The Wall

What's more, the McManuses, being more self-conscious than most about the company-building process, saw the wall coming. Despite the increasingly overwhelming "grind" of daily demands, McManus wrenched his head above water and sought insight, advice, and solutions anywhere he thought he might find them. (As we'll see, that search led him to two of the country's wisest analysts of the entrepreneurial experience.) But the McManuses hit the wall anyway. And it would not be until they questioned their own most basic assumptions about "the way Magellan's was managed"--the company's dependence on them, the heroic-leader model they'd brought into the company from day one--that they would have a shot at doing what few founders can when the wall confronts them: getting through it.

They'd been trying to get through it--or maybe skirt it entirely--since 1995, a year that was in many ways the best of times and the worst of times. "Growth was fierce," recalls McManus, which meant he and Gloria were putting in more hours than ever. From 5 in the morning to 9 at night. All-nighters. By June 1995, the end of the company's fiscal year, sales had risen 60%, to $3.6 million. There were 40 employees by then, up from 16 in 1993. Gloria was exhausted but hopeful. "We were stretched to the limit, but I felt there was no end to what we could do."

Keeping the faith was tougher for John McManus, who was overwhelmed trying to write and produce the catalog, hire people, pay the bills, run interference with the bank, meet with dozens of vendors, and settle employee issues. In 1995 the owners borrowed money to move out of the space they were in--a Quonset hut, a barrackslike structure made of metal. A certain black humor had set in. There was a quiz game they used to play, says McManus. "The question was, How many leaks does this building have? The correct answer was 10." One day a rat severed the network connection.

"That was the first time I thought about selling the company," says McManus. "It probably would've been worth $250,000 at that point. Gloria's response snapped me out of it." The McManuses convinced themselves things would get better when they got more help and moved out of the rat shack.

So in 1995, in one of the couple's earliest conscious attempts to change how they ran the company, McManus hired his first manager, for finance--someone to ostensibly free him from the burden of managing cash flow. That year he also brought in several catalog consultants to help him redesign the catalog. Gloria, for her part, hired her first manager to run the call center, the heart of Magellan's.

None of the fixes worked. The McManuses followed the advice of one catalog consultant, and sales took a quick drop. Gloria's call-center manager was gone in a matter of months. The finance manager bumbled his way through for several more years, never rising above the level of supervised check writer. "It was a matter of not knowing how to manage the managers. So there was no relief for me," McManus says.

The couple tried to give more responsibility to staffers who'd been around. But when they left the office for even a few days, all hell seemed to break loose. "It seemed further proof that we should never leave," says McManus. All the McManuses' experiences seemed to demonstrate that the survival of Magellan's depended on their personal attention.

So they had no time to enjoy Santa Barbara's serene mountains or shining sea. Memories of weekends spent sailing were as deeply buried as the sea urchins McManus used to harvest as a commercial diver. "On an enjoyment scale of 1 to 10, we were at about 1," says McManus.

This Is Your Life (And You're Not Gonna Like It)
In the summer of 1996, in the sea of office mail a package arrived, as unexpected as a message in a bottle and as astonishing as a baby floating among the bulrushes. It was a book called Corporate Lifecycles, by Ichak Adizes, a consultant who also teaches at UCLA's graduate school of management. When McManus sat down to read it one day, he was shocked to find that the book described his life.

In what's widely recognized as groundbreaking research, Ichak Adizes makes the case that companies go through nearly universal stages not unlike human development. In telling detail, he describes the experience of leaving "infancy" and the "go-go" years and entering "adolescence." In a company's "infancy," Adizes writes, "it is normal that the founder is working long hours, does not delegate and makes all the decisions."

Isn't that the truth, said McManus. He read on.

During the "go-go" years, writes Adizes, "we have now reached a stage where the idea is working, the company has overcome negative cash flow and sales are up." The company is flourishing. "Sometimes he [the founder] feels he is invincible. As a result, Go-Gos usually will get into trouble by going in too many directions at the same time." Uh-oh. McManus could relate to that.

At the next stage, a "rebirth" takes place, more painful and more protracted than the original birth of the company. "The organization is being reborn apart from its founder--an emotional birth." Ah, adolescence. But many companies don't survive the preteen years, Adizes warns, because their owners fall into "the founder's trap." The founder is frustrated because he or she wants to pursue the company's abundant opportunities but can't, because it's impossible to get out from under daily chores since there are no systems and controls in place to make delegation possible. What ensues is a painful period of giving up some control and grabbing it back.

 PREV  1 | 2 | 3 | 4 | 5 | 6  NEXT