Now that the company's sales have grown to more than a half billion dollars, Snapple has another kind of problem: how to maintain its "We're just folks, we're not PepsiCo" persona. So it has added Rush Limbaugh to the parade of media pitchmen, in addition to featuring national TV spots with neighborly, down-home customers. The message: we're established but local, solid but quirky, big-league but still fresh, a phenom -- the $516-million public company that doesn't feel corporate. Not easy.
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Then: You gave them start-up experience and maybe some equity. What more could employees want?
Now: Bucks. You want talent, you pay for it.
When Mark Cohn launched Damark, a consumer-products catalog retailer that moved $364 million worth of stuff last year, he couldn't offer much in the way of cold, hard cash to prospective employees. "Back then," Cohn recalls, "we were selling people on being on a rocket ship to the moon." A ticket was often enticement enough.
Eight years later Damark can't sell that buzz anymore. "Now the compensation system is different, absolutely," Cohn says, "because we're trying to attract different kinds of people. Clearly, today we're compensating in a much more thoughtful and much more professional way." Besides, Damark doesn't look poor anymore, so it can't pay lean, mean wages. "Today you pull up to the building," says Cohn, "and it's hard for people to remember the time when you didn't know if you were going to be able to meet payroll, and you didn't know if the catalog was ever going to work or whether you'd be able to finance the business. We win people to our cause a bit differently now."
Robert and Ellen Wallace, who founded Arizona Sun Products, have learned much the same lesson. "I used to hire people at low rates, but I've had to rethink that," Robert says. "It's the same with everything else. Better phones, faster computer systems. If you want quality, you have to pay for quality."
Partly it's a case of learning the hard way. You start out with cheap and you make do -- until you finally admit that cheap isn't good enough. "At the beginning I couldn't afford to pay a premium for an employee," says Bejan Douraghy, founder of Artisan Professional Freelance Representatives, in Chicago, "and my turnover was high. That's really changed, especially in the last year. Now I pay people what they deserve. I've recruited people from Fortune 500 companies, and I've really gotten a good team together."
But also, as your business grows, it grows more complex. Tasks arise that didn't exist at the beginning, and someone's got to take care of them. "After a while," says Jim Noble, "the company's growing quicker than you can grow, and you say, 'Hey, it's going to be in everyone's best interest if I recruit senior management."
Still, he had trouble paying serious money for senior managers when he was paying himself only $35,000. "It was hard to bring in a $90,000 guy," Noble says. "I didn't have a good understanding of what a guy like that did to make his money."
He does now.
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Then: You were the whole show.
Now: Others have key roles. You're the producer.
"I've gone through two big transitions with staff resources," says Subway's Fred DeLuca. "First I went from having no resources at all, to finally getting the resources and learning how to manage them. Now I'm at the point where I'm managing less. When people know what they have to do, the worst thing I can do is overmanage."
Delegating is a simple concept, granted, but it's among the toughest skills an entrepreneur must learn, and the most important.
"It was hard for me," DeLuca says. "But I learned that as the boss, I could be a really serious obstacle to people's getting their work done. I'd jump up and run over to the next office and say to our marketing guy, 'I just had a great idea!' and I'd give him an assignment. One day he said to me, 'Fred, it's wonderful you have these great ideas, but you've got to give me enough time to get the last great idea done.' And it struck me that I was creating far too much turmoil for people to work."
Part of what helped DeLuca begin to undo bad habits was franchising the operation in 1974. Faced with the need to deal with people who worked for Subway but not for him, he learned a new set of communication skills. "I realized I had to switch from an authoritarian to a persuasive style of management. I had to be able to explain what I wanted so it made sense. And that was a revelation."
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Then: You and your company were one.
Now: You're still friends, but you've given each other room to grow.
Partly it's a money thing. if you're like most people, not only did you start out by putting all your personal assets at risk; long after you were established, you continued to guarantee business loans with personal assets.
And partly it's a matter of the heart. At the beginning, success, failure, embarrassment, accomplishment -- whatever happened to your company happened to you. If the company won, you won. If the company took a pounding, you suffered. Nothing could keep you apart.
That kind of relationship is hard to escape. Some company owners never do. Says Bejan Douraghy, "It's very hard for me to separate the risk I take and the risk the company takes. Even though I know they're separate, I still feel that I'm totally responsible."
For Tom Chappell, it has been a fitful process, marked over the years by a slow-growing acceptance that at least a few other people in this world may care about Tom's of Maine almost as much as he does. Those people have helped give Tom's a life apart from Tom. "You have to go through some struggle to know how committed people are," he says. "Before, I would have regarded it as a weakness not to have all the answers and be the leader. I don't feel that way now."
Mark Cohn's epiphany occurred on an airplane in 1989, three years after he'd founded Damark with David Russ. On that day, a slow, subtle shift achieved critical mass. Not that Cohn wasn't needed anymore; he just wasn't needed every hour of every day. He realized that yes, within limits, things would take care of themselves back at the office. It was still his company, but it had a life of its own.
"I used to run to the phone the moment I got off the plane," says Cohn. "And I didn't that day. It was a wonderful feeling."
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Research assistance provided by Karen E. Carney.
