Daniel G. Jacobs

Monday, 22 July 2002 09:47

Excellence under the sun

The evening was filled with anticipation and delivery, the air literally teeming with energy from the combination of laser lights, rock music and video presentations.

Then Gregory K. Erickson, director of entrepreneurial services for Ernst & Young, cranked it up even further by uttering four words: “Ladies and gentleman, Riverdance.”

With a blast of traditional Irish music, several members of the renowned dance team leapt onto the stage, exhilarating the crowd of entrepreneurs and their spouses. The troupe’s performance was a gift from the Irish contingent of EOY winners, and it was only the beginning. Denny Dent and his “two-fisted art attack” followed, dazzling everyone with paintings of Billy Joel and Bruce Springsteen as speakers blared the musicians’ songs.

But with all its flash, the annual event is really about the men and women who turn ideas into thriving enterprises. It’s about putting it all on the line and taking a gamble. And though the gathering in Palm Desert, Calif., assembles hundreds of regional Entrepreneur Of The Year award winners, only one walks away with the top national prize.

This year, it was Richard M. Schulze, founder of Best Buy Co. Inc.

“Words just can’t describe how I feel right now,” Schulze said after the announcement. “What an honor. What a feeling.”

Best Buy does $10 billion in annual sales and employs more than 54,000 people in 300 stores nationwide, 26 of which opened during the last 18 months. Schulze now has plans to go international.

That’s a far cry from its humble St. Paul, Minn., beginnings, when Schulze had just six stores, then known as Sound of Music. He grew that small enterprise to nine stores before a tornado destroyed his largest store. In classic entrepreneurial style — creating opportunity from disaster — Schulze decided to have a tornado sale. In the process, he reinvented the company as Best Buy. The rest is recent history.

Describing his experience, Schulze explains the draw for many young entrepreneurs who opt for risk over a safe executive job: “It’s been an adrenaline trip for longer than I almost care to remember.”

Schulze was the largest honoree, but not the only award winner. Here are the other winners of the final Entrepreneur Of The Year awards of this millennium:

Category: People-centered leadership

Winner: Jack Alexander

Title: CEO

Company: Worldtravel Partners

Location: Atlanta, Ga.

Category: Health care/Life sciences

Winner: Peter Johnson

Title: President and CEO

Company: Aouron Pharmaceuticals Inc.

Location: La Jolla, Calif.

Category: Real Estate/Construction

Winner: S. Dale High

Title: President and CEO

Company: High Industries Inc.

Location: Lancaster, Pa.

Category: Technology/Communications

Winner: Henry Nicholas III

Title: President and CEO

Company: Broadcom Corp.

Location: Irvine, Calif.

Category: Internet

Winner: Pierre Omidyar

Title: Chairman

Company: eBay Inc.

Location: San Jose, Calif.

Category: Master

Winner: Timothy E. Hoeskema

Title: chairman, president and CEO

Company: Midwest Express Holdings Inc.

Location: Oak Creek, Wisc.

Category: Young

Winner: Christina Jones

Title: president and COO

Company: pcOrder.com

Location: Austin, Texas

Category: Emerging

Winner: Allen J. Berning

Title: CEO

Company: Pemstar Inc.

Location: Rochester, Minn.

Category: Supporter

Winner: Monica Doss

Title: Executive Director

Company: Council for Entrepreneurial Development

Location: Research Triangle Park, N.C.

Category: Manufacturing

Winner: Young J. Paik

Title: Chairman

Company: Paco Steel & Engineering Corp.

Location: Rancho Dominguez, Calif.

Category: Software/Information

Winner: Satish K. Sanan

Title: Dhairman and CEO

Company: IMRglobal Corp.

Location: Clearwater, Fla.

Category: Service

Winner: Michael Chowdry

Title: Chairman, president and CEO

Company: Atlas Air Inc.

Location: Golden, Colo.

Category: Retail/Consumer products

Winner: Richard & James Cabela

Title: Chairman (Richard) and president (James)

Company: Cabela’s Inc.

Location: Sidney, Neb.

The national Entrepreneur Of The Year competition is sponsored by CNN, CNNfn, USA Today, the Nasdaq-Amex Market Group and the Kauffman Center for Entrepreneurial Leadership.

Daniel G. Jacobs (djacobs@sbnnet.com) is senior editor at SBN.

Monday, 22 July 2002 09:46

A Woodstock for kids

It was the phone call Beth Kohn knew might come one day and dreaded. Kohn, a children’s entertainment event producer, had devoted countless hours to developing a musical program that was to be part of a huge, month-long children’s festival in Atlanta, Ga.

Her show, Kidstock, patterned after the generational icon Woodstock, was so successful that while it was being staged, national media organizations took note. It landed Kohn’s event in Billboard magazine.

For Kohn, it appeared her biggest worries would be selling tie-dyed T-shirts and coordinating the musicians’ schedules for the remainder of Kidstock’s run. But the event’s success not only caught the eye of a national audience, it grabbed the attention of the creators of Woodstock, who had recently purchased the trademark rights to the Kidstock name.

So with a few weeks left in Atlanta, Kohn found herself on the phone with one of those owners, who wanted to talk about the event.

“Of course, I freak out,” she recalls. “I call my attorney (and say), ‘Oh no, they caught me. I’m using their name.’”

That phone call could have led to the end of Kidstock, but it didn’t. Instead, it took Kohn to New York, where the door opened to an extraordinary opportunity which the soft-spoken, artistically driven Clevelander never imagined.

A few years earlier, Kohn, who also works as the director of event production for Eventworks Inc., was mired in the business of producing benefit parties.

She was mildly successful, but it wasn’t until she met David Jack, a children’s entertainer looking for bookings, that she hit her stride. Jack couldn’t afford to contract Kohn to act as a full-time booking agent, but he was willing to pay an agent’s fee for any shows she arranged.

