The phone call from Fred wasn't really a surprise. We had been in touch off and on during the 30 years I had worked for a series of large corporations -- U.S. Steel, General Cable, Kearney-National, and Gould -- and in earlier calls he had hinted at his frustration with the rat race. Now he had reached a new level of discontent and was ready to walk away from his job as vice-president of a major corporation.
"OK, Charlie, now let's hear the straight scoop" is how he started the conversation. "How are you finding it, running your own company, after having been a big wheel in the corporate world?" The big-wheel reference was a dig, quoting an article in the local newspaper about my switch from a large to a small company a few years back. I think Fred both expected and wanted to hear a long litany about how fantastic it was: no more politics . . . quick decisions . . . making lots of money -- the typical assumptions of frustrated managers in large corporations.
Generally, I'd say, these points are valid, but the facts are more complicated. The real truth is that while many things are gained, some are lost. I told Fred that if I really searched down deep, I had to admit that I missed some of the glamour. He scoffed at the idea, but he simply doesn't realize how much he takes for granted.
My work, like his, had been in substantial and prestigious operations, where an aura of size, power, and substance pervaded the very physical trappings of the buildings, offices, and even the entrances. Today, when I walk in the side door of our warehouse building at Battery & Tire Warehouse Inc., the company I acquired four years ago, I certainly feel a sense of pride that this is my company. But it sure as hell doesn't reek of prestige and power. Important? Most likely not. Today, I am quite comfortable with the situation, but I have to admit that comfort didn't come overnight.
Little things, for instance, aren't done nearly as automatically as they used to be. Consider getting letters typed. Marlene Fredrickson, who handles our payables and personnel, doubles as the secretary for the whole office. While she is strong in payables and personnel, she's the first to admit that typing isn't her long suit. This is a far cry from the days when I had a private secretary with a word processor. Now, I answer many letters by hand, writing notes on the bottom of the sender's original typed letter. And I have to say that this is an amazingly efficient technique once you get over the culture shock of it.
For me, the true source of pride and satisfaction at Battery & Tire Warehouse is in having taken a company that was in deep trouble, both structurally and financially, and turning it around within a year. It's been a great thrill to see the sales go from $7 million to $10 million in one year. Even more important, we've gone from losing money to making a profit. And, in contrast to the world of large corporations, I can see the direct and specific effect of programs and systems that I have installed. I can analyze a problem, sort out the alternatives, develop a program, install it, and within weeks start to see some early results. Another big plus in achieving this turnaround is that I've been able to work closely with a tremendous group of people -- my employees and our customers -- and to get to know all of them personally.
Still, if you are high enough up in the management hierarchy of a large corporation, some pretty exciting things can come your way, and I miss that. International travel under the corporate umbrella was, without question, a lot of fun and extremely exhilarating. I'll never forget, for example, the 10 days I spent in Saudi Arabia. I was with Gould at that time, negotiating a joint venture with a Saudi prince to build a battery plant. Being the guest of a prince and sitting down to a Bedouin feast with his 30-person entourage was, frankly, pretty special. We ate with our bare hands, or rather with the right hand only. Being a southpaw, I literally had to sit on my left hand lest I use it and offend my host. I was surprised that I enjoyed the camel's milk, to say nothing of the prince's home movie: a videotape of their latest falcon hunt in the desert.
As an officer of General Cable, I also was periodically invited to have dinner with the board of directors, which included Alan Greenspan, then on his way to becoming a member of the President's Council of Economic Advisers. These days I don't get too many opportunities to stand next to an Alan Greenspan at a cocktail party, exchanging ideas on where the national economy is headed. On the other hand, as a business owner, I am much more involved with the local community than I ever was before. I'm on the board of the Art Center of Minnesota, for example, and head its fund-raising committee. This has given me the chance to know people from a variety of backgrounds who are interested in promoting the arts, and I'm also meeting some of the driving forces within the business and political communities. In the final analysis, this may be more important than meeting with a national figure. But let's face it, it's not as glamorous.
And then there is the issue of sheer size and magnitude. Since coming to Battery & Tire Warehouse, I have developed a "rule of 50": the ratio of what attracts my attention today, compared to my corporate days, is about one to 50. An expenditure or a sale of $500 now pricks up my ears, whereas it took a figure of about $25,000 to get the same attention then. There was something very satisfying in running divisions with 2,000 people in 10 plants over the whole United States, and having sales levels up in the $200-million level. Frankly, I was very aware that I was playing in the big leagues.
I remember standing in a broad farm field in Kentucky, watching bulldozers and cranes in the process of constructing a massive, 150,000-square-foot telephone cable plant. The plant was a direct outgrowth of the studies that I had put together a year earlier at General Cable and had championed throughout the company. At the ground breaking, with the governor of Kentucky at my side, it was both frightening and a little awe inspiring to view what was taking place as a result of my personal efforts and predictions.
