CHAPTER FOUR

THERE’S NO BUSINESS LIKE A NEW BUSINESS:
START-UPS AND INVENTIONS

Jeff Frank has always had a mind for entrepreneurship. “I just like to do things differently. If you give me three choices, A, B, and C,” he says, “I’ll look for D, E, and F. That’s just the way I’ve always done it.” That’s why, at 56, he decided to go into business for himself in what many considered to be a dying industry.

His 35-year career in the furniture industry started when Jeff took a job selling furniture for Woolco, the discount department store chain found by the Woolworth Company in 1962. It was the same year Sam Walton opened the first Wal-Mart. Jeff is the first to admit that he wasn’t a great salesman but, frankly, that wasn’t really a problem. The $199 living room sets sold themselves. What was a problem was that he couldn’t sell pieces directly off the showroom floor. Here he was with decent merchandise priced to sell and customers ready to walk away with their newest impulse purchase, but the store’s inventory was kept in a warehouse two states away in Pennsylvania. Even more frustrating, it required ample delivery time. All too often, this confluence of inconvenience was a deal-breaker for customers who were given a chance to catch their breath, step back and consider more fully their purchase decision. “Do we really need a new living room set?” they’d ask themselves. For many of them, there just wasn’t enough love for the loveseat.

After three months of missing sales due to the lag time between purchase and delivery, Jeff had had enough. He hopped in his car and drove through the night straight to the warehouse and knocked on the door of the company president. The man wasn’t expecting him — who would? — and he certainly didn’t expect what happened next: the 21 year-old standing in front of him asked for a truckload of sofas.

“I could sell your stuff,” Jeff told him. “I could sell a ton of your stuff if I had it available. But it’s not. What are we going to do about this?”

What do you say to a kid with that kind of stones?

Nothing, apparently.

The president sent a truck full of living room furniture straight away to Jeