Look out, Anthony-Thomas Candy Co. You could be next.
Those with an incurable sweet tooth and a waistline to prove it could take you for millions in court. After all, its your fault theyre fat, so youd better be ready to pony up for the medical bills theyve incurred for weight-induced health problems.
Sound ridiculous? Of course it does. But isnt that essentially whats happening to the tobacco industry when smokers take cigarette companies to court and win? Consider the recent $12.7 million ruling in Miami against big tobacco for causing the cigarette-related health problems of three smokers.
Just whose fault is it that these people took up smoking? Theyre adults, after all. They have to be legal adults to buy cigarettes. Presumably adults can think for themselves. Too bad their thoughts turned to finding someone else to blame and pay for their mistake rather than living with the consequences of their own choices.
Now dont get me wrong. Im not defending the harmful products tobacco companies produce. I, personally, couldnt sleep at night if I marketed something as knowingly dangerous as that. I do, however, think its equally wrong to expect tobacco companies to shoulder the legal blame for what happens to its customers. Those who choose to smoke need to take responsibility for their actions.
Its not like the dangers of smoking are unknown to the public. Were beaten over the head almost daily with campaigns that preach the ill effects of tobacco use. Every package of cigarettes not to mention every cigarette advertisement clearly warns us of the health risks.
What more can a tobacco company do? The smoker is making a conscious choice to ignore those warnings.
I think we forget sometimes that tobacco companies are businesses, too. What do we expect from them? The products they make are perfectly legal even if offensive to some. Its their job to sell cigarettes. Theyre not going to start sponsoring smoking cessation classes. That would be like asking Graeters Ice Cream to promote Weight Watchers. What business in its right mind would support something that could put it out of business?
Sure, some beer companies underwrite the Know when to say when and Friends dont let friends drive drunk campaigns to curb irresponsible alcohol consumption. That makes sense for them. To do otherwise would be to risk losing a loyal customer to a car wreck or alcohol poisoning. Who wants that?
Funny how you dont see patients with liver failure going after Budweiser or Miller Brewing for damages. With the legal precedent set by the Miami case this spring, however, we soon could.
Judges and juries need to realize tobacco companies arent holding guns to the heads of their customers, forcing them to smoke. This is a choice the customer makes.
He or she needs to be held responsible for the consequences of that choice no matter how horrific.
Nancy Byron (firstname.lastname@example.org) is editor of SBN Columbus.
E-mail and cellular phones may be more important business tools than fax machines or pagers, according to a survey conducted earlier this year among state Small Business Persons of the Year award winners for 2000. A full 92 percent of the 53 state award recipients-- which included winners from the District of Columbia, Puerto Rico and Guam -- reported using e-mail, and 96 percent said they use modems giving them access to the Internet. Cell phone use was reported by 92 percent of award winners, while 88 percent said they use fax machines and only 55 percent use pagers. Some other interesting stats from the survey, conducted by the U.S. Small Business Administration:
- The average sales for the winners' companies was $7.6 million.
- By comparison, average first year sales were $457,000.
- The average payroll was 150 employees.
- At start-up, the average payroll for these companies was three employees.
- 57 percent of the winners ran family-owned or family-operated businesses.
- 46 percent of the winners were in manufacturing or retail.
- 35 percent were women-owned businesses.
- 30 percent were minority-owned businesses.
- 67 percent received financial or management assistance from the SBA -- although it is not a criterion for nomination.
The SBA presents the Small Business Person of the Year awards each spring. This year's state winner for Ohio was Paula Inniss, president of Ohio Full Court Press. Past winners have included M. Cameron Mitchell, president of Cameron Mitchell Restaurants, in 1999 and Ross O. Youngs, president of Univenture Inc., in 1998. After winning the state, Youngs went on to win the national Small Business Person of the Year award in 1998.
Nominations for the SBA Small Business Person of the Year awards are solicited each fall. For nomination information, contact Doug Sweazy at the Columbus district office of the SBA at 469-6860 ext. 276 or e-mail him at email@example.com. SBN Columbus is a co-presenter of the SBA Awards ceremony held at the statehouse each year, which honors the Ohio winners. Nancy Byron (firstname.lastname@example.org) is editor of SBN Columbus.
