How to Raise an Entrepreneur
A first-generation american, half Polish and half Macedonian, Michelle Rousseff grew up on a 160-acre cattle and grain farm in Fort Wayne, Ind., went to college, and married another Macedonian, John Markoff, who owned a tavern. She had a baby, then two more: Jonathon in 1971, Katrina in 1973, and Natalie in 1976. Shortly after Natalie was born, Michelle's marriage collapsed. "I have three children. What am I going to do?” she wondered, but she didn't waste time brooding. She was from tough stock; she coped. To help ends meet, she worked a paper route. At the age of 29, she was getting up at dawn and flinging newspapers at people's houses from her Ford Country Sedan.
It took Michelle a while to tell her father about the divorce. But he had already guessed that there was trouble. "What took you so long?” he asked. Then he gave her a job at the janitorial supplies company he owned. At night, Michelle changed the paper dispensers in bathrooms; by day, she sold degreasers and chemical solvents. Sales was thought to be a man's world, but Michelle excelled. She liked winning customers and clients.
Then, another shock: Her father had a heart attack and briefly became an invalid. Without him running the operation, the bank threatened to call a loan and take over the business. Even worse, it initially refused to let Michelle run the company. But she was determined to keep control, so she recruited Patrick Kemp, a salesman who worked for a rival company, to be her partner. The bank backed down. And over time Patrick and Michelle fell in love and got married. The kids nicknamed their stepfather "Kemper.”
It was the late '70s and the government had begun putting pressure on companies to dispose of hazardous waste properly. This affected many of Michelle's customers, many of them industry and factories that were buying serious solvents and storing them on-site. So she and Patrick figured: Why not dispose of the very chemicals their company sold? Their new business, Kemark, became the first outside sales force in the region to broker the disposal of industrial waste. It secured a comfortable future for the family, if not a fortune.
And it led to the kinds of questions that almost every entrepreneur with children grapples with at some point. Should the kids be groomed to think like their parents, big and ambitious? Or is it okay to let them pursue their own passions, however quirky? And if they do pursue their own passions, what will become of the company?
Like many business owners, Michelle, who is now 55 years old, wanted her children to understand what it meant for her to be an entrepreneur. "I made sure my children saw me not only as a parent but also as a working parent,” she says. "They grew up with us talking about business at breakfast.”
But, again like many business owners, Michelle also turned out to be an indulgent mom. When Jonathon graduated from high school, she chartered a sailboat for him and six friends to explore the Caribbean. She thought all six families would split the bill, but when the other parents balked at the cost, she wound up paying for the trip herself. "I guess I learned a lesson,” she says with a laugh.
Michelle spent as freely with her second child, Katrina, who had been riding horses since the age of 10, competing in shows from California to Maryland. Michelle paid for air fare or for a car to follow the trailered horse. Later, after Katrina graduated from Vanderbilt University with a double major in chemistry and psychology, and then hinted that she'd like to try cooking, Michelle packed her off to Paris and Le Cordon Bleu. "Until I turned 18,” says Jonathon, "I never knew that my mother wasn't wealthy.”
The whole family indulged the youngest sibling, Natalie. At the age of five, she loved to "do business,” so her grandfather set up a pretend office in the house, complete with bank deposit slips. When Katrina began showing horses as a teenager, Natalie handled the details of her travel. As Natalie grew older, she developed an interest in fashion. She majored in marketing and Italian at Southern Methodist University in Dallas, dreaming of a career in Milan. While still a student, she took a job working for a catalog marketing company owned by her cousin. After she graduated, she moved to New York City, where she started working at a Ralph Lauren store as a cashier.
As Michelle's children began their careers, the inevitable questions began to arise. Would any of the kids come to work for Kemark? Would none of them? John Ward, professor of family enterprises at the Kellogg School of Management at Northwestern University in Chicago, notes that it's common for siblings to pursue career ambitions that take them in opposite directions and that "in a business family, that impulse is exacerbated” as each child tries to create a unique identity. And despite the popular notion that children of a business owner tend to follow their parents into the family business, Ward says that it is quite common today for children of entrepreneurs to start their own companies. From a young age, Ward says, "they see they can survive on their own. They recognize that self-reliance is feasible.”
From the start, it was pretty clear Katrina had no interest in hazardous waste disposal. After a year and a half at Le Cordon Bleu, she roamed the top kitchens in Europe. For a time, she apprenticed in Spain at El Bulli, the acclaimed restaurant run by wild man chef Ferran Adria. But before long, she decided that restaurant work was too confining.
So she headed east on a vagabond odyssey, from Europe to India, Asia, and then Australia. In Venice she slept in the garden of a gondolier; in Thailand she hung out with a family that showed her the art of fruit carving. She surfed the Pacific. She had no idea what she wanted to do for a living. Though her grandfather and her parents had been hard-working business owners, she didn't seem to carry the entrepreneurial gene. "I had no idea where she'd end up,” Jonathon says. "She is such a dreamer.”
