At this point the past rolls quickly into the present. "On Hain Pure Food, we sold bonds, and a bank put up $14 million when they shouldn't have given me 14?Simon says. With future acquisitions the technique would be the same, though the numbers would keep going up. Over the next six years, in order to acquire companies, Simon would sell equity or borrow, and then cut costs and sell off manufacturing facilities. Then he'd improve and expand the brand and push it into new markets.
That bank was right after all: Simon did know what he was doing. But each time he took a risk there was more at stake. "Every time I went out and did another deal, I risked the company, because I was borrowing $30 million to $40 million, and I never cashed out. The question that always came back, always, was, Do I just stay this small little company, do I have a bigger percentage of the company, or do I go out and take a risk by putting more debt on the company and become bigger, with the chance of it all blowing up?" he says. "And I always just felt bigger is better, and I always knew I was betting the firm."
But isn't there some point where it is stupid to bet the firm?
In bumper-stickerese: ORGANIC WASTE HAPPENS. Simon's biggest acquisition, Celestial Seasonings Inc., brought a whiff of just that when Hain's due diligence failed to reveal that Celestial's sales channels were overstuffed. Bad enough that those heightened revenues may have encouraged Simon to overpay, but with Celestial's distributors holding too much product, the tea line's sales quickly dropped. As did Hain's share price and Simon's net worth. Still, worse things could happen: for all the variety of its products, Hain Celestial is essentially a one-trick natural/organic pony. According to Nutrition Business Journal, growth rates for this sector are expected to slip steadily from a 2001 high of 8.9%, to 8.1% in 2002, 7.4% in 2003, and 6.6% in 2004. Should this trend bump into a long, deep recession, Simon could take a hit. Now consider the hypothetical worst: in the midst of an E. coli scare, what happens when 60 Minutes does a nasty piece on the kinds of fertilizer that make produce organic in the first place? Lordy, there must be some point where it really is stupid to bet the firm.
Simon's mouth softens for a moment. He looks away, and at once you know that he is back in Glace Bay, carefully arranging those bottles of Heinz ketchup, and his father is in the back cutting meat for the Passover rush, and outside the Nova Scotian wind is whipping up off the North Atlantic, and little Irwin is thinking about growth and risk, and growth and risk, and why his father refuses to take that risk. And then finally it comes out, the grown man saying it, saying it straight out with the kind of relief his own father must have known, that there is a point in life where no gain is worth the loss of what you have, little as it is, big as it is.
"Today," says Irwin Simon, "it would be stupid to bet the firm."
In just a week Simon is off to Europe to close a $20-million deal for a Belgian company -- Lima NV -- whose CEO, Philippe Woitrin, admires the aggressive businessman who is Irwin Simon. ("Irwin? Irwin is a pusher!" Woitrin says.) Just before Simon leaves, 10 adult male Jews convene in an office overlooking a Long Island parking lot for the brief memorial service that is traditional on the anniversary of the death of a loved one, in this case of the late chairman, president, and CEO of the tiny business empire that was Simon's Dairy, one Nathan Simon, of blessed memory.
As he recites the Hebrew words the eyes of Nathan's boy grow moist -- then tear.
Author and consultant Hesh Kestin never met a bad-for-you food he didn't like.
Copyright © 2002 Hesh Kestin
Doer's Profile
Irwin Simon, 43, head of the $413-million Hain Celestial Group Inc.
HOMES: New York's Park Avenue; the Hamptons in the summertime
COMMUNICATIONS TECHNOLOGY: In order of efficiency -- eye contact, telephone, BlackBerry
LAST BOOK READ: Jack: Straight from the Gut, by former General Electric chairman Jack Welch
LAST VACATION: Casa de Campo, Dominican Republic: "Couldn't get my satellite phone to work."
FAVORITE FOOD: Officially, the Good Dog, Hain's soy frankfurter. Unofficially, doesn't sneer at steak.
FAVORITE DRINKS: Bottled water. Club soda. Beer.
QUOTE: "Never could understand the Internet -- where was the business? Hey, I'd rather be lucky than smart."
ACCOMPLISHMENT: Smart and lucky, in eight intense years he bootstrapped virtually nothing into America's leading natural/organic-foods company. Risking everything he owned to get a stake, he risked that again and again to add and expand quality brands.
STRATEGY: Looks at dozens of possible brand acquisitions each week. "I'm always looking for the Six Got-to's: (1) Got to be in a growth category -- a great brand in the wrong category won't work. (2) Got to be first or second in market share -- other people know how to create brands, I know how to take it to the next step. (3) Got to feel in my gut we can add value, make it better. (4) Got to be big enough -- it costs the same $5 million to improve a $100-million brand as a $10-million one. No comparison in the payoff. (5) Got to complement our product lines -- bring something we don't have. (6) Got to be so unique we can demand a premium price. The Six Got-to's."
FIRST MAJOR HIRE: Tireless head of operations who still needs only three hours of sleep a night.
LAST MAJOR HIRE: New chief financial officer. CFO's task: "Keep Irwin in line."
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