How can state liquor officials be so naive? Do they really think imposing a five-day waiting period and requiring special forms to be filled out when five or more kegs of beer are purchased will stop underage and irresponsible drinking?
They must. They unveiled the new five-keg rule with great fanfare this summer. Apparently they didn't notice everyone scoffing.
Lt. Gov. Maureen O'Connor, who added her blessing to the new rule, says the intent is to "allow law enforcement agencies to monitor areas where multi-keg parties are going to be held." I can almost guarantee this rule change will not have the intended effect.
College students aren't that dumb. If they want to have a 20-keg party, they're going to have it -- and they're not going to tip their hand. They'll simply send five guys to buy four kegs apiece. How hard is that? And why can't state officials see that inherent flaw in this new policy?
All this rule change will do is run up the cost of government. Special forms now need to be designed, printed and distributed throughout Ohio to any business that sells keg beer. That won't be cheap.
In addition, someone at the Ohio Department of Public Safety is going to have to review these forms -- if, in fact, any of them actually get filled out -- and, presumably, alert the appropriate authorities so they can monitor areas where mass quantities of beer are expected to be consumed.
Where will the funding come from for these new staff positions? What a waste. That money certainly could be better spent elsewhere.
Can't we stop wasting money on worthless policies like this and try tackling the tough issues for a change? Funny how we can't figure out how to adequately and equitably fund our public schools but we can pony up the cash for ridiculous new rules like this.
As business owners and managers, we can have a powerful voice in government. Let's capitalize on that and tell our public officials to start doing something to make Ohio a better place to live and work.
A vain attempt to curb keg parties isn't accomplishing that. Nancy Byron (email@example.com) is editor of SBN Columbus.
It doesn't take an advanced degree or even a high school diploma to be a successful entrepreneur.
Dave Thomas is proof of that. Although he says dropping out of high school was the biggest mistake of his life -- and he has since earned his GED certificate -- the Wendy's founder still managed, without a 12th grade education, to turn a little hamburger joint on Broad Street into one of the largest restaurant operating and franchising companies in the world.
How'd he do it? My theory: good, old-fashioned work experience.
Dave got his first full-time job at age 15 as a bus boy. Although that may sound like a rather humble position, I'd argue it taught him virtually everything he needed to know about running a business.
Our first jobs, no matter how lowly they may have seemed at the time, probably did the same. Here's my proof:
Lesson No. 1: Be on time.
As an employee, arriving late to work or appointments can call into question your dependability, dedication and work ethic. As an employer, shipping product late or failing to pay invoices on time can lead clients to believe you're not as reliable or financially stable as you claim to be. That could cost you business.
Lesson No. 2: Ask for help when you need it.
Good employees don't assume they know it all. They seek advice when they are unsure how to proceed with a new project or when they don't feel properly equipped to handle a situation or problem.
CEOs often forget they can do the same. This city is full of seasoned executives who have been through many of the challenges your company is facing right now. Call them up. Meet with them. Ask their opinions. Form a board of advisers. Join a group like YPO, YEO or TEC, where you can consult with other business owners.
Nobody creates a successful business single-handedly. Asking for help isn't a sign of weakness; it's a sign of intelligence.
Lesson No. 3: Don't spend more money than you make.
It's simple logic, really, but what young employee hasn't been tempted to live beyond his or her means when looking at that first big paycheck and the pre-approved Visa application that arrived in the mail the same day? CEOs can react in a similar fashion when those first big accounts start rolling in the door -- and bankers start calling with loan offers.
It's all too easy to begin counting unhatched eggs and get in over your head. Debt is a dangerous tool. Use it wisely.
Lesson No. 4: Listen to the boss.
Even the most eager, talented employee recognizes the importance of listening to the CEO. After all, that's the person who signs the checks -- and the one who has the authority to hire and fire at will.
So why, then, when we are placed in that top spot, do we stop listening to those who pay our salary and who decide whether our firm is worth doing business with again? Our clients are the ones in control now. We ought to spend less time telling them what services or products we can provide to their companies and start asking them what products and services would help their businesses grow.
Lesson No. 5: Prepare for the worst.