He, on the other hand, was eager to join Kemark and learn the business from his mom and stepfather. At the time, the company was grossing $8 million to $10 million a year. Patrick didn't want Jonathon to join the staff, however, and Michelle agreed. In effect, she was denying her son the same opportunity her father had offered her (under admittedly different circumstances). What was she thinking? "If children go into business from the get-go,” Michelle says, "they don't appreciate what they have, and they don't take risks. I don't believe in nepotism. It doesn't create the hunger, it stifles the discovery. I told him, I'll give you all my contacts, I'll help you all the way, but I'm not going into business with you.”
Jonathon was not deterred. He left Georgia's Mercer University in 1994 without graduating and decided to start his own waste-management company from his Atlanta apartment. Michelle provided a computer and $10,000 in seed capital. He assembled a probable client list and began making calls. Almost immediately, he hit pay dirt. "I just happened to call this customer up and he said, Come and see me,” Jonathon recalls. "It was a huge client, Bekaert Steel; they transported seven loads a day of hazardous waste. I found him an outlet that recycled the material. It saved him four cents a gallon, over a thousand dollars a day.”
Six months later, Bekaert had become a $400,000 account and Jonathon was off and flying. The company he has built, Compass Environmental, contracts to clean up contaminated industrial sites. It digs up soil and builds landfills; in industry parlance it provides "pollution abatement” and "remedial action.” It can demolish any big manufacturing plant—for steel, electronics, petroleum, pesticides—or serve as an industrial-sized vacuum cleaner to maintain existing sites. It's big in wetlands and water preservation, helping to shore up unstable aquifers.
"I wasn't sure what I was going to do,” says Jonathon, "but I knew I'd be successful.” He was less sure about Katrina. "She is such a dreamer,” he says.
Now headquartered in Chicago, Compass operates out of a 15,000-square-foot loft in the booming West Loop. Jonathon's office is spare, loft-chic with exposed beams and heating ducts. Dressed casual-sharp in black pants and a black jersey, he's quiet, almost inaudible. He lets his business speak for itself. "I wasn't sure what I was going to do,” he says bluntly, "but I always knew I'd be successful.”
All along, Jonathon and his parents talked often. Good ideas went back and forth between them. At one point, Jonathon observed that Kemark was spending millions hiring outside contractors to haul waste, so he suggested his mom and stepfather start a second firm to handle this work, which they did. What began with three tractors and some trailers with roll-off boxes now works a broad swath of states that stretch from the Gulf of Mexico to Lake Michigan. "We're pulling a pretty good amount of material around,” says Patrick. Still, he says, "I'm happy to keep it small. I don't have Jonathon's ambition.”
Katrina was no closer to a stable career once she returned from her extended travels. She took a job at her cousin's mail order business in Dallas and began to form a vague notion about starting her own gourmet food company.
One night, she put on a favorite necklace from the Naga tribe in India. She thought about the tribe and then thought about what kind of product she could create to teach people about their culture. In the kitchen, she started to play with chocolate, mixing in curry and coconut. "That's it,” she thought. "Explore a culture through the medium of chocolate.”
Perhaps inspired by Ferran Adria's inventive standards, the recipes that came out of Katrina's chocolate project often seemed ridiculous. She laced chocolates with wasabi, Hungarian paprika, Chinese star anise. She made ice creams flavored with chipotle chilies and pandan leaves. The moment of truth came when she took a batch of sample truffles to Gardner Randall, then the candy buyer at Neiman Marcus in Dallas. "They tasted great and I told the store manager, 'Hey, you ought to try these,'” Randall recalls. "I never saw anything like it. Not a lot of people combined chocolate with spices.”
Suddenly, Katrina—the child who never showed her siblings' interest in business—found herself starting a company. She called it Vosges (pronounced Voj) Haut Chocolat. Michelle was supportive,though she was surprised by Katrina's decision to take the entrepreneurial plunge. "She loved to bake, she loved to cook,” Michelle says, mentioning an Easy-Bake oven she bought for Katrina when she was a girl. "But did I ever think she'd be in the chocolate business? No! Never!”
Jonathon was even more skeptical. For one thing, he is a milk chocolate man. Before Katrina got into the business, he'd never tasted a truffle. So he worried that there wasn't a market for her product. "She said she was going to make chocolate with wasabi and vinegar,” Jonathon recalls. "I said, 'What?'”
Moreover, Katrina's manufacturing plan seemed unrealistic. "When she started the company she said she was going to make everything by hand,” he recalls. "I told her, you need to subcontract or outsource. I told her, 'Baby, you can't make every truffle.'”
Most of all, however, Jonathon worried that Katrina just wouldn't stick with the idea. "She took chemistry and wanted to be a doctor,” he says. "She traveled the world and stayed in hotels and studied to be a shopkeeper. She had this idea of manufacturing plates with resin or something.” And then came chocolate. "What are you doing?” Jonathon thought to himself.
Katrina seemed to be asking herself the same question. Early on, she decided she would need a partner to handle a lot of the business details, the stuff she never had much of an interest in. So she teamed up with a high school chum. The old friend seemed perfect to Katrina, who saw her as a fiscal conservative, risk-averse, lacking the Markoff anything-goes spirit.
