Cool Corp

Joe Issa, penetrating Jamaica with his Cool brand

Joe Issa, penetrating Jamaica with his Cool brand
BUSINESS LEADER NOMINEE #2
Observer Business writer
Wednesday, February 23, 2005

Joe Issa at his Cool Oasis flagship service station in St
Anns Bay.

In a strange way, Joseph (Joe) Issa was handed precisely what he, during his moments of private reflection, used to wish for, when, in June 2003, he was fired from SuperCiubs, the hotel chain owned by his parents, John and Ida Issa, and where he was executive president and heir apparent to the chairmanship.
“Growing up in a successful family setting, I always had this burning desire to see if I could be successful on my own,” remarks the 40 year-old entrepreneur, now principal shareholder and executive chairman of the Cool Group of Companies, the multi-faceted retailer he founded 10 years ago.

In a strange way, Joseph (Joe) was handed precisely what he, during his moments of private reflection, used to wish for, when, in June 2003, he was fired from SuperClubs, the hotel chain owned by his parents, John and Ida Issa, and where he was executive president and heir apparent to the chairmanship.
“Growing up in a successful family setting, I always had this burning desire to see if I could be successful on my own, remarks the 40 year-old entrepreneur, now principal shareholder and executive chairman of the Cool Group of Companies, the multi-faceted retailer he founded 10 years ago.

The development of this retail conglomerate, from a single service station, Cool Oasis, in St. Anns Bay in 1995, has been nothing short of a singular lesson in brand management.
“The main asset and the first building block of the organization is the brand Cool,” explains Issa. “Like Richard Brandson’s Virgin Group, our philosophy of doing business is to sell an attitude and a lifestyle. It also involves basic principles in which we are obligated to spend less and sell more to achieve financial success.”

Headquartered at 19 Main Street in Ocho Rios, the Cool Group of Companies span petroleum products, cellular phones, accessories and calling cards, specialized clothing stores, cambios and ATMs, automotive accessories, petrol management systems and sign construction.
Remittance and bill payments, air condition manufacturing and sales, and a plastic bag making company are now in the making – all under the Cool brand.
With sales growing by approximately 170 per cent for each of the past three years, the Cool Group currently boasts annual sales of $4.5 billion, in what Issa describes as high-volume, low-margin businesses.

“We operate in high-volume businesses with very thin margins, but we are a profitable company,” he says.

To maximize the output of the 300 workforce, Issa structures his group into semi-autonomous entities, each with its own sales, efficiency ration and profit targets – making it easier, he believes, to identify strengths and weaknesses and to move nimbly towards corrective action.

“Within the Cool Group we encourage the divisional heads to build a strong team around them, and not to be intimidated by somebody’s ability or ambition,” he explains. “Each company has its own targets.”
Cool Oasis service stations, and Cool Cards represent the core of Issa’s empire.

There are 32 Cool Oasis gas stations throughout the island: 20 retail outlets and 12 fleet outlets. Issa owns eight of the retail outlets, while the others are owned by independent operators, and branded by Cool Oasis. They are located in Kingston, St. Ann, Maggoty, Darlington, Whithorn, Port Maria, Browns Town, MoBay, TopHill in St.Elizabeth. One is now under construction at Boscobel, in St. Mary.

The fleet outlets are set up on the premises of companies that have large fleet of motorcars, firms, which, according to Issa, are seeking efficient management and tight oversight of their petrol consumption. Among the customers are JUTA in Ocho Rios, and David Phillip’s National Meats and Foods Company located in Lydford, St. Ann.

The proprietary, computerized fleet control system installed at the private locations are estimated to save clients a minimum of 20 per cent on their annual petrol bill.

“Twenty per cent saving is what we put on paper, that is the experience of customers,” declares Issa.
There are other compelling reasons, he argues, for businesses to sign up.

“For the fleet we have controls in place to protect the gas going in so that you make sure you get what you ordered and are supposed to get,” Issa explains. “Then the system protects the gas going out. It cuts down your theft and inefficiency. It allows management to look at an anomaly report, and also has a maintenance management component.”

The Cool Group does not own or manage petrol delivery trucks, opting as a matter of strategy, to work with four or five contractors who make the deliveries.

While the real value of fleet management is the savings it brings to client companies, the primary selling point of the other core product – Cool Cards – appears to be the convenience that it brings to the process of shopping for all things cellular, in an industry with monthly sales of US$25 million.

“The Cool Cards brand is a one-stop shop for all cellular phone needs, from accessories to phones and cards,” brags Issa.

Cool Cards can be bought at some 700 retail outlets throughout Jamaica where the company offers some 15 different phone cards via its computerized terminals.

“We are a master sub-agent of Facey,” explains Issa. “We decided not to create our product but sell everybody’s products, so customers can get about 15 different cards.” Facey Ltd is the company that has the distributorship for Digicel’s calling cards in Jamaica.

As envisioned by Issa, the next stage in the evolution of this service is the installation of credit card and remittance services on the machines, and through a partnership with Paymaster Jamaica, bills payment service.