What employee, no matter how happy or secure, doesn't keep an updated resume tucked away in a file at home "just in case?" Things change rapidly in the business world, and no matter how far ahead of the pack or financially stable your company may seem today, it could all change tomorrow.
Your biggest client could take its business elsewhere. Your entire management team could quit. Your production plant could burn down. Having an emergency fall-back plan is crucial.
One more entrepreneurial lesson we learn as employees, but tend to forget as we ascend the ranks: Remember to take breaks. Whether it's an hourlong lunch with a friend or a weeklong vacation to sit beachside or ski, taking time to clear our heads is often the best thing we can do for ourselves -- and our companies.
Refreshed CEOs, like refreshed workers, think better. Better thinking can lead to better decisions. Better decisions make for better companies.
And what's not to like about that? Nancy Byron (firstname.lastname@example.org) is editor of SBN Columbus.
But suspected crimes or ethical misconduct are another story. And what a story they've made for the media in recent months.
The collapse of Enron did more than put Arthur Andersen in a tailspin. It's given big business a collective black eye.
The general public historically hasn't trusted -- or even respected -- big business. It's always portrayed as the bad guy. Can you think of a single court case, movie or book that sings the praises of corporate America? I can't.
Big business shoulders the blame for all the ills of society: pollution, disease, corruption, coffee burns. It's the whipping boy for citizen groups and overzealous lawyers. It's the one entity consumers readily hold responsible for all the suffering of the little guy.
I can almost see Joe Q. Public looking smug, pointing to Enron and Andersen and saying, "See? I told you so. They're all corrupt. Those money-hungry big corporate executives are finally getting what's due them."
In the Enron case, one can only hope so. But to judge all corporations based on the actions of a few is more than unfair. It's plain ignorant.
Sure there are a few bad apples in the business world -- regardless of the company's size. Take the reprehensible behavior of Buckeye Egg the past few years. Still, the vast majority of corporations in this country not only follow the rules, they do a lot to help the communities in which they operate.
Consider how many people these companies employ. The wages at most big companies are more than fair, and the benefits tend to be generous. Large corporations also tend to have a philanthropic arm that gives grants to charitable causes.
Longaberger, Nationwide, The Limited, Wendy's --they all have impressive records of giving back to the community. Some even loan employees to nonprofit groups like the United Way to help with manpower needs.
So here's to all you big business executives who are tired of getting a bad rap. I appreciate what you do for our community. I know I don't stand alone.
Bank One had it all five years ago.
Its CEO, John McCoy, was a native son whose family was well respected and ran among the social and political elite in Columbus. The bank's reputation fed off this popularity and its assets and earnings tended to reflect that.
The only local financial institution that could hold a candle to Bank One was Huntington Bank. The two developed a natural, but fierce rivalry. Then, when merger mania tore through the financial industry in the '90s, the Bank One we grew up with became something else entirely. It became just another big, out-of-town bank.
Tom Hoaglin, who spent 26 years working for Bank One, lived that rivalry. But now he's on the other side of the battlefield -- if it's even fair to call it that anymore. After all, when Bank One merged with First Chicago NBD and moved its headquarters to the Windy City, the rivalry faded. Huntington was crowned champ by default.
Still, Huntington's new crown didn't sparkle like it should have. Perhaps that's because Huntington execs didn't take advantage of Bank One's exposed underbelly. They never marketed Huntington as the real banking leader in Columbus. And when other out-of-town banks started gaining a stronger foothold in Columbus and Huntington's earnings and assets fell off, shareholders got angry. They even called for the head of former chairman Frank Wobst.
Hoaglin knew some serious image repair was going to be needed when he took Huntington's top job last year. He's wasted no time getting started.
Already the company's luxurious executive suite is history, and so is its corporate jet. Hoaglin is trying to provide better service at bank branches by empowering front-line employees, who used to fear taking action without approval from above. He's trying to open lines of communication with employees, customers and shareholders.
He's trying to make Huntington the bank it could've been three-and-a-half years ago. From what I've seen, I think he can do it. We'll find out April 29 if shareholders agree.
Despite the dot-com shakeout, some entrepreneurs are still finding ways to use the Internet to generate profits. Others, as you may have read in our cover story a few months ago, are turning ideas into cash -- without having to shoulder the cost of implementing those mental breakthroughs on their own. Pretty amazing stuff.
