Two friends. Two companies. Two totally different management styles. One life became a story of shared success, the other ended in tragedy
Two friends. Two companies. Two totally different management styles. One life became a story of shared success, the other ended in tragedy
THERE IS A STILL A TRACE OF bitterness in Steve Kellogg's voice when he speaks of his last conversations with Charlie Moore. The calls came thick and fast in the weeks stretching from May through early June of last year, before they ended in an awful silence. Though the agenda often changed abruptly, mostly according to Moore's mood, all the conversations shared an element of soul baring -- and a sense of urgency. At first Moore had begged him to assume some of the work load overburdening his small consulting firm. Later, it was "Steve, I can't do this anymore. You've got to buy my company."
Despite the distraction of his impending wedding, Kellogg found the idea appealing. He respected Moore as a businessman, valued him as an old colleague and friend, and saw an opportunity for his own company, YWC Inc., to make a sound acquisition. Still, it grew difficult for him to hide his mounting annoyance with Moore. Aggravating enough that his friend and confidant kept rejecting advice to share equity in C.E. Moore Inc. with a few key employees; to Kellogg, this seemed the most straight-forward solution to one of Moore's biggest problems, namely the lack of motivation -- and sense of alienation -- he reported emanating from his own employees. More troublesome, Moore had never sent Kellogg the firm's financials. Kellogg found this unfathomable. Friendship was one thing, after all, but who in his right mind agrees to buy a company whose balance sheets lie buried in the chief executive's desk drawer?
That question never found a satisfactory answer. On June 19, 1986, Steve Kellogg's annoyance with Charlie Moore dissolved in anguish. David Moore, Charlie's nephew, phoned him that morning saying he had some "real bad news."
"Charlie has taken his own life," Kellogg heard David say, his voice edgy with shock. "You're one of the few close friends he had. Would you still consider buying the company?"
Taken his own life?
As the words washed over Kellogg, his first reaction was to focus on the ludicrous: How can I be one of Charlie's closest friends when I hardly know the bleeping guy? His second was denial. "What is this, David?" he barked into the receiver, not wanting to believe what he had just heard. "Some sort of sick joke?" Then he hung up.
It was, alas, no joke. Seven days earlier, after telling his secretary he was off on a sales call, Moore had left his Exton, Pa., office and driven about 20 miles west along the Pennsylvania Turnpike. Parking his car by the roadside, he walked up into the woods, gun in hand. A passerby found the body five days later. To the despair of those who knew him at all, personally or professionally, Charlie Moore had cashed out with a gunshot wound to the head.
For the rest of the morning, Kellogg closeted himself in his office. In a company that thrived on easy access to the boss, orders quietly circulated to give his door a wide berth. He sat there alone as the hours passed, pounding on his desk in frustration. He put his head down and sobbed into the blotter. He cursed Moore to the heavens -- you bastard, how could you not let me know how bad this had become? -- and ripped himself apart for not having responded to Moore's calls by seeing him in person.
Then, as the initial wave of guilt and anger passed, Kellogg rose from his desk, stared out the window, and asked himself: OK, Steve, how different are you -- really -- from Charlie? You've been pretty frustrated yourself before. Could you snap, too? Is running your own company worth the price that Charlie just paid?
By the time he returned David's phone call, Kellogg had reached a decision. He would buy his friend's company, whatever the price. Following through on that promise was, he believed, the best -- perhaps the only -- way to see that C. E. Moore's good name did not perish with its founder.
Yet it wasn't only Moore's reputation on the line for Steve Kellogg. Owning that company, he knew, would be an ever-present reminder to him. A reminder that issues such as growth, market share, and profitability are only elements in a vastly complex equation.
He hadn't known Moore very well, certainly not well enough to know the dimensions of his fatal depression. But he knew enough to believe intuitively, insofar as any friend could plumb another's psyche, that Charlie Moore's frustration with managing his own company had cost him his life.
Stephen Kellogg bought YWC, which specializes in wastewater treatment and other environmental services, from its corporate parent, York Research Corp., in 1981. At the time, York Wastewater Consultants had been providing most of the ballast for a $5-million environmental-consulting firm struggling to stay afloat. Kellogg had worked his way up to become the division's top manager and chief engineer, and like Don Johnson and Bob Bradley, two of the York Research colleagues who joined him in the newly independent venture, he regarded employee equity and team morale as crucial factors in motivating a young growth company. These had not been easy commodities to come by in a firm top-heavy with vice-presidents. Kellogg knew his own path up York's management ladder was littered with obstacles. He also saw the company struggling to cope with fundamental changes in the environmental-engineering business.
