Flower Power How Jim McCann sows seeds of fortune with 1-800-Flowers

Jim McCann loves to talk. Business, philosophy, politics,religion-he's got opinions about everything. But presshim with questions about how he built Westbury, New York-based1-800-Flowers into the largest retail floral telemarketingoperation in the world, and he'll suddenly turn humble, thoughhe has every reason to boast. In less than a decade, McCann hasbecome the most powerful entrepreneur in the floral industry.

Heading an empire composed of 30 company-owned stores and 100franchises, 44-year-old McCann gives new meaning to the term"Flower Power." Last year's sales topped $250million; 1-800-Flowers' 1996 sales are projected at $325million.

McCann says he stumbled into entrepreneurship. "I think ofmyself as a 'nontrepreneur,'" he says."Nontrepreneurs never planned on going into business. Due tocircumstances beyond their control, they fell into it. They had tosupport families, were laid off from their jobs and, thanks to afree entrepreneurial system like ours, they jumped onopportunities."

McCann makes a point of saying that all nontrepreneurs arebootstrappers. "When you start with next to nothing,you're forced to be creative," he explains. "Ifyou're not, you won't be around very long."

Fresh out of college, McCann didn't have the foggiest idea whathe wanted to do with his life. "I was just a typicalIrish-Catholic kid growing up in New York who didn't see a heckof a lot of career options," he says. "I could join myfather's paint contracting business, become a cop or tendbar."

McCann fulfilled what he called his "genetic requirement"by tending bar after he got his psychology degree in 1974 from theCity University of New York, New York City. When he heard about anopening for a counselor to work the night shift at a home forteenage boys, McCann jumped at the opportunity to apply hisacademic knowledge to real life. The hours also left him plenty oftime to pursue other interests.

With time on his hands, the restless McCann helped his dad expandhis paint contracting business into buying, renovating and sellinghouses. "I enjoyed doing many things at once," saysMcCann. He also discovered he had a knack for making money andspotting opportunities.

By the end of 1976, McCann was married, had a child and wasclimbing the walls looking for a new venture to start. He drew apaycheck from the boys' home and the business he ran with hisdad was also thriving. But, it wasn't enough.

That same year, a friend asked him if he was interested in buying atiny 700-square-foot flower shop in Manhattan. McCann chuckles whenhe recalls the fortuitous event. "The price was $10,000,"he says. "Even then it was a ridiculously low price for anestablished business. Today, you can't touch a business likethat for under $2 million."

McCann saw the tiny shop as an opportunity to be siezed. Itdidn't matter that he knew nothing about the flower business;he recruited a friend who did to be the store's manager."I bought the store on a lark," he says, "because itwas cheap and I figured it could turn a decent profit."

Hardly six months after buying it, McCann found himself at acrossroads; suddenly his life had become hectic. "I realized Ihad to think seriously about where I was going to spend mytime," he says. "I asked myself, 'What is going togive me the most bang for my buck?'" Certainly, a decentdollar could be made buying and selling renovated houses, yet thefloral industry offered bigger and better opportunities.

McCann saw the problem as a mathematical equation. He couldn'taccount for all the variables, but the ones he could identifypointed to success. "The floral industry was appealing becauseit was a decentralized business consisting of 40,000 floral shopsthroughout the United States," he says. "There were nobig chains, it was true mom-and-pop terrain and wasn't afaddish business; it's been around since the beginning of time.Even Neanderthal man was buried with flowers."

His timing could not have been better. By the mid-1970s a greenplant boom was under way, and plant stores started doing briskbusiness. McCann opened two more stores in 1977, with salesreaching $200,000, and 12 more throughout New York City over thenext decade. In 1983, he was so busy that he recruited his youngerbrother, Chris, to help him full time. Three years later, McCannquit his job at the boys' home to devote all his time to hisblossoming flower business, which he had dubbed Flora Plenty.

The following year, sales leaped to half a million dollars. McCanncould have sat back, counted his money and watched his flourishingbusiness grow all by itself, but that's not his style. Again,he was growing restless. Money alone wasn't driving thisentrepreneur, but also the inexplicable thrill of playingentrepreneurial chess.

In 1984, a hot new telemarketing company called 800-Flowers askedMcCann to fill its orders. The Dallas firm offered a uniqueservice: By dialing 1-800-FLOWERS, people could order and sendflowers anywhere in the United States. Both companies profited bythe arrangement, until 800-Flowers encountered rough seas a yearlater.