Yet even with all these options for financial gain, I still find myself surprised and disgusted with what some people will resort to in their quest for riches.
Some of you may blame what I'm about to say on my recent leave of absence to spend more time with my children. You'd be wrong. Graphic, violent video games aimed at teen-agers have been a hot button for me for years. I just now have the time to start venting about them.
Yes, it's a violent world we live in. That's disturbing enough. The fact that some businesses have chosen to capitalize on that sickening trend -- and even feed it -- is appalling.
Take, for example, what appears on the surface to be a fun, child-appropriate, interactive toy: PlayStation. It's a video game system aimed primarily at children and young adults. One of my nephews, Nicholas, owns a PlayStation. Several years ago, when I was spending Thanksgiving with his family, I overheard Nick giving directions about one of his PlayStation games to another of my nephews, Bryan.
''You get more points if you shoot me,'' he said.
What?! I turned to watch their game. Both boys had control of a video animal character driving a motorized cart through a maze. They lost points for crashing into walls. They gained points for picking up certain objects as they sped by. They gained points for passing each other.
They got even more points for murder. I was aghast.
You can't tell me teen-agers wouldn't play these games if there weren't bloodshed involved. I won't accept that. The life of a teen is all about competition. My nephews didn't care if the object of the game was to cross the finish line first, pick up the most treasure or record the highest body count -- they just wanted to win. I tend to think that's typical of youth.
Graphic violence should not be a commodity to market alongside scooters, walkie-talkies and Barbie dolls. There's nothing entertaining about blowing off another guy's head.
You wouldn't let your child watch something like that happen on the evening news. Why would you encourage him or her to do it as a source of amusement? That's what toys are supposed to be, right?
Think about that when you go holiday shopping this year. Are you really giving your child a gift? Or is it a license to kill? Nancy Byron (email@example.com) is editor of SBN Magazine in Columbus.
Panic is never good.
It makes us act rashly. It makes our hearts race and our palms sweat. It leads us to believe a situation is more dire than it typically is.
So stop panicking about the economy. It's not worth it.
Sure, some belt-tightening is in order during business slowdowns, but some of you are scaling back too much in your rush to prevent the sky from falling. In doing so, you are actually endangering your company further.
It's easy to work yourself into a frenzy over a poor financial outlook. After all, positive cashflow is everything. And when you've just revised your sales projections downward and you need to put company expenses in line with that new figure, the hatchet inevitably comes out.
Hold on. Before you start figuring up the body count, try being innovative.
Instead of laying off your six lowest-producing sales people, for instance, switch them from base-plus-commission to 100 percent commission -- but pay them a higher percentage of each sale. That way, you don't have poor performers weighing down your balance sheet month after month, and those who can improve their sales will be adequately rewarded.
If you lose a few people under the new system, so be it. You were going to cut their jobs anyway.
Another option is barter. When money is tight, trading your product or service to cover a budgetary necessity -- office supplies, commercial printing, courier services, even rent -- could help perk up your bottom line.
If, after exploring options like these, layoffs are still necessary, step carefully. Remember:
- Every staff cut puts an additional burden on other workers who are expected to pick up the slack. Not only is that a morale killer, but suddenly those you counted on most are spending time on tasks they didn't sign up for -- and may not be qualified to do.
Frustration mounts. Their production slips and doesn't recover. It can't. You've simply put too much on their plate. You've set them up for failure. Your company will pay the price.
- If you cut down your work force to the point that every single person is indispensable -- so there is absolutely no redundancy in any position -- you're running too thin. People get sick. They take vacations. Accidents happen. You need to be sure your company can survive all of the above -- simultaneously.
- Smart companies find ways to eliminate most, if not all, the job tasks of the positions they're cutting. Slashing production staff by a third? Better phase out your slowest selling products along with those jobs. Eliminating the HR staff since you're under a hiring freeze?
Better outsource your benefits administration, since the stream of 401(k) and health insurance inquiries from "surviving" employees -- as well as the paperwork that goes along with payroll, government reporting, employee evaluations, etc. -- won't just disappear with the HR staff.
Don't call Clyde Henry's business an organization. He's not into structure. Not in the least.
