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What Have You Become?

You have employees you don't recognize, sales you can't keep track of and a business that's grown way beyond "small." Do you even remember when everything was just innocent and entrepreneurial?
May 1, 2000
URL: http://www.entrepreneur.com/article/26422

It never occurred to Ann King, owner and impresario of Blooming Cookies Catalog.com, an e-commerce gourmet gift service in Atlanta that posted more than $3 million in sales in 1999, that her business would grow so large she'd lose her entrepreneurial status. "I believe, after 15 years, that I'm still an entrepreneur, but I've changed my mindset to a more traditionally corporate mindset."

King, 48, launched her company in 1984 after being convinced she could do a better job than a similar business she saw featured on television. It took a true entrepreneurial mind to write her company's success story. In fact, her start-up struggles could be illustrations of worst-case scenarios in the entrepreneur's handbook: There wasn't enough money to buy a commercial oven-just as orders were piling up. A snafu saw her original recipe fall into the hands of a major hotel chain-with no compensation to King. Her first location had leaky roofs and saw minimal foot traffic, and took a $20,000 hit after a large order to J.C. Penney cost twice as much to fill as anticipated. Things got so bad an accountant advised King and Glo Ghegan (her business partner and friend) to file for bankruptcy.

"Things were tough early," King says. "But I learned a lot. And I learned that communicating and reinforcing my vision throughout the company was my responsibility. Once I understood that, things got better right away."

A watershed moment came in 1993, after a fire at the company's plant. The building was leveled, but Blooming Cookies wasn't. The near-tragedy turned into a PR winner when local TV stations began reporting King's statement that the company would be back in business by Monday-a scant three days away. King and Ghegan did better than that, shipping cookies (with a local bakery's help) to amazed clients within 36 hours.

Blooming Cookies never lost momentum after rebounding from the fire. A deal with 1-800-FLOWERS led to a better one with FTD-and an even better one with Kodak, enabling customers to send images over the Web to be printed on Blooming Cookies' cookie jars. The company's 1998 sales hit $2.6 million, and King aims for $12 million in the next few years.

But making millions changed her entrepreneurial vision to something more corporate. "I think our company still feels like a start-up, in that we all work closely together, and everyone knows we'll all pull together to make things happen," King says. "But things have changed for me. Instead of diving in and making things happen with a 'whatever it takes' mentality, I've become aware of how all components of a decision affect the big picture. It's not just about me anymore. My decisions affect lots of lives, and I have tremendous respect for that responsibility that I didn't have as an entrepreneur."


Brian O'Connell is a Framingham, Massachusetts, freelance business writer. His most recent book is Generation E: How Young Entrepreneurs are Changing the Corporate Landscape (Entrepreneur Press, 1999). He can be reached at Bwrite111@aol.com.

Thinking Corporate

If today's entrepreneurs could write an epitaph to sum up their attitudes toward their burgeoning businesses, "It's not just about me anymore" may be it.

The exhilarating days of living on Pop Tarts and Top Ramen, sleeping on the office sofa and filling orders with the help of old college buddies are long gone for many entrepreneurs. With a roaring economy, consumers eager for new products and services, and new opportunities in e-commerce, a growing number of entrepreneurs are waking up to the realization that they now run fairly large businesses with successful pedigrees. But that success comes with all the requisite duties and responsibilities bigger businesses bring to the table.

"It's a very passive thing," says Ethan Winning, author of Labor Pains: Employer and Employee Rights and Obligations (TFM Publications). "Small-business owners don't even think about change, or about becoming a full-fledged corporation, until after the second or third wave of employees comes on. Let's face it: The 'one big happy family' mentality would be pretty dysfunctional if it covered 300 employees."