“He wanted a marketing promotions person,” she says. “I knew nothing about booking talent, but I was up for the challenge. I started to do a lot of research and spent a few years learning the children’s entertainment business.”

Kohn traveled around the country with Jack, attending conferences and putting on shows.

“We did conferences. We did schools. I met more artists,” she says. “A lot of them said, ‘If you can book him, book me.’”

But it wasn’t as easy as she thought. Kohn quickly discovered that booking children’s entertainers in a world geared toward adults was akin to finding the latest toy craze for your five-year-old on Christmas Eve.

“It was a very hard business,” she recalls. “People are not geared toward spending money on children’s entertainment. You can go to a big fair or festival where they have huge talent and a children’s stage, and they’re spending $1 million on all the big talent. And for the children’s stage? There, they have a budget of $500.”

In the summer of 1997, Kohn decided that rather than book performers for other shows, she would leverage her expertise to produce a show of her own. She founded Dream Team Inc., and chose Chicago as a launching point. With the support of the city’s Children’s Museum and the financial backing of Sears, in early 1998 she staged a successful show. That prompted her to take the show on the road to as many cities as she could book.

“I called it Kidstock,” Kohn says. “During the course of all this, I decided to trademark the name. I went to a trademark attorney and he said, ‘You can’t use the name, it’s taken.’”

That didn’t sit well with Kohn, who put herself in an interesting situation.

“I have to use the name,” she explains. “I’m basing this whole thing on Woodstock. I ordered tie-dyed T-shirts. I ordered peace sign necklaces. It’s based on Woodstock. Each singer gets up there and they do 20 minutes, then they get off. It’s continuous. Just like Woodstock.”

But Kohn’s attorney didn’t budge. He had done a trademark search and found a woman in Minneapolis owned the name, but wasn’t using it.

“He said, ‘Find another name.’ I didn’t like the answer, so I called another attorney, explained the situation and he said, ‘Let me look into it.’”

The new attorney discovered that the Minneapolis woman had sold the name to the original producers of Woodstock, but they weren’t using it, either. So Kohn and her attorney came up with a plan.

“He (the attorney) told me, ‘We’re going to trademark it in Chicago.’ He said, ‘Let’s get through this first show and then we’re going to give you the state mark on it.’”

The plan, Kohn says, was to trademark the Kidstock name state by state.

“Eventually, we could appeal and say, ‘We’re using this and they’re doing nothing with it,’” she says.

Around the same time, Sears expressed an interest in backing shows in Houston and Atlanta, then returning to Chicago. For the entrepreneurial Kohn, it was like a dream come true. Her business idea was being brought to fruition.

In the summer of 1998, the month-long show in Atlanta finally gave Kohn some of the press she’d been looking for. And with it came that fateful call. But as it turned out, the trademark owners weren’t going to put the kibosh on Kohn’s show.

“They hold the trademark,” Kohn says. “They wanted to do something with it. They didn’t want to stop me; they wanted to work with me.”

So Kohn hopped on a plane and met with John Roberts, Joel Rosenman and Michael Lang, three of the original producers of Woodstock. They were impressed with Kohn’s work and had some ideas.

“I thought (her event) was delightful,” says Lang. “It was just scratching the surface of what we envision it could be, but she had a real feel for it.”

The trio saw a much broader event, Lang says, “a sort of a kids’ expo.”

Lang, Roberts and Rosenman agreed to allow Kohn to produce her smaller shows, but she would also help them create a Kidstock festival which followed in the footsteps of its musical elder. To give it the right feel, it would be held on the original Woodstock site. But before they held that concert, the trio wanted to bring Kidstock to Woodstock ’99.

Although the Woodstock ’99 producers were not encouraging children to attend, they knew many attendees would bring their children. Kidstock was set up to run six hours a day during the event to entertain those children and their parents.

“The first day that they opened up, kids overtook our stage,” Kohn recalls. “Our stuff got overtaken. The third day, after much stress and turmoil, Michael (Lang) put us on the third smaller stage. We performed Sunday, for one day. We were supposed to be there for three. (It was) nobody’s fault.”

If it comes as a surprise that there was a Kidstock at all at Woodstock ’99, it should. Kohn wasn’t allowed to publicize that part of the show because the producers didn’t want to promote children at the event.

But that was then, Kohn says. The focus now is on a Kidstock-only festival with a target date some time during the summer of 2000.

“If we do this festival, it’ll be the best thing,” she says. “I think it’s the way Kidstock should be. The way I’m doing it now, it’s expensive and it’s hard to sell. People aren’t geared toward children’s entertainment.”

For all its promise, the mystic aura surrounding the original Woodstock still carries power, Kohn says, which continues to spill over into other ventures.

“When I went with Michael to the original site of Woodstock last May, I had based the show on Woodstock,” Kohn says. “I had read their book about it and learned all about Woodstock. I became really knowledgeable to plan this show.”

Even the best laid plans, extensive research and business experience didn’t prepare Kohn for the feeling that rushed over her that day when the two of them stood and surveyed the event location.

“There I was on the original site with the original producer,” she says. “He was saying ‘That’s where we got our water from, that’s where the stage was, those were the fences that were up for four minutes before they knocked them (down).’ If nothing else, I did all this and it brought me here with him. To me, it was really cool. And that’s why I’m hoping that this festival takes off.”

With more than a fistful of event planning experience under her belt, Kohn knows there is, indeed, a viable market for children’s shows. Kidstock, she says, is proof.

“I think there are so many geared to adults that I keep saying to (Michael) that this is going to be successful and it’s going to be easy. I’ve told him I’m here to do it, all you have to do is get me started. I can take it from there and you can sit back.”

And if all goes the way Kohn expects and Kidstock takes off, she, Lang and the others will bring music to the ears of a new generation.

How to reach: Beth Kohn, Dream Team/Eventworks Inc. (216) 575-0177

Daniel G. Jacobs (djacobs@sbnnet.com) is senior editor at SBN.

