If expertise was one credential Beaver sought for his board, the other was familiarity. "I wanted time-tested relationships," he stresses. "Ben and I aren't in this just for profits. This business is as much about our personal and theological beliefs. It's critical that the board understand our philosophies and know us as people, not just as businessmen."
What the Board Does
It's hard to point to a decision the board wasn't involved in during its first eight months in 1985, from pricing to suppliers to packaging. As Beaver says, "The only thing I didn't have to do was raise my hand to go to the bathroom."
When Beaver disagreed with president and CEO Stapelfeld about how to raise $400,000 in initial capitalization, the board came to the rescue. Where Beaver was wedded to a corporate sponsor, his partner favored investment banking. Into this deadlock, the board introduced a third option: a private stock offering for a total of $400,000. The board members' own investments comprised one of the largest blocks of stock outside what the founders and their families had purchased. Beaver figures this advice alone saved 26.5% in equity potentially parceled out to investment bankers.
Before Beaver opened his manufacturing facility, Dan Hoover leased out part of his own plant to New Pig for a year. "It was a laboratory where they could debug and test ideas with our factory foreman before stepping out on their own," explains Hoover. Beaver also tested out new uses for his star product at Snyder's plant. One of those tests resulted in a "new and improved" Pig sock that gulps not only oil but also water, protecting expensive machinery from water damage.
But Beaver cautions that the advice of a board, however wise, should never supplant the founder's gut intuition. In particular, Beaver remembers when Hoover and Snyder -- two old-line manufacturers -- advocated that New Pig sell through established distributor channels. Both men had long depended on this approach in running their own businesses. Since it worked for them, they figured, why shouldn't it work for New Pig? Beaver, however, was not convinced. Rather, he contended that interaction with the end-user was critical, asking, "What is manufacturing but service in a box?"
The decision? For three months New Pig would use distributors for 95% of its business, and 5% would remain direct. Month after month the results were irrefutable, as direct sales outperformed distributor sales by at least 40%. Beaver still recalls when the board turned to him with one question: "Why are you messing around with all these distributors, anyway?"
Five years later, with New Pig's revenues topping $14 million, the board focuses less on the factory floor and more on foreign markets. In 1989 international sales climbed to 11% of total revenue, and that's without spending a cent to foster that market. Beaver suggested going after foreign sales with gusto, setting up a New Pig Corp. in Europe rather than hassling with foreign distributors. The board came down with a resounding no, cautioning that such a move would drag the company into the "transportation and translation business" and distract it from its core and still-undertapped market: the United States. "Sometimes the board's job is to remind me what business I'm in and how small we still are," Beaver admits.
What's in It for the Board
"The first time I met Don he was washing my windows," one board member offers. "Yeah," chimes in another. "Don built an addition to our house -- by the way he worked I knew he wasn't your average guy." There's pride in this boardroom. New Pig is a home-grown success, and these guys believed in Beaver and his partner long before that was obvious. As Kranich, the jewelry retailer, explains: "I'd rather invest in New Pig, where I'm on the inside, than pick a stock on the Big Board and not know what's going on."
As New Pig grows, so too do the potential returns to the board. In the early days the board acted as mentors guiding a new kid on the block. "I looked at my board and I wondered why they even consented," Beaver recalls. "I just wanted to be worthy of tying their shoes."
But today New Pig has 180 employees and is as large as most of the board members' own companies. When Don Snyder had a question about setting up his own in-house marketing team, he consulted Beaver.
Privately, one board member wonders if New Pig will soon outgrow this board, forcing Beaver to reach for Fortune 500 muscle. But Beaver scoffs at the notion: "This board got New Pig in shape for the minor leagues; now, together we can help one another play in the majors."
Meetings: Monthly. Phone conversations between meetings.
How recruited: All members are local businessmen who had known one or both of New Pig's founders for years. Dan Hoover and LeRoy Metz had also advised another Don Beaver venture. Mike Kranich was a New Pig investor who later joined the board.
Compensation: Each board member gets $200 per meeting attended, a monthly retainer of $300, and $150 for any additional committee obligations.
CEO's average preparation time: Three to seven days before a meeting, New Pig's CFO sends board members a packet containing minutes of the last meeting, P&Ls, and balance sheets. After reviewing the numbers, CEO Ben Stapelfeld puts together an agenda and runs it by Beaver before presenting it to the board.
BROTHERS WITH SUCCESSION PROBLEMS
After running their $27-million family business for 20 years, Donald F. Dew, 65, and his brother, B. Jarvis, 68, were approaching retirement, but it was hard for either of them to rest easy.