The closest I could come today to that experience, I guess, would be the $120,000 purchase of the property we had been leasing at our truck-tire recapping facility -- quite a difference from the $20-million cable plant. Come to think of it, though, that highlights another interesting contrast between owning your own company and working in a corporate environment. The decision to build the plant in Kentucky took over a year, and even that was considered fast. I decided to purchase the recap property on one morning and negotiated with the owners that same day. I arranged bank financing the following morning by phone, and the deal was consummated on the next afternoon. The net result of being able to move quickly, before the owners reconsidered, was to pick up a property for $120,000 that had been appraised at $190,000 and that also eliminated a $30,000-a-year rental fee. Not a bad return on investment.
In the same way that I miss the opportunities to meet the likes of Alan Greenspan, I also miss the intellectual stimulation I got from people I had had access to in big companies. Fred scoffed at this notion, too, but in a small company you just don't have the same pool to draw from. I remember with pleasure working with Larry Morris, my controller, and Rusty Asdourian, my vice-president of manufacturing, at General Cable, and John McClung, who was my vice-president of operations at Gould. They are tremendously sharp men, and I learned more from them than I ever learned from the people to whom I reported.
I think I missed those exchanges more in my first month at Battery & Tire Warehouse than I do now. It's also true that I have since figured out some ways to compensate for the loss. For example, I joined The Entrepreneur's Network in St. Paul, and a group of us now meet once a month and act as an ad hoc board of directors for each other. The entrepreneurial wisdom I've picked up has been invaluable. I also make it a point to keep in touch with a half dozen old friends, interesting people such as Larry, Rusty, and John. I give them a call every other month or so, not necessarily to ask about business, but to hear what they're up to and to talk about whatever's on my mind.
Whatever I may miss about being in a large corporation, decision making is one area in which Fred's frustration can't be denied. It is such a delight now to make decisions based on one criterion only: is it a good decision, in both the short term and the long term? When you are making a decision in a large corporation, you also ask yourself that question. But then, in parallel and with virtually no exceptions, you have to ask yourself, how will this decision look at corporate headquarters? Can it be defended against attack? If it goes wrong, what's the recovery procedure? God, what a pain in the ass that was! As Fred says, "Life's too short for all this hassle." Besides, it's bad management.
Today, my goal is not to make all perfect decisions, but to make a fairly high percentage of good ones, and to make sure that the bad ones are not catastrophic. It's been great having the marketplace be my judge instead of that bureaucracy. Let me give you an example of the difference. We ran into a real mess with one customer at Battery & Tire Warehouse, which caused us to write down a $100,000 receivable. I was highly responsible for this blunder, which occurred to a large extent because of my total lack of experience in credit and collection. It was a very expensive education, but did make me quite savvy in the area -- so much so that I designed and implemented a slick exception-reporting system for accounts receivable that we are now marketing to other companies. The interesting point, however, is that if you use my rule of 50, then the $100,000 mistake would equal a $5-million write-down in my prior world, and I doubt that I could have survived an error of that magnitude.
The Fortune 500 atmosphere is extremely punitive. I remember being shocked by the statistic that the average tenure of a general manager at Gould was less than two years. But later on, the figure didn't surprise me at all. People in the corporate world play to a higher audience that equates action with results. The constant pressure is to demonstrate that you are a tough manager capable of making tough decisions -- such as firing the general manager if you've had a bad year. I can recall two specific occasions where plants -- mind you, whole plants with hundreds of people -- were shut down to demonstrate to higher management that the decision makers were tough and action oriented. In neither case did the economics justify the shutdowns when looked at over the long term. As a business owner, I no longer have to prove my competency through touch-looking actions, image, and style. Our customers couldn't care less. They want service, results, and reliability.
I hear a lot about the tremendous stress and pressure of running your own company -- the awareness that you have bet the family farm, and it's all on your shoulders. I read in this magazine last February an account of a phenomenon called entrepreneurial terror. Granted, there is a continual dread of failure -- I can't really agree that it's terror -- but at least it's the marketplace that is making the judgments. In the corporate world I always felt at the mercy of some individual hundreds of miles away who was making sweeping decisions that had profound implications for my life. Consider the number of people being arbitrarily bumped by the current wave of corporate restructuring. Terror? Entrepreneurs don't have a monopoly.
Fred finally interrupted me before I could go off on another tangent. "Hold on, Charlie," he said. "I'm getting too much on the one hand this, and on the other hand that. Let's get down to the bottom line. Are you really happy you made the switch?"
"Are you kidding? Hell, yes!"