Monday, 22 July 2002 09:45

A penchant for passion

Through the window of the lunchroom, behind a brick patio and across a worn patch of grass, a tiny break in the trees is the only indication of one of Kinetico’s most unusual employee benefits.

The Newbury-based business, which manufactures water treatment systems, sits on nearly 160 acres in a largely wooded area. A few years ago, several employee volunteers built a nature trail that weaves through an undeveloped part of the property. The trail is just one of the many perks owners of the 30-year-old Kinetico offer to keep their 340 employees happy.

Kinetico was recently recognized for its intangible benefits as one of the Northcoast 99, named one of best places to work in the region.

“They wrote the book on how to treat people with respect and dignity and trust,” says Judith E. Sedivy, vice president of human resources, about the company’s founders.

But it’s not just superior employee benefits that separate Kinetico from other companies. It’s the attitude of those employees.

When the trail was finished, company management called a special meeting to introduce it. Volunteers were stationed along the pathway, and as employees entered the woods, they were handed a bag. At spots along the way, they were given another item to add to their bags. When their tour of the trail was over, employees had a complete lunch in their bags.

In the company’s lunchroom, shared by everyone in the building — there is no executive dining area — is a rack with candy bars and snacks. A money box sits on the top shelf for employees to deposit their coins. Chairman and CEO Bill Prior refuses to put vending machines in the building, asserting that there must be an element of trust or things will begin to fall apart.

Trust, he says, starts at the top and filters down, throughout the organization.

“Kinetico is successful because of its people,” says James W. Kewley, co-founder and executive vice president. “Our people are our most important asset.

While many organizations proudly champion their perks as exposition of the company culture, Prior is careful not to allow those trappings to become the focus. For him, culture is not defined by the extras, but by the passion for the job that allows those extras to be offered. It’s an important distinction, so much so that Prior authored “A Statement of Culture: The Core of Kinetico’s Heritage and Future.”

In it, he writes, “There is a confusion here as to what the Kinetico corporate culture is. People frequently comment that the corporate culture of Kinetico has to do with a comfortable lifestyle, company luncheons and social interaction, personal freedom, casual dress and a general lack of stress, focus, accountability and pressure ... We have Thanksgiving bonuses, big Christmas food bags with tree ornaments, and the officers go to Canada in the summer.

“But I don’t see all this as essential to our culture. It is fun. It is our personality ... So what is the corporate culture that I am committed to? I would say it is a culture of passion.”

Prior knows his employees relate to those intangible benefits, such as Popsicles on a hot summer day, but his goal is to remind them where it all originates.

“If there’s anything I’d really like to do,” he says, “it’s to have them focus on that culture of passion. We have a lot of the structure that allows the passion to continue.”

Prior admits there was more excitement when the company was located “in a two-car garage,” and a derivative of growth is an inevitable decrease in passion. Not every employee can deliver with the same energy as the company’s founders, but it doesn’t mean they don’t try.

“The real challenge is to try to figure out how to retain a culture of passion in a company as it grows,” he says.

Prior offers one last reason to be cautious about touting the extras.

“When you have the luxury of all the fancy trappings,” he says, “you probably aren’t working hard anymore.”

How to reach: Kinetico Inc., (440) 564-9111 or on the Web at www.kinetico.com

Daniel G. Jacobs (djacobs@sbnnet.com) is senior editor of SBN.

Laughing at work

There’s one intangible benefit that you’ll be hard pressed to easily describe: Does your workplace allow employees to have fun at work? Is it even a goal?

A study conducted by HR consultant William M. Mercer Inc. found that more than one-third of employers say their organizations encourage having fun on the job. While most employers (63 percent) take a neutral approach to humor in the office (they leave it up to manager discretion), nearly two-thirds of respondents say they believe encouraging fun or humor in communication/management style benefits employees and the organization as a whole. Of those people:

  • 55 percent say fun/humor reduces workplace stress;

  • 34 percent say it increases job satisfaction;

  • 28 percent say it stimulates creativity and innovation;

  • 24 percent say it strengthens employee loyalty;

  • 22 percent say it improves customer service;

  • 16 percent say it increases productivity.

Monday, 22 July 2002 09:44

What ‘s next for Cleveland?

Cleveland is a manufacturing town. From its early industrial days through the new millennium, the economy has been molded from the huge, noisy, industrial machinery that pumps petroleum products, electricity, finished metal and mass-produced steel into the marketplace.

And while Northeast Ohio clings to a heritage imbedded into its institutional memory, one might be left with the erroneous impression that the rest of the world has rushed to embrace the latest technologies as Cleveland chokes on its cyberdust.

But, though the region’s businesses may not be creating the technology that drives this new economy, make no mistake, efforts are underway to bring the area into the 21st century. Many of the traditional industries have embraced technology with open control panels and an eye toward a more efficient future.

Little research exists to provide hard evidence about the types of new businesses entrepreneurs are creating, but a quick survey of those who work with new companies suggests that Northeast Ohio has slowly begun the shift toward a larger base of technology-based businesses.

One number that sticks out comes from the Weatherhead 100 list of fastest growing companies. In 1988, 53 percent of the companies comprising the list were manufacturers. That number dropped fairly steadily to 23 percent in 1998 and 26 percent in 1999. Conversely, 40 of the 100 companies on the 1999 list were technology businesses.

Northeast Ohio might never be mistaken for Silicon Valley, but that doesn’t mean that the region doesn’t hold up its end of the Internet revolution.

“When we really look at the new economy, we’re not talking about just using a piece of technology,” says James Cookinham, executive director of Northeast Ohio Software Association. “We’re not talking about programmable controllers or using the various digitally controlled numeric machines.

“We’re talking about everybody in the plant using e-mail. We’re talking about communicating with all your customers electronically. We’re talking about having your sales guy in California being able to go online and see the status of a job right now.”

