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They're Baaaaaaack!

Entrepreneur's young millionaires, the reunion tour. You won't believe what happened next . . .
March 1, 2001
URL: http://www.entrepreneur.com/article/37906

Many faces have graced the pages of Entrepreneur over the years. We've profiled manufacturers and marketers, developers and dotcoms. And the one thing most of them had in common? We never talked to them again.

Hold on-we're not as heartless as you might think. To give you a look at how some of our entrepreneurs of old have fared over the years, we've tracked down several Young Millionaires who have appeared in our annual special.

What we found were businesses that have merged and grown, and entrepreneurs who have done the one thing many can't do: survive. We could take credit and say "We always knew they'd succeed. We sure know how to pick 'em." Instead, we'll point to the tenacious biz owners themselves and show how each has authored his or her own history.

Introduction Jerry Cohen, Ebbets Field Flannels
Todd Bernstein, L.A. TEL Mark Overly, Kaladi Brothers coffee
Dominique Raccah, Sourcebooks Gregory Calhoun, Calhoun Enterprises Inc.
Kenny and Staci Munic Mintz, Little Miss Muffin Art Afshar, Micro Express

A Prosperous Union

Todd Bernstein, L.A. TEL (formerly Corporate Telecomm)

Then & Now
No. of employees
1991: 20
2001: 40
Sales
1991: $3 million
2000: $4.3 million
Biggest change
Corporate Telecomm merged with L.A.-Tel in 1999.

While We Were Away
Hot cell phone in 1991
The Fujitsu Pocket Commander, weighing in at a chunky 10.2 ounces and costing $1,195
Hot cell phone in 2001
The Kyocera SmartPhone, weighing in at a low, low 7 ounces with a built-in Palm PDA, costing $499

From an on-fire go-getter to a more mellow leader, life has changed considerably for Todd Bernstein, founder of Corporate Telecomm, since we last spoke with him in 1991. Though he still works from the same Van Nuys, California, location providing office phone systems, his company changed size and shape after merging with L.A. TEL in 1999.

"[The merger] was a good way for me to grow on a personal level and to instantly increase sales," says Bernstein, who took the lead role as managing member of the new company. But the change presented its challenges: Bernstein says it took about six months for the two company cultures to truly merge. Combining offices so the two groups of employees could work together helped. "We [didn't want] a 'we/they' mentality," he says. "Finally, people realized we're all the same company."

Over the years, Bernstein's ridden out the ebbs and flows of the changing economy. A dip in sales during the recession of the early '90s hurt, but Bernstein continued to run the business conservatively, always keeping enough cash on hand. His philosophy when times get rough: The owner is last one to get paid and first one to go without.

While Bernstein's economic instincts haven't changed, his role has. He says he feels more like a manager than an entrepreneur-instead of being involved with every meeting and decision, he delegates now. He sees himself steering the ship, not so much working the decks. "You get more mellow as you get older," he says. "When I started, it was [all about] burning the midnight oil. Now I'm 39, and I've got three young children. You just sort of take the perspective that you're working for a quality of life, and you need to bring balance [to it]."

Pages Of Profit

Dominique Raccah, Sourcebooks

Then & Now
No. of employees
1992: 6
2001: 56
Sales
1992: $1 million
2000: $20 million
Biggest change
A few Sourcebook titles have made The New York Times Bestseller List.

While We Were Away
Bestselling nonfiction title of 1992
The Way Things Ought To Be by Rush Limbaugh
Bestselling nonfiction title of 1999
Tuesdays With Morrie by Mitch Albom

Bestselling books. Top-name authors. Continuous growth. It's been a wild and successful ride for Dominique Raccah, 44, since we last wrote about her company, Sourcebooks, in 1992. Back then, she published business-related titles and boasted sales of about $1 million. Today, she publishes all different types of books-from mediafusion (books that come with audio) to fiction (under the Sourcebooks Landmark imprint)-to the tune of $25 million.

Raccah points to her company's fierce devotion to its authors and to publishing quality books as the secret of her success. That, and the determination to prove her doubters wrong. People said Sourcebooks wouldn't be able to attract top-name authors and should only publish within a certain niche. Building a successful publishing house in Naperville, Illinois, was unheard of-all the big names were in New York City. "There are a lot of cliches and assumptions about independent publishers in America today," says Raccah. "We've [heard] a long list of 'you can't, you shouldn't, it won't work that way' that we've been debunking for the last 13 years."

The changing face of the publishing industry in the past decade aided Raccah's cause. As larger publishers consolidated, mid-list authors were hurt in the crunch. Smaller publishers like Sourcebooks thrived by giving those writers the special attention the larger houses couldn't.