"We work real hard here to maintain anarchy," Henry says of his 30-person architectural firm that designs more than $250 million in construction annually. "A lot of firms fall into the trap of, as they grow, gaining structure."
Henry and company co-founder David Price want no part of that.
Organizational charts? Forget 'em.
Job titles? They don't exist -- not even on business cards.
Time clocks? Price and Henry don't see the point.
Private offices? No way. At TRIAD Architecture Inc., even the company founders share their office with other employees -- and they long for the day when a better-designed, larger office building will allow everyone at TRIAD to work in one large, open room.
"We want to be right in the mix; right on the production line," Henry says, noting he'd like to set up a work environment with no cubicles or dividing walls, where everyone can see and hear what's going on at every desk.
"People say, 'Don't you need confidentiality?' I say (employees) should see what's going on. I really believe, in most situations, inclusion is better."
Employees generally find the nontraditional atmosphere at 4-year-old TRIAD in Gahanna either refreshing or downright terrifying, he says.
"Some people, until they get used to it, are really scared. They wonder, 'What have I done?' We've had people who have been here three to five days and just said, 'Hey, I'm over my head here,'" he recalls. "They're used to working in a more restrained environment."
Henry would rather lose a talented hire or two than cave in to regimentation, however. He considers policies and procedures unnecessary evils that simply slow down production.
"Dave knows one firm where you have to fill out a form every time you run a letter through the postage machine," Henry says. Not only is that burdensome and disruptive to workflow, he adds, but "What does that say? We don't trust you with 34 cents -- but we trust you with client projects that are worth millions of dollars."
Treating every employee with respect, trust and as an equal, Henry says, reduces the need for excessive paperwork and promotes a team atmosphere.
"We have no organizational chart. Basketball teams don't have a chart for who throws the ball to who; they throw the ball to whoever needs it to score," Henry says.
Likewise at TRIAD, employees play different roles depending on their skills and the project at hand. Employees can pull anyone -- including Henry and Price -- into a project if their expertise is needed.
"We have no seniority," Henry says. "We recruit the best players. And if they don't perform, we cut 'em. And we do transition people out very quickly ... It's move up or out here. A coach wouldn't keep a player on a basketball team because he's been there 30 years."
Performance is what matters.
"If you don't fulfill the mission, that's fatal," Henry says. "We cannot tolerate not fulfilling the mission."
TRIAD's No. 1 goal is client satisfaction. That's why employees at TRIAD get so much autonomy.
Project managers interview and hire their own project engineers, for example.
"That puts the project manager's neck on the line if that person doesn't perform," Henry explains.
Employees are also authorized to purchase whatever supplies or equipment they need -- even items costing $1,000 or more -- without anyone's prior approval.
"If you give somebody responsibility, you have to give them the authority to use all the assets of the firm to make things happen," Henry says. "If you need it to fulfill the mission, don't tell me about it; go order it."
Henry acknowledges this management approach can lead to some expensive decisions.
"The back room is full of junk that's outdated," he confesses.
Still, he says the payoff is in knowing everyone in his firm is doing what he or she thinks is best to meet client needs, and that clients aren't lost in a maze of bureaucracy waiting for answers.
"Our people don't have to say, 'Gee, I have to check back with the office first,'" Henry says. "They can give an answer right away."
When costly mistakes are made, they are discussed openly -- like the time Henry bought an office phone system that lasted somewhere between three and 30 days, depending on who is telling the story.
"It gets back to the example of the basketball team. With a basketball team, you're coaching on the floor," Henry says. "If a player does something wrong, you talk about it. Other people on the team hear that and learn from that, too."
Henry and Price say maintaining an open, unstructured environment has become more difficult with the company's growth. When issues arise, it's tempting to make a rule or create a manual to address it, they say, but they haven't given in yet.
"There's not a set of controls that will solve every problem," Price says. Instead, "You really have to stop and say, 'What is this all about?' It's not about creating bureaucracy -- that creates a whole other set of problems. It's about reinforcing the mission again." How to reach: Clyde Henry and David Price, TRIAD Architects, 751-1833, firstname.lastname@example.org or email@example.com
Nancy Byron (firstname.lastname@example.org) is editor of SBN Magazine in Columbus.