The company's difficulties read like a textbook inentrepreneurial screw-ups; 800-Flowers was underfunded and poorlymanaged, and supported a telemarketing center far too large for itsvolume of business. Even more disastrous, its management didn'tunderstand the floral industry. "The fundamentals weren'tin place," says McCann, diplomatically. Translated,800-Flowers was a mess.

No one in the floral industry was surprised when 800-Flowers'management asked McCann for help. He was the brash new kid on theblock with a knack for building a profitable company fromscratch.

"The 800-Flowers management asked me if I'd like to runthe company," says McCann. Having tasted entrepreneurialfreedom, however, he wasn't about to work for someone elseagain. Besides, he thought the troubled company needed a new ownerto get it back on its feet. So he offered to buy it.

McCann saw 800-Flowers' woes as an opportunity in disguise. Tohis consternation, however, no quick deal was made. Over a two-yearperiod, in a seemingly endless round of negotiations, he commutedbetween New York City and 800-Flowers' corporate office inDallas.

"I never thought it would take that long," says McCann."It was exhausting running a business and traveling back andforth to and from Dallas." In 1987, the drama ended whenMcCann bought the ailing company for $9 million.

McCann confesses that the purchase of 800-Flowers was aneye-opener: "I realized then I didn't want to be justanother player in a big industry. The acquisition of 800-Flowersforced me to dream bigger. Maybe it's because I dug a deep holefor myself by assuming so much debt. One thing was certain, Iwasn't going to get out of that with a teaspoon. I needed abig-mouth shovel."

By enfolding his established company and his new acquisition intoone company called 1-800-Flowers, McCann destined himself to becomea big player. McCann waxes philosophical about the biggest move ofhis entrepreneurial career.

"There's a point soon after start-up when things are goingwell and entrepreneurs have to make a critical decision," hesays. "The easiest thing to do is become complacent about itand do nothing. Andy Warhol said everyone enjoys 15 minutes in thespotlight. The same thing is true in business. You can enjoy it andstay where you are or move on from there and build onit."

McCann opted for the latter route. He envisioned a sprawlingoperation and was ready to work around the clock to make it areality. McCann moved the company to one of his large flower shopsin Bayside, New York. He gutted the building and built 25 cubicles,each with a telephone and computer. Then he hiredtelemarketers.

"I pulled on the reins and tightened the company," McCannsays. "We improved quality, offered customers guarantees (theycould return flowers if they wilted within seven days) and welaunched a national advertising campaign." A year later, in1987, 1-800-Flowers racked up $400,000 in sales. Then the companyreally took off.

In 1990, along with an assortment of floral packages, McCannintroduced a variety of gift baskets, filled to the brim witheverything from herbal teas and snacks to gourmet chocolates. In1991, McCann moved his entire operation to its current base inWestbury. Today, more than 600 telemarketers (a number thatquadruples to 2,400 during the holidays) man the company'stelephones 24 hours a day.

Once 1-800-Flowers was on solid ground, McCann concentrated onbuilding a sturdy organization. "Early on I learned Ican't do it all myself," he says. "The smartentrepreneur learns how to be a good manager. I worked hard atbuilding an organization of core people who can grow with thecompany and share in the wealth. Ultimately, they're the keysto sustained growth."

McCann describes himself as sort of a head coach. "I no longermake all the decisions," he says. "As coach, I chart thecourse, give advice and help shape the company culture. Theorganization now has a life of its own that is separate from me. Itcan run without me."

But it wouldn't have happened if McCann didn't shape anddirect it. He's not ashamed to admit there were some costlyblunders along the way. "It's part of the game,"McCann laughs. "Also, there were occasions where we lost focusand went off in too many directions."

Some products turned out to be monumental duds. "I wasconvinced one product was the greatest thing since whitebread," McCann admits. "I'm still trying to liquidateit."

Losing money hurts, but McCann says he learned from his mistakes."They taught me to recover quickly, stay focused and keep itsimple," he says. "They reminded me to stick to my corebusiness and concentrate on quality. The best businesses, no matterhow big, are simple. They deliver great products accompanied byextraordinary service."

Bob Weinstein, a frequent contributor to several nationalmagazines, has authored 10 books, including "So What IfI'm 50?" (McGraw-Hill).