"The downside is it's harder to run a business like this than to just sell furniture," Varacchi admits. To keep his new customers satisfied, he has to make sure the separate companies work as one. For him, as for Ellison and Stewart, the challenge is to find men and women who share his customer service orientation, then to provide the direction and support needed to keep all parts of the network growing together. But the upside is burgeoning sales, from $19.6 million in 1982 to $65 million today.
Dunham and his partners at Effective Management Systems (EMS) have created a similar structure -- and the company's sales have risen from $3 million in '82 to $30 million today. Their strategy was to establish alliances in other cities with entrepreneurs who shared EMS's service-driven attitude. There are now 13 such alliances selling EMS applications software and providing service support in their own local markets. EMS owns 3 of the allied companies, holds an interest in 2 of them, and has exclusive contracts with the other 8.
Dunham and Varacchi both share equity and responsibility with an internal senior management team as well. Dunham just added five new partners to the four principals who own and run the Milwaukee parent company -- "to show people there's room to grow here." Varacchi is one of five partners who own Furniture Consultants; all have their own divisions and customers. The partners meet every Thursday afternoon from 3:00 to 7:00. With so many people involved, it may take longer to reach decisions than if the company were a one-man show, but it takes less time to execute the decisions, and the process ensures that responsibility is shared and that strategic planning uses the strengths of the team.
Al Toth didn't set out to form an external alliance. He first tried to grow PBM Office Products by launching a retail division, but he had to ax the expansion after opening seven stores when he came up against the buying power of the new superstores. Since the retail end of the business made up only 10% of sales, he decided to concentrate on corporate accounts instead, joining a coast-to-coast network of 30 independent companies called American Office Product Distributors. With combined annual sales of $2 billion today, American Office Product can act like a giant. The network's strength is its ability to market with shared advertising and promotions to midsize and large corporations across the country, coordinating the members' efforts through a huge computer network. "It's great for customers," Toth says. "They get national purchasing power with local service." It's been great for PBM Office Products, too: sales have grown to $17 million, up 150% since 1982.
And it's been great for Toth himself. "I'm much less intense and stressed," he says. Inside PBM he's expanded the senior management team to four people, and he's cut his own workweek from 70 hours to 40, spending the newfound free time with his two young children. He's a year-round coach, in baseball and basketball, and an elected member of the local school board.
"After a while what's interesting and important changes for you," Toth says. "The company is still important to me financially, but now I'm more concerned with making sure the employees benefit from success."
It's interesting, seven years later, to talk with the 53 surviving CEOs from 1983's top 100. The more they've given up control, the faster their companies have grown. But the more successful they've become, the less driven they sound today. There are still crises to face, of course, but they've spread the responsibilities and shed the day-to-day worries.
And though growth has made them rich, they insist the money hasn't changed their values. They remain as Main Street as they were at the Inc. 500 conference six years ago, focused on their companies and their families. "I would hope I'm the same person I've always been," Carl DeSantis insists, speaking for many in the group. "There are only so many steaks you can eat and cars you can drive."
Life is sweet for DeSantis, the founder of Sundown Vitamins (#48), which had sales of $10.1 million in 1982. Today sales of the company and its affiliates are up to about $100 million. He has seen his two sons grow up in the business, too. Both are now vice-presidents. Although DeSantis is still the CEO, he's stepping back, coming in at 10:30 or 11:00 in the morning and working until 6:00 or so at night, taking time off for boating or scuba diving, his newest hobby. If he had to start again, his sons would be his first two hires, he says. But he doesn't necessarily expect them to take over when he retires. "That's up to the board of directors," he says.
DeSantis is typical of the successful survivors. They're not ready to retire. Still focused on the long term, just as they were in '83, they remain committed to the future growth of their companies. But now they're relying on the teams they've built, in which they profess unbounded confidence. For the CEOs themselves, success means freedom, a shorter workweek, and more time off, an opportunity to savor the rewards.
For John Nady, who built Nady Systems (#23) from sales of $3.3 million in 1982 to nearly $15 million in 1990, success means a chance to go back to his rock-and-roll roots. If you'd been in Oakland, Calif., in the late 1970s, you might have seen him, a trained engineer billed as Captain Nasty, lead guitarist with Titanic, for which he'd developed a new microphone, the Nasty Cordless. When the microphone took off and the band didn't, Nady decided he had to put his guitar aside to focus on growing his new company.
