Looking into entrepreneurship in contemporary Romania can be a bit like entering perilous territory. As a recent documentary shows (Kapitalism: Our Improved Formula), business and politics have been far too close to each other since the 1989 Revolution, a “marriage” oftentimes wrought with suspicions of corruption. Hence let it be said from the very beginning that, in order to avoid exploring the slippery ground of allegedly corrupt business today, this article will focus on three inter-war Romanian male entrepreneurs, on the one hand, for the sake of some historical perspective, and on three young contemporary female ones, on the other hand, for a taste of present-day Romanian entrepreneurship. The controversial 1990s and 2000s will be graciously overlooked, i.e. they fall beyond the scope of this article.
Historically, there are three legendary entrepreneurs of whom Romanians raised during communism heard from their grandparents’ generation, and who are said to have made “Romania’s entrepreneurial spirit what it is today” [1]: Nicolae Malaxa, born in 1884 in Huşi, north-east Romania, dead in 1965 in New Jersey, the USA; Max Auschnitt, 1888 Galaţi, eastern Romania – 1959, the USA; and Dumitru Mociorniţă, 1885 the county of Prahova – 1953 Ploieşti, Romania.
Nicolae Malaxa was born into a family of Aromanians. Supported by his family of (some) boyar descent on his mother’s side, he studied engineering at the Polytechnic University of Karlsruhe and then returned to Romania. He started work in the Romanian Railways Company and after World War I he resigned and opened a rolling stock maintenance facility. Given the post-WWI decay of the infrastructure, the venture was very successful and in the early ‘20s it grew into a production unit equipped with machinery imported from Germany. Also, 180 German workers were hired initially at Malaxa’s new factory, to ensure quality production and to train Romanian workers to take over professionally. The first steam locomotives were produced in the late ‘20s, then diesel ones as well as other rolling stock, some provided with innovative engineering solutions developed by local engineers Henry Holban and George Constantinescu.
As the European powers, especially Hitler’s Germany, were just starting to rattle the war sabre again, Malaxa diversified building new factories in the 1930s. One manufactured weldless steel pipes using Stiefel American technology, the other – artillery equipment and ammunition. At the end of the ‘30s, Malaxa was a shareholder in four major plants around Romania, the owner of at least four others based in Bucharest, Zărneşti an Galaţi, and overall, the creator of the “biggest industrial groups in Southeastern Europe” [2]. Last but not least, the (arguably) richest man in the country at the time manufactured at Reşiţa, in 1945, the first wholly Romanian automobile: it wasn’t a Dacia, but a Malaxa 1C, with a 30 hp engine and which could transport up to 6 people - see photo. [3]
It would be nice to know that Malaxa’s extraordinary success was due mainly to business acumen and diligent work. But the truth is that it was very much due to clever (and controversial) politics, too. Malaxa had a very close relationship with King Carol II and his (in)famous “camarilla”. Thanks to that friendship, he was able to access state loans easily, which infused capital into his factories, which produced locomotives and arms which Malaxa sold to the state at a high profit rate. In recognition of that state-facilitated profitability during Carol II’s reign, he once went to His Majesty carrying an elegant briefcase that contained 100 million lei and kindly offered it to the king, to express gratitude on behalf of the Romanian heavy industry. [4]
His political flair also prompted him to finance all the relevant political parties active in Romania in the 1930s-40s, from the King’s right-wing National Renaissance Front to the Soviet-supported Communist Party, but it was the far-right political forces that he apparently sided with. For example, when Iron Guard mentor Nae Ionescu travelled to Nazi Germany, Malaxa mandated him to negotiate some business on his behalf; the philosopher did that so well that the industrialist reciprocated by paying off the mortgage for Ionescu’s villa in Băneasa.