The difference between Northeast Ohio and Silicon Valley, though, is that while the region embraces the technology, its businesses aren’t the manufacturers. Instead, they are end-users. That distinction has made existing industries more efficient and more profitable, but the regional economy isn’t currently driven by the creation of technology.

“We’re just not leading edge in terms of all these start-up software companies that are creating so much wealth,” Cookinham says. “But my sense is that the curve in Northeast Ohio is going up. We’re making great advances. The question is, at what rate are other areas’ curves going up?

“Are we going up at the same acceleration or are we falling behind? That’s the challenging question.”

One area in which change is quite visible is in the influx of capital into start-up ventures. Many angel investors, unfamiliar with the ways of technology, traditionally tend to shy away from the tech-related start-ups. But, explains Charles Burkett, director of minority assistance at Enterprise Development Inc., as they become more savvy, investors are willing to invest more of their money into these ventures.

And it all builds upon itself. As the ventures become successful, those tech-savvy owners will readily invest in even more new deals, perpetuating capital investment in regional start-ups.

Another trend brightening the picture is that West Coast money people are looking to the Midwest as a place to sink their funds.

“There is so much money chasing too few deals on the West Coast,” Burkett says.

Investors can get a higher equity percentage for less money by coming here.

“That is embracing the new way of doing things,” Cookinham says. “It is true that we have no Microsoft, but I think there are plenty of companies here that are implementing and figuring out how to make an e-company work — make some of these old companies do things in new ways. I think that’s a big challenge.

“If we could get good at that — if we could brand ourselves (as) the rust-belt software capitol, then that would be a good product itself. If we could say we are the one that has helped the manufacturing industry make this transition, it would be nice if this region could be known as the region that is doing that.”

One technology company doing just that is TMW Inc., which writes software programs for distribution companies. There’s no one else doing that, says Benjamin R. Keller, program director for the EDI. It entrenched itself in a niche, which while not huge, is nearly all its own.

Other factors contribute greatly to the growth of our area as cybercenter.

“The quality of life has been a driver for the success of these companies,” Burkett says. Combining that with the area’s world class educational institutions producing the necessary talent should make this an attractive site for start-ups, which are already beginning to seep in as smaller, but powerful, drivers for both employment and influence in the regional economy.

Next month: A look at Northeast Ohio’s start-up economy, and some of the organizations that make the region conducive to entrepreneurial growth.How to reach: James Cookinham, (216) 592-2257 or on the Web at www.NEOSA.org; Enterprise Development Inc., (216) 229-9445 or on the Web at www.enterprise-development.org

Daniel G. Jacobs (djacobs@sbnnet.com) is senior editor of SBN.

Monday, 22 July 2002 09:44

The first hurdle

In December 1968, Monte Ahuja left Bombay, India, aboard a Zurich-bound Swiss Air flight. He’d scraped together enough money for the flight and to complete about two quarters in The Ohio State University’s graduate engineering program.

But what should have been a routine flight was hampered by a series of mechanical problems, dwindling funds and weather delays. It gave him his first lesson on an issue any future entrepreneur needs to know —how to handle adversity.

Shortly after take off, the plane developed mechanical problems.

“So instead of going to Zurich, they landed in Athens, Greece,” Ahuja recalls. “They put us in a hotel overnight, at their cost.”

With no flight available (planes didn’t run as regularly 30 years ago as they do now), the airline offered the passengers a tour of the Hellenic city, the birthplace of civilization. It was something Ahuja couldn’t afford on his own, so he took full advantage of the airline’s largesse. At the time, the Indian government allowed travelers to leave with only about $15, he says.

A flight was arranged and Ahuja was on his way. Then another problem hit — the weather. A snowstorm in Zurich forced the pilot to reroute to Frankfurt, Germany. After an overnight stay, and a very brief exploration, Ahuja finally reached Zurich.

“We actually had a tour of Zurich,” Ahuja says.

He and some friends each contributed $2 (the first money Ahuja used of his limited funds).

“From there, we went to London” for a planned two-night stay.

Ahuja planned to spend the layover with a friend living in London, but missed him because of the delays. With nowhere to stay, he tried to get a free bed in an embassy, but was turned away and forced to spend a few of his precious dollars on a bed and breakfast. (He later met with his friend’s family and spent his remaining time in London with them.)

Ahuja finally arrived in New York, again during a snowstorm.

“So they put us in an international hotel,” he recalls. “By this time, I was totally sick of it. For five days I had not tasted our food, and I was alone in New York in the middle of winter. I didn’t have an overcoat because I wasn’t prepared for (the weather). So I could hardly even get out.”

Late the following afternoon, the storm abated enough to allow a plane to depart for Columbus. Just before leaving, Ahuja asked the airline to send a message to an international students group assigned to greet him and take him to the university. He’d been trying to keep the group up to date on his constantly changing itinerary.

It was near 9 p.m., two days after Christmas, when the last plane landed in a nasty snowstorm at the Columbus airport. As the last few passengers and employees deserted the building, Ahuja learned he’d been abandoned by the people assigned to meet him.

“They finally gave up on me,” he recalls.

But in response to all of Ahuja’s messages, they’d left one of their own — an address and the suggestion that he take a taxi.

Checking with a passerby, Ahuja learned the $3 left in his pocket wouldn’t get him to the university. Without a coat (he wasn’t familiar with Midwest winters), without knowing anybody in town and no way to get to his new “home,” it wasn’t the auspicious start to American life for which he’d hoped.

But, luck being what it is, Ahuja found someone heading to Ohio State.

“He looked like a hippie,” Ahuja says. “I was scared shitless. I don’t know who he was and nobody knew I was here. That was something that kept bothering me. If something happened, then not a soul was going to find out who it was (that did it).”

The man turned out to be a professor, and he dropped Ahuja at the school without charging him for the ride.

