Dal LaMagna could have retired after selling Tweezerman, his beauty-tools business, for a reported $57 million in 2004. Instead, after spending several years investing in various businesses, he took the helm of Brooklyn, New York, countertop maker IceStone. The company had been hurt badly by the economic downturn in 2008. Just as recovery was in sight, Hurricane Sandy hit. That's when LaMagna would find his core management beliefs truly put to the test.
How did you go from investing in IceStone for seven years to actually running it?
I was attracted to the company because it uses recycled glass to make durable surfaces, which fits with my interest in investing in companies that make a social impact. And it was run like Tweezerman had been, with a focus on responsible capitalism and the firm belief that employees are key stakeholders. The 2008 downturn brought projects to a halt, and by 2011 IceStone was about to close. I took the helm as CEO, CFO, and president, deferring my salary for a year and then working for $60,000 a year until we're profitable.
What was your first move?
I persuaded all 80 shareholders to give 10 percent of the equity in the company to our 40 employees, who really know the product. I embedded employees in every level of decision making, and I had them elect a representative to be the third managing partner. If my other managing partner [Larry Lunt] and I disagree on something, that third partner makes the decision the employees prefer. We also set up an executive committee of five employees to work with me to run daily operations. I started teaching everyone how the company works, particularly the finances. I knew from my experience at Tweezerman that by really empowering employees, giving them responsibilities, paying them living wages, and providing health care and job security, their mindsets will change. This is not just a job--it becomes something they own.
Did they rise to the occasion?
When I took over, we were losing $250,000 a month; breakeven was $600,000 a month. I told everyone, "This is not sustainable. It's everyone's job to get our overhead down." Employees came up with endless ideas that enabled us to reduce our breakeven to $350,000 a month. By September of 2012, we were just about breaking even.
Then Hurricane Sandy hit. How badly did it affect IceStone?
We were flooded with 5 feet of water. We had $6 million worth of equipment and no flood insurance. I told the employees we were finished. They said, "No, we can fix this. We'll take everything apart, flush it out, dry everything, and put it all back together." It took us five months, but the factory did get put back together. Our employees' motivation never flagged, not for a minute. In fact, the big problem for us wasn't motivation; it was fatigue. People were working so hard sometimes I had to send them home and tell them to take a day off.
You're 67 and hardly needthe money. Why do this?
In my younger days, I was the entrepreneur who had the idea and who drove the business. I hired employees to help me. Today, I have employees who respect me. They love their work. They work hard. It's very satisfying. I ran into New York City Mayor Bill DeBlasio before he got elected and talked to him about wealth inequality. I told him the most important thing about wealth inequality is to empower employees. He asked for my card.