Vic Barouh has built a profitable company by doing everything wrong.
Lee Abrahamsen, who spent 20 years with a competitor before joining Barouh-Eaton Allen Corp. tbree years ago, claims there isn't another company like it in the world. "If you judge it by the way the book says you're supposed to do things," says Abrahamsen, "this place shouldn't work." He isn't exaggerating.
A growing company with international sales of more than $50 million should not put its corporate headquarters on a mean waterfront block in Brooklyn. A business interested in controlling costs shouldn't hire people it doesn't have jobs for or tie up its cash in interest-free loans to employees. It should have an outside board, a strategic plan, an executive compensation program, a computer. A company in a highly competitive industry should not dispatch a former stenographer to open a new branch plant. Its chairman should not load pal lets. He should not kiss the women who work for him. He should not call them girls. He should not shout so much. He should not be so naive as to believe that love and respect are crucial to business success.
But don't bother explaining any of this to Victor Barouh, age 57. He won't understand what you are talking about.
Barouh is the founder, chairman, and majority shareholder of Barouh-Eaton Allen Corp., usually called Ko-Rec-Type, after its best-known consumer product. With plants on both coasts and in Puerto Rico, Canada, and Ireland, Ko-Rec-Type is the country's largest independent manufacturer of inked ribbons for such things as typewriters, printers, and bar-code markers. Its principal competitor in many of its product lines is IBM Corp., which could have put Barouh out of business a few years ago. The story is a useful one to begin with, because it illustrates much about how the Bronx native runs his company.
In 1957, a year after he started the business Barouh rather accidentally invented the product that fueled its early growth. A company typist kept a piece of white chalk by her machine. She would lightly erase an error, then rub over it with the chalk. It took forever, but the correction was neat. Barouh's business was making carbon paper, so one day, while watching the typist, he got an idea. He borrowed her chalk, rubbed it on one side of a sheet of paper, put the paper between the error and the typewriter key, and struck the key. Most of the error disappeared under a thin coating of chalk dust. That is how Ko-Rec-Type was developed. The company prospered.
Then IBM invented the self-correcting typewriter. "The funny thing was," Barouh relates in as fine a New York dialect as you are likely to hear, "that on Saturday or Sunday IBM announced that they came out with a brand-new typewriter and it lifts off errors. Monday morning about 40 people were at my door telling me they saw it on TV, and we're going to be in trouble because nobody's going to use our Ko-Rec-Type anymore.
"We immediately went down to the IBM showroom, and when the salesman was demonstrating the machine he looked at me and he says, '. . . and if you buy one of these machines, you'll never have to buy Ko-Rec-Type again.' So I immediately put in an order for a machine. I got back to the plant and I called everybody together and I said, 'Okay, here's what we have to do. We have to make this ribbon, and we have no idea what this ribbon is. We have to make the cartridge, because the cartridge isn't available. And we have to go into the injection-molding business to make the spools that hold that tape . . . So, first we gotta come up with the ink, then we gotta come up with a machine that puts ink on film . . . and with a machine that would split the rolls, and with the cartridges that these things go into.'
Within six months, we produced the first ribbon, and we were the only company in the entire world that produced that product. Later, we found out it took IBM six years to develop that product, and we did it in six months with absolutely no clue as to how to start."
Barouh's talent for motivating people gets him extraordinary results. His first employees, for example, were volunteers.
"My first job in this industry -- I was about 20 years of age -- I got a job working for Old Town Carbon & Ribbon in Brooklyn in the shipping department. . . In five years, I became the assistant plant manager. And then the company was sold . . . and they brought in a team of business experts. They were going to take this, what they called 'grocery store' type of operation and make it a national, well-functioning type of business. The first thing they did was they took all the middle managers and sent them to Philadelphia to take a test to see whether they were suited for the particular job that they were doing. And I refused to go. I did so badly in school that I knew I couldn't possibly pass the test, and I didn't want to be embarrassed. I told 'em, and they said to me that if you don't take the test then we have no alternative but to let you go.
"When they let me go I immediately took a 5,000-square-foot loft in Brooklyn and started to put together a little factory. A dozen or so people came from the old company to help me. Some of them just worked after hours, and some of them worked throughout the day. I explained to them I had no way of paying them, but they were willing to give me a helping hand, and that helping hand was what got me through the first couple of months to produce the first product."
Whatever would make someone go to work for nothing, with no promise of anything down the road? Maybe it has something to do with the kind of interest Barouh takes in people.
One day, when the crowd in his office had grown to nearly a dozen people, each with his or her own problem or idea that needed the boss's attention, the boss was busy advising one employee on the best washing machine to buy with the interest-free loan the company was making him. The loans are common practice for the company, made to finance cars, doctor bills, vacations -- almost anything an employee's supervisor considers reasonable. Barouh, one supervisor said, often overrules her and grants loans she has turned down. Nothing that affects the people who work for him is trivial to Barouh.
And he loves to talk. Ask him a question and he tells you a story.
Question: Is that the best use of your time, giving advice on washing machines?
Story: "People make the thing or break the thing. Management can do whatever they want with banks and borrowing and manipulating and everything else. If the spirit of the people isn't in everything they do, the damn thing is going to fail . . .
"I got a fellow here who's retired. [Casper's] been in this industry for many, many years, but his health is suffering. He's retired, but he can't stay home. He comes in two, three hours a day, and we put him in the office. One day his wife calls up and she says she's gotta talk to Vic. I never met his wife, but when she called she asked for Vic, and that's because when Casper goes home he says Vic this, Vic that. So she asks for Vic, and she says, 'Vic, this is Casper's wife, and I'm so worried. He passed out and he's in the hospital.'