So it’s no surprise that Ahuja is the first to tell you fate has as much to do with his success as anything he’s ever done in the business world.

Daniel G. Jacobs (djacobs@sbnnet.com) is senior editor of SBN.

Monday, 22 July 2002 09:44

Master mechanic

Monte Ahuja was three years into running his transmission parts business when his silent partner — and the majority owner — decided to voice an opinion.

Though he had promised to stay out of the day-to-day operations, the partner’s decision to renege nearly cut short the life of the company and forced Ahuja to make tough choices that have since defined his business principles.

Ahuja founded Delta Automotive on April Fool’s Day 1975, shortly after he was laid off from a previous position at a rival transmission parts firm. The India native was just a few months shy of completing his MBA at Cleveland State University when, on the advice of his entrepreneurism professor, he turned his class assignment into a real life business plan.

With a $10,000 bank loan and a partner who agreed to provide a $40,000 loan in the form of inventory in exchange for two-thirds of the company, Ahuja was on his way.

“(It was) not a very smart deal,” he says. “But who was (I) to argue, considering what I had going on at the time.”

Perhaps an argument early on in the partnership could have helped him avoid what nearly became Delta’s end.

“The major threat turned out to be the mentality of my majority partner,” explains Ahuja. “(He) seemed to have his own plans for our business. Unfortunately, he expressed his thoughts to a common friend who alarmed me of his intentions — that he planned to pull the rug (out) from under my feet once the company got to a certain level. Needless to say, I wasn’t going to work my ___ [sic] off and be left on the block again.”

A litany of discussion, threats and counter threats followed before the one-time partner agreed to sell his interest in the company for the “unimaginable sum of $250,000,” plus the initial investment. He accepted $100,000 cash and a note for the balance, which was to be collateralized by the 100 percent stock of the company, Ahuja says.

“His clear expectations (were) that neither could I raise such an amount of cash nor sustain his payment schedule, thus giving him the opportunity to repossess the business.”

But steadfastly confident in both the business and his ability to make it succeed, Ahuja forged ahead.

I was willing to bet my life and everything else I had on this business,” he says.

With a track record reflecting a profit in Year One, Ahuja convinced a junior loan officer at Ameritrust to approve a loan. He used it to pay off his partner and, in late 1978, gained full control of the company. To underscore the change, he switched the name from Delta Automotive to Transtar.

“I’m glad it happened at that early stage,” Ahuja says. “It allowed me the opportunity to own the business myself and take it in the direction I wanted to take it and not have to worry.”

A difficult partner was only one of the problems Ahuja faced in his struggle to succeed. Like most entrepreneurs, he dealt with limited funds, labor issues and attacks from competitors. In fact, his former employers made it their mission to crush his budding business.

For 25 years, Ahuja, president and CEO of Transtar Industries, has blended creative problem solving skills with a healthy dose of perseverance to beat the odds at every level. And, though he’s no stranger to the business elite in Northeast Ohio, he remains one of the most successful entrepreneurs in Cleveland with a seemingly low profile. But, as Transtar continues to grow, eclipsing the $150 million mark last year and closing in on $200 million in revenue, that anonymity won’t last much longer.

Survival of the fittest

Like hundreds of others, Ahuja fell into the role of entrepreneur by chance. He was working at a transmission parts firm when his boss died, creating a leadership vacuum. In the ensuing power struggle, Ahuja was forced out because he was seen as one of the deceased man’s proteges rather than as an ally of the new leadership group.

“Following his death, there were a lot of internal company politics that became pretty ugly,” Ahuja recalls. “There were people who didn’t see eye to eye with him (the former owner). They saw me as one of his men, and he was gone.”

The rude treatment served as a wake-up call and taught Ahuja a lesson he would never forget. It was such a powerful experience that it continues to influence his approach to business today. It should come as no surprise, then, that when Ahuja started his own business, his former employers viewed him as a threat.

“When I started the business, they really came after me with a vengeance,” he says. “(They) tried to intimidate me. We steadfastly fought that.”

Instead of being cowed by his former employers’ tactics, Ahuja used their aggression as a source of inspiration and competition.

“For many, many years, we always compared ourselves to them,” he says. “There was a strong inner motivation to outdo them.”

Ahuja’s perseverance paid off. While Transtar showed continuous growth in an industry in which most others faltered, those bitter competitors closed their doors five years ago.

“I’m not ashamed to tell you that was a great sense of accomplishment that they did not survive in this industry,” Ahuja says. “It’s a sense of accomplishment that we not only survived, but we became the largest in the industry. And, the company that tried to put us out of business is out of business themselves.”

He may have taken a measure of satisfaction in the demise of that business, but Ahuja felt no such glee that its closure left people without jobs. He clearly understood the political nature of his release and, where another might have held a grudge, he hired the man who was forced to hand him the pink slip. That employee retired from full-time duty about a year ago, but continues to act as a consultant.

Even with the battle won, it took five years of sustained growth before Ahuja felt his company had become successful.

“We had a plan to be a $10 million company after 10 years,” he says. “Considering the company that I used to work for (at the time the largest in the area), how long they were in business and knowing the industry at the time, that was a reach. But based on the success that we were enjoying, I kept changing the target every six months.”

Transtar reached $10 million in revenue after seven years.

The role of fate

No matter how many honors are heaped on Ahuja, and there have been several, he’ll be the first to tell you that fate has as much to do with his success as any of his decisions.

“If I had not gone to Ohio State, I would not have come to Cleveland,” Ahuja says. “If I did not come to Cleveland, I wouldn’t have ended up with (my first job). If I hadn’t ended up in that company, I probably wouldn’t even have thought about transmission parts. It’s a series of incidents and fate that brings you where you are today.”

That includes the company’s current structure, which differs drastically from its inception. Four business segments comprise Transtar: Transtar Industries Inc., Transtar Autobody Technologies Inc, Atec Trans-tool and Nickels Performance Warehouse.