That's the case with Minneapolis-based Crazy Carrot Juice Bars, which started with just two full-time employees in 1998: co-founders Eric Strauss, 30, and Tony Barranco, 25. Demand was strong right off the bat, as the company's first store was a huge success-so strong that Barranco and Strauss soon found themselves ordering more than 3,000 pounds of oranges per week, up to 1,500 pounds of jumbo carrots and hundreds of pounds of bananas, strawberries, raspberries and other assorted fruits and vegetables. The Crazy Carrot's ingredients were carefully picked by members of "Team Carrot"-a group of people strategically assembled with the goal of taking the company to the next level. The Crazy Carrot concept-which consists of everything from a distinctive logo and one-of-a-kind smoothies to the company's focus on environmental awareness-was more than 18 months in the making.

By September 1998, a second Crazy Carrot Juice Bar opened in Minneapolis' Uptown neighborhood, an area positively dripping with cachet. A third store opened near the University of Minnesota campus in Minneapolis. By spring 1999, two more locations had opened. The founders' passion for juice drinks and flair for marketing paid off: Sales for 1999 soared past the $1 million mark, and payroll grew to 95 employees.

But their company grew too fast. The headaches of scouting out new locations; fending off larger, copycat competitors and grabbing additional funding wore Strauss and Barranco out. Last November, the company merged with Heartland Juice Companies, a regional developer of Jamba Juice. The deal's fallout was nightmarish for Strauss, who was forced out by Heartland. Barranco stayed on as director of operations in Minnesota and Wisconsin in what to him was a more regimented, traditional corporation.

"It's a good-news, bad-news thing," says Barranco. "As entrepreneurs, we lost focus and soon found ourselves in danger of being swept away. My personal feeling is that when you start out scrubbing floors together and making your first drink together, you're living the entrepreneur's dream. But when you change speeds and grow as a company, you take a closer look at whether that entrepreneurial spirit withers or not. In my case, [the growth of the company] made it a lot easier to walk away. I know our company is in reliable hands, with lots of money and resources, and that means a lot to me."

Success And Moderate Growth

Some entrepreneurs, particularly younger ones, grow companies only to a level that ensures a freewheeling mentality will hold sway. These business owners view traditional corporate tenets with skepticism and see no reason to ride herd over the gray-flannel-suit-oriented culture that sucked the life out of their baby boomer parents. "The longer I do this, the more I think I don't want to have a $100 million company," says Steve Lake, the 31-year-old co-founder (along with Dave Klimkiewicz, 29, and Dennis Telfer, 30) of Sector 9 Inc., a skateboard maker in San Diego.

Lake and his buddies started the company in 1993 after tinkering with their own custom-made skateboards. After some initial problems, business took off. "The boards caught fire from Day One," says Lake. "People would stop us on the streets and ask us to make them a skateboard. So we started making 4-foot-long skateboards for $25 apiece on Dennis' pool table." Sector 9 snowballed: By the end of 1998, the company had earned $4 million, boasted a staff of 40 employees and saw a flurry of competitors enter the market.

But even as Sector 9 takes off in a big way (its products are distributed in 1,800 stores and 40 countries), Lake says he's still wrestling with what he calls the corporate "growth problem." "I think we'd like to level off and maintain the flexibility we have now," he explains. "We did grow another 25 percent this year, and there's always a need to add staff and invest more money into the company. But is that the wise thing to do? You know, we're still wearing shorts to work, still riding our skateboards to work. I'd hate to lose that flexible feeling. And if we grow that much faster, we could."

Having It Both Ways

Unlike the guys at Sector 9, sacrificing dollars for flexible office culture is something most won't do. But, a growing number of entrepreneurs insist they can have it both ways-big profits and a loosey-goosey workplace. "At some point, you have to let go of your baby if you're going to get your company to where you want it to go," says Christian Larsen, one of two founding partners of Pacific Web Works, an Internet software services firm in Salt Lake City.

"If you have a need for a computer programmer skilled at writing great code, you get that programmer at all costs," Larsen adds. "But you also need to get someone to manage all your programmers, and that's where the corporate-think enters the picture." Larsen says his company has recruited top managers to help his company grow even further. "Our CEO came out of a $1 billion firm, our call center manager came out of AOL, and our chief financial officer came from PricewaterhouseCoopers. That's the price you have to pay to become a successful corporation."

