Small Giants

Small Giants
Companies that Choose to be Great Instead of Big
by Bo Burlingham

This is a great read by editor of Inc Magazine. Anyone who is, or knows and loves, an entrepreneur will love this book. Burlingham chooses several smallish companies, including, among others, some you may have heard of: Clif Bar, Righteous Babe Records and Anchor Brewing. Anchor Brewing’s founder may have a familiar ring: Maytag.

This is business, personal-interest style. Yet rigorous. The anecdotes include real dollars, real struggles, and meaningful triumph. The stories grab you from the start: Clif Bar partners were about to close a deal yielding them $60 million each. Yet the founder found himself weeping, unable to sign on the dotted line. And certainly unable to deliver the $60 million to his partner who was ready to cash out.

Righteous Babe is run by singer artist and ex-boyfriend as business manager. Maytag himself seems to marvel at his archaic yet revered brewing process, right down to the copper kettles. This is business as art.

As editor of Inc Magazine, author Bo Burlingham has seen plenty of companies operate with a range of cultures, business models, success and failure. With this collection of entrepreneurs he chose to tell a particular kind of story, profiling smaller companies who have made a commitment to, “a new class of great companies.” Their very success implicitly challenges the assumption: grow-or-die. With engaging story telling skills he explores what is it exactly that makes them stand out. In all cases, these entrepreneurs created companies which they look forward working in every day.

The heart and soul of the entrepreneurs is the draw. Each company is multi-dimensional, with struggles, disasters, recovery, and triumph. Of course triumph is in the moment, needing to be reinvented on a regular basis. Yet these companies have inspiring staying power. With the plot turns and obstacles to overcome it reads like a novel. They prove that entrepreneurship is a chance to create the world to be the way you want it to be.

It is primarily a tribute to the something special, which he calls “mojo”, as in, “I’ve got my mojo working.” Inventing measures of success beyond textbook business models, the common threads among the companies profiled are compelling.

Defining Success
In addition to using the classic revenue and profit metric, these entrepreneurs have been bold enough to name their own success criteria. In all cases, it was an unconventional excellence that they valued. To be included in this book, the author’s selection criteria included a vision and operations style that was unusual. Those who had a real option to grow, receive funding, be acquired or go public, and chose another path had their commitment tested, and therefore became part of this collection. It’s one thing to assert your independence when you never really had a choice – it’s another to be tempted to grow big and turn down the offer in favor of more compelling values.

Anchor Brewing run by Maytag (yes the great-grandson of that Maytag) is a quality brewery so successful they could not keep up with production. Faced with high praise and increasing sales, founder Fritz Maytag had to grapple with how to keep up with demand. They have a deep commitment to an old fashioned brewing process, including copper kettles and natural cooling of evening breezes. At one point he had to fly to Reno to turn down a huge order because he wanted to keep all production within his own facility. Accepting the order, “...would have meant sacrificing something so fundamental as to have violated his entire purpose for getting into the business – namely the authenticity of the products.”

The pressure to grow at any cost comes from all around: investors, newspaper headlines, accountants and lawyers, advisors and even family and friends. So to stay the course, committed to a quality product or a limited size takes particular attention and commitment.

Clif Bar, the snack for athletes, had an offer for $120 million purchase, from a buyer rumored to be Quaker Oats. Owner Gary Erickson had built the business in just 8 years, developing the energy bar and naming it after his father. At the point when he was supposed to sign on the dotted line to receive his millions, he started having a panic attack and realized that not only was he not ready to give up his business for the $60 million that would be his half, he would have to find the financing to buy out his 50% partner who was ready to take it. And that’s what he did.

Intimate Relationships With Community

These successful companies also build strong relationships with the community. These went way beyond the volunteer-for-a-day kinds of involvement, to participating with significant financial investment, and meaningful contributions of volunteer time. Moreover, they took an interest in local activities.

Zingerman’s Deli wanted to be the absolute best sandwich maker around. Their success cried out for branches or franchises, yet they were concerned they would be unable to maintain the quality of product, and the spirit of the company. Results of years of agonizing about their choices concluded in committing to their geographic area (Ann Arbor), enabling specialty companies using the Zingerman’s name, but specializing in other food groups.
The owners came up with a new business model called Zingerman’s Community of Business. In addition to this unique form of expansion, Zingerman’s made a particular commitment to non-profits in the community.

Intimate Relationships With Customers and Suppliers
An unusually close relationship with customers and suppliers characterized these entrepreneurs. “They were highly accessible and absolutely committed to retaining the human dimension of the relationships. Customers responded by sending fan mail.”

At one time on the brink of bankruptcy, Union Square Cafe and Gramercy Tavern, owned by Danny Meyers in New York, needed to look at what made his business stand out. Overall satisfaction was higher than food, service or decor. It was time to discover what their “mojo” was. He operates with the philosophy that although mistakes can happen, it’s how your respond to them that becomes the story. “Enlightened hospitality” is the word used for the level of service he provides. His goal is for customers to have an experience, not just a great meal. Because the qualities of enlightened service are empathy, sensitivity and caring, he hires for those and teaches the rest.

The examples profiled demonstrate a commitment to integrity, to making sure all parties benefit from the relationships, to receiving value and listening to customers.

Intimate Workplace

The companies created very strong communities within, and among the employees. They seemed to feel there was genuine caring about them.

Yet consistent with the theme of making up the rules, one profiled company prohibited employment of family and friends and the other encouraged referrals.

CitiStorage, which began as a messenger business, expanded to provide business records storage due to strong workplace relationships (and an inventive way of looking at his business – as real estate). They provide all employees with customer service training, so that any prospective customer would be treated well by employees in every department. Furthermore it supported the kind of culture they wanted to create. At the end of one such tour by a prospective customer, he was ready to sign the contract. Owner Norm Brodsky was surprised, as the usual rhythm with a prospect was a preliminary inspection, some talk, more discussions, more talk. The specific reason the customer was ready to sign was because everyone was smiling. When the customer left Brodsky got on the loudspeaker and announced the success to the entire company.

Conclusion

An inventive corporate structure, deliberate choices, and a passion for the business were the other themes highlighted. The leaders, while being rigorous about the business success, all had “deep emotional attachments to the business, to the people who worked in it, and to its customers and suppliers.” They loved their work, and their specialty.