The radio buried somewhere in the dusty clutter of Jerry Ellis's office is playing Billy Joel's "Just the Way You Are," but Ellis is too engrossed in the conversation to notice. The topic is the universal quandary of how to grow a company without changing its fundamental character. Now that his warehouse salvage-and-surplus operation has cleared the $50-million, 900-employee mark, it is a quandary Ellis confronts daily.
"Doing business has become a constant battle against what I call 'the forces of conformity," Ellis explains, closing the door on several employees anxious for a minute of his time. "It would be much easier to surrender to mediocrity, to become just another retail clone."
Growth and change are inseparable forces for most companies. It's a frustrating fact that, no matter how cleverly they fill their corners of the market, growing businesses inevitably find themselves being pulled toward the crowded center of the room. Although many founders resist the changes, they often discover that maintaining the personality of the business takes more energy and awareness than they can muster for very long.
Jerry Ellis has held the line longer than most. It's been 21 years since he founded his dirty, messy, and embarrassingly addictive warehouse-sales company in Building #19 of an old shipyard in Hingham, Mass. Today there are seven Building #19 Inc. stores in and around Boston -- each as dirty, messy, and embarrassingly addictive as the first. You can still peruse the stacks of half-opened boxes and find a gross of inoperable cameras ("Make great paperweights!!") alongside five-piece place settings of bone china. Flip through the sagging racks, and you may discover discarded graduation gowns among the designer-overstock fashions. Ellis's penchant for mixing humor with gimmickry was a major draw for the original Building #19, and it is still evident in the signs that hang all over the stores, in his advertising circulars, even in the patter of his employees. This is not a company that has outgrown its owner's influence. But, believe Ellis, it's trying.
"Every day there are a hundred things bombarding you, trying to make you just like the other guys," Ellis warns. "Vendors trying to ship to you in standardized cartons and bill you on the same terms as everyone else. Customers trying to get you to start taking credit cards. New employees trying to get you to widen the aisles. Give in to that stuff, and nobody has to think, nobody gets mad. But nobody falls in love, either."
A company's essence -- its gestalt -- is seldom the result of a calculated decision; usually it's happenstance. IBM, for instance, built its reputation for customer service because its founder was peculiarly obsessive about that aspect of the business. Du Pont's fabled passion for safety and cleanliness dates back to the time when its employees used to handle a lot of gunpowder. Then there is Electronic Data Systems, whose militarylike esprit is a reflection of the larger-than-life personality of its founder, H. Ross Perot.
So, too, Building #19's gestalt is a reflection of Ellis. This is a guy who originally looked on his salvage-and-surplus business as a two-day-a-week proposition, intended only to keep food on the table as he sought more respectable work. "It took me a couple of years to realice that I already had a job," he grins. By then, the store had evolved a slightly crazed, pleasantly disorganized image -- not unlike the slightly crazed, pleasantly disorganized person who first opened its doors. Civilize it? His shoppers wouldn't approve. "The personal touch is important to us," says Ellis's secretary, Phyllis Devaney. "That -- along with the dirt, and the crazy signs, and the sticky floors -- is what stays in the customer's mind about our stores."
As is often the case, there is an element of "love me, love my business" in Ellis's own attitude toward Building #19. But holding the line on change is more than a matter of ego gratification. There are dollars-and-cents considerations as well. "Any successful business is part circus and part theater," says Building #19's resident merchandiser and business philosopher, Murray Saltzman, who lectures from more than 40 years of retail experience. "Is there a cash value to personality? Of course, there is. Consumers don't want sameness. They want to make friends. The business has to have a person, someone who is not just a businessman, but a presence in the community."
