Quiet giant Featured

6:32am EDT February 24, 2005
Tom Hurvis and Riaz Waraich are friends, neighbors and business partners. Not surprisingly, they love a good argument.

"In the early days, Riaz and I would argue," Hurvis says.

"We still do," Waraich interrupts.

Indeed, the partners -- who founded Old World Industries Inc. more than 30 years ago and have grown it into an amalgam of name brands and private labels -- meet every morning to "discuss" business.

"You can call that the board meeting, the shareholders' meeting," Waraich says. "We discuss everything -- no reservations, and that makes the day pretty productive.

"A lot of conflict goes on," he adds. "We don't agree on everything. We only agree on the objective, but we have different paths on how to get there. We jog each other's intellectual prowess and see what goes on."

In other words, conflict leads to progress, and it is a methodology the two have shared with the rest of the organization since the beginning.

"We would get into some pretty severe arguments - yelling at each other," Hurvis recalls of the early days. "Everybody else would run out of the room. One of the reasons we did this is because we wanted to let people know it is OK to conflict. "

"As long as you have a common objective and you are fighting (about) the ways to get there, that's OK," Waraich adds. "That's pretty much the company culture - like a family that fights and doesn't hold anything back. That works for us."

What also works for the company is keeping a relatively low profile. Hurvis, who is chairman and CEO, and Waraich, who is managing director, are content that most of the world doesn't have a clue their company exists. They so embrace this notion that they nicknamed their operation "The Quiet Giant." Name brand products get the limelight -- Peak antifreeze, Herculiner pick-up truck beds and SplitFire sparkplugs among them -- while the company and more than 90 private-label products take a back seat.

Hurvis and Waraich won't release financial data, but Hoover's Inc. estimated Old World Industries' 2002 revenue at $500 million -- not bad for a company that started with two people and four phones in downtown Chicago.

Starting out

The two met in 1969. Waraich, who was born in what is now Pakistan, was working in the New York office for Reyaz-O-Khalid Ltd., owned by one of 22 Pakistani families that controlled much of the commerce in that country until the government took control in the early 1970s. That was one conflict that Waraich did not see as productive.

"I felt the hostility and socialism coming," Waraich recalls. "Everything was shaking and the 22 families were in the limelight, so I decided to call my friend Tom."

Hurvis owned an advertising agency, which received some notoriety for making Screaming Yellow Zonkers popcorn treats a hit, and Waraich left the Pakistani company to work with him.

"(An agency) is an idea type of environment," Hurvis says. "Riaz and I were with the agency nine years, and there were plenty of conflicts there, but that's what good idea generation is."

In this case, conflict led to a new approach to tackling projects.

"We innovated a little bit in the advertising approach by having art directors and copywriters working together as teams instead of the copywriter coming up with the headline and giving it to the art guy and saying, 'Why don't you do some graphics here?' or vice versa," Hurvis says.

That relationship also led them in a new direction. With $2,000 and space rented from a friend with a design business on Michigan Avenue, the two started a chemical trading company on the side.

"We did $3 million to $4 million the first year, starting from zero, and made some pretty good money and thought, 'Hey, this is a hell of a lot better than the advertising agency business, which, although a lot of fun, is not the most stable business," Hurvis says.

Hitting it big

It was a great time to be in the chemical trading business, as government price controls provided access to high profits.

"We made a lot of money, and a lot of people made a lot of money," Waraich says.

But the good times wouldn't last, and the pair learned the hard way how limited their operation had been.

"All of a sudden, Nixon pulled the price controls off and everything stopped," Hurvis says. "We (had to) decide what we were going to do because there was no longer room for traders. We had a fellow come to us. He said, 'Can you support me on an antifreeze bid for the Department of Defense?'"

They found a formula and made a bid, although they didn't get the business.

"But we decided, 'Let's stay in antifreeze,'" Hurvis says.

Despite such modest beginnings, the pair formulated an approach that lets them compete with their international peers. Ethylene glycol, the key component for making antifreeze, is derived from gas or crude oil, so there is enormous competition from the Middle East, particularly Saudi Arabia.

"We're totally vertically integrated, and that gives us big opportunities," Hurvis says. "We entered the drilling business in the last year. We're out doing our own gas drilling and exploration. We're making some headway in that. We've just gotten our feet wet for about (one year)."

