edited the post to reflect the fact that we did eventually get our visas but I have tried to keep the tone the same. This was an incredibly terrible process and I have no desire to sugar coat it just because we got through it. I've had to put a little distance between the events and my posting to even look it over because the whole thing is mostly a mess of bad memories for me. So, without further ado please enjoy...

 

Well folks you're in for a doozy with this one. I apologize in advance. If you're the kind of person who doesn't want to see things about Moldova that make you sad, depressed or enraged I recommend stopping now. 

That picture you see there is my whiteboard's countdown. It was a countdown from the moment my visa got rejected to the day I needed to get myself out of this fine country I've called home for over 2 years. It reflects the fact that for almost a month our living room became a war room dedicated not to our business but to fighting a corrupt and confused visa process just in order to stay in the country. At the end of this process our appeal was accepted and we managed to get visas. Before it did though that whiteboard counter hit zero and went negative. Read on to follow the tale... 

 

jump to... 

Chapter 1 

The Gatekeepers

Chapter 2 

Official Rejection

Chapter 3 

What is to be done

Chapter 4 

The Meeting

Chapter 5

The Appeal

Chapter 6 

Conclusions

 


 

CHAPTER 1


"The Gatekeepers"  

or...

"A Tale of 4 Bureaucrats"

Our tale starts where we left off in the first post about visa applications where I posted an update saying that we could get a 5yr visa instead of a 1yr (the first post is recommended preliminary reading as this sorrowful saga builds on many of the same themes of ambiguity, misdirection, misinformation, obscurity and downright rudeness). This information was conveyed to us by a person at the immigration office who, it turns out, is one of 4 gatekeeper bureaucrats who review your visa application before they go before a final commission. This information came as a surprise that slowly dawned on us as it was never explained who was going to review the application. We were told that two departments needed to look them over but it was implied that the kindly woman at the submission window constituted one of those departments. Either that was untrue or she confused "2 departments" with "lots of people."

Anyhow, our 4 bureaucrats. It is unclear what their purpose is. Our theories revolve around the idea that they a.) just redundantly check for document completion (along with the application room receptionist and the person at the application booth) or b.) that they review the applications and make a recommendation to the following commission. Honestly we have no idea but theory a.) is strengthened by the fact that their behavior mirrored the reception woman and the kindly woman at the booth in that they all had totally different ideas of what was required for the application. 

 

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it is my hope that cute pictures of dogs and bad puns shall make this post less trying to read

 

So... bureaucrats 1-3 turned out to be quite nice. One of them was super insistent on our internal document numbering scheme (something we didn't want, they required, and then they judged was inadequate). Another was excited to tell us that as Americans we were eligible for 5 year visas instead of 1 year. This would have been excellent since this process has already consumed over a month and would need to be done every year. Then came bureaucrat number 4. 

This man was less helpful. He first attacked our company's capitalization. To some extent his questioning is understandable because the documents in his possession showed only a 100 MDL (just under $7) investment in the company. We had felt no need to provide more updated documents because there is no law requiring a certain level of capitalization for your company for you to get a visa

 

...let me reiterate that...

 

nolaw

image-2

image-3

image-6

...for all you English major's out there that's what you call some foreshadowing. 

 

Ok, back to our guy. So he's really unhappy with our 100 lei. 100 lei is the legal minimum for an SRL and all we need to prove to be, in theory, visa eligible. He took this clear state of undercapitalization as proof that we were, at best, unserious, or worse trying to scam our way into Moldova (this suspicion was reoccurring - do people actually do that?! *see note at end of chapter). We explained to him that we have an American company that has all of our capital and is really excited to send it (We neglected to end that sentence with ...as soon as your colleagues in the State Registration Chamber stop insisting that they are experts on Virginia Law or, put more simply will allow us to send the money here)Vlad signed an Affidavit affirming that this money was inbound imminently. Additionally we explained that the capital in our Moldovan company isn't 100 lei but 18000 lei at this time. He told us to prove it and we did. A few documents and stamps later we were clear bureaucrat #4. This one had left a bad taste in our mouths though. He wasn't a very nice person and made it super clear he would not approve us for a 5 year visa and had reservations about us entirely. 

This may be the time to mention that at literally no stage in the process of trying to get a visa to start a company in Moldova, or the process or starting that company, or the process or trying to invest money into the economy, has one. single. solitary. person said the words: "happy to have you! Moldova really needs investment and jobs! welcome aboard." This in spite of the fact that the government preaches this goal literally. every. day

 

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I'm unsure that the pictures of dogs are enough to make this less sad. I think I need more puns... 

