My financial mistake After buying US$50,000 worth of hair products, this Dubai hair stylist's relationship with the investors turned sour - and so did his precious merchandise.
Question of chemistry
In August 2008, Nesko Selim sat pensively in his car, just inches from a skip in a dimly-lit car park. Behind him were dozens of boxes piled high on the back seat. Taking a deep breath, Mr Selim stepped out of the car and started tossing the boxes, one by one, into the stinking bin.
They were supposed to be his ticket to fame and fortune, but these boxes didn't contain cash, gold or precious stones. Instead, they were filled with more than US$50,000 (Dh183,510) worth of shampoos, conditioning treatments and styling waxes. With just a six-month shelf life, these high-priced chemicals were now worth little more than rubbish. Mr Selim, an Armenian-American hair stylist from Hollywood, arrived in Dubai in May 2006 in the hopes of striking it rich.
Indeed, these were no ordinary hair products. They had been developed and branded by Giuseppe Franco, the Beverly Hills stylist who counts Sharon Stone, Brad Pitt and Jon Bon Jovi among his clients. Mr Selim, 40, who worked under Mr Franco as an apprentice from 1992 to 2001, arrived in Dubai with the dream of being the sole distributor of hair care items branded to the celebrity stylist. To get started, Mr Selim bought a thousand units of straightening chemical at Dh300 each, which he later sold to various salons in Dubai for Dh1,000 each, making a tidy 70 per cent profit. But while these items sold steadily, it still wasn't enough to cover all of his expenses.
So he started working as a freelance hair stylist - visiting clients in their own homes - to supplement his income. As Mr Selim established contacts and expanded his freelance business, two of his clients, whom he preferred to keep anonymous, offered to serve as sponsors in a more ambitious venture. The plan was to open a training academy in Dubai that would also serve as a salon and distribution centre for Mr Franco's products.
"I was so excited," Mr Selim says. "I wanted to be the glint in Franco's eye and make him proud." In December 2007 plans were drawn up, and Dh500,000 was laid on the table by his sponsors to secure a premises in Dubai Marina in preparation for its official opening in the summer of 2008. In response, Mr Selim paid for a major shipment of supplies - worth about $50,000 - direct from the manufacturer in Japan.
This included perishable items such as shampoos, which had a six-month shelf life, and non-perishable items like brushes and combs. Three quarters of the cargo had been earmarked for distribution, and the remainder was for the training school. He paid for half of the shipment with savings, and the other half he slapped on his credit card. Everything seemed to be going to plan. But over time, Mr Selim realised he may have been too hasty in choosing his business partners.
"As time went by it became more apparent we had different ideas about the business model," he recalls. "We were no longer on the same page and my dream of opening a training school with a distribution centre seemed to getting dimmer and dimmer by the day. They just wanted the salon open to make a fast buck, whereas I wanted to build a brand and a reputation." Mr Selim says opening the academy, and bringing a glimmer of Beverly Hills to Dubai, was the project closest to his heart. In May 2008 - the month the distribution was meant to start - Mr Selim called a meeting with his partners. With the opening of the academy scheduled for July, he felt it was time to talk.
"I told them if we couldn't agree on anything that there was no point in going on," he says. "Things turned ugly, and I just wanted out." It was at this point that Mr Selim decided to cut his losses and get rid of his merchandise. But without the support of his sponsors, and the shelf-life of the perishable chemicals running out, these products had little resaleable value. He sold and returned what he could. The manufacturer, fortunately, offered him 20 per cent of the original value on a portion of the hair care products, allowing him to recoup some money. But the majority, he says, ended up in a Dubai skip. By August, the combs, shampoos and chemicals were gone. All that remained was a $25,000 debt on his American credit card.
To make matters worse, in September, he received a call informing him his mother was ill. Discouraged and penniless, Mr Selim decided to return to the US to be with his mother. Now, looking back, Mr Selim feels he was far too hasty in pursuing his business ambitions. While his investors appeared to have the same goals and ideas, he regrets not drawing up a formal contract which stated their shared intentions and vision.
"I was too hasty with wanting to get the venture off the ground without doing my homework or signing any legally-binding contracts," he explains. "We had different ideas of what the business model should be, and no clear agreed mission statement. This resulted in conflict and confusion, not to mention losing our money." But after spending a year with his mother, Mr Selim is back. He returned to Dubai in October 2009 after his mother's health improved, hungry to give his business another try. A handful of former clients, he says, have once again offered to back his plans to open a salon, combined with a distribution centre and training academy. This time, however, he plans on doing things differently.
"I'll make sure I have sole charge as creative director and CEO, and that the investors are just that - investors," he says. "And before any money is ploughed in, I'll make sure we all know what we're doing and where we're headed."