Impressive as it was, Nicolae Malaxa’s locally-built industrial empire was, thus, far from ethical, and the entrepreneur, who emigrated to the USA in 1948, remains a controversial figure of Romanian business. Still, as one of his collaborator’s reportedly remarked, he was the one who had the courage, skill and patriotic impetus to “show the world the Romanians’ industrial vocation” in times when the world regarded the Romanians mainly as an agricultural people. [5]
Malaxa’s arch-rival was, on a business as well as political level, Max Auschnitt. (The two competed for the favours of King Carol II, and Malaxa eventually won, as we shall see.) Auschnitt was born to a Jewish Romanian family from Galaţi and graduated from the Academy of Commercial Studies in Vienna. Following graduation, he returned to Romania, volunteered to serve in the army and fought in World War I. In the early ‘20s, he took over his father’s small factory of wire and nails in Galaţi and integrated it into the Titan-Nădrag-Călan Group, which included several metallurgical plants. In the late ‘20s, he became the majority shareholder of Austrian company Steg, which owned a steel plant, the Iron Domains and Factory (IDF) in Reşiţa. On the verge of bankruptcy when Asuchnitt was appointed its Managing Director, IDF turned around to become the biggest stock company in the country, with the largest capital (one billion lei), the highest turnover and the most employees (16,669 in 1938). Subsequently Auschnitt expanded regionally, taking over a Steg-associated steel plant in Yugoslavia and buying a locomotive factory in Poland – all of which led to his being dubbed “The King of Steel”. [6]
But in 1939 the other king, Carol II, was already succumbing to Malaxa and Minister of the Court Ernest
Urdăreanu’s machinations, and he agreed to get rid of Auschnitt when, in the context of Romania’s cooperation with Nazi Germany (where, let us remember, Malaxa had business partners), the Jewish Romanian industrialist was set up and falsely accused of “endangering the country’s arms production”. [7] Consequently, Auschnitt was arrested, trialled, given a 6-year prison sentence and imprisoned, while his companies were “Romanianised”. In 1942, however, he was released and his prison sentence commuted to a community service one which he served in his own former factories. Two years later, he was re-trialled and acquitted. It was now 1944, Romania was Nazy Germany’s ally, and so Auschnitt did not hesitate: he left the country, flown to Egypt by his pilot friend Matei Ghica. The Germans sentenced him to death in absentia. He returned to the country after the war, hopeful that he was going to contribute to its reconstruction, but in 1947, realising Romania was being drawn into the Soviet sphere of influence, he left for good, this time to the USA. The new communist regime confiscated all of his property and sentenced him to death in absentia, too...
(Just to round off Auschnitt’s story with a sense of retribution, let it be said that, once in the USA, he did everything in his power to have Malaxa expelled from America and handed over to the communist regime in Romania, on account of his collaboration with Nazi businessmen. He passed away before he could succeed, though.)
Unlike Malaxa and Auschnitt, Dumitru Mociorniţă never had anything to do with the King’s “camarilla” or influence, and his business was built up step by step due to talent, a bit of luck, family support, expertise, good decisions and hard work. His was, as sources indicate, “clean business” [8], and he was considered an “exemplary entrepreneur” [9].
Mociorniţă was born into a poor family of peasants with seven children. At primary school he was seated in the last row of desks because he was barefoot. He did his secondary school in Ploieşti, giving private lessons to colleagues and using the money to take classes of German and French, and the Kreţulescu Economic High School in Bucharest, which he graduated magna cum laude. That’s how prominent politician Ion C. Brătianu noticed the gifted young man and decided to provide him with a scholarship. Thanks to that, Mociorniţă was able to continue his studies at the Superior School of Commerce in Bucharest and the Superior School of Industry in Paris.
As part of his training, Mociorniţă went on to gain practical experience around the industrialised states of Europe: he worked in the textile industry in France, in car manufacturing in England, the chemical industry in Germany, and as a representative of a chemical products company based in Hamburg. He also learned about the applied management experiments carried out by industrialists like Taylor, Ford and Krupp. Having matured as a business student, he refused the opportunity to emigrate to the US and returned to Romania, instead. Here, he got acquainted with businessman Grigore Alexandrescu, married his daughter and became the director of Alexandrescu’s small leather factory in 1909, when he was 24.
World War I saw Mociorniţă behind the frontline in Moldavia, Bessarabia and Transnistria, in charge of providing the army with basic supplies and equipment, an activity for which he was decorated. Following the war, the businessman had a clearer idea of what the market demanded: boots for soldiers, saddles for horses, leather jackets for pilots and policemen, and costumes for motorcycle riders. The ambition to open up his own factory grew bigger and bigger, and in 1925 Mociorniţă borrowed 30 million lei which he used to buy and rent land on the outskirts of Bucharest, where he built his own shoe factory, equipped with machinery leased from Germany and Great Britain.