"The air-pollution-control business was really falling off," he says, "while technologies like wastewater treatment and hazardous-waste services were really taking off. It got to the point where [our division] was carrying an overhead load way out of whack with what we were contributing in profits. One day the president called me into his office for what I thought would be a talk about my finally getting a piece of the company -- maybe 5% to 10%. To my surprise, he proposed a leveraged buyout instead."
The deal -- a $750,000 package, payable over three years -- put Kellogg in total control. So keen was the equity issue for him, however, and so deep his conviction that YWC would prosper only if his management team were as committed to growth as he was, that he gave 49% of YWC to Johnson, Bradley, and a handful of others.
The results soon confirmed his belief. Not only was the note fully paid off in 21 months, but over the next six years, company revenues rose from $330,000 to more than $10 million, earning a ranking of #147 on the 1986 INC. 500 list of the fastest-growing private companies, and capitalizing the creation of several profitable new divisions. One of these, YWC's testing lab, recently became one of about 50 officially sanctioned by the Environmental Protection Agency. Kellogg's marketing strategy: compete aggressively for small to midsize plant contracts; provide innovative services; and respond rapidly to the needs of an industry in which regulatory and legislative action can change the rules overnight. "Our whole philosophy is: identify new markets, get into them quickly, and go after markets the other guys aren't too interested in," he avers.
Kellogg's competitiveness made him set tough goals for himself as well as his company. And from an early age, one of those goals was to make money. The eldest of six children, he grew up in a working-class family in western Massachusetts and resolved "to have a better life." He was a high school basketball star and the only one of his siblings to go to college. At the University of Massachusetts at Amherst, he earned a degree in civil and environmental engineering. At Cornell University, on full scholarship, he studied environmental engineering and business administration. His strategy of combining technical training with business exposure proved prescient, for the environmental-engineering field was just getting ready to explode, and there was little business expertise out there to exploit it. There were engineers and operators, yes, but they weren't necessarily businesspeople. There were businesspeople, yes, but they didn't necessarily have a feel for how the systems worked.
Kellogg had a feel for both, and it was at Roy F. Weston Inc., a West Chester, Pa., consulting outfit, that he got a chance to apply his curiosity most fruitfully. Hired in 1973 as a project engineer, he rotated among different departments. For stretches of 8 to 10 months, he worked in process engineering, detail design, and -- "the real eye-opened," he says -- start-up and operations. There he met Charles Moore.
"Charlie was a [plant] operator," recalls Kellogg. "Even though he lacked engineering training, he was one of the best operations guys they had -- the type of guy who knew more about how the systems worked than the designers did. Charlie was a quality nut. He was absolutely obsessive about detail. But he was also real personable. Charlie and I became friends -- not real close friends, but friends."
"Dad was a perfectionist," adds Brian Moore, 23, almost a year after his father's death. "Really, he was something beyond perfectionist. It sort of goes back to where he came from. He left home when he was about 14 with just the shirt on his back. He and my mom had me when they were both 16. Dad worked hard to get where he got; he earned everything he achieved the hard way. And if a tough challenge came along, it only made him try harder."
The bond between Kellogg and Moore was a fairly natural one. Like Kellogg, Moore had grown up poor in a rural community -- in his case, Honey Brook, Pa. And like Kellogg, he had married at a young age and was motivated by a desire for money and the "better life" it would bring. Quite unlike Kellogg, however, Moore had never gotten a chance at a college education and had little firsthand knowledge of basic business skills. What he did have, all the more impressive in Kellogg's eyes, was the raw nerve to go out and start his own company.
Moore actually did it twice. The first phase lasted from 1966 to 1974, during which his consulting firm mostly served clients such as townships and trailer parks. Moore proved himself as skilled at the technical end of plant operations as he was lousy at running his receivables. He sold contracts with convincing ease, yet the fundamentals of bookkeeping and personnel management utterly eluded him.
"Charlie was always pretty aloof," says Dan Hudson, who worked for him in both incarnations of the company. "He never shared any information with any of us, and even people who went way back with Charlie had difficulty getting in to see him. They used to sit in the reception area and try to catch him on the way out the door. Charlie started out in a pickup truck, you know, and I don't think he ever got too comfortable being in the business world."
One of Moore's mistakes, adds Hudson, was the way he structured his consulting contracts. Instead of charging a flat fee, payable up front at the beginning of each billing period, he waited until the work was done. "That meant," says Hudson, "he'd do the work, bill a client after 30 days, wait another 30 days to get paid, and then wonder why there was thie 60-day delay in his cash-flow cycle. For a guy who was fanatical about detail, the messiness [of his business] really drove him crazy."