With 23 locations scattered nationwide and in Puerto Rico, and a joint venture operation in Mexico, Transtar has grown through a combination of acquisitions and expansion. Of those 23, 15 are the result of acquisitions or mergers.

In January, the Association for Corporate Growth honored Ahuja with a Deal Maker Award for those acquisitions and how they’ve helped build Transtar’s value. The notes on his award spell out why: “For developing a distribution system in the U.S. through ‘new start’ or acquisition in order to effectively service the national market with prompt delivery service ... It’s obvious that the philosophy worked very effectively as Transtar continued to prosper every year since its start, while the entire industry suffered setbacks and turmoil.”

Despite the accolades, Ahuja deflects responsibility for the growth of his company, saying he’s benefited from good timing.

“It’s not just a stirring thing that just happens once in awhile,” he says. “I think it’s more common than people recognize, especially for an entrepreneur starting something small. This is fate. Fate is being in the right place in the right time with the right people.”

Ahuja may not like to sing his own praises, but others are quite willing to give him the credit he deserves.

“I remember Monte because he stuck out,” says Jeffrey C. Susbauer, professor emeritus at CSU’s James J. Nance College of Business Administration. “He was dedicated. He was driven. He was a good student. Monte was obviously diligent, and I thought his plan was a good concept.

“Unfortunately, there are more good business ideas than there are good businesses.”

That’s why Susbauer, who still teaches the entrepreneurism course, uses Ahuja as an example in class when people tell him that developing a business plan as a project is too complex a procedure to complete in the time allotted.

“Back in those days it was on quarter (system), which was about 10 weeks,” Susbauer says. “He (Ahuja) finished his plan in about six weeks. Somebody who’s motivated can get it done very quickly.”

Power of the entrepreneur

While it’s said that luck brings opportunities to your door, it takes a lot more than luck to carry those opportunities over the threshold and make them work.

“Every time there was a wall in front of me, I could have stopped and said, ‘It’s over,’” Ahuja admits. “But maybe the key to being an entrepreneur is that you really don’t accept the wall to be an end. You see it as a challenge and say, ‘Well, how do I penetrate this?’

“As you begin to think creatively about some idea or plan, whether you punch through it, crack it or climb it, it seems that if you are a truly motivated entrepreneur, you will find a way to get through.”

Ahuja readily recalls a half-dozen or more hurdles he’s faced in his life, and says they’ve occasionally slowed him down.

“But deep down, I have a determination that if my fate is with me, I’m going to overcome that,” he says. “That is the strongest factor in making me a success. Today, I feel that no matter what the challenge is in business, I don’t see it as a major problem. (I say) ‘Let’s find what we have to do.’”

Proof of that ability to face adversity head-on came in 1994, when Ahuja earned Entrepreneur Of The Year recognition from Ernst and Young in the wholesale/distribution category. He went on to impress the national judges and walked away from the national conference as a runner-up.

The people

It’s impossible to hold a discussion with Ahuja about Transtar without his repeated references to the employees and management team which helped him

steer the company through the rough times.

“The most crucial part of running a business is your people,” he says. “And I don’t think any business program that I’ve seen teaches you the business of managing people. They teach economics and accounting, and finance and marketing, some labor law and all those fancy things.

“But the success of any business, especially a small business, is people management.”

And that, he says, is something that takes a while to grasp.

“I don’t know what it is, but you learn that while you’re working, while you’re doing it,” he says. “As you learn, you also have to learn how to apply what you learn. It’s kind of self-growth, growing from your own experiences.”

The link between Ahuja’s experiences and his approach to people management is clear. It was favoritism that led to his firing 25 years ago, and he refuses to let anything similar seep into his own ventures.

“People who apparently resented my boss considered me their enemy and a total outsider in their clique,” he says. “It was truly disappointing. I was beginning to feel very passionate about the business, and looking forward to helping the company grow out of its complacency and old mindsets, but it was clear I couldn’t fight this battle.

“I had no choice but to accept the fate. I will never allow any kind of a clique, not in my company. They (employees) know my tolerance for that. On a scale of one to 10, it’s zero. And I have taken action when I found out a clique developed in my company.”

That was several years ago, when a small group began to form at Transtar. Some of the mid-level employees began to show favoritism toward a few employees. When it was brought to Ahuja’s attention, he confronted everyone involved. Today, none of those employees are with the company. Some left on their own, others were let go.

“I neither condone that nor accept it,” he says. “I’ll sacrifice some good people and not regret it. At any cost I want to maintain the culture of Transtar.”

The future

Like any owner of a successful privately-held business, Ahuja has been approached numerous times about selling the company. He’s turned down all offers.

“I’ve looked at that and decided that I’m too young to sit in my rocking chair and look at my bank balance,” he says.

His goal is to have the company continue to grow but to step away from the daily operations and let the team he hired make it happen.

“I have clearly chosen my path to grow the company, not necessarily being involved in running every company myself to the extent I have in the past,” he says.

As the company gets larger, Ahuja continues to adjust the numbers.

“My mental target, by the year 2005, I want to be a $500 million company.”

A lofty goal, for sure. Reachable? Ahuja certainly thinks so.

In some small part, he has ensured that no matter what happens, future Cleveland business leaders will remember his name. In 1999, Ahuja donated $2 million to CSU for the construction of a building to house the James J. Nance College of Business. In gratitude, university trustees agreed to name the building Monte Ahuja Hall (although insiders prefer the affectionate Monty Hall).

Perhaps the best way to sum up the life of Monte Ahuja comes from his former teacher. Says Susbauer: “He disproves the adage that nice guys don’t always win.”

How to reach: Transtar Industries, (440) 232-5100

Daniel G. Jacobs (djacobs@sbnnet.com) is senior editor of SBN.

Monday, 22 July 2002 09:44

A sweeter sound

The musical world praises Stradivarius in much the same way the art community does Picasso or entrepreneurs do Gates.

