The pair's talent for making others feel like fathers extends from their willingness to behave like ever-youthful sons. While meeting to talk business, whether with a mentor or not, they play catch with an inflatable globe or crack each other up by breaking into impersonations. Touring their offices, you half expect to find a bunk bed.
Beyond that, though, the two are so enthusiastic about their business and so eager to improve, that it's hard not to find something endearing about them. "When I look at them, I smile," says Gerson, 49. "They are where I wanted to be at their age." Kahn says his kinship with them derives from the fact that they, too, "were aware of a large market, and they found a creative way to reach it." Russell Epker, 49, general partner in a venture capital firm, feels an affinity for them because he himself had a mentor early in his career.
The same cannot exactly be said of Benard-Cutler and Fialkow. For all practical purposes, these two had a mentor even before they had a career.
* * *
Most entrepreneurs brag that their businesses would never have been founded had they taken anyone's advice. The very existence of National Leisure, though, can be laid at the impeccably housed feet of one Samuel Gerson.
Gerson began thinking about offering travel in his Filene's Basement retail stores in early 1986. To mesh with the Basement's off-price image, it needed to be a discount travel agency. Most people knowledgeable about the travel industry responded to Gerson's exhortation, "Talk to me about off-price travel," as if he were asking about package tours to the Bermuda Triangle. Except Ted Cutler, a businessman whose trade-show-exhibition company includes an interest in a wholesale-travel club. He mentioned that while in law school, his son, Joel, had cofounded Last-Minute Travel Co., a small agency in Allston, Mass., that sold more than $1 million a year in very cheap trips to students and others with unduly flexible schedules. He explained that the younger Cutler and a friend, Fialkow, had recently attempted unsuccessfully to buy a travel agency.
Benard-Cutler and Fialkow had an idea they were anxious to try out. The concept, which they soon shared with Gerson in his office, grew out of the different work that each had done since law school. Toiling at his father's company, Benard-Cutler noted an oversupply of airplane seats and hotel rooms. Fialkow had been analyzing retail businesses for venture capital firms. He couldn't help noticing the dominant trend: specialty retailers that focused on a narrow range of products, squeezing the best deals from a handful of vendors.
The two entrepreneurs planned to adapt that strategy to travel. Selecting a limited number of hotels and destinations, they would buy in bulk to get better prices -- even guaranteeing those vendors a specified level of annual volume. In return, they expected the best prices, superb service, and generous co-op advertising dollars. They would spend that ad money "screaming louder than anyone else," says Benard-Cutler. Unlike typical travel agencies, which waited for consumers to drift in, they planned to drive customers in by trumpeting great deals on prepackaged itineraries to such interchangeably sunny spots as Aruba and Jamaica. Most sun worshipers, they figured, would simply grab the best deal.
Gerson saw a clear fit -- and not just conceptually. "You could put them in an area that was not very good selling space," he says. The pair spent much of August 1986 drawing up a business plan for The Vacation Outlet Filene's Basement Inc., which would be a division of National Leisure Group, which also included the two branches of Last-Minute Travel. They soon agreed to a deal whereby the Basement would collect a portion of the 487-square-foot store's revenues.
Even before they nestled in behind the handbag department of the downtown-Boston store, Gerson encouraged Benard-Cutler and Fialkow to work with his executives on design and advertising. Over marathon breakfasts, Samuel DePhillippo, Filene's Basement's senior vice-president of marketing and merchandise planning, shared demographic data. "They had to understand that our customers are people who could afford to pay more but don't," he says.
Benard-Cutler and Fialkow may have known that, but it took some time before they managed to incorporate it into their merchandising. After The Vacation Outlet opened, in November 1986, "price for us was like a drug," concedes Benard-Cutler. It was the only way, they thought, to carve a niche in the crowded market. Gerson kept pushing value. "We're not cheap here," he lectured them. "We offer outrageous savings." Instead of selling a $499 trip for $299, he said, they ought to be offering $999 trips for $699. The difference was this: consumers who were attracted to the very cheap trips were just looking at price and wouldn't have any loyalty. And they were even less likely to tell friends and coworkers about The Vacation Outlet. To Gerson, it seemed painfully obvious. "You guys are thick," he would yell. "You just don't get it."
Gradually, Benard-Cutler and Fialkow began mixing deluxe hotels, all-inclusive resorts, and cruises into their offerings. With Gerson's help -- "Mostly, he just let us watch how he did it," says Benard-Cutler -- the two entrepreneurs began figuring out how to balance the delicate equation of price and value.