If not crazy, then at least back to Roy F. Weston. In 1974, Moore shut down his consulting firm and returned to the relative security of his old operator's job. It was here, a year or so later, that he hooked up with Kellogg, who in casual conversation would mostly hear negative things from Moore about his small-company management days. He complained about "the bullshit factor," the drudgery of bookkeeping, and the tedium of dealing with lawyers. Victimized as he was by lack by experience, though, Moore also came to suspect that he might have been in the right business after all. He just might have gotten into it too early. So, in 1978, Moore decided to go out on his own all over again.
Moore had no trouble filling his appointment calendar. He locked into a number of small-plant contracts, the kind of $10,000-and-under jobs that Weston thought too puny to touch. He also was more cognizant of his own limitations than he had been the first time around, turning to people like his friend Steve Kellogg for additional horse-power. Kellogg was happy to have the extra income and helped out on the engineering functions and proposal writing, things Moore wasn't always confident he could do very well. Their relationship deepened. Not too long after, Moore called Kellogg to offer him a senior managerial role -- and a nice piece of the action.
Kellogg almost said yes.
"In the end, though," he now admits, "what stopped me was I just couldn't see working for Charlie. I mean, I could see working with him. And, considering how Charlie felt about the equity issue, being offered 15% of his company was pretty attractive. Still, my gut instinct told me that, sooner or later, my having 15% when he had 85% was not going to work. That upset Charlie, but what could I do? I honestly thought it was a situation that could wind up threatening our friendship."
Having turned down the offer, Kellogg completed his LBO of YWC in 1981.
It was at this point that the two men really began grappling with the independence-versus-security issues that had come to dominate their private dialogue. These issues burned keenly for Kellogg. At Weston, he had exhausted every conceivable option for work experience (including a stint with the sales force) before reaching the conclusion that he would a) never get equity, or at best a token amount; and b) never penetrate the upper reaches of management, or at least not soon. Later, in the launch phase for YWC, he applied theory to practice, and the results convinced him even more.
"We had tremendous chemistry," he says. "We all worked round the clock if we had to. Was it pressure packed? Sure. There was constant pressure.
"But," he adds, "and it's a big but: everybody knew exactly where we stood, exactly what kind of cash we had to generate to stay in business. I believe in my heart and soul that the more open and honest you are with the most intimate details of your company, the more your people are willing to make that kind of effort."
"This is an extremely high-pressure industry," agrees Bob Bradley, who oversees YWC's testing lab. "The glue that kept [YWC] from flying apart in the early days was Steve, Don Johnson, and me. We always had each other -- we could always relax, sit down, lay it all out for the three of us. Charlie, I'm afraid, lacked that kind of insulation."
Indeed, for two companies ostensibly in the same business, YWC and C. E. Moore could hardly have looked more different. Kellogg was an open-door, we're-all-in-this-together type of manager who deliberately blurred the line between hard work and fun. He set tough growth goals and expected 18-hour days from his employees when they were on a deadline; yet he also invited them on company-sponsored ski trips and other strictly social functions. As his company began to grow, moreover, he recognized its need for automated systems, Big Eight accountants, and heavyweight attorneys: the kind of professional support a company often requires to move forward without falling on its face.
Not so Charlie Moore.
"From what I can tell, Charlie ran a oneman show," says Hugh Hanson, who joined C. E. Moore as president last November. "He tried to clone himself as much as possible. The more contracts he got, though, the harder it became to see each client personally. He never seemed to learn the difference between delegation and abrogation."
"When Charlie tried to grow [the firm]," adds Dan Hudson, "his style was to brow-beat people. If a project report went out with a typo in it, he'd call you in his office and scream bloody murder. There were times when the form of a memo seemed a whole lot more important than its content."
Moore's management style was not entirely ineffective. His company was debt free and prosperous. He himself was a master salesman and a consummate technician, earning a reputation to the effect that, says Hanson, "when [a client] hired C. E. Moore to run its plant operations, the state regulators backed off." And although the company itself never grew much beyond the $750,000-a-year level -- "Dad kept saying he didn't want it to get any bigger than he could handle himself," says Brian -- it was consistently profitable. The company earned 20%, 30%, even 40% pretax margins, far beyond the 10% earnings of YWC.
To most observers in and around the company, however, C. E. Moore Associates also grew to suffer from its CEO's insecurities. Somewhere along the line, Moore's obsessiveness crossed over into neurosis, and that isolated him even more. He might have built up a support network among old Weston contacts or industry colleagues, but he was uneasy among his peer group (he never took an active role in Pennsylvania's chapter of the Water Pollution Control Federation) and quirky about keeping up appearances. He would angrily reposition the office furniture if the cleaning crew rearranged it. He refused to take a phone call directly, insisting that it be routed through a secretary and an administrative assistant before it rang on his desk -- even when the two desks sat no more than six feet apart. As for corporate culture, employees describe the social atmosphere around C. E. Moore as having all the warmth of a sludge press.
