You might start an auto-body shop because you like cars. Or maybe you want to sell pies because baking has always been a favorite activity. But sticking to a given passion is not necessarily how you create a business that will stand for generations.

Diana Nelson learned that lesson early and often from her grandfather, Curtis L. Carlson, the founder of Carlson, a massive Minnetonka, Minnesota-based enterprise that runs businesses, mostly in travel and hospitality, across 150 countries. As part of the third generation in charge at Carlson, Nelson keeps her grandfather's wise words--if not his methods--close to her heart as she not only runs the family business but also helps mentor its fourth generation, which is just starting to graduate from college.

"Carlson is an 80-year-old privately held company. Part of celebrating our 80th is that we are now pointing toward 100," Nelson, the company's current board chair, told the Inc. Uncensored podcast in December. Successfully hitting this 100-year milestone seems likely; however, if history is any indication, the company in the future will look far different than it does today.

The Foundation

It all started in 1938, when Curtis L. Carlson turned a $55 loan into the Gold Bond Stamp Company, which gave local stores a precursor to customer-loyalty points. Customers would collect the stamps in booklets to earn gift rewards, such as a set of patio furniture or a mink coat.

The company grew so nicely that by the 1950s it was the largest distributor of mink coats in the United States. Meanwhile, its leader diversified--purchasing a hotel in Minneapolis he was fond of called Radisson. The company changed its name to Carlson Companies Inc. in 1973, and later in the '70s bought two tiny restaurant chains, T.G.I. Friday's and Country Kitchen. These all grew well enough to become household names, and Carlson for its part did various things with them, such as taking T.G.I. Friday's public twice.

In 1994, the company's travel business, Carlson Travel Group, merged with Paris-based Wagonlit Travel, and formed Carlson Wagonlit Travel, which is a top global corporate-travel management company, and which rebranded earlier this year to CWT. The company, which accounts for Carlson's largest business unit, had a reported $4.4 billion in revenue in 2016. (Carlson declined to provide more recent revenue figures for CWT and its overall business.)

And even though Carlson sold off most of its hotel holdings in 2016, the company still sees itself as stable, if not the dominant force, in the global business-travel industry. It fills 100,000 hotel rooms a night, according to CWT chief executive Kurt Ekert, and has more than one million users for its mobile app for business travel. 

Today, the business is no longer just one of the largest family-owned private companies in the United States. It also employs tens of thousands of people around the globe, and it operates an investment portfolio and family foundation.

Sunday Brunch

While the modern version of the company may not be recognizable to Curtis L. Carlson, the tenets upon which he built the business are indeed intact--the result of many hours of deliberate indoctrination in the form of weekly family brunches over the years, says Nelson. Grandpa Curt was unwavering in his belief that the business should stay private, and stay in the family, for as long as could be envisioned--and he made sure his children and grandchildren understood that. 

"We learned a lot at family brunches every Sunday about the businesses that stayed and that were sustained over time, and the many, many more that did not sustain and last to the third generation," added Nelson. What else did she learn? Don't be nostalgic; don't be precious; don't fall in love. In other words, if consumer demands shift, you can't be nostalgic and stay in business.

"We've tried to be strategic about moments when we've needed capital," said Nelson, 
specifically referring to taking T.G.I. Friday's public in both 1983 and 1999. "We've also had to have the view that we're in business for the long term, not necessarily in one particular business."

That lesson should be particularly instructive for entrepreneurs, as falling in love with what you do is often part in parcel with starting up in the first place. But as Nelson points out, that's short-term thinking. You don't get to be a three-generation business that's lasted for 80 years -- and fixing to make it to 100 -- by falling in love.

What's more, you'll often be asked to make difficult decisions. Nelson pointed to the 2016 sale of Radisson Hotels, which her grandfather grew from a single, stand-alone location in Minneapolis to 1,400 locations across the globe. Curtis L. Carlson was fond of the hotels business; you might even call it is his passion, says Nelson. So the sale was tough. "We looked at what was happening in that market with consolidation. We realized that as a private business we weren't going to be able to buy some of the extremely large platforms that were ahead of us," said Nelson. "Sometimes you have to make hard decisions... to be in business over the long term."

Nelson herself once had mixed feelings about making her career in the family business, where her mother, father, brother, and uncle all worked. She wanted to build her own career and body of expertise, and after attending Harvard and Northwestern, she worked at Oglivy and Mather Advertising and American Express Travel Related Services. But in 2003, she decided to formally return to Carlson, when she joined the board. 

"I saw it as an exciting opportunity to help sustain a platform that had grown and sustained our family, and to play a role in keeping that legacy alive," she said.

That future won't be straightforward, however. The travel-planning and -booking space has become crowded with upstarts over the past decade--and some of them, such as Palo Alto-based TripActions, which raised more than $200 million in venture capital, are gaining footholds. It will be important that Carlson continues its push to move its technology into the future, as airlines compete to manage more of their business from companies and travelers themselves, says Norman Rose, a senior technology and corporate travel analyst at Phocuswright, a travel and hospitality market research firm. He says the travel giants like Carlson are "being nibbled at by these mid-market entries... There's pressure on them and under them to develop technologies to improve efficiencies."

Lasting Traditions

To that end, Nelson is taking planning for the future seriously. There's a fourth-generation of the Carlson family, and every one of them, including six who have already graduated from college, are expected to learn about the business, even if they don't end up running it. These days, there's a subtler form of acculturating them to the family business than grandpa Curt's brunch-time lectures.

"We try to make their early exposure to the business as much fun as comic books, if possible," Nelson said. That includes the kids making travel bookings to comprehend the complexity of moving people around the planet, or taking a gig as a cook in a restaurant. Once the heirs are 18, they start to sit in on family shareholder meetings.

That said, there's no pressure. "They have a number of different talents and interests, and our goal is not to mandate that everyone work in the business or create their life and career to be part of the business," Nelson said.

However, appreciation of the family legacy and how hard family members work is not optional. "We want all of them to appreciate the business and how hard others have to work to keep a business going."

Published on: Apr 25, 2019