Focusing on service, one man builds a financial empire on spiritual principle
LINZ, Austria - He wasn't penniless, but neither was Faramarz Ettehadieh wealthy by any stretch of the imagination when he founded Imperial Finance Group in the early 1970s - a company that grew during the 1980s and 1990s into a multifaceted enterprise that has managed more than US$1.1 billion in investments over the last 30 years.
His main capital was an idea. The young Iranian immigrant had figured out a way to create a new kind of investment for Austrians, allowing ordinary people to invest jointly in real estate without endless paperwork.
In other countries, this arrangement is known as a real estate trust. But in Austria, the concept was unknown - and thought to be impossible because of the country's complicated system of property laws.
Dr. Ettehadieh ignored those who said his goals were unattainable. "My whole life, whatever I've tried to do, people have always said it will not function, because of this or that objection," said Dr. Ettehadieh. "They think it is impossible to do something because they cannot visualize it. You must have a vision if you want to realize something and you must have the ability to transfer this vision to others."
With money in hand from multiple small investors, along with some $2,500 that he himself had earned selling insurance, Dr. Ettehadieh's first project was to purchase and develop a vacant parcel of land, bombed-out and undeveloped since World War II, in the heart of this northern Austrian city on the Donau River.
On that land in 1974, he built an eight-story office building. Today, it is the headquarters of Imperial Finance Group. And from that headquarters, Dr. Ettehadieh oversees an extensive financial and real estate investment company that manages the money of some 50,000 investors, operates eight posh hotels in Austria and Italy, and manages more than 70 small shopping centers in Austria, Germany, Hungary, Italy and Spain.
"He's very innovative and very dynamic," said Peter Muzik, editor-in-chief of Wirtschaftsblatt, which is today the only daily financial newspaper in Austria - and which was co-founded in 1995 by Dr. Ettehadieh. "He is financially very competent and he has found lots of new fields to work in."
For his part, Dr. Ettehadieh attributes his success to the straightforward adherence to some simple rules of conduct - rules which he has derived from the spiritual principles of the Bahá'í Faith.
"At the end of the day, when you have thought everything through, there are some basic spiritual principles that, if you obey them, you will have long term success," said Dr. Ettehadieh. "And if you don't obey them, then in the long term you will not be successful."
According to Dr. Ettehadieh, these principles boil down to the simple virtues that have been taught in every religion and that are today especially emphasized in the Bahá'í teachings. They include the importance of honesty in all dealings, a stress on absolute trustworthiness and an ideal of service over self-interest in all endeavors. The understanding of human oneness and the concept of justice as expressed in the Bahá'í teachings have also been guiding elements in virtually all his undertakings, he said.
For example, his initial ideas about putting together a real estate trust came partly from his understanding of the principles of equity and justice - leading him to think hard about how to create stable and yet profitable investments for ordinary men and women.
"For the poor or even the middle class, there is almost no possibility to purchase land or another type of real estate development," he continued. "But in the type of real estate developments that we are doing, they can put aside every month a little bit of their income and so, over 20 or 30 years, have a substantial amount set aside in a solid investment."
Dr. Ettehadieh has also sought to ensure that those investments will give the best return by focusing on another spiritual principle in the operation and management of those properties: service.
"With many companies, they think profits are the main goal," said Dr. Ettehadieh. "And that sometimes works well in the short term. But our approach has also been to make service to our customers as the main goal. And then to use profitability as an indicator that you are serving people well."
Imperial's system of time-sharing hotels, which operate under the name of Club Cordial, is a good example of how a focus on service can lead to success, said Dr. Ettehadieh.
Traditional time-sharing programs require people to buy a specific time, usually in week-long increments, at a specific resort area. Marketed as both an investment and a way to hold down holiday costs, such programs have also been criticized because they sometimes lock customers into a situation where they must go to the same place, at the same time of year, especially for low-priced programs.
Club Cordial allows customers to purchase and accumulate "points" in the system, instead of a owning a "deed" to a particular unit at a specific time and place. In this way, the customer/investor is more like a shareholder in the hotel's operation.
"In Europe, this system is absolutely unique," said Dr. Ettehadieh, explaining that the idea emerged from a desire to put the customer first. "With other time-sharing systems, for example, you can buy points, but you don't accumulate real ownership shares. This all comes out of the principle of service."