 

*Update: Evidently they do have problem with people trying to scam the visa process in order to immigrate from areas in the middle east - especially Syria. One theory that was explained to us is that this gives them an excuse to hassle everyone more in order to extract more bribes from them. I cannot speak to the legitimacy of this theory but I can say 100% that we were treated like criminals for a good portion of this process for no reason whatsoever. 


 

CHAPTER 2


"Official Rejection"  

or...

"Dear Moldova Why Don't You Want Our $$$"

 

The title pretty much gives away the gist of this chapter. October 9th rolled around and we took a stroll down to the Immigration Office in the hopes of good news. Instead, we got what even we knew was more likely - no news at all. Mostly confused looks and a vague suggestion to return tomorrow. We did and this time everyone in the office knew who we were. We were barely through the door before they blurted "your visa has been rejected."

 

b2ap3_thumbnail_84628.jpg

no matter how prepared you are to find that the letters from
Hogwarts were just leading you on and that it was just your parents you still cry. It felt something like that.

 

If you would like to see a scan of the actual decision issued by the government please David and Matt's identical rejection letters. 

For those of you who can't read Romanian here is basically what it said. 

Under Article 32 para. (5) letter a.) Law no. 200 of 16.07.2010 on foreigners stay in Moldova and there is no basis for concluding, after examination, 1 of 09.09.2014 the administration "SMOKE HOUSE" LLC. for right of stay in order to work immigration US citizen DAVID LEO SMITH.

Additionally it explains at the bottom that we may appeal as stipulated in law nr. 793-XIV din 10.02.2000.

 

If you google translate that law and look at the relevant sections you will see, rather clearly, that this provides absolutely no information. The law essentially outlines the things you need to comply with in order to get a visa - our rejection says that we violated them. One of them? all of them? who knows. The appeal law is equally cryptic essentially providing for our right to appeal the decision within 30 days. The problem is that this law covers almost all federal agencies and therefore has no process information - each agency is different. How do you appeal then? I asked this. Here was the conversation:

Me: Why were we rejected?

Woman at the Immigration office who just gave us the decision (for brevity we'll call her Linda): I don't know. 

Me: Well, how do we appeal?

Linda: I don't know. 

Me: Well who do we appeal to?

Linda: I don't know. 

Me: When we make this appeal, somehow, to... someone, how long will it take? Can I stay in the country when it processes? 

Linda: I don't know. 

Me: Will it take one day? two?

Linda: I don't know. 

Linda's Coworker: Much longer. 

Me: Who does know?! who can tell me more?!?

Linda: I don't know. 

Linda's Coworker: [indifferent stare. It said "i could literally not give fewer fucks"]

 

After this and all of our other ordeals Matt and I really wanted to tear our hair out and say the following to Moldova:

 

b2ap3_thumbnail_takeOurMoney.jpgliterally. Please. 

So, what's next? As that nice dialog demonstrated rather clearly I have no idea and literally no one else does. The one thing I know is that as of the moment I got that decision the clock was ticking. I (David) had 19 days left in Moldova on my tourist visa and Matt had just over a month and a half. We had work to do. 

It's about time to mention the elephant in the room here. This problem can very quickly go away. It was conveyed to us in no uncertain terms that for 300 euros each this process can be "smoothed." No one asked for this (it came via a trusted lawyer associate) and no one ever asks for or takes your money. Said differently, no one can be caught as this is carefully done. It also needs to be done before the decision is rendered. Based on our previously mentioned ideals this was never going to be something we did. Our current situation could be said to be the result of that attitude. 


 

CHAPTER 3


"What is to be done"

or...

"Calling Everyone We Know"

 

When you don't know what to do find someone who does. These are words to live by no matter how hard they occasionally smart the prideful amongst us. Moldova has been pretty tough on my pride already so it was pretty much immediately time to set about finding help. We called and emailed lots of people. I'm going to keep this section brief because the next chapter is more informative and moves this strange tale along. The key here is that we consulted many good people from various orgs and agencies to try and get help and information. As mentioned at the beginning of this post I intended to post this as the process was ongoing but held off for a few weeks to put some distance between me and the problem and get some perspective. As such I originally I included chapter 3 here in case anyone reading had a good idea. Literally, any of them. No hair-brained idea sounded too silly at that point. I held off on posting this so this chapter is no longer a call for help. That said it accurately reflects the state of confusion that we were in. We were really looking for a plan...

 

b2ap3_thumbnail_rube.png

Once the rocket launches it deploys a flare that alerts the one person in Moldova
that cares that we want to invest in the economy and they ride a dragon to our rescue

 

Ok ok I know that sounds a bit sci-fi. We all know that that such person does not exist in the Moldovan government. 