Initially, the factory had three outlets in Bucharest, but Mociorniţă soon realised that if he wanted his business
to grow significantly, he needed his own distribution networks. He built those and subsequently opened outlets in a range of cities around Romania, from Cluj to Craiova and Galaţi. The Mociorniţă shoe factory became Romania’s biggest shoe manufacturer in the interwar period. All revenue was reinvested. Moreover, the owner grew a reputation as a philanthropist, since he offered, for example, scholarships to the studious children of his employees, and financed vocational schools. The factory kept expanding until 1938, and in 1941 the business had a capital of 250 million lei, around 1,500 employees, and Mociorniţă had been nicknamed “the king of shoes”.
With the outbreak of WWII, the factory became the Romanian Army’s main supplier of leatherwear and footwear, and the prospects, despite the misery brought about by the war, looked good. But then the tables turned in Mociorniţă’s life, just as in Romania’s history: the Soviets poured into the country, the communist regime was established, and all of his property was nationalised. Since he refused to leave the country, Mociorniţă was trialled, charged as an “exploiter” and sentenced to prison along with his sons. He died in prison in 1953, leaving behind a legacy of honest, honourable and successful entrepreneurship.
Remarkable present-day Romanian entrepreneurs are true children of the post-industrial age, with business ideas in the field of digital technology and/or computer science. As our first example, Raluca Ada Popa, maintains, IT is everywhere today, from planes to banking and the watches we wear. Raluca confesses she chose to focus on data security because it implies a blend that’s irresistible to her: mathematics and engineering. A native of Sibiu, Raluca left the country, graduated in computer science and mathematics from the Massachusetts Institute of Technology (MIT), and did her PhD in computer science at MIT, with a doctoral thesis on a security solution subsequently used by Google, Microsoft, SAP and Lincoln Labs software. Recently, she co-founded a start-up called Preveil, based in Boston, which deals with encryption solutions for company mails and documents and was awarded an A round of investment from Spark Capital, a fund that manages budgets of up to 3 billion dollars. [10]
Secondly, there’s Mădălina Seghete, who left Romania 15 years ago to study at Cornell University. After
graduating, she did post-graduate studies in management science, engineering and design, as well as an MBA at Stanford. That’s where she met three colleagues who were going to be her partners on her first entrepreneurial project: a start-up called Kindred Prints, founded in 2013, which produced an app that collects photos posted on Facebook or Instagram, organises them into albums and emails or posts them to a recipient. Kindren Prints then inspired Mădălina et co’s next enterprise, Branch Metrics. Using “deep linking” technology, the latter allows apps to send links which users can access without having to install the app itself. This recent start-up initiated by Mădălina received three rounds of financing amounting to 53 million, plus a new investment of 60 million last year, from Android founder Andy Rubin’s Playground Ventures investment fund. [11]
Finally, Alina Călin from Cluj was included by eu-startups.com on a list of 20 interesting and inspiring female entrepreneurs in the IT field. Alina co-founded MIRA Rehab, a start-up which produces medical software designed to speed up the rehabilitation and recovery of patients with physical impairment. The personalised solutions provided by the software ensure the recovery is fun and easy, turning physical exercise into video games – as shown in the clip below. Alina’s business was named in 2016 “The best start-up with a social impact in the world” at the Global Startup Awards competition. As for the entrepreneurial approach itself, Alina maintains perseverance is the key. She also says an entrepreneur should always rely on his/her own strengths, rather than imitate others; and teamwork is pivotal, despite occasional differences, if you want to reach far. [12]
Is there, ultimately, anything “specifically Romanian” in Romanian entrepreneurship, then? Most probably not. But as the examples reviewed above show, there’s a right (war or peace) time for success in Romanian entrepreneurship, and, perhaps, a right cause, too. At the end of the day, respect is gained by entrepreneurs by demonstrating they are more than businesspeople.
Picture credits
Notes & Sources
[2] “Nicolae Malaxa”. Wikipedia. Accessed 24 Sep 2018. <https://en.wikipedia.org/wiki/Nicolae_Malaxa>
[4] <https://ro.wikipedia.org/wiki/Nicolae_Malaxa> Other sources maintain that on that occasion the “gift” was offered to the King by both Malaxa and Auschnitt together. Cf.
[5] Ibid.