Steve Cuntz keeps BlueStar Inc. Ahead of the Game Featured

12:19pm EDT March 1, 2011
Steve Cuntz, president and CEO, BlueStar Inc. Steve Cuntz, president and CEO, BlueStar Inc.

The past few years have brought about the worst economic climate we have seen since the 1930s, and for Steve Cuntz, president and CEO of BlueStar Inc., the situation was no different.

However, Cuntz saw the economic downfall coming and prepared his company for the worst. His actions have helped BlueStar not only get through the downturn relatively unscathed but put it in a growing position and expanding globally.

“We have been successful beyond my wildest dreams,” Cuntz says. “I really anticipated more problems than we have experienced. Having been in the electronics industry long enough, the one thing you can guarantee is change.”

BlueStar is a national business-to-business distributor of point-of-sale and auto-ID products. Its ability to adapt to ever-changing conditions played a big part in its success through tough times and in its growth.

“Any time you’re growing, it’s anticipating the strain that scaling causes on an enterprise,” he says. “In any organization, your growth can put you in a position where the things you never would have dreamed of doing, now you’re going to have to do.”

BlueStar’s ability to adapt and keep its 370 employees hard at work through the downturn resulted in 2009 revenue of $365 million.

Here’s how Cuntz created a company that can weather tough economic times.

Be unique

As a private company, BlueStar has sometimes had trouble getting suppliers to pay attention to it as a viable distributor.

“Since we are a privately held business, [suppliers] have a tendency to sometimes question your capability,” Cuntz says. “We manage to overcome it one supplier at a time. There’s nothing like performance that wins somebody over. It takes awhile for people to drink the tea, but once they get a taste of it, they understand what we are about. Usually in business, especially in distribution when you are doing order fulfillment and things like that, it’s just take the order and fill it. We go out and try to find new orders and try to develop new customers for our manufacturing partners, and over time, that has helped us create a major difference.”

During a time when a lot of companies were losing money and struggling to keep business, BlueStar was growing. The company used its position to help its customers, and in return, BlueStar gained valuable relationships.

“During the last recession, we bent over backward to extend credit terms and find ways of creating a business flow of capital that allowed our customers to live and keep their credit ratings while we continued to try and expand the marketplace,” Cuntz says. “That was a bit unusual, which may have had an impact to our suppliers, because during the recession, our sales actually went up. It’s ironic because a lot of what we sell is exactly what an enterprise needs to do to cut expense overhead.”

Cuntz didn’t think twice about stepping in and helping customers through their tough times. In fact, that kind of effort is a company philosophy.

“Going above and beyond is just part of our organization’s philosophy, which is ‘Give more than you receive,’” he says. “It provides a differentiator in so many ways. In the long term, it provides an advantage. Providing that extra value also provides you extra recognition, notoriety and opportunities that might not exist otherwise. You have to create a unique difference for yourself. Fill a need or a void that currently isn’t being filled. It depends on the business you’re in, but always be good for the money and always create a value-add difference for your business, and it will work.”

Hire strong employees

During the recession, companies like BlueStar had to keep people motivated by keeping them busy at work.

“It became very activity-based,” Cuntz says. “Call the customers up and let them know that if they have a deal, we want to help them close it. Call them up and tell them the good news that we’ve got extended credit. Call them up and tell them that we’ve got inventory. We didn’t cut our purchase orders, we stayed the course. We became one of the few distributors that actually had product available. They saw an immediate return on their investment because of increased activity. So it wasn’t hard to keep people motivated because they were writing orders as fast as they could.”

That motivation was also fueled by strong leadership and employees who were hired because they would grow within BlueStar and help the company succeed.

“We’ve got substantial managers in our organization,” Cuntz says. “Our philosophy is you can’t move up until you replace yourself with someone better. Our management team has continued to get better because we keep hiring better people than we are ourselves and after awhile that becomes attractive to talented people who look for a career path.

“You have to create an environment where you lead by example. Every day, people are watching you, and unless you have somebody better than you sitting behind you pushing, it’s easy to fall into that yes-man trap, and we haven’t had that. It’s very important in a growing company that you have people that want to grow.”

BlueStar’s challenge quickly changed from “How do we stay motivated?” to “How do we meet goals in this down economy?”

“You have to be honest and communicate with your employees,” Cuntz says. “You should tell them what you expect them to be doing. We use budgetary goal setting to discuss our future plans and growth. Sometimes we will use weekly meetings depending on what things are happening within the company. We have weekly meetings with our sales and marketing teams, and we communicate through terms of budgetary accomplishment and feedback loops and what we expect. Are we hitting our goals? Are we not hitting them? Why do you think that is? You have to ensure that employees are doing the things necessary to succeed. If you’re not meeting goals, then you need to communicate with staff and see what things need to be changed.”

Cuntz and BlueStar are also constantly combing for people who will bring drive and the desire to grow to the company.

“Hiring people is kind of like Glengarry Glen Ross with the ABCs of selling, ‘Always be closing,’” Cuntz says. “We use the term ‘Always be recruiting.’ I think you have to always be in the frame of mind when you see a talented person who expresses a desire to be a little bit more in life or has some desire to make a change; we just try to be sensitive to that and keep our ears open. Networking is critical. With the nature of our business, we are constantly at trade shows, and we work with hundreds of suppliers, so we are constantly networking with folks. We try to carefully define what we are looking to accomplish and what kind of skill sets and characteristics it’s going to take to fill that position. It’s not just a saying, ‘Always be recruiting.’ We are always thinking of that.”