For three centuries, violinmakers have worked, without success, to uncover the famed violinmakers secrets. Peter Zaret wasnt interested in what Stradivarius did to create his sound, he simply wanted to equal it.

Zaret is convinced he has done just that. For years, the graduate of the Julliard School of Music and Catholic University has focused his attention on the instruments bassbar, a slender piece of wood attached inside the violin. Six years ago, while living in Norfolk, Va., Zaret happened on a design that he says allows him to take a good copy of an Italian violin and make it sound as good, if not better, than a genuine Strad or Guarneri.

But before he got the opportunity to convince the music world he had a better violin (a task he has yet to complete), Zaret had to convince a more important person a patent clerk that his bassbar design was truly new and therefore worthy of a patent.

“It’s their job to play the devils advocate,” Zaret says.

Knowing the process was a complicated one, the former violin performer and teacher contacted a lawyer to help him navigate the tricky path.

Do your homework

There have been 25 patents (including Zarets) for bassbars in the United States, dating back to 1853. Before Zarets, the most recent was in 1983.

In her preparation, Zarets attorney, Linda Blackburn, cited many of the previous patents in the application, explaining why they didnt work or werent as effective as Zarets.

The application was submitted on April 18, 1997, and patent No. 5,831,191 was issued Nov. 3, 1998.

The path to success wasnt smooth. Zarets patent was denied once. In the patent process, thats not unusual. Zaret and Blackburn read through the explanation and disagreed with the patent clerks assertions. They recast the information and resubmitted the application.

Explains Zaret, “We came back and proved that he was wrong. The patent is on the bassbar, which can be modified for other instruments in the viol family, and for the violin with the bassbar.”

Explain the idea thoroughly

Fortunately for Zaret, he didnt need to explain why it worked, only that it was different and that it significantly changed the sound of the instrument. He uses words and phrases like fuller, richer and lower the voice to describe the resulting sound.

Zaret knows the bassbar affects the way the strings vibrate, but even though his father was a physicist, he doesnt know why. He developed his design simply through trial and error.

But not everyone is a believer. During the past three centuries, there have been many attempts to replicate the sound of Stradivarius violins. Many believe, Zaret confesses, that he is simply the next in a long line of impostors.

“People believe youre a crackpot if you say you can duplicate those old instruments,” he says. “Believe me, I dont have all the answers. But I have two or three more than anybody else. The essence of my patent is very simple.”

Put the patent to work

All this hasn’t come without a price. Obtaining a patent can be expensive, even if its not rejected the first time. Zaret estimates he spent $6,000 to $7,000. Eventually, he hopes it will pay off and the music community will come around. That would justify his claim that he can make a violin sound as good as a Stradivarius.

Zaret is willing and able to put his bassbar up against a Strad. Zaret purchased an authenticated Stradivarius several years ago and is willing to play both it and one in which he has installed a bassbar. The results have been impressive and Zaret does have some support for his contention.

He sells and repairs violins and other members of the viol family in his Lyndhurst shop. His advertising literature boasts letters from several internationally known violinists, including Isaac Stern, who wrote, I tried your violin briefly and it has an extraordinarily vibrant sound.

Violinist Robert McDuffie penned, “I want to thank you for showing me your violins with your new bassbars. It was a great pleasure to play on the instruments. I didnt have to force the sound. It came out with a natural beauty.”

As further proof, two members of the Cleveland Orchestra play violins with his bassbar.

How to reach: Peter Zaret Violins Inc., (440) 461-1411

Daniel G. Jacobs (djacobs@sbnnet.com) is senior editor of SBN.

Monday, 22 July 2002 09:43

Vested interest

Verne Ticknor was a successful salesman earning top salary and hefty commission checks at a local men’s clothing store.

But there was one problem — Ticknor had peaked. Faced with the reality that he could receive only incremental raises, Ticknor decided it was time to move on.

He linked up with current partner Kevin Chernikoff, and the pair opened Ticknors Mens Clothier at Great Lakes Mall in October 1993. Within a few years, sales were strong, solid management was in place and the duo expanded to Beachwood Place and South Park Center.

When the time arrived to plan a fourth store at Summit Mall in Akron, however, concerns arose about being able to continue staffing quality management, says Ticknor. It wasn’t that the people in place weren’t good enough. In fact, it was just the opposite.

But Ticknor recalled his own experience as an employee — limited opportunities and the ease with which he was able to walk away. It was a grim scenario he didn’t want to see repeated in his own business.

Chernikoff and Ticknor tried a different approach. When they opened the fourth store, they offered long-time employee Mike Gaylord 49 percent ownership in the new venture. Gaylord agreed and anted up $100,000 for a 49 percent stake in the store.

Admittedly, it was a risky proposition, but one that had to be made, Ticknor says.

Gaylord affirms Ticknor’s concerns, and says if the offer hadn’t been made, “I think I would have definitely left. I was already considering options when we were discussing that (partial ownership) as an alternative.”

Gaylord was, in effect, rewarded for his loyalty. He spent six years working for Ticknor and Chernikoff. He was their first employee, then a manager. He also trained most of the chain’s sales staff.

His loss would have been a major blow, a fact not lost on Ticknor and Chernikoff. Besides, they reasoned, having an owner, not just a manager, running daily operations would bring a new level of responsibility and commitment to the organization.

“It puts a (person) at every location who cares as much as an owner, because they are,” says Chernikoff. “We always looked at what didn’t work with everybody else.”

So far, the new business model has worked according to plan. Chernikoff and Ticknor say that with the right personnel in place and the right business opportunity, they will open more stores using the same approach.

Says Gaylord, “It’s a terrific concept that allows you to have employees that can have long term opportunities in a business that normally doesn’t have that.”

Opportunity, though, comes with a price. Gaylord says he feels more pressure to succeed than if he were simply the store manager.