 

CHAPTER 4

"The Meeting"

or...

"All the reasons we suck but none of the reason(s) we were rejected"

 

In our attempts to gain some insight into what happened to us Vlad called the Immigration Department and requested a meeting with the department Chief. To our surprise they agreed and scheduled it for Thursday the 16th. Talking to our contacts we found that her taking the meeting at all is very rare and unusual so we took this as a good omen. We prepared for the meeting via the aforementioned "calling everyone we know" and managed to get a friend to ask his brother, an immigration lawyer, to meet us before the meeting to talk things over. He basically said that we should go in and politely see what is the problem and how we can fix it. If they give us no recourse we'll got to court (other contacts have assured us that as they have essentially groundlessly rejected us we would almost certainly win in court... but they could drag it out for months). 

 

I have included a short summary of the meeting below. It was a very confrontational discussion in which they repeatedly accused us of either wrongdoing to ill intent in Moldova but never explained on what legal basis we were rejected. As you will see they had serious reservations about our company's capitalization but also admitted that this was not a legal basis for rejection. The outcome of the meeting is that we needed to submit all of our documents for re-review. They had promised to conduct the review in 10 days rather than 30. This was not necessarily encouraging given the process of the meeting (see below). 

All in all we were hoping for a friendly, frank, conversation with the director of the department (who studied in America and speaks English!) but instead we found her deputies who were like...

 

image-6

and you are nothing
wait... I've been here before...

Here's a rough transcript of the meeting: 

Smokehouse Team (David, Matt and Vlad): introduced ourselves, our company and our intended business in Moldova. Asked "what is wrong with our documents and how do we fix them"

Immigration People: They did not introduce themselves. Had no information about our case. Did not tell us their positions or titles. We gave them xeroxed copies of our packet and reiterated the question: "what is wrong with our documents and how do we fix them." After much shuffling of papers they said that the statutory capital of our company (100 lei - the legal minimum) was too low and angrily demanded how we were going to start a business with so little. 

Smokehouse Team: we explained that the statutory capital is only one part of a bigger picture with our capitalization. We directed them to documents in their possession showing personal loans of 18000 lei to the company and a sworn affidavit explaining that we would be transferring the bulk of the investment from the parent US company in the immediate future (greatly delayed because of disputes with another department that are finally reaching resolution).  

Immigration People: ignored the documents we referenced. Make a huge fuss about the 100 lei. Asked us if they would be allowed to go to America for 100 lei? I asked if there was a law determining minimum capital investment here (there is not - there is in many countries, not in the USA). They did not respond.  

Smokehouse Team: We showed them a bank statement clearly showing our American company's money ready to transfer.  

Immigration People: They made a big fuss about how we can (heavily implied "should") just give our Moldovan partner the money and go back to the states.  

Immigration People: As I (David) handed over the relevant financial documents (which they refused to look at or take form my hand) they loudly accused me of making a much larger fuss than most people who invest millions of dollars. When I placed the document on the table in front of them (after they refused to take them from my hand) they accused us of being dramatic and making a show. 

Immigration People: The woman present viciously verbally attacked Vlad, loudly yelling that this* was all his fault. That he failed to fix this* for the Americans. We asked, again, what is this*? what was wrong with the application? was it the 100 lei? is there a law for that? They agreed that there was not a law and 100 lei is all that is required. When pressed for what was wrong they simply pointed at the refusal document which references the immigration law. This was the best answer we got and is summed up as "we rejected you according to some point in the law." She remained adamant that it was Vlad's fault for failing to fix this* 

Immigration People: Agreed to review documents (according to our legal right - not exactly a concession on their part). Ended the meeting. Told us only what their first names were. We asked which documents we needed to resubmit (aka the whole application? just a clarifying document?). They did not respond or clarify - they simply said "all the documents you have." When asked if we can stay in the country while this process proceeds and the man personally guaranteed that we could and if the decision was negative we would have 3 days to leave. When asked if they could say if the decision would be positive they said no. 

 End of meeting. 

*It requires little imagination to understand what our Moldovan partner failed to do for us and why he was deemed to be solely at fault. American's aren't expected to understand the... out of office procedures here but Moldovans are. 


CHAPTER 5

"The Appeal" 

or... 

"all the documents" 

 

We're not done here yet. We have appeals to write. Documents to gather. Lawyers to hire. Phone calls to make. and emails to write. We're not giving up on the idea of opening a BBQ restaurant here. We're not going quietly.

 

I wrote that as the ending of the original post when this process was still ongoing. Combined with a major sting of rejection and fear of imminent defeat it summed up our attitude at the time. So here's what we did. 