Yet the $375 million Rich Langdale has raised for his family of companies in less than two years isn't what's gotten the business community talking about him. It's the prominent slate of investors he's attracted to underwrite his ventures that started heads turning in Columbus. That and the fact that he's raised so much venture capital so quietly.
Only the $75 million deal Langdale closed in December 1999 for his then-start-up venture SubmitOrder.com and the additional $40 million he secured this past May for the same company -- which has since dropped its dot-com suffix -- have grabbed headlines. The other $260 million he raised with very little fanfare.
Langdale says he prefers it that way.
"I never had any interest at all in being famous," says the golf-shirt-clad entrepreneur who will turn 37 at the end of this month. "A certain level of anonymity is a good thing."
That's not to say Langdale is bashful. Not by any means.
"I'm probably more cocky than I should be," offers the refreshingly candid founder of SubmitOrder, NCT Ventures, Digital Storage Inc. and a handful of other companies based here and abroad.
All the same, Langdale -- who also owns Retail Planning Associates and holds a minority interest in EnergyGateway.com -- seems clearly uncomfortable with the notion of having the spotlight turned directly on him rather than on his companies or associates.
"This is very much a group effort," he repeatedly emphasizes. "There are over 2,000 people worldwide that work very hard and deserve credit for the success of the companies of NCT."
Yes, but how many of those people have inked deals worth enough money to collectively buy 250 thoroughbred horses, 360 Lear jets, 24 Lamborghini Diablos and the naming rights to seven Major League Baseball stadiums?
That's the magnitude of the cash Langdale has raised. And that's precisely why he's become the poster boy -- if reluctantly -- for securing large volumes of venture capital.
"Pure venture capital of this magnitude is unusual," says Mike Endres, a principal with Stonehenge Financial Holdings Inc. in Columbus and business adviser to Langdale.
It may even be unheard of in Central Ohio, suggests Larry Hilsheimer, Ohio Valley managing partner for Deloitte & Touche, who says he knows of no one else locally who has raised as much venture capital as Langdale.
"At this point, Rich has as much ability to raise venture capital for a particular idea as anybody in this community because of the relationships he's developed over the past couple years and the relationships he's strengthened with the people involved in those deals," says Hilsheimer, who also advises Langdale on business matters. "That access and those relationships provide him with the ability to make contacts most of us in this community can't make. So if the next great idea comes along, it's going to be a lot easier for him to develop it than somebody else."
Langdale, sitting in a meticulously clean, glass-fronted conference room in the Smith Bros. Hardware Building, says he doesn't fancy himself an expert in raising capital.
"Part of it is being in the right place at the right time with the right concept for a company," he says.
Yet a survey released earlier this year by the Columbus Venture Network shows the $260 million Langdale quietly raised in 2000 for his fledgling online-order fulfillment center was more than half of all the venture capital secured by Central Ohio-based companies last year -- and more than a third of the total venture capital raised by businesses throughout the state.
Apparently Langdale has been in the right place at the right time more often than most.
He cut his first big venture deal in the waning months of 1999, shortly before everything dot-com fell out of vogue with investors.
"With the benefit of 20/20 hindsight, you have to appreciate his timing of the market," Endres says, "because the ability to raise money in that market became very, very difficult very quickly (after that). He had a business plan that was very attractive to people. So attractive that he got the attention of some of the biggest (investors) in the country."
"It's almost surreal how it all happened," Langdale says, taking a quick gulp of decaf.
Just a month earlier, his cup would've been filled with thick, dark, caffeinated java. Just a month earlier, however, Langdale was burning through energy faster than a blowtorch would a dinner candle -- a phenomenon his doctor blamed on excessive caffeine consumption.
But who could blame Langdale? It takes a lot of hustle to attract venture capital -- especially in the amounts he has -- and that first, highly publicized $75 million investment was cut in an extremely chaotic, high-pressure atmosphere.
"The financing was going on at the same time as our first e-Christmas. So there was some mixed emotion going on there. We knew we'd have to keep our heads down and do a good job with Christmas," he says, but he also knew the company couldn't wait until after the holiday rush to seek financing.
SubmitOrder was running out of cash.