Even Issa himself professes to being baffled by the frenetic pace of his and his company’s transformation into such a national retail mogul.

“I never thought I would ever been in the gas business,” he charges. “It was an accident and it evolved. We never thought of this level of growth. It took a life of its own.”

Indeed, he is now as far away from base as he could have imagined as a youngster growing up in the Issa family where he was expected to follow the footsteps of his father, John, and grandfather, the late Abe Issa, into the hotel business. Issa also accepts that as the eldest of three children of John and Ida, he was “born into privilege” but is quick to point out that his was a life of disciple and modesty.

“Looking back we were born into privilege but did not realize it because of our upbringing and what was happening nationally at the time,” he explains. “Our parents taught us not to take things for granted, an insisted that we develop the skills and right attitude to survive on our own if had to start from scratch. There was a sense of humility.”

In the 1970s John Issa as co-chairman and capital partner in the family holding company – the House of Issa – that spanned car dealership through Motor Sales Ltd, banking through Issa Trust and Merchant Band and Hertz car rental.

His teen years coincided with Jamaica’s heady period of experimentation with so-called democratic socialism, in the 1970s – a period when as Issa recalls, the family business came under financial pressure.

“There was fear of communism, fear of being forced to become a refugee in another country. Business opportunities were limited. It was difficult time for the family business,” he notes.

But young Issa also remembers the lucrative distributorship for the Russian-made car, Lada, and the Hertz rental business, that together “placed the family back on strong financial footing.”

In 1978, the Issa family started Couples Hotel, to be followed in 1980 with the opening of SuperClubs by John Issa. Joe was 15.

“From age 11, I began working in the family business,” he recalls. “During the summers I also started doing odd jobs at the hotels, like working the bell desk, and telephone operator.”

St. Peter and Paul Prep School was followed by seven years at Campion College, a ferment as he remembers it, of intellectual exploration.

“At Campion, I became the first third former to become the editor of the school magazine Campionite. From first form I used to get involved, so by the time I reached the third form, I had three year experience under my belt.”

His dossier speaks unmistakable of a youngster who was being groomed for a career in hotel management. In the mid-1980s he spent a summer at a lead Forte hotel in Sardinia, Italy.

He spent time learning odd jobs in the kitchen at the Grosvenor, a “good learning experience as he puts it”. He spent a summer at the BITU working under Ruddy Spencer.

Issa graduation with honors from the College of the Holy Cross in 1988 with a bachelors degree in economics and accounting, as a certified public accountant.

A brief stint in 1988 at Pepperonis at Northside Plaza Kingston – a business in which his father has a stake – after graduation was followed by a posting at Bloody Bay Hotel Development Co, which developed Grand Lido Negrill. He was resident manager.

A whole series of promotion in the hotel group followed:
-1992 to93 – general manager, Couples Hotel, SuperClubs.
-1993 to 95 – general manager, Grand Lido An Souci, SuperClubs.
-1995 to 96 – vice-president, development and special projects, SuperClubs.
1996 to 98 – senior vice-president, sales, SuperClubs.
1998 to 2003 – executive vice president, SuperClubs.

But while he climbed the corporate ladder at a company essentially created by his father, young Issa never lost his personal ambition of building his own empire.

The first real opportunity to start came in 1993, after the petroleum sector was deregulated by the government. Issa recalls that a friend, Wesley Dixon identified a parcel of land in St Ann’s Bay as an ideal spot for a gas station.

Over several years Shell Company had made unsuccessful attempts at convincing the owner to part with the property. He tried his luck and succeeded.

“I must have caught her at the right time as she sold it to us,” he said.

Issa borrowed US$80,000 to buy the land and spent another US$80,000 that he had saved, and had raised privately to build the service station.

It was his first foray in big business, and a learning curve awaited him.

The business opened in 1995 under Roy d’Cambre’s National brand.

“I was clueless as it related to the gas business,” he acknowledges. “I got it at as good price so I was able to use the property as collateral.”

So Issa did what every thoughtful businessman would do. He hired a manager to run the station.

Those early days, he recalls, provided some painful lessons, and eventually solid grounding for the years ahead.

“Like every business, there is a learning curve and a capital requirement cure of about two to five years,” explains Issa, now, much wiser. “One of the things we learned is that it is vital that you manage the gas you receive on delivery. It took about two years to put in the system of theft prevention. We also had to learn about pumps – which ones to buy, and which ones to avoid. We also learned how much easier it is to build an existing organization than to start one from scratch.”

But there were two factors that were driving Issa’s vision for his service station: the value of branding – something he learned too well in the hotel business – and the fact that people constantly told him that the location he had acquired was so much like an oasis.

“People used to say it was an oasis, but at the same time we did not want people to think of the place as being hot,” he says. “The hotel business taught me the difficulty with brands. At an early age I had consciousness for brands.”

In 1995/96 the name Cool Oasis provided the perfect name that Issa was seeking around which he could begin to develop a series of products and services.