 

Documents for the Appeal

In addition to a whole slew of documents they already had we submitted the following documents in the appeal. We managed to pull everything together in an afternoon which sounds a whole lot easier than it was and resulted in us literally running to the Immigration Department to submit them before close of work. 

  1. The appeal letter describing that we are appealing the decision in legalese and what documents we submitted. This document is critical because you get to keep a copy that they stamp proving that you actually submitted these documents on that day and that they were accepted. 
  2. Bank account statement Smoke House SRL - proving we had much more money than 100 lei
  3. Excerpt from personal bank account - this is required under different types of visas to prove you can support yourself and won't be seeking help from Moldova's nonexistent welfare state. 
  4. Bank account statement Moldova Company LLC - showing the money that was all set to transfer
  5. Decision of "The Moldova Company LLC"  to invest a stated sum in capital of Smoke House SRL
  6. Documents Apostilled in the U.S. showing proof of ownership in the Company Moldova Company LLC by us
  7. Copy of current loan contract between SRL Smoke House and Matt and I

 

As you can see from these documents we were basically working on their concern about the 100 lei in the statutory capital. As mentioned before this for sure wasn't their only problem but it was the only one we could take a whack at. 

Getting Permission to Stay Temporarily

After waiting, as requested, until the whiteboard counter almost hit zero I went to the office and got a meeting with the man from the previous meeting to request a document explaining that I can stay until the decision finishes. He was noticeably more polite (see strategy below) and was able to get me a document allowing me to stay until Nov. 24th (one month). 

Strategy

This is the key entry to this chapter. We were told via our back channel connections that we would be denied again no matter what went into the appeal. This isn't specific to us but a blanket pseudo-policy because to accept our appeal would be to admit to a mistake in the first place. Obviously this is flawed thinking but it pervades a lot of the thinking of Moldovan "Directors."Flawed or not though we clearly needed more than just "vague hope" to win this one.

As mentioned before we pay no bribes as a company policy. As such we decided that the best we could do is make it clear that we are more trouble than we are worth to them. We were able to ask people to call on our behalf and inquire about our process and to make it clear that if we didn't get a fair treatment we would not give up here (aka go to court). I know this is all rather vague but the key is that they needed to send the message that we would continue to fight via courts of media if we were rejected without just cause. 

The Waiting Game

Commence the waiting game. This sucked. 


 

CHAPTER 6

"Conclusions" 

or... 

"time to get back to work"

 

I won't go through all the back and forth and trips to their office that it took to get the answer eventually (it took 14 days) but the key is that they did eventually give it to us and it was positive. We will likely never know what exactly happened to create this outcome but we can say definitively that it was honest. All in all the fact that we made lots of calls to make it publicly clear that we would be shining a light on this process probably made the decide just not to bother with us. 

In conclusion... Being rejected and given neither good reason nor a way to make things right is rough. We always knew things would be hard (though maybe not this soul crushing). Put simply, Matt and I are still here, after two years pushing oversized stones up muddy slopes in the Peace Corps, because we believe, despite all of the (rather obvious) problems, that Moldova is full of opportunity. Put even more simply, we believe in Moldova. We are proud to call Vlad our third partner because he believes in Moldova too and is willing to endure hardship to make it a better place. Moldova made it abundantly clear that it doesn't want us. But just like that stage 5 clinger who gives out those too-long awkward hugs in high school we're just gonna grip tighter. Hey there Moldova, bring it in for the real thing

 

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closer... closer... closer...

 

This post is far too long but I'll follow it up with a concise set of recommendations for if you are trying to apply under this type of visa yourself. We learned a lot and I feel pretty confident that if we were to do it again we could have headed off a number of the problems. More to come. 

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Posted by on in Stories From The Field
On Stamps

So here's a topic that will look very familiar to anyone who's lived in the post-Soviet space but seem totally nuts to everyone else. Stamps - what are they for? Well in Moldova the answer is "literally everything." I first came in contact with this when I went to Kazakhstan as an English teacher and my packing list included "stamps for grading papers." My first thought was "I thought I was going to be teaching high school - why do I need smiley face stamps?!" The reasoning is because no matter how silly looking the stamp they make things "look official."

To understand this you need a little background on how things become "official" here vs. in the states. In America your signature is your bond. Furthermore your word can be your bond in contract law if it is deemed a verbal contract. I am not a lawyer but the gist is that in the US agreements can range from silly-informal to super formal. In Moldova they are always super formal. In theory this is to "control" the process ("control" being a translation from Russian for something like "oversight on steroids") and to prevent fraud and forgery. In practice this is a system of red tape unrivaled by even the darkest fears of government fearing anarchists. It is literally like buying shotguns to kill flies. 

