I was terrified at the thought of starting my own company with $50 and a bright idea," says Joe Wise, 50, a 20-year veteran of Xerox and IBM. "Maybe I could have, but with the family and all . . ." What Wise wanted was a little business that already had some revenue, something he could grow. He bought MicroMedia Information Systems Inc., a business in Freeport, N.Y., with less than $500,000 in sales and 17 employees that performed microfilming archival services for large corporations. Five years later, MicroMedia under Wise employs 85 people and generates annual sales of more than $2.5 million.
"We -- people who have been in big companies -- bring in what entrepreneurs lack: a little bit of structure, planning, more professional as opposed to seat-of-the-pants management. . . . The decisions I make here are still based on corporate logic. We're expanding marketing services, but before I decided, I did the net-present-value calculation, compared costs to anticipated revenues, and used all the analytical tools. I don't think 'gut' enters into it that much. Besides, I've used them all before."
Wearing a bathrobe, Victor Kiam touts Remington electric shavers on TV. Kiam owns the company, so using him is cheaper than hiring a model or some tongue-tied jock. Anyway, Kiam (Harvard M.B.A. 1951) made a career at Lever Brothers, International Latex (Playtex), and Benrus, so he knows something about making and marketing consumer goods. He bought Remington Products Inc. from Sperry Corp. in 1979, and has seen it grow from less than $50 million to more than $150 million in sales since then.
"Sperry had made no bones about wanting to get rid of it, so the worst problem I had was controlling the morale of the company. . . . [First] I created an attitude of savings, starting with the highest-level executives, so that when we started doing things in the factory, it was much less painful. We had to let people go, so I went to the heads of divisions and said, 'You make the decision. You've got four days.' On the fifth day we cut $2 million in payroll. . . . We held all our employee meetings on the factory floor. Other departments came to the factory so that we got one message to everybody. And we started profit sharing immediately -- for everybody.
"The individual who goes into something like this has got to be dedicated to the success of the organization, not to how much money or lucre he's going to walk away with. If you have success, the money will come."
Tom Melohn dropped out of his three-piece suit in 1977, when he was 47, after losing a political battle for the presidency of C&H Sugar Inc. When he bought North American Tool & Die Inc., a San Leandro, Calif., company with nothing special to recommend it, he brought the standard executive tool box -- financial analysis techniques and so forth -- to work with him. But he brought something else besides: an attitude. "Let me tell you a story," he says.
"At Pet Milk once they asked me to look at the frozen food division. I studied it for about six weeks, and then I went into the general manager, and I said, 'I recommend that we have a contest.' 'Oh great,' he said. 'What kind of contest?' I said, 'Why don't we see if consumers can guess, hmm, let's see, they can guess the number of cherries in our cherry pie?
"'No,' I went on, 'that won't work.' 'Why won't it?' he asked. I said, 'Well, it'll be too easy. They'll all guess one.' He got so mad, but you see, to get his costs down he had filled the pies with red gelatin. He'd pulled the quality out of the product.You cut the cost of goods, you get a longer gross margin, then you start dealing it. Instead of fulfilling your consumer franchise, you become a whore. . . ."
Sales at North American Tool & Die, $1.8 million the year Melohn bought it, were "well over $7 million last year," according to Melohn; sales per employee, he says, rose from less than the industry average to more than 90% greater than the typical company's.
"Jerry Gura creates the environment that we can perform in," says a divisional merchandise manager at CWT Specialty Stores Inc. -- which, until Gura and other managers bought it from its corporate parent in 1982, was a company headed nowhere. "There was no direction," says Margo Albanese, a junior-sportswear buyer. "You didn't know what the company stood for. Were we a discounter or a specialty chain? Jerry decided we were a specialty chain. Then we knew what we had to do, and he gave us the confidence to do it." This year, CWT will open its 53rd store, up from 42 when Gura took over with his 25 years of specialty-store retailing experience. "I'd had the opportunity to make every mistake at least twice," Gura says.
"A pall had settled over the company. People started to lose their self-esteem and sense of worth. They began to believe that this was a company of losers. . . . There was an ivory-tower complex among management. They called each other mister and wouldn't visit stores.
"If I could have created a situation where I could step in and look good, this was it. We just made a few basic decisions, and people began to understand that we were going to win. They saw highly visible, hands-on managers. No, maybe hands-on is wrong. People got the visible support of top management. . . . Now, when a buyer wants to try a new line, our visceral reaction is to tell her to go for it."