Grow and invest

In the world of technology, the industry is never quiet. It is constantly changing and progressing forward, and it is crucial for companies like BlueStar to be able to grow, adapt and invest within those changes.

“The things that seem intuitively obvious with an enterprise package are not,” Cuntz says. “That was a real challenge for us, and it continues to be. We knew coming in that we will face change. How you change and how you succeed with that change is the real key. With a flexible mindset and a flexible business plan, you have to expect that it’s going to happen and you have to be willing to make the investments. You have to invest in change. I’m always thinking about what’s our next investment.

“You have to have some expectations of three things when you think about investing. First of all, you have to understand what the investment is thoroughly. I don’t care whether that’s stock of a Fortune 5 company or a small business. You need a real thorough understanding of who that company is and who the people that are managing the company are. The second thing is does the company have the capacity to do better than it’s currently doing? Look for the missing links. What could you do to bring about change that would help make this company or this investment more than it is? The third thing you should look at is does it fit with your culture? Also, is it attractively priced? If all those elements are in place, then you could probably move forward with that investment.”

In recent years, BlueStar has grown to a level where it has been looking to expand globally and make acquisitions that will augment and enhance its business. However, with global growth comes more changes and challenges.

“The one thing I didn’t plan on was the organizations’ cultures,” Cuntz says. “Different parts of the world have different customs, labor laws and things like that. The biggest challenge to us has been to understand not so much that the business appears to do the same kind of work that we do but to understand the underlying business development of that organization and what the thought process of those employees are. Those are the challenges of understanding if you bought a company that doesn’t match up philosophically with yours.

“You have to focus on companies that are in the core market of the kinds of products you sell. If you’re going to look for a merger or key acquisition, you have to look for key managers that are going to stay on that share your corporate philosophy. And you really have to know what it is you want to accomplish. You have to look for similarities where you don’t necessarily have to reinvent the wheel but where you can offer them something that they need that will help both of you grow.

“You have to understand the market you’re getting into and the culture of that market. Does the market have the potential to grow? What’s the economic climate? The U.S. is not the best benchmark for how most of the other parts of the world operate. You have to understand that there are other costs involved of managing foreign entities that we are not aware of. You have to have a team in those regions that can clearly explain to you what those costs are and what those opportunities are so you can make a valid decision whether that’s going to fit your business model.

“We can determine pretty quickly whether they’re of a like mindset or not. You have to sit down and say, ‘Here’s where we want to go, and here’s how far we have reached.’ And if they’re not in agreement with that, then sometimes you have to make a change. It’s going to come down to communication. Communication is not a quantifiable formula. It’s a skill set on both ends of the communication.”

If you’re the investor, it’s your job to make sure that you are being understood. And it’s your job to make sure that you understand what’s also implied or said or inferred in a relationship.

“It’s an art form, a skill set to make sure that you know your partners,” Cuntz says. “That’s something there is no formula for. You have to be completely unassuming. My method is I assume that I was not clearly understood and there’s the old saying, ‘Inspect what you expect.’ My first inclination is maybe I didn’t say it right, so I’m going to monitor the response to the communication to make sure that I’m seeing the results to the request. You have to be very, very specific.” <<

How to reach: BlueStar Inc., (866) 830-0140, or visit www.bluestarinc.com.

The Cuntz file

Steve Cuntz

President and CEO

BlueStar Inc.

Born: Cincinnati

Education: Received a bachelor’s degree in accounting and a master’s degree in finance at Xavier University

What was your first job, and what did you learn from it?

My first job was as a night manager for a fast-food restaurant called Burger Chef. What I took away from that job was that I found out I didn’t have any ability to know I was making a correct hiring decision at the time I was making it. Some people interview well and wind up being terrible employees, and some people are terrible at being interviewed, but they make tremendous employees.

What is the best piece of business advice you’ve received?

Always spend less than what you make. The gentleman I heard that from was my loan officer, Bob Herman, who actually helped BlueStar get going when I became CEO. I asked him, ‘What advice do you have for me, because I don’t want to ever let you down?’ He said, ‘Steve, you’ve got to spend less than what you make and you got to set money aside for contingencies, and the businesses that fail to do that usually don’t make it.’

What do you enjoy most about your job and why?

I really enjoy setting budgets and goals and then hitting them. I’m a very goal-oriented person. It’s kind of an architectural thing. You put it up on the board, and you look at it and wonder if you can build that thing, and then you put together plans to achieve it.

If you could invite any three people, past or present to dinner, whom would you invite and why?

I would love to have George Washington, Albert Einstein and Lou Gehrig to dinner. I would be curious to know how Washington kept it together in the face of that kind of adversity. His skills and leadership just floored me.

Guys like Einstein, I’ve admired my entire life, because I wish I’d been a better science student. Einstein was able to take really complex ideas and make them really simple. I still don’t understand half of what Einstein talked about. And Lou Gehrig, to me, was an icon. He was a natural-born leader and had the respect of his teammates and was one of the first truly great athletes that also was a role model.