 

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not only is this a real product but you too can be killing flies
with a shotgun for the low price of $39.95. I fucking love America.

 

So we get to stamps here because every legal entity must have one. In order for something to be official it MUST be stamped and signed by the company administrator (post on administrators coming soon). This is not just true of contracts and such but literally EVERYTHING. For a restaurant menu to be official every single page must be stamped with the company stamp. Every one. For a receipt for goods your company buys, say for example onions, you not only need their company's stamp confirming the sale but you also need to stamp it confirming that you purchased it (this is called a "factura fiscal" and will get it's own post later). In order to open a bank account here they needed to print off some ungodly document that actually required 27 stamps (yes I counted). The crazy part? It was an internal document. It wasn't even for us. They stamped it 27 times and put it in a drawer. I imagine that you're beginning to see that this system is a little "troubled."

 

In the interest of keeping this blog constructive and semi-helpful here are a few practical changes in your thinking that need to occur in order to do business here. These are the primary ones as I see them but feel free to add thoughts in the comments.

1.) Never leave the house without the stamp

It is as important as wearing pants so in the interest of sense (and decency) forget neither. That example about buying onions? not made up. You really need the stamp for everything. The question of "who is actually empowered to wield this powerful tool" is something I will write on later. 

2.) Anything can become official with a big enough stamp

Anything. A careful read of my past posts will show that stamps trump almost anything else (top examples are the US Embassy Affidavit in place of a criminal background check for the visa and Appostilles that technically only certify the identity of the signer being taken in Moldova to certify the contents of documents). The problem is that without a stamp things cannot be official here. For a Moldovan SRL this is easy. Follow step 1 and always have the stamp. For an American company needing to do business here (my Virginia LLC) this is a problem. Most officials kinda understand that American company's don't have stamps but they don't really trust it. Partly this is conscious and partly it is subconscious. Either way it is a solvable problem. You just create a stamp for yourself. Here is a picture of the stamp created by our corporate embosser purchased by the nice people at Ideal.

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so beautiful I might cry...

In America this stamp has no legal significance whatsoever (you could empower it but it's all very old school). In Moldova however it turns heads. Not only does it actually emboss the paper instead of a simple ink stamp but take a look how it compares to the plastic Moldovan stamp:

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yes the other items on my desk are a knife, duct tape and a tape measure. I like projects

 

This big metal thing is intimidating here. Think in these terms, as a teacher in a school the grade I give doesn't derive as much authority from the fact that I'm the teacher as it does from the fact that I stamped it with a ---- stamp. Now realize that my company stamp is metal and imprints paper. This is psychological warfare and this stamp is a big big weapon. 

 

3.) Expect this process to cause countless delays and hidden costs 

That first image at the intro to this entry is how official document packets are bound here. There is this fine thread that they tie through and then stamp so that you know it's original. That particular example is our company's operating agreement but they do this for many many things. When we got documents translated they had to be bound by the notary like this. Even xeroxes aren't deemed original without a stamp. You literally need to go to a notary for an "original copy" xerox. I know this is done in the states too at times but here is it constant. Furthermore not everyone has stamping authority so if you need to buy those onions and there's no one there to stamp your receipt you aren't getting one. You'll need to come back on another day. Imagine the delays this causes - not to mention the fees. It's death by a thousand cuts because you need to pay everyone for this. The amounts are typically small but with how constant it is they build up. Oh, and you want to get an original copy of a company document? That's 10 lei for the copy + you need to come back tuesday for a stamped receipt certifying that you purchased the original stamped document. 

 

 

To conclude I'll leave you all with this lovely stamp:

 

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if only absolute athority could be wielded with such mundane items in America... 

 

 

 

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Of LLCs and SRLs Part #2 - Banking and Conclusions

This is Part 2 of the process of introduing a US based LLC as a parent company of a Moldovan SRL. Find Part 1 here.

 

Note: this post is mostly a wordy, if humorous, take on banking and wire transfers in Moldova. If you would like to jump to the recommendations section for Parts 1 & 2 of this post do so here

 

**Update Nov 15: we just finalized all of the papers so this process is over. Once we got through the lower level people to the department director things got much easier. This is in spite of the fact that they royally messed up our paperwork. The director fixed it all himself and was not only professional but extremely pleasant to work with. It's always a wonder when you find someone in the government who really wants to help and make your day easier. Today, at the end of this mess, I have a lot of respect for the State Registration Chamber. Also we discovered that we can in fact have multiple "Administrators" of the company. Post coming soon...