Targeting the big boys
Langdale knew if his fund-raising efforts were going to be successful, they would have to focus not on explaining SubmitOrder's services, but on the financial return the company could bring potential investors.
"When a venture capitalist gives you $1, he's looking for a clear route to make $10," Langdale says. "So many people get caught up talking about how cool their product is, but at the end of the day, what matters to the investor is, 'What kind of return am I going to get?'"
With that in mind, he began identifying a select group of investors who seemed like a good match for SubmitOrder, based on the type of return they would expect, the timeframe in which they would expect that return and the types of companies they'd run or financed in the past.
One investor who fit the bill was former Netscape Communications Corp. CEO Jim Barksdale.
"Jim Barksdale -- with his background at FedEx, which is a logistics company, and Netscape, which was a high-growth technology company -- he understood what we were about. We were a high-growth logistics company with technology," Langdale says. "We were absolutely certain this was the right fit for him."
Getting that message to Barksdale was not as simple as sending SubmitOrder's business plan to The Barksdale Group, which was Langdale's first -- and admittedly naive -- approach. He got a generic rejection letter in return. He got similar rejections from others on his list, including Kleiner Perkins Caufield & Byers, the California-based venture firm known for investing early in revolutionary Internet business concepts such as Amazon.com and Netscape.
The negative response didn't dissuade Langdale.
"He's persistent," Endres says. "When he is satisfied that he's got the right plan, he's very dedicated to that."
Langdale gathered his business advisers -- a group that includes marketing expert Roger Blackwell and logistics guru Bud LaLonde, both of The Ohio State University, and Roger Lautzenhiser of Vorys, Sater, Seymour and Pease -- to help him find a better approach. They began fishing for a personal connection: a friend or business associate of Barksdale's who might be easier to reach and who could encourage him to take another look at the strength of SubmitOrder's business plan.
They eventually found a link, albeit a rather distant one. A former student of LaLonde's was a top executive at Ingram Micro Inc. -- a $30 billion company out of Santa Ana, Calif. -- whose CEO used to work with Barksdale. It was a bit of a stretch, but it was all they had.
"He had a reason he needed to be in Columbus, so we sat down and talked about some of the strengths and weaknesses of the business plan," Langdale says of the connection, whom he declines to name. "We talked about whether this might be interesting to Mr. Barksdale or not, and we felt together it might be a good fit for him."
By the close of that meeting, Langdale knew he at least had a shot.
"He just said, 'You place a call and I'll put in a good word for you if he asks,'" Langdale recalls.
The wheels had been set in motion.
Closing the deal
Around the same time, Langdale got word that a newly formed venture firm based in Menlo Park, Calif., was ready to invest in the Internet fulfillment market.
As luck or fate would have it, one of the principals of that firm, Silver Lake Partners, was scheduled to be in New York at the same time Langdale was meeting with an investment banker there. Silver Lake caught wind of Langdale's plans for SubmitOrder and arranged for him to stop by its New York office while he was in town. The meeting held particular significance for Langdale since the ever-elusive principals of Kleiner Perkins were involved in Silver Lake, too.
What started as a brief meeting with some junior partners in the firm quickly turned into an invitation to dinner with Silver Lake principal and co-founder Jim Davidson so the two could discuss Langdale's plans in full detail.
"We found we had a lot of things in common and similar interests (including) our view about how to attack this e-fulfillment business," Langdale says. "It became very apparent that we were going to work together. It was not whether to get it done, but how to get it done.
"By the next day, we were already setting up time lines."
Although Silver Lake was willing to commit up to $1 billion to SubmitOrder, Langdale wasn't ready to give up the idea of getting Barksdale involved in the company, too.
"We felt they would be a great addition to the team," he says.
Silver Lake agreed to take the lead on securing Barksdale's investment, and within three weeks, "we were pretty certain The Barksdale Group would be engaged with the deal," Langdale says.
Only the due diligence process remained.
Langdale traveled to the West Coast to meet with Barksdale's people. It was an experience unlike any other.
With many venture capital firms, the due diligence process is "almost adversarial," Langdale says, "like they're looking for dirt." With Barksdale's team, however, "If they uncovered a weakness, I didn't feel like I had to overcome it by showing them another strength," Langdale says. "It was, 'How are we going to make this better?' It was a very positive process."
