The Heart of a Company

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From a very young age Kramm helped out in the store, sliding fliers into envelopes, pasting price stickers on bottles of laxatives, whatever needed doing. Over the years he had absorbed his father's philosophy that having a family business is less about passing on than about pitching in. Consequently, there was no question in the entrepreneur's mind that his father would do more than just bankroll the new company. Kenny Kramm possessed business and marketing skills. But Harold Kramm understood the technical details of compounding -- the practice of customizing medicines to meet individual needs. A pharmacist himself, he knew the target market as well as anyone.

The only problem: Harold Kramm was as comfortably old-fashioned as his business. Impressed by what the flavoring service had done for Center's bottom line, he saw no need for the service -- or Kenny -- to ever outgrow the store. His son argued that it was time. They'd put in three years of development on the product and had 50 pages of flavor and medicine combinations in their formulary. (That number has now risen to more than 500 pages.) They could make life better for millions of children instead of the few hundred who patronized the store.

And, if it worked, they'd be helping Hadley. "All my decisions, at that time and since, were influenced by Hadley's situation," says Kenny Kramm. Slow growth was not an option: He wanted financial security and he wanted it soon. "I felt I had to accomplish my goals as quickly as possible," he explains. "That made me much more aggressive than may have been natural to me."

The issue came to a head in the summer of 1995. The National Association of Retail Druggists was meeting in Las Vegas, and Kenny Kramm saw the conference as the perfect opportunity to test the concept's acceptance. Harold, by contrast, saw it as "a waste of time and money," says his son. But, in a rare instance, Kenny's entrepreneurial instincts overrode his filial ones. "I told him he could either join me or I would go alone," Kenny recalls. At the conference, FlavorX's no-frills booth attracted long lines, and the embryonic company signed up its first 20 accounts. Harold was convinced, and "I guess for the first time I really was too," says Kenny.

But the real battle -- or what passes for a battle in such a polite, soft-spoken clan -- erupted when Kenny Kramm suggested FlavorX sell its system to chain stores. In Harold's eyes, it was a deal with the devil. "My father is not a fan of the chains," says Kenny. "When we started, all he wanted to do was help his granddaughter, but in the first two years something like 5,000 independent pharmacies went under. As one of the survivors, he wanted to do something for the other survivors."

Bowing to his father's wishes, for three years Kenny Kramm sold exclusively to independent pharmacies, touting his product as a sling to wield against Goliath. "We actually turned down the chains -- it was stupid, stupid, really stupid," he says. "I didn't want to upset my father and I didn't want to be screamed at by our independent customers for selling out. But the independents were going out of business, and I didn't want the company to die because I made a bad decision."

So in 1999 Kramm, whose confidence had been growing along with his company's sales, decided to target the behemoths with or without his father's blessing. To make it easier on his father he began with a local chain -- Giant, now owned by Royal Ahold -- dragging Harold along to meetings with their new customer. "My father had watched Giant grow, which made it easier to get used to the idea," says Kramm. "And when he saw that we sold 150 sets in one hour, it started to make sense to him."

Standing beside his son, Harold Kramm -- still dapper at 73 -- shrugs gently. "At least the independents had a few years to get it established," he says.

The son's strategy is paying off: FlavorX has grown at a five-year rate of 786%, landing on the Inc. 500 list in 2002; it's been profitable every year but one. "Kenny has made this thing into something so much bigger than I had ever imagined it could be," says Harold Kramm. "He is a very talented boy."

FlavorX moved out of the Center Pharmacy building in 1998, but it didn't go very far: The company's headquarters are just five miles away from the family business. The two places are even closer in spirit, displaying on their walls some of the same snapshots, mottoes, and posters, including one proclaiming 14-year-old Sarah's anointment as Miss Teen USA for Maryland. Kramm's office is a gallery of portrait-sized family photos and homemade artworks. ("Hadley does a lot of handprints," says the CEO.) On his desk rests a memo pad emblazoned with childish drawings of one girl in a wheelchair and another clutching a shopping bag. "From the Dad of Sarah and Hadley" reads the legend across the top.

Today the dad of Sarah and Hadley is conferring with the uncle of Sarah and Hadley -- a.k.a. Woody Neiss, the company's chief financial officer and Shelley Kramm's youngest brother. Neiss, who four years ago left a well-paying job at PeopleSoft to enlist in the family mission, has just returned from a three-day trip to Australia, where he accepted the Thomas Alva Edison Award for Innovation from the Young Entrepreneurs Organization. The trophy -- a century-old phonograph, one of the originals peddled by Edison's company -- is fragile and bulky and clocks in at 60 pounds. Neiss carted it home on the plane himself so he could present it to FlavorX's 40 employees at the Monday-morning staff meeting. "I couldn't wait," he says gleefully.

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Leigh Buchanan

Leigh Buchanan is an editor at large for Inc. Magazine. A former editor at Harvard Business Review and founding editor of WebMaster magazine, she writes regular columns on leadership and workplace culture, and she contributes Inc.'s capsule book reviews, "A Skimmer's Guide to the Latest Business Books."

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