 

Section 4: Wire Transfers and a Note on Banking in Moldova

 

This section is about the process of the wire transfer from the American bank (we use Wells Fargo) to the Moldovan bank (Mobias Bank). I know this seems like a pretty trivial discussion and perhaps even a waste of time, after all wire transfers pretty standard procedures. This is true, however there are enough nuances that it's worth mentioning here. Additionally I'll mention a few notable differences in dealing with banks here vs. in the states. 

Ok, so off we go. 

The first step we did was to go to the bank and ask what we should do. The basic procedure that was presented to us is this:

  1. Initiate the wire transfer from the states. It was mentioned in passing that the money should be indicated for statutory capital in the wire transfer (more info below). 
  2. On reception of the funds in Moldova come to the bank and present it with documents proving the purpose of the money. In this case that purpose is "to increase the statutory capital of the Moldovan SRL" and these documents are decisions by the companies to invest in/be invested in.
  3. Receive from the bank a confirmation of the money transfers reception with a value for the money in MDL (in our case we have a USD account at Mobias Bank so this reflects the amount the money was worth on arrival and will determine any profits/losses the company will incur as a result of currency fluctuations).
  4. Request from the bank a document confirming that the money was received for the purpose of statuatory capital. This is basically a form letter and the silly process of getting it I will mention below. 
  5. Bring these documents to State Registration Chamber so they can enter it into the statutory capital. 

 

So this is what we did with one notable exception. #1 says that we need to indicate that the money is for statutory capital. What they mean by this is writing something in the comments box of the wire transfer form. I forgot to do this and assumed that this is fine because they have ample proof in the form of contracts / us being physically present telling them things. It seemed a little silly that the comments box, used for things like "happy birthday sweetie!" on your Western Union transfers could be such a big thing. You know where this is going...

In fact, this is a very big deal in Moldova. After the received the money and we came in to stamp lots of documents and such they called us back in later in the day to resolve the comments issue. They told us that we need to amend the comments within 36 hours or they would send the money back. We were obviously startled by how serious this seemed to be and asked if something else was possible, maybe more papers from us (after all it IS OUR MONEY) or a call from the bank in the US or literally anything. Nope. It needed to be changed. We explained that wire transfers aren't like facebook wall posts that can be edited after you sober up. They remained adamant that it needed to be done. 

 

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admirable in so many circumstances... of which this is not one

 

So we called up Wells Fargo and (predictably) they said, "ummm the comments box? really?" to which we replied "yes. This is Moldova. If there is literally any tiny spec of a process that does not have bureaucracy in it they will find a way." We asked them if there was anything at all they could do. They responded "I don't know sir. Let me find someone who does and get back to you." Hearing those lines over the phone in Moldova is more refreshing that you can possibly imagine. Our bank here (Mobias), despite charging us an arm and a leg above Wells Fargo on constant fees responds to those questions with "I have no idea." full-stop. Wells Fargo called back and said that transfers can't be changed past 30 min after their departure. We explained to them that this was critical to us. Not only did our money hang in the balance but possibly our visas (the upcoming post on Visa Part II will explain this). They said, "ok sir let me call our wire department and see if we can't figure it out." After the process in Moldova this was literally music to my ears. 

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you get me kid

 

 

It turned out they could somehow. Basically they sent a followup message somehow. Wonderful customer service Wells Fargo.

 

...back to Mobias. A few days after the transfer went through, they called us and asked if we wanted a confirmation from them that the money was in the statutory capital (#5 above). We went into the bank thinking they needed more paperwork from us but she just asked if we want this document. We were like "why do we need it?" She replied "I don't know." Didn't see that coming did you?

 

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eventually rightious anger fades to mild indignation and then just 
bitterness with a faint notion that somewhere things aren't like this...

 

We asked why she called us in then. She said "lots of people get it." We asked "how much does it cost?" She said 200 lei (~$13). We were like "you want us to spend 200 lei on something we may not need for a reason you don't know." She said "well... it could be 60 lei." Not the answer I was looking for (at least it got less expensive I suppose...). 

We called our lawyer and he recommended we get it because more documents is always superior to fewer documents in Moldova (also not the answer I wanted but sadly very true here). As icing on the cake with this exchange the following happened. While she prepared the document she asked us "where did the money come from." We said "our American company." She said (while pointing irritatedly at the wire transfer confirmation form) "where does it say that here? I don't see your company's name at all!!" (a mix of irritation and triumph on her face for finding our "mistake"). I numbly pointed at the form where it has Wells Fargo and the relevant account numbers and such. She was looking unsatisfied so I decided to show her my best "I have no idea how to process this. I did not invent the wire transfer system. Furthermore, you have already exlained that you do this process many many times. What the #*$% are you #*$%ing talking about!!!" face. It looked like this...