Together, they got Vosges off the ground. Dozens of high-end emporiums began to stock the company's signature purple boxes of truffles, and hotel chains signed on as customers. The Ritz-Carlton placed Vosges products in its minibars, and the Peninsula hotels put them on guests' pillows as part of the evening turn-down service. The Web and catalog mail order business began to take off.
And that's when Katrina and her partner developed different ideas about the business. The partner wanted to focus on truffles, and Katrina did, too. The problem was that Katrina thought up all sorts of surprising ways to sell them. Manufacturing a limited-edition handbag? Why not? Organizing yoga and chocolate retreats in Oaxaca, Mexico? Great idea. But, according to Katrina, her co-owner didn't think so. In 2002, four years into the business, Katrina bought out her partner. She doesn't like talking about the split today. "We're not friends,” she says.
After the split, Katrina started to lean more on Natalie. Their sisterly collaboration became formal in August 2003 when Natalie joined Vosges, first as director of public relations and then as a vice president. If Katrina brings charisma and creativity to Vosges, Natalie brings structure. Jonathon describes Natalie as "lights-out smart, the smartest in the family.”
And she's certainly the most organized. "That's true,” says Natalie. "That's why Katrina and I are such a good fit. I'm definitely a multitasker. Being the baby in the family, I was always the one who had to choose sides or mediate some argument over a pencil.”
In some ways, Natalie was always a partner to Katrina. When Katrina was first getting Vosges off the ground, "she and I would always be speaking as sisters,” Natalie recalls. "I'd always be coming up with ideas and helping her.”
After Ralph Lauren, Natalie had been hired by the maternity designer Liz Lange to help her open a store in New York City. She became a sales associate, then store manager, then she managed the whole chain of Liz Lange stores. "When Katrina wanted to open a store in New York, I said, 'Well, that's what I've been doing,'” she says.
Unlike her brother, Natalie believed that Katrina really could transform the way people ate chocolate. And she tolerates Katrina's wild ideas, which presently range from comfort food (a line of toffee and caramel marshmallows) to a rooftop spice garden to a museum that will celebrate the history of chocolate. "Her mind is endless,” says Natalie.
"My mom always encouraged us to take a chance,” Natalie says. "She always presented it as, If I take a chance and fail, am I any worse off than I was before I started? No.”
Natalie also has learned a lot from her stepfather, who has encouraged her to master the details of business. He sometimes reads over contracts for Vosges and answers Natalie's tough questions about managing people. "Kemper is the first one I go to for advice with the logistics of how-to,” Natalie says. "The balance with my mom's passion and Kemper's vision and realism were an equal influence.”
Today, all of the Markoff family businesses are doing well. Jonathon's company, Compass, is easily the largest of the bunch. It ranked No. 27 on Inc.'s 2005 Inner City 100 list. Last year it did $90 million in revenue and acquired a large competitor, Williams Environmental. Jonathon expects the company to continue to grow rapidly; he has an eye on sales of $500 million. Compass now has 450 employees in 12 cities nationwide. One of these employees is Jonathon's father, John. "Having my dad working for me is wonderful,” Jonathon says. "We have become much closer, and I cherish our relationship now.”
Vosges continues to expand, too. In 2004 the company was ranked No. 374 on the Inc. 500. Vosges grossed $4.5 million that year, up from roughly $870,000 in 2001. It now operates five retail stores. One of them is in Chicago, in the upscale Nordstrom's mall off Michigan Avenue. As she developed her plans to open that store, Katrina stopped at a nearby Cosi sandwich shop that was under construction to ask who the contractor was. He turned out to be a handsome guy named Jason, who owned a building business in New York City. "We became friends like that,” says Katrina, snapping her fingers. "It was chemistry.” Their wedding is set for September, in a forest near Fort Wayne. The prospect of marriage seems to both delight and shock Katrina. "I am so noncommittal!” she says. In addition to mapping out Vosges' expansion strategy, Natalie is also planning Katrina's wedding.
"For natalie, it was less about achieving a dream than a goal,” says Michelle. "She's a big asset to the others.”
Perhaps DNA goes only so far—Natalie seems to be the one sibling who is content to cheer from the sidelines. "For Natalie, of course, it was less about the dream than achieving a goal,” Michelle says. "Of all the children, she's the most solid, she's very focused. She's a big asset to the others.”
So I ask Natalie, "How come you were never tempted to go into business?”
"Actually,” she says, "I just incorporated myself into a public relations firm. I'm calling it BugPR because Katrina always used to call me Bug. And it's like 'put a bug in your ear.' Get it? My entire family is very excited.”
No one is prouder than mom, who instilled entrepreneurial values in her children from an early age, even as she lavished them with sailboats and horses. Michelle may not have encouraged them to take over her businesses (which she and Patrick still run), but she certainly taught them to be tenacious and creative—and to take risks. But she doesn't feel like she did anything special. According to Michelle, the credit belongs to her entrepreneurial parent.
"My father used to say you can do anything you want,” she says. "The work ethic—it was in all of us.”
Jonathan Black can be reached at email@example.com.