Within three months, the deal was finalized.
As part of the $75 million Barksdale-Silver Lake deal, Langdale had to give up his majority stake in SubmitOrder. That, he says, was the hardest business decision he's ever had to make.
After all, for Langdale, who has started no fewer than eight companies, the idea of giving up control of even one of them was tantamount to asking him to abandon one of his children. Nevertheless, he had to put emotions aside and do what was best for the company and its shareholders.
"The opportunity for liquidity became so apparent and so large that I wanted to give up control," he says. "There was enough value being created that I felt it was best for everyone -- not just me.
"We had a firm offer on the table to buy the company outright for $100 million," he continues. "So whatever we did, we had to create something that would create at least $100 million for the shareholders. We felt if we could get some of that money up front and stay in the business for a longer amount of time, that would keep our interests much more aligned than, 'Let's get bought out and go home, and they'll take it from here.'"
Langdale still serves as chairman of SubmitOrder, while Barksdale, Davidson and two other Silver Lake executives hold a majority of seats on his seven-member board.
The company has taken some sharp turns since he relinquished control of it in exchange for that first big venture investment less than two years ago. Twice the company has changed CEOs, and its work force has been cut by roughly 10 percent. Langdale says he tries not to think about whether the direction the company is taking now is any different than the one it might have taken had he still been calling the shots.
"The most important thing I needed to do to come to the peace of mind to give up control was to never ask that question," he says. "If you start second-guessing the management team you put in place or what you would be doing differently, you're in the wrong mindset. To successfully be a minority partner in a growing entity is to support the team that's in place wholeheartedly and bring suggestions forward, but let them take those suggestions and respect and support their opinion -- or you'll drive yourself crazy."
Apparently the investment community isn't second-guessing the direction SubmitOrder is heading, either.
Between July and November 2000 -- the year of the big dot-com fallout -- SubmitOrder managed to bring in a fairly steady stream of financing in blocks of $10 million to $30 million, although Langdale kept news of those deals under wraps.
"Submit continues to raise money," Endres says. "It's a testimonial to Rich and his business sense."
Even when two of the company's largest clients -- Zany Brainy and Kmart Corp.'s BlueLight.com -- admitted this spring to having serious financial troubles that would adversely impact online ordering, SubmitOrder still closed another $40 million deal with investors who clearly were not shaken by what appeared to be an increasingly precarious position for the online fulfillment house.
"Rich is optimistic," Hilsheimer says. "He doesn't focus on the negative side of things. He focuses on, 'How do we make it better? How do we accomplish what we want to do?' That's typical of successful entrepreneurs."
Restless by nature
True entrepreneurs never slow down. They're always looking for "the next cool thing," which, ironically enough, is what the "NCT" in Langdale's investment firm's name stands for.
"My strength is coming up with new ideas, getting the original business model in place and grunting it out," Langdale says. "That's the bootstrapping phase. My weakness is running a large company that's scaling out. I tend to get bored and start dinking with other ideas, and that can be a distraction."
That's why Langdale no longer runs most of the companies he founded -- even though he maintains a controlling interest in nearly all of them. Each has its own president or CEO who oversees daily operations.
Turning over the reins has "allowed me the freedom and the time and the increased financial ability to go out and do some fun things with NCT," he says.
"I love the way things turned out. I love the role we play: the visionary role, putting financing together, putting the management teams together. It's what I'm made for. Whatever got us here, I can't say I have any regrets."
So what's next for the man with a million ideas and the money-raising ability to see them through to fruition?
"He's got a lot of different interests," Hilsheimer says. "One of the things we're working on and trying to sort out now is where does he go from here?"
"I'm sure you'll hear more about him -- and that he'll make things happen," Endres says. "He's very passionate about what he does and he works harder than most. That's a pretty successful formula." How to reach: Rich Langdale, NCT Ventures, 564-1045 or email@example.com; Larry Hilsheimer, Deloitte & Touche, 229-4653; Mike Endres, Stonehenge Financial Holdings Inc., 246-2500
Nancy Byron (firstname.lastname@example.org) is editor of SBN Magazine in Columbus.