 

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oh how you undertand me internet...

 

In a brief summary of other differences between Mobias Bank and Wells Fargo...

 Mobias Bank Wells Fargo 
Hard questions confuse them and get no answer.  Hard questions get the response "let me find someone who can help you with that" 
Mistakes they make are your fault*  Mistakes you make are going to get their full attention and never an accusation (see above wire transfer story 
Their "bank client" for managing your account online a.) does not work b.) can only be installed on Windows XP or earlier c.) looks like it was made in 1993 and d.) doesn't have an installer, opting instead for 2 convenient videos (read huge filesize, available on cd only and without explanation, captioning or sound) explaining hot to manually install the program dlls in the system32 folder. This was literally the first time in my life I was unhappy not to find the README file.  Has wonderful online banking 
Their policies are 100% uncompromising (even if they differ as you talk to different people) You are a customer and your needs are treated with respect. If they can help you, they will. 

 

*At one point this mislabeled a deposit we made to statutory capital - aka they forgot to mark what it was for. They then told us that we made a mistake and that they clearly "thought it was a loan." We said "we have done a loan and you needed a ton of contracts for that too so there's no way that's true." They said, fix it - not my problem.

Final note: In defense of Mobias Bank I can say that the following 2 things are true. 1.) The Moldovan Government has saddled them with a whole lot of silliness to deal with in terms of regulations so this isn't all their fault and 2.) all the other banks here are likely just as bad. That said, I am a customer. I have put a lot of money in your care. At least give me enough respect to realize that I did not either invent the banking system or study it in school. I'm not stupid for not knowing things, especially things that you don't know. So find me the person who does please. 

 

Section 5: Conclusions and Recommendations

 

1.) Just an SRL or SRL / LLC combo?

What do you need? If you need to manage anything more complicated than a company that you form in Moldova with your personal money (aka - no investors, no sale of shares nothing) then you should not deal with the SRL system. Found your company somewhere sane and manage it there with an SRL here to conduct the business. Let me stress here (because I think I forgot to earlier) this is not a tax strategy. You will likely pay more taxes this way because you pay US taxes on top of Moldovan taxes and even if you can fully write off the Moldova taxes (posts about this later when we manage our taxes) US tax rates may be higher than Moldovan taxes if you are talking about an LLC because profits are passed through to the indvidual who are subject to their personal tax rate. This is solely about your sanity. 

2.) Thinking about changing anything about the Moldovan SRL's statutory capital?

Hire a decent lawyer unless it's as easy as selling some shares to your cousin Ivan. Even then, hire a lawyer. 

3.) Apostiles and Documents

In Moldova there is a paradox. More documents is always better than fewer documents. However, whoever is reading your documents believes everything contained therein is their business. Our strategy was therefore find out what happy middle ground would pass muster. That said, because of the time delay involved and in spite of the cost we got Apostiles for MANY MANY more documents than we ultimately needed. $10 more up front is better than $10 + lost time + another $100+ DHL packet later.

4.) Time time time

Allot so much more time than you ever thought would be necessary for literally everything

5.) Wire transfer - check well in advance with both banks to see what is needed

Ideally have the Moldova bank write it down. They probably won't because it gives them deniability later (or they will but without a stamp they can deny it anyways). 

6.) Moldovan Banks - watch everything

Mistakes are your fault and it's your money so don't make them. 

7.) Next time you think about being short-tempered or rude to an American customer service representative don't.

Seriously. You have no idea what a wonderful job they are doing in spite of dealing with people like me (ask any one of my college roommates). Possible exceptions here for the robot (yell away) and anyone who works for Comcast or Verizon who, while possibly being nice people, are in the employ of satanically evil companies and thus forfeit some of their protections under this recommendation. 

8.) Keep your head up. 

Everything in Moldova is far harder than it should be but ultimately solvable. We're doing this because we believe the rewards outweigh the challenges and have some hope for change. You aren't alone being frustrated but just think of how funny this will all be in retrospect? right...?

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Of LLCs and SRLs Part #1

Note 1: This post is an update to our first post about organizing a company in Moldova. While that post was pretty general and explained our initial reasoning this one will attempt to explain the results of that reasoning over the last few months and a few preliminary recommendations for other entrepreneurs (ok, this got long. Conclusions Recommendations will be in Part 2 [COMING SOON]). We will be writing a further update on this topic later on with more solid recommendations. (small update below)

Note 2: This post is covering quite a lot of experience had over a long period of time. The topic is dense and often technical. Please comment if things are unclear and I will add more information. Also, as usual, please feel free to tell us how stupid we are. Everyone can learn from that. 