That said, Larsen defends his company's entrepreneurial spirit. "I really don't think that's changed," he says. "Just because we bring professional managers in doesn't mean we're becoming a staid, stuffy organization. On the contrary, people want to come here because we still offer a start-up mentality."

Seeking The Perfect Business

Seeking Business Nirvana

In a perfect world, most entrepreneurs would love to run a flexible, creatively driven shop where decisions are made at all levels and managers are accountable to employees as well as vice versa. But they also want bigger sales, a better facility, and the cachet of a hugely successful company. Can it be done without cor-porate hassles, petty office politics, insulated managers, and presenting a bigger target for competitors?

"A lot of entrepreneurs wouldn't mind operating under the radar screen, taking their companies along a steady growth path and having a lot of fun with it," says Winning. "But I don't know if that's possible. For too many people, the fun is in starting the company and not keeping it running. That's what [Microsoft's] Paul Allen did-and he's as big a hero to a lot of entrepreneurs as Bill Gates is, any day of the week."

A Traditional CEO?

The Root Of All Evil

How does success really affect the entrepreneurial spirit? Here are some firsthand looks.

Many wildly successful firms out there started with little more than a desk, a fistful o' dollars and a great idea. But when those companies grew to become successful ventures, did their leaders lose their entrepreneurial spirit? Entrepreneur asked the successful business owners featured on the following pages the same question: "Do you still feel like an entrepreneur, or do you feel like a traditional CEO?"

Name: Jack A. Martinez
Company: Black Flys (sunglasses maker)
Based: Costa Mesa, California
Fast fact: $8 million in sales in 1999
CEO or free spirit? "It's strange-I do call myself a CEO, but I sure don't feel like one," says Martinez. "In fact, this is the first year I've had a business card. "But so many of our licensees have different cultures, I felt it was important to be identified as the CEO-there's a comfort factor there. But if you came to our office and saw all the weird photos and toys hanging around the place, and the laid-back work environment, I think you'd call me an entrepreneur.

Name: Lisa Swayne
Company: The Swayne Agency Literary Management & Consulting
Based: New York City
Fast fact: One of the fastest-growing literary agencies in New York City
CEO or free spirit? "We've doubled in size over the past three years," Swayne says. "We have a bigger office and will double sales this and next year. I don't work Saturdays anymore-I actually went on vacation last year.

"In that sense, I don't feel the same. Somebody asked me where we kept the postage materials for the postage meter the other day and I didn't remember. I don't vacuum my own floor anymore. But I'm also constantly thinking about growing the business, what's going to be the next thing, and I try to be agile. So in that way, I do still think like an entrepreneur."

Name: Snooky And Tish Bellomo
Company: Manic Panic (hair-care & cosmetic products)
Based: Long Island City, New York
Fast fact: Started with $200 in 1977; now grosses $5 million per year
CEO or free spirit? "We are very independent-minded," says Tish. "I never feel like a CEO at IBM or anything like that. But things definitely get quite different from the day you started. You still learn from experience, and you certainly apply the things you learn like a traditional CEO does."

"I don't think we'd ever feel like that," says Snooky. "Everything we do is still really exciting to me. We're still taking risks, not resting on our laurels, doing new stuff and staying one step of ahead of anybody. When you're avant-garde and cutting-edge, you don't really want to be known as a CEO. We started out as singers and entertainers, and that's part of what makes us different. We've got to keep our edge."

Name: Tom Scott
Company: Nantucket Nectars (juice company)
Based: Boston
Fast fact: Grew 35 percent in 1999
CEO or free spirit? "There are moments when I don't feel like an entrepreneur," says Scott, "but no matter how much we grow, I'll always look for ways to change, and I'll always be trying to change the way our business is run.

"Our office is very organic and as fun now as it ever was. We're still the underdog and still have to play with the big boys. The only way to succeed in that environment is to be entrepreneurial."

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