Issa then decided that he wanted to develop his own marketing company and part ways with National, and brought in an oil expert, Ron Santicola from the USA to develop the business.

“Santicola made the formal application to Petrojam and we were among the last group to be approved as marketing company,” he says.

But with a single location, and a huge quota to qualify as a marketing company, Issa had to get creative.

“We started to develop fleet sites,” he recalls. “The idea came from the USA. Santicola was instrumental in getting us the rights for the Caribbean for the fleet management system.” With this service, Issa could set up petrol tanks and pumps at the service sites of companies with large fleets of motors and trucks, a move that helped drive sales to satisfy the minimum requirement as a marketing company.

In every early stages of his journey to becoming the largest indigenous petrol station operator in Jamaica Issa has his most defining moment.

“Shell made me an offer on the station for US$1.3million,” he says. “And that is when I knew I could do it. I realized I had developed an entity that was worth something. My father and sisters said I should cash in and run. But if I did that, I would have invested the money in the US stock market and would have lost.”

In the early days, expansion was fairly slow. The station in Browns’ Town became the second to operate under the Cool Oasis brand as an owned and operated enterprise.

But the rural town of Maggoty was to provide the first dealer branded station – marking a new phase in the development of the Cool Oasis brand of gas stations. Simultaneous, the company continued to develop its fleet of service operation.

Once the service stations as a business model started to take shape, Issa began to seek out ways to leverage the Cool brand.

Cambios and ATMs followed. In essence, what began as a single-station business in 1995, within less than a decade was transformed into an impressive array of businesses – that now employ a combined 300 workers, an had turnover of $4.5 billion over the past 12 months.

Among these businesses:

Cool Gear – which operates four branded stores that sell clothing and gift items. Two will be added shortly with plans for the branded to be exported to the islands of the region.

Cool Automotive Distributors – a company that distributes lubricants, batteries and tires in Jamaica, Trinidad and Canada, with expansion plans for elsewhere in the Caribbean.

Cool Tow – a tow truck company.

Cool Signs – a company that makes and installs signs. Issa recalls that his entry into the calling card business with Cool Cards was not without some level of trepidation.

“The card business was an accident,” he says. “A friend was in, and it did not do as well he encouraged me to go into it, and told me where he had made mistakes and how to avoid them. At his insistence and guidance I went into it.”

This high-volume low-margin business is the number one electronic phone card distributor in Jamaica.

“Our focus has been the creation of a one-stop shop for all our cellular phone customer needs,” explains Issa. “We have an all island sales team for phone accessories, and phone cards in both electronic and physical format.”

Issa has no hesitation, to publicly declare himself as having no Midas touch, and a failure at some of the businesses he has tried.

“I toyed around with a regional newspaper and sports bar called Cool Out that did not work,” he told the Business Observer. “So I shut them down immediately. If I try things and they do not work, I am not embarrassed to deal with it.”

Apart from hard work, one of the keys to his success for this savvy entrepreneur has been his belief in the human factor. “I’m a big believer in people,” he declares. “You are only as good as the people around you. I have helped several people in life, and have lived to see where I have had to turn to lots of friends for financial and other support.”

In fact, Issa recalls the day he was fired from the family business, after having made a decision to marry Ocho Rios businesswoman, Asha Rochu Manglani.

Most – but not all – of the financial institutions that supported his personal businesses were willing to stand by him, after it became public that he was no longer with SuperClubs.

These include: Manufactures/Sigma, Pan Caribbean, DB&G, NCB and RBTT.

“They were very accommodating and understood that the Cool Group was as completely independent and stand-along entity,” he said.

Issa will shortly be launching two new ventures that will diversify his Cool Group into manufacturing – one company. Cool Bags with manufacture black, so-called scandals bags for the Jamaican market. This company to be headed by Peter Turpin, formally of Jamaica Grande, is a 50/50 partnership.

Issa promises an energy efficient, and capital-labor intensive operation, and says that he will be able to minimize material costs because an important raw material used in the production is a byproduct of oil

“Our goal is to start in Jamaica and go into the region,” he says of the facility now under construction in Ocho Rios. “We want to start small and once we get it right to expand in six to 11 months.”

He is also launching a brand of air conditioners called Cool Wind to be sold through distributorships worldwide – again through a 50/50 partnership.

“We spent about three years working with manufactures in Asia to get models built to our specification using a special compressor,” he explains. “ We will appoint distributors in every country over the next 24 months. What we are selling is the value of the Cool brand.”

The development of the Cool Group continually reinforces Issa’s faith in the power and commercial value of branding.

“Brand is the main building block of our company,” he says. “Most of the stations that have converted to Cool Oasis say their sales have gone up 20 to 30 per cent. We have seen a 170 per cent growth in sales for each of the past three years.”

As his Cool brand continues to penetrate the local market, Issa has one major strategic move under consideration:
“We do not rule out a public listing,” he says. “It is something we have talked about, but not at this stage.