Entrepreneurship in a carpet shop
Dr. Ettehadieh was born in 1948 in Teheran, Iran, into a family whose adherence to the Bahá'í Faith goes back five generations on both sides. His father, a chemistry professor at the University of Teheran, died in an accident in 1951. In 1957, his mother brought him and his two siblings out of Iran.
Settling in Linz, Dr. Ettehadieh's mother established a small carpet shop, using the pension from her husband. "If you want to know where my sense of entrepreneurship came, it is probably from her," said Dr. Ettehadieh. "What I learned in my mother's carpet shop was to be persistent - not to give up. And to rely on God and to pray - then a solution to every problem will come."
At the time of his graduation from Kepler University in Linz in 1972 with a master's degree in economics, Austrian law placed restrictions on non-citizens that effectively prevented Dr. Ettehadieh from getting a job in banking. So he instead set up his own financial institution, built around the concept of real estate shares. And then he put the idea into practice, while pursuing a doctoral degree at Kepler, by putting together a group of shareholders to buy the land for his first building in Linz.
"I had found this land to buy, in the heart of town, but it belonged to many people, and everyone said it was not possible to bring everyone together to develop it," Dr. Ettehadieh said. "Many of the owners had small quarrels with each other or other concerns. But in my mind, the principle was to promote unity. And so I brought them all together and got them to sign, in the presence of a notary, the required papers. This was the beginning of Imperial."
His next step was to put together a group of small investors to finance the land's development - and to create a trust where shareholders can buy in or cash out as they please, at a fair price. "I knew from the Bahá'í writings that everything must be based on justice and equity, or it would not function," said Dr. Ettehadieh.
The first project served as a model for others, and Dr. Ettehadieh gradually developed these concepts in endeavors like Club Cordial and in the construction of more than 70 small shopping centers around Austria, which are themselves distinctive for their placement outside urban centers.
"At first, no one wanted to finance these projects," he said of the shopping centers. "People said no one wanted to get into a car to go shopping. But over time, the idea has been highly successful."
The storms of success
As is often the case with successful people - and especially those with innovative ideas - Dr. Ettehadieh has faced more than his share of criticism and attacks.
At one point in the early 1990s, for example, the Austrian tax authority questioned whether Imperial's hotels were entitled to certain tax exemptions as a business. A national magazine, owned by a competing banking group, got wind of the issue and unfairly accused Dr. Ettehadieh and his company of tax evasion.
Subsequent audits and the tax courts both upheld Imperial's position, however, and other Austrian magazines and newspapers rallied around Dr. Ettehadieh, publishing a series of positive articles that vindicated his name and projects.
"There was nothing true in the original article," said Alex Kaefer, who recently retired as an economic editor at the Austrian News Agency (APA) and has been a longtime friend of Dr. Ettehadieh. "And I can confirm that the principles of honesty and trustworthiness are two key words for him. He is well known in Austrian business and economic circles, and he is recognized and appreciated for those qualities."
Partly motivated by his unhappy experience with negative press, Dr. Ettehadieh moved to start up a new daily financial newspaper, Wirtschaftsblatt, in 1995, in which he today retains a 6 percent ownership interest. "The whole line in founding Wirtschaftsblatt was to be constructive, not negative," Dr. Ettehadieh. "We wanted to deliver information that is useful to the reader. We didn't want to deliver news that is not useful, like gossip."
Dr. Ettehadieh's outlook for the future and direction remain distinctly positive.
Imperial has steadily expanded into other European countries, including Eastern Europe, aiming to offer higher levels of financial security to small investors. In 1992, Imperial founded Partner Bank to handle its growing work in portfolio manamgement and private banking. Partner Bank is today legally and economically separate from Imperial and is owned entirely by an Ettehadieh family foundation, which itself was formed primarily for the purpose of promoting social and economic development in the global South.
In the mid-1990s, Dr. Ettehadieh founded the Two Wings Network, a non-governmental organization that seeks to establish North-South partnerships aimed at raising the capacity of women.
Married for more than 23 years, Dr. Ettehadieh also treasures the close relationship he has with his wife and their children. "My wife, Bahia, is trained in architecture and, in addition to consulting generally about my work, she has been involved in the interior design of our hotels," said Dr. Ettehadieh. "We have a life of real partnership in terms of supporting and encouraging each other to develop our capacities to the utmost, to have a harmonious family life, and to live with a spirit of service to society."