Ellis refuses to talk about his profit margins, and says he can't figure out his sales per square foot, but his competitors confirm that his is one of the best-run werehouse operations in the country, and probably among the more profitable. "I think the most successful companies are the ones that are honest," Ellis avers. "By that, I don't mean just giving correct change; I mean letting the business be an honest reflection of management personality and philosophy. If I'm gonna run a class store, it should be the class store. If I'm gonna run a junk store, it should be the junk store. People should know it reading the ads, shopping the stores, seeing the owner." Thus, when he wears a $29.95 suit to a society bash, it's only partly because he didn't have time to get his own suit pressed. "I uphold the image," he says with a twinkle in his eye. In fact, Ellis and Building #19 are so inseparable that its owners says he changed his name to maintain some semblance of a private life. "I started using Ellis in place of Elovitz about the third time I got a late-night phone call from somebody whose new TV didn't work."
The trick for Ellis and all founder-managers is to figure out what sorts of change are acceptable -- indeed, inevitable -- and which ones pose an unacceptable threat to the company's image. Ellis seeks to protect the quirky ambience of the stores themselves -- all the idiosyncrasies that immediately telegraph Jerry Ellis's personality to his customers, and thus set his operation apart from the big discounters. He didn't mind all that much when the town of Hingham made him pave the potholes in his parking lot. Nor did he balk for long when selectmen in another town cajoled him into changing the motto on his sign from Good Stuff Cheap to The Humble Department Store. Ellis even gave in when customers lobbied long and loud for such "amenities" as dressing rooms and moist towelettes. (The wrapping explains it: "Building #19 customers must wash hands before returning to the real world.")
But Ellis won't quit serving the $60,000 worth of coffee he provides each year, no matter how much his employees yell about the fact that it leaves puddles on the merchandise and reduces their profit-sharing checks. ("I offer people something when they visit my home, why not my store?") He also refuses to add color to the cartoonlike advertisements that he writes himself. ("People aren't reading 'em for their aesthetic value.") Nor is he about to start accepting credit cards. ("What would credit cards cost us? Uniqueness. Image. And about 2% of sales.") The line has to be drawn somewhere. Knuckle under to too many details such as these, Ellis says, and he'd not only be neutralizing his own sales pitch, but robbing himself of his own motivation.
"If I were to compete on the basis of efficiency of distribution, as most discounters do, I'd lose. I'm an inefficient, congenital slob," Ellis says, wryly. "Besides, I'd be bored to tears selling the same thing, year after year."
Of course, preserving a business identity is not a one-person job, as Ellis is well aware. "A successful merchant does not build a business," reads a sign in his office, "he builds an organization -- and the organization builds the business." The fact is, Ellis couldn't change Building #19 now if he wanted to. He has a cadre of managers who think, act, and talk like the boss. Like his, their offices are piled high with stacks of paper and merchandise that teeter when a door gets slammed, which is often. Their conversations, like his, are peppered with wise-cracking humor. (What other store would offer a flyswatter with a hole through it, carrying the admonition, "Give a fly a sporting chance"?) If Ellis screams, they scream back. And when the boss wants something done, chances are they've already done it. "I hear my own words coming back to me all the time," chuckles Ellis. "Like it or not, they've all been brainwashed."
It wasn't always that way. Employees, until fairly recently, were Ellis's biggest headache. "Every time I hired a new manager from Zayre, or some other big discounter, he'd automatically find it necessary to widen the aisles. Drove me crazy. No matter what I did, it seemed the employees were coming in like some huge Trojan horse, changing Building #19 to resemble some other store they were more comfortable with." How did he remedy the situation? "First, I stopped contributing to the problem by asking them how their old employers did things. Second, I started living with 'em, preaching to 'em, and twisting their arms."
Ellis regularly meets with the staffs of his seven stores, offering updates on new merchandise, answering questions on company-policy matters, and eyeballing their conformance to Building #19's nonconformist image. No, not all the stores do things exactly as Jerry Ellis would do them. He used to think that mattered, but no longer. "There are maybe 100 different ways of doing things, and mine represent maybe only 10 of them. That doesn't mean all of the other 90 are wrong. You weigh each change as it comes along."
Ellis may allow more changes in the future, but it's clear that he's not letting down his guard. From the radio, Billy Joel returns to the conversation. "Don't go trying some new fashion, don't change the color of your hair. . . . I love you just the way you are." There, in Ellis's cluttered office, it sounds more like a business anthem than a love song.