 

Jump to... (note to use these section links open up the full version of the post by clicking the title or on "Continue Reading" below)

Section 1
Basic Organization 

Section 2
Selling Shares vs Adding a Founder: 
Section 3
The Necessary Documents for Adding a Founder
Section 4
Notarizations, Apostilles, Translations and DHL 

 

 

So Begins a Tale of SRLs and LLCs...

 

 

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The path to success is almost self evident!

 

 

Section 1: Basic Organization


 

I'll begin where the last post ended which was with a discussion of the process that we decided to embark upon. That was to organize the companies basically as follows:

 

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I'll let you all guess which silhouette represents which manager...

  

So to describe what you're seeing there we founded a Moldovan SRL called "Smoke House SLR" (they refused to believe it was one word and we didn't fight it). Additionally we founded an American LLC called "The Moldova Company LLC" in Virginia. The purpose of the LLC, as described briefly in the previous post, is to escape from some of the more challenging bureaucratic differences between a Moldovan SRL and an American LLC. These all...

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Hard Times Always Reveal True Friends

While I'm not sure who wrote the quote I've used as the title for this entry I'm sure we've all seen it circulate around the internet. In this process of starting a restaurant in Chisinau we have run into roadblocks in the strangest places and more ambiguity than I can quantify. If one were to identify a single thread of anger, disappointment and exasperation that pervades my postings (and much of my work right now) it is ambiguity. In most countries there is an easily understandable lines between what is and what isn't permitted. Furthermore, it is pretty easy to figure out where you will encounter difficulties. If you were opening a restaurant in NYC for instance there are numerous resources that could help you find the information on the startup process you need. In Moldova this is not the case. If I were to sum things up it would be that...

Nothing is easy but everything is possible. 

 

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This is supposed to be inspiring but terrifies me day to day. 

 

Wait, you say - nothing and everything are pretty strong words. Well this all comes from the aforementioned ambiguity. We now know that there are 46 laws governing kitchen construction and equipment. What are they? no idea. I have seen 1 and in 47 pages it manages to say that the windowsills must be slanted so they can't be used as shelves. The others are, to the best of my knowledge, secret. The health department will not share them. There is no "easy 150 step guide." There is no one who has been willing to give us much of a consultation. Kitchens are just one of many many areas like this we have encountered. Ok, we get why nothing is easy but how is everything possible? Because in power vacuums formed by ambiguity in laws a certain type of people thrive. "Fixers," either within the government or without, are how things need to be navigated. This system is effectively putting faith in people with a certain arcane knowledge (and little to no accountability) so it's wise to start educating yourself fast. This is where we have found a number of true friends. Such as... 

Restaurateurs

 

 

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Some are more helpful than others.

 

Yes, other restaurateurs. This class of overworked people, constantly parodied on TV as unable to find time for family gatherings or to lead normal social lives have absolutely opened up their restaurants to us and helped advise and mentor us. It has surprised and overwhelmed me how much they have opened up and helped us. Not one single person has viewed us as potential competition (possibly a critique?) but as someone who will be better for the overall market. If I've learned anything here it's that this business has very little room for bullshit and less in Moldova. If you are running a successful restaurant here you probably understand that more choices are better for the whole market of eating out and that more voices in the restaurant industry will help bring about meaningful reform. Speaking of reform we have some new reform minded friends in...

 

The Government 

 

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source: http://neveryetmelted.com

Did I say the government? I was joking. We have not met anyone sympathetic there (though we are looking and I am an optimist). I meant...

 

MAR

 

MAR (www.mar.md) is the "National Association of Restaurateurs and Entertainers." They are a sector association that is working to promote cooperation between restaurants and to improve the state of the industry as a whole. This includes advocacy work on behalf of the sector and representing the interests of members to the national government. In short, literally a thing of my dreams. We have already received extensive help with contacts to suppliers, advice on the startup process and, critically, help connecting to more restaurateurs who are willing and able to talk to us about the startup process. Just having short informal conversations has been amazingly helpful to understanding how the process works. More importantly it is wonderful to hear someone say "don't worry, it's possible. We can help." This is what friends are for. And we will be remembering these friends when someday we're open and in a position to be helpful to someone else. In a business climate like this it's the only way. 

 

In the meantime, if you're in Chisinau and want to support some really awesome cafes I recommend the following:

Opa Cafe - Excellent Greek food in the center

KIKU Steak and Wine - interested in a small intimate cafe with excellend food and a high class feel? This is your spot

Oky Doky - Real American donuts and bagels. 'Nuff said. 

Trattoria - moderately priced, delicious food and great service by the state university

 

 

 

 

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