"I think we all went out for beer and pizza once," recalls Hudson. "Charlie kept mentioning it for months. At 5:30 on a Friday afternoon we'd all be in the parking lot, talking about getting something to eat together, and Charlie would walk by and say, 'Great, we'll have to do that sometime.' Then he'd drive away."
In time, Moore began to drive away some key employees as well. In a hassle over benefits, his longtime assistant quit. Others may have figured that if the CEO chose to play his cards so close to the vest, they'd deal themselves hands of their own.
"Charlie would call me up with some technical problem, a grease trap, say, that wasn't working right," says Kellogg, "but within a couple of minutes it was always, 'So-and-so's screwing me over. He's writing his own contracts on the side. I can't control him.' Personnel stuff, you know.
"That's when I'd hammer on Charlie about equity. 'For Chrissake,' I'd tell him, 'open up to people. Get them involved.' For some reason he couldn't. I had guys like Don [Johnson] and Bob [Bradley] to let my hair down with, but Charlie had nobody. There wasn't one person in that company who knew what the hell was going on."
The more Kellogg talked to him, the more he began to realize that Moore's penchant for secrecy wasn't having a negative impact on just his management team. It was having a negative impact on customers as well. Some of the smaller accounts had already been falling by the wayside. Moore was starting to relay complaints about reports not getting out, about systems not running right -- details that were not characteristic of a Charlie Moore to leave unattended, even if he did them himself. And that, indeed, was part of Moore's problem. Even when he couldn't do them all himself -- and in the final months he got around to perhaps only 30% of his plants -- he took responsibility for each project personally. Each failure, large or small, was his failure. He was increasingly angry with his employees and angrier still with himself.
"It was a classic situation," says Hanson. "A guy sets standards that are way too high -- that others can't possibly live up to -- and then feels betrayed when they give up trying. Actually, it was a mutual sense of betrayal. He couldn't bring himself to fire [anyone], but he felt let down. And they didn't trust him."
Even Hudson, who salutes Moore for having "taught me everything I know," confesses that in the end, he, too, was reaching the end of his rope.
"I was seriously considering leaving if it'd gone on much longer," he says quietly. "Charlie got difficult just being around." He stares at the tabletop. "I don't want this to sound morbid," he sighs, "but maybe Charlie found the one way he could think of to finally quit his job."
After Moore's death, Kellogg dispatched Don Johnson to Exton, Pa. Johnson packed his camper and dug in for what would be a three-month siege, making good on Kellogg's promise to help David Moore hold the company together until a buyout arrangement could be reached. He also spent as much time as he could with Brian Moore, Charlie's son. Brian had joined the company about eight months before his father's death, and now he was determined to preserve his father's legacy. Johnson was just as determined to help him.
How troubled had Charlie Moore been? As he went through Moore's desk, the first thing Johnson spotted were the financials for the previous five years. Sitting 18 inches from the CEO's elbow, they might as well have been entombed in steel.
The acquisition took four months to complete. Kellogg delegated the details to trusted colleagues and asked not to see the contracts until they were "95% done." It would be another six months before he could bring himself to set foot in the offices of the only company his own had ever taken over.
Steve Kellogg, 36, sits in his office and tugs on his slightly graying beard. Surrounding him are an architect's sketch of the new YWC headquarters and a wall full of framed degrees and engineering certificates -- the kind of visible evidence of achievement that his friend Charlie Moore, as Kellogg well knows, never decorated an office with. He has agreed to talk about Moore, not to second-guess a dead man's motives, but to offer a perspective on what that loss has meant to him.
"How has Charlie's death changed me?" he repeats. "Oh, some little things. I've cleared up some insurance questions. And I don't let a day go by without telling my wife and kids I love them." He pauses.
"I used to believe almost in growth for growth's sake," he says. "Charlie never set any goals for his company -- not that I knew of anyway -- but I did. To me, growth was like sex -- an extension of your emotions, a release, something you do because it feels good. Now, I question that. Charlie's gone now. I'm still around. That has to mean something."
This September, Kellogg will join the wedding party at Brian Moore's marriage ceremony. For Charlie Moore's family, friends, and colleagues, the nuptials will be a strictly social event -- the kind of event Moore himself might not have been too comfortable at, yet one that surely would have given him enormous pride to attend.
That has to mean something, too.