"I didn't have the marks to go to law school, so I was recruited for an insurance company, in sales. I spent the summer training, but when it came time to write the test, I failed. I just was not into it. I didn't want to do it. Things happen for a reason. Six months later I got a job in Toronto -- my three sisters were living there; my father and mother and brother were still in Glace Bay -- at a company that was a Canadian licensee for H?en-Dazs, and did very well with them in sales and marketing. So I lived in Toronto for three years. My family was there, and I was living with a lovely woman from a very, very wealthy family. Her father kind of inspired me because he had started out from scratch. One day he said, 'You know, marry my daughter and you probably won't have to worry the rest of your life.' "
Though better-for-you foods is one way Simon describes his category, no one really knows whether a daily diet of soy smoothies and spelt flakes really improves human innards: fed enough of this stuff, lab rats may or may not sprout green leaves for ears. Hain Celestial's message is thus directed to the cerebrum's nodus guiltus: eat as much of this stuff as you like, because it won't hurt you -- and to prove it's better, note the price.
"I never wanted to be a bought person," says Simon. "So when I was offered a job in New York for H?en-Dazs, I jumped. It was just a great move in my career." With a telling beginning. Simon flew to New York to find that his new bosses had neglected to lay on transport to their headquarters in New Jersey. The airport cabbies wouldn't go there. Simon noticed a limo driver holding up a sign with someone else's name on it. "That's me," he told the driver.
That would hardly be the last time Simon saw opportunity in taking a ride on an underutilized name. Simon himself conflates a good name with a good brand. "In a small town, what was important was maintaining the reputation of the family name -- that's the thing you'll have till death," he says.
Many natural and organic foods cost more than their nonorganic cousins, but the higher prices often merely reflect the higher costs of smaller and less efficient manufacturing. But in this niche a really good brand name, even a new one, can practically set its own price -- regardless of costs. A six-ounce bag of Terra Chips -- taro, cassava, sweet potato, batata, and parsnip -- cost this writer $4.79 at a New York-area supermarket -- or about 8?iece. The only chips more expensive are made by Intel. In a supermarket in the Hamptons, close by Simon's summer spread, any illiterate can pick up a box of name-brand nonorganic pasta for as little as 69?pound; it takes a truly discriminating shopper to pay a cool $3.62 for a pound of Simon's DeBoles organic brand. At these prices, Simon's products had better be good for you.
At these prices, they've certainly been good for Irwin Simon.
"I was lonely in New York, a real hard adjustment. I was totally an outsider, but at the same time I was not going to give up. Many nights I put my head down on my pillow, and there were tears. I missed my family and thought maybe I should scrub this and go back. I was 23, 24. But I loved what I was doing, working for a major brand, creating growth, learning a lot. I was maturing -- plus I was making American dollars. Things at H?en-Dazs went well. I went up through the ranks in sales and marketing, working with H?en-Dazs in Europe, running operations for our retail stores. But there was just something missing that I couldn't put my finger on. I was frustrated. I wasn't being challenged. Things moved much slower than I wanted. A new product took two years. It was almost as if somebody was in control of my destiny, how much I was going to make, what I was going to do."
Control is a big part of Hain Celestial, whose gross margin for its last fiscal year was 43%. Simon is just plain good at maintaining quality under tight cost controls. Example: Hain has just built a plant in New Jersey that nearly tripled its production of Terra Chips using a patented technique for vacuum frying. Aside from being a great potential enlivener of high school physics and leaving the chips tasting more like a vegetable and less like oil-soaked construction paper, the low-temperature process reduces the amount of fat absorbed by the chips and saves money because the remaining oil lasts longer. Here in one potato chip is a good deal of the Simon savvy: better tasting, more healthful, and produced economically -- though in truth the only reason Hain Celestial produces the chips itself is that it hasn't been able to find quality packers with enough capacity. That being the case, the company moved quickly to turn the vacuum-frying technology into a profit center by licensing it through a European joint venture. In most cases, however, Simon will buy a company with the intention of selling off its manufacturing facilities, whose operators often become Hain's suppliers. Simon then uses the proceeds to pay down the debt incurred in the acquisition. About half the company's production is farmed out, and that figure would be 100% were there enough dependable quality suppliers.
"The other thing is that here I was, 26, 27, and I was going out and terminating people in their fifties, which is not only difficult to do -- they have kids in college -- but, you know, I didn't want to be there one day in the same situation. They'd replace these people with younger people that made less and had a lot more energy, and they'd burn those guys out too. I said, 'This can't happen to me.' I went to Slim-Fast."
Though Simon has managed to hold on to many managers during his eight years, he is not sentimental about making changes among the staff at Hain. He's on his third chief financial officer, for instance. But the second is now head of operations. Simon, sitting in his ground-floor Long Island office, which overlooks a parking lot and contains a desk and conference table that appear to be the unsold orphans of some yard sale, explains: "Because of our growth we go through people. But if people can learn new talents, you should help them instead of throwing them out. So you move these people around." Though Simon has thrown out plenty, a lot more remain to move around. The company has grown to 1,400 employees, with about 10% of them at its headquarters, which recently moved into larger offices near Hain's former base. Simon took his low-rent furniture with him -- "I'm superstitious: that's my lucky desk," he says -- as well as a recently acquired corporate-style human-resources director who replaced one who Simon felt may have been too friendly with the staff. "I no longer fire anyone," Simon says. "She does."