That means Old World Industries controls the product from the ground to retail shelves.

"Nobody has that story in antifreeze, certainly," Hurvis says.

The company has since added a number of respected automotive products to its offerings. The duo saw Herculiner truck bed liners at a trade show and liked the do-it-yourself product so much that they bought the rights to it.

The company offers SmartBlade window wipers and a number of runway deicing products for airports, including O'Hare and Midway, across the country. They've also added to the antifreeze line with the Fleet and Sierra brands.

Getting into some of those brands was a source of conflict at the company. The key, Waraich says, is not taking things personally.

"We make it clear, when somebody criticizes an idea, it's the idea, not the person," Waraich says. "So people are not offended. They know that out of 10 ideas, probably five are acceptable."

One idea that was acceptable was the SplitFire spark plug. In the late 1980s, a "redneck-type guy" came to Hurvis and Waraich with the idea of a spark plug with a V-shaped plug tip that would improve combustion efficiency.

"We came up with a name that nobody was very enthused about marketing," Hurvis recalls.

Eventually, Hot Rod magazine ran an article about the product.

"We had 15,000 calls off of that one article," he says. "We were deluged with calls and we didn't have a product. They mentioned in the article that the price was about $6. We started selling on the phone. We bought some plugs from one of our suppliers.

"We cut these plugs in the kitchen, and we sold about 80,000 plugs the first year. We, in essence, created the premium category."

Getting results

Old World Industries' success shows that Hurvis' and Waraich's unconventional approach to conflict works for them. But it's a philosophy that took some getting used to, especially for employees coming from large, publicly held companies.

"We have some big company people, but you've got to have the right kind of mentality to come from a big company here," Waraich says. "Big company people, they go to big companies for a known career path and security. From Day One, when people come in, and they question, 'What's my job security?' Tom's answer always has been, 'If you want job security, go work for the post office.'

"Here, your performance is your job security, and your ideas are what they are, and you are a free man. Nobody is there to supervise you 24 hours a day. We just check the results."

Hurvis and Waraich quickly learned to ask the right questions when hiring.

"The last 30 years, very few people have left us," Waraich says. "Those people are attuned to be entrepreneurial -- they like their own thing, they stick with us because that's what they enjoy. Every officer and supervisor feels th at they own this business. They have to do that.

"Conflict is pretty much spelled out; as long as it is for business purposes, you can do that," he adds. "Once you decide whose idea is better, you follow through. People like that. Conflict doesn't mean you grab somebody and say, 'It's my way or the highway.'

We make a lot of decisions. The conflict is never personal; it's always for the common goal of creating wealth for everybody and for the company."

And creating wealth for the company's 150 employees is a key part of the formula, Hurvis says. "People participate in the wealth here. Our slogan -- 'Have fun, make money' -- everybody knows that. We tell the people if we do well, then everybody does well. If we don't do well, then bonuses are going to be pretty thin. Everybody knows if we do well -- and that is what our history is - then they're going to make money. "

But for that process to work, the company had to flatten its hierarchy.

"We don't care what anybody's background is here," Hurvis says. "We don't care if you have a doctorate or are in high school. The important thing is performing. We have a lot of communication. There are very few layers here. Anybody can talk to anybody at any time. We're the major owners of the company, and we're hands on. And that's the fun of it, frankly.

"Nobody likes politics, and we have very few politics here," he says. "That's the key; we have no tolerance for that whatsoever."

Staying private

There is one area where Hurvis and Waraich eschew conflict: They're not interested in pressure from Wall Street. As a result, they have chosen to remain privately held.

Being The Quiet Giant behind such well-known products allows the company to maneuver behind the scenes in the manner a public company could not, Hurvis says.

"Being private gives us a huge advantage because people don't know what we do, frankly," he says. "From a competitive standpoint, the fact that you're revealing everything in your annual report, that's pretty significant to a competitor. Why should we give that away?

"Wall Street dictates to some extent how you operate the company," he adds. "If we're going to go into a long-term deal where we're going to have to spend working capital for a couple of years to get something up, that doesn't necessarily sit (well) with Wall Street.

"We do what we want. We like this, being the masters of our own destiny."

HOW TO REACH: Old World Industries, www.oldworldind.com or (800) 323-5440