The past few years have been especially triumphant. Three Sourcebooks mediafusion titles-And The Fans Roared, We Interrupt This Broadcast and The Crowd Goes Wild-have made The New York Times Bestseller List. "The first time you make [the List], your jaw drops a little, and there's a silence that goes over the room," says Raccah. "It's pretty amazing."

Looking ahead, Raccah plans to enter the e-books market. And in an industry that already publishes about 50,000 books a year-not counting e-books-the real challenge will be to get noticed. "I think with the advent of the Internet and e-publishing, you're looking at millions of books. The big question will be, How will readers know about those books and how to find them? We're going to have to find a way to get a reader to a book. That's going to [be harder] than when we had a limited number of books in a [traditional] environment. "

Regardless of industry changes, Raccah's core philosophy remains constant. "Publishing is a craft," she says. "I'm passionate about creating books that will resonate in people's minds."

Baking Success

Kenny and Staci Munic Mintz, Little Miss Muffin

Then & Now
No. of employees
1995: 10
2001: 29
Sales
1995: $1.5 million
2000: $3.5 million
Biggest change
The company also sells doughnuts and cookies, such as Rocky Road long johns and French Toast doughnuts.

While We Were Away
Domestic shipments of baking or frying fats in 1995
6.99 million pounds
Domestic shipments of baking or frying fats in 2000
8.46 million pounds
Source: Institute of Shortening and Edible Oils

What do you do if you're a fledgling entrepreneur and you lose a customer who accounts for 45 percent of your total business?

"You mean after they scrape you off the floor?" jokes Kenny Munic, 30, co-founder of Little Miss Muffin, a Chicago bakery that specializes in creative, low-fat muffins such as Peach Blueberry Cobbler and Raspberry Poached Pear.

Founded in 1993, Little Miss Muffin could have gone out of business when it losts its biggest customer in 1997-but it rode out of the storm. Today the company, which Munic runs with sister and co-founder Staci Munic, 34, projects revenue of $3.5 million for 2000, up from $1.5 million when we first profiled them in 1995. "We sucked it up and worked longer hours and got more customers," says Kenny Munic. "At the end of the following year, we replaced 100 percent of the lost business."

The brother-sister tandem also expanded, and in 1997 founded Big Shoulders Baking, a full-fat muffin line featuring temptations such as Carrot Cake Muffins and Quadruple Berry Scones. In 1998, the Munics launched Donut Boy, which serves up creative concoctions like Rocky Road long johns, Toffee Bar Crunch doughnuts and French Toast doughnuts. According to Munic, creativity is what sets his companies apart. "We try to launch three new products per quarter," he says. "Our products are unique because that's what our customers want."

Munic also thinks that working with his sister (currently on maternity leave) is a big advantage. "We enjoy working together, and we get a huge sense of satisfaction from creating things," says Munic. "That's the key to our success."

Historically Inclined

Jerry Cohen, Ebbets Field Flannels

Then & Now
No. of employees
1991: 4
2001: 13
Sales
1991: $1 million
2000: $3.3 million
Biggest change
Ebbets Field Flannels has expanded to include vintage hockey and football jerseys.

While We Were Away
Past stat:
The wholesale sports apparel market was worth $12.8 billion in 1991.
Future stat:
The wholesale sports apparel market is projected at $21.05 billion in 2001.
Source: Sporting Goods Manufacturing Association

Fresh off the buzz of baseball films like Field of Dreams and Bull Durham, Jerry Cohen had a hit with his vintage sportswear apparel company, Ebbets Field Flannels, when we profiled him in 1991. With sales approaching $1 million, he'd found his niche.

What he didn't predict was the fact that his specialty would soon become crowded with competitors. "Big fashion companies have taken the looks we originated and spun them into their own fashion design," says Cohen, 43. "Being a small company, it's more challenging to get our message out than it was nine years ago."

Never one to back down from a challenge, Cohen did what few would dare do in the face of hardship: He expanded. He began making vintage baseball hats and apparel in lower price ranges as well as moving into other sports, namely hockey and football. The strategy worked. By 1998, Ebbets Field Flannels had commanded enough attention for the NFL to commission the company to make historically accurate uniforms for the league's nostalgic "Throwback Games." Ebbets Field Flannels have also been worn by rock group Pearl Jam and featured on The Late Show with David Letterman.

Even though the past decade has brought many changes to the historic sports apparel market, the most profound differences are in Cohen himself. Where he once did everything from accounting to marketing, Cohen now enlists the help of professionals to take on the more technical aspects of his Seattle business-like finance and management. That way, he can now concentrate on his first love: sharing the rich history of sports. "We take a product and we wrap an interesting story around it," says Cohen. "We give people a window to the past."