“There’s more liability,” he says. “My whole life is riding on the success of this store. If you’re just an employee and the store goes out of business, you can find another job. Here, you live or die on how successful the business is.

“And, you have to work hard to make sure things are being done the right way.”

How to reach: Ticknors Mens Clothier, Beachwood Place (216) 514-7848, or Summit Mall, (330) 864-7848

Daniel G. Jacobs (djacobs@sbnnet.com) is senior editor of SBN.

Monday, 22 July 2002 09:43

Lessons in HR

From the outside, Olympic Steel might just look like any other steel-servicing center.

It’s what’s inside the walls that separates the company from its competitors: its people. And it took Olympic Steel a while to realize that.

“When you come right down to it, we sell a commodity,” says Maureen Mason, director of human resources. “And what really make the difference are things like quality and on-time delivery. Those things are tied to people.

“We just needed some systems in place, a little bit more rigor around our processes and systems, to guide people in the business.”

To reach that point, Olympic Steel first had to create a professional human resources department — something the giant steel center had never considered.

Olympic Steel was started in Cleveland in 1954 by the Siegal brothers, Morris and Sol, in a rented building with 40 employees and no human resources department. Like many small businesses, the traditional human resources issues — hiring, payroll, benefits — were handled by a traditional HR executive.

The other side of HR, the strategic issues — people and policies — were handled by President and CEO Michael Siegal. Olympic Steel put its first personnel manager in place about 10 years ago.

Says Mason, “There was a manager identified who focused on those things as well as employee relations on a full-time basis.”

But that manager used a transactional approach, not a strategic one.

“The company got to a point, around January 1999, where it was very large and the executives had many other responsibilities,” says Mason, who was hired to fill the human resources role.

Siegal (son of one of the founders), who had handled many of the strategic HR issues up until that point, realized his attention was needed elsewhere in the business and reluctantly gave up the role. He enjoyed and “did a wonderful job of caring for the people issues,” Mason says.

But sometimes business gets in the way. In addition to growth through acquisition, Olympic Steel went public about six years ago and completed a secondary public offering in 1996. The company, which processes and distributes flat-rolled carbon and stainless products, now has revenues of about $600 million with operations in 13 locations nationwide.

For Siegal, the strategic issues simply became too much to handle.

“At the urging of the board of directors, they decided to bring in a professional HR director to bring a different perspective to the human resources organization,” Mason says. “(It wasn’t) to replace or to be another person doing transactional work, but it was to take more of a strategic look at the people of the business.”

Mason’s job, then, with the board’s blessing, is to focus the company’s HR department on issues such as training, development, restructuring compensation packages and even looking for the Olympic Steel’s next CEO.

The company recently rolled out the Professional Advancement and Career Enhancement program, designed to identify, develop and retain “high potential” managers. The PACE program is even part of the succession planning process, Mason says.

Maximizing people, the company’s most important asset, is the goal.

“That is what human resources is all about,” Mason says. “We function as a strategic business partner, and we look at the people of the business and we basically say how can we maximize their contributions to this business.”

Even with the backing of the top brass, Mason’s appearance rankled a few managers.

“There were certain leaders in the business that viewed human resources as personnel people,” she says. “There were some eyebrows raised when initially I showed up at some key strategic business meetings, where we were talking about our goals and objectives of the corporation.”

While those issues were quickly dealt with, not having the full support of management within an organization can be a problem.

“I have seen HR people not be effective in the business, because they don’t have the support of the top leadership,” Mason says. “They work for leaders that don’t understand the impact HR can make. When you’ve got a senior team that understands that people are critical to the business and they value human resources, then it can really be a partnership.”

Creating that understanding is the first thing a company must do before it moves from the traditional transactional HR model to the strategic model.

“My first recommendation is for a company to think about it from a strategic standpoint — how can I make my people a value-added difference in this business.? The HR professional comes to the business understanding the levers that can be pulled to make that happen — compensation, staffing, training and development.

“I think they have to look at it more broadly,” Mason continues. “What can be gained in the business by increasing employee productivity? Think of that bottom-line dollars and cents impact to the business. HR people, by really understanding risk management and benefits, we can negotiate.

“We can bring some very specific bottom-line dollars to the business by developing more cost-effective benefits packages, by developing new compensation mechanisms.”

How to reach: Olympic Steel, (216) 292-3800

Daniel G. Jacobs (djacobs@sbnnet.com) is senior editor of SBN.

Monday, 22 July 2002 09:43

Is anything left?

Traditionally, business owners considering a new facility had three options: build a new building, expand an existing site or take over another structure.

But some communities have found themselves with little or no land available for new buildings and are at capacity in existing buildings. That’s pushed the focus away from breaking ground for a new site to refurbishing an existing one.

“There’s a much smaller supply than there was five years ago or even seven years ago,” warns William Nice, a principal with commercial real estate firm Chartwell Group LLC. “(But) new construction is still going strong.”

All of that building has created a strong second-hand market, he says.

“There is a little more existing real estate coming on the market. As companies are building new buildings, eventually there are going to be old buildings that are going to become available. It took a while, and there’s not an oversupply of existing buildings.”

That’s something Nice is adamant about.

“Industrial real estate,” he says, “has not been overbuilt to any degree.”

So which is better — building a new site or renovating your existing one?

That depends on your goals.

“We typically bring one of these people in who are construction experts and look at the building and talk about what the client’s needs are and come up with a retrofitting plan,” Nice says. “We try to get a number as to what it will cost to make this building usable.”

Nice says that is a key consideration which must be factored in before someone buys a building — in addition to the purchase price, how much will they have to invest into renovations to make it work for their business?

And how does that investment compare with simply buying a plot of land and constructing a new building that meets the company’s needs?

How to reach: Chartwell Group LLC (216) 360-0009

Daniel G. Jacobs (djacobs@sbnnet.com) is senior editor of SBN.