Healthy Java

Mark Overly, Kaladi Brothers coffee

Then & Now
No. of employees
1995: 88
2001: 5
Sales
1995: $4.2 million
2000: $600,000
Biggest change
"The conquests are more satisfying," says Overly. "Now I'm back to a full entrepreneurial role, and it's a lot more fun."

While We Were Away
The buzz in 1995
Coffee pundits eulogized instant coffee.
The buzz in 2001
Organic coffee (or green coffee) is the fastest-growing niche among specialty coffees.

Happiness is found in starting something new, says Mark Overly, who founded Kaladi Brothers Coffee back in 1987. "There is a difference between entrepreneurship and managing," he says. "When you get big, you can have lots of toys, but it's empty if you're not doing what you love."

Overly opened his first store in Anchorage, Alaska, and added five more in the state over the next 10 years. When we caught up with him in 1995, the company was reaping $4.2 million per year. But as the business grew, Overly felt increasingly less like the adventurous entrepreneur he'd started out as. "I felt constrained," he says. "I became more identified with employee and management meetings. And I missed the freedom of a small organization."

In 1999, Overly sold his Alaskan outlets and moved to Den-ver, where he opened a new Kaladi Brothers store. "I had 88 employees in 1995; I have five now," he says. "It would have been safer to stay in Alaska, but I wanted a small, guerrilla-type business [again]."

The Denver store expects sales to be around $600,000 for fiscal 2000-2001. Better still, Overly is doing what he wants.

From Bag Boy To Boss

Gregory Calhoun, Calhoun Enterprises Inc.

Then & Now
No. of employees
1992: 300
2001: 560
Sales
1992: $50 million
2000: $100 million
Biggest change
Calhoun Enterprises grew to become the 25th-largest African American-run company in the United States, according to Black Enterprise magazine.

While We Were Away
In 1992
Number of African American-owned companies: 620,912
Since 1992
Minority-owned businesses have increased by 68 percent.
Source: U.S. Bureau of the Census; SBA

At 16, Gregory Calhoun bagged items at a supermarket in Montgomery, Alabama. At 30, he ran the store. Now 47, he is president and CEO of Calhoun Enterprises Inc., the second-largest African American-run company in the South, according to Black Enterprise magazine.

"As the company has grown, my role has changed," says Calhoun. "Now I [create] opportunities rather than handle daily operations." He consults with major companies on diversity issues, and his work with the Rev. Jesse Jackson on several projects also gives the firm national prominence. Yet Calhoun has trouble gaining fair access to capital. "It's hard for us to get the credit it takes to operate a business our size," he says. "I sit on bank boards that lend people three times as much money, without half as much as I own. The good old boys system still exists."

Still, Calhoun's sales have doubled since 1992, and he projects earnings of $100 million for 2000. More important, he says, "People have grown with the company through employment opportunities, and in that way, I'm giving something back to my community."

Playing With The Big Boys

Art Afshar, Micro Express

Then & Now
No. of employees
1991: 100
2001: 80
Sales
1991: $40 million
2000: $40 million
What hasn't changed
Micro Express stayed afloat despite drastic industry changes by offering high-quality computers, service and warranties.

While We Were Away
Number of PCs shipped in the United States in 1991
9.4 million
Number of PCs shipped in the United States in 2000
50.5 million
Source: IDC

Over the past decade, micro-processors have gotten faster, hard drives bigger and laptops more compact. And what's state-of-the-art today might be obsolete in six months. Art Afshar has been at ground zero of the industry since we featured his Irvine, California, firm, Micro Express, in 1991.

Keeping up with the changes while competing against major brands like Dell and Gateway isn't easy, but Afshar has kept his edge by staying true to his philosophy of developing high-quality computers, offering a great warranty and delivering strong service.

And Afshar, 38, has done it without bowing to trends. During the mid-'90s, when the big thing was bargain-basement computers, Afshar continued building his custom-designed products ($1,500 for desktops and $2,000 for notebooks, on average). "We're in a very volatile and competitive industry," he says. "It's been that way since Day One-and it's getting worse. The best way we can differentiate ourselves is with service." For example, Afshar provides 24-hour tech support.

Afshar's customers were mainly businesses back in 1991. Now at least 80 percent of his new clients are consumers looking for home computers. At least half of that business is the result of Afshar's Web site, which not only influences sales, but also reinforces the company's emphasis on service. "We can make a change in the morning," he says, "and it's accessible to customers immediately-whereas before it took more than a week."

Micro Express has doubled the number of computers sold due to a more efficient manufacturing system, and its PCs have garnered high ratings from PC magazines-so Afshar's dedication is paying off. He says, "I'm sure we would have been gone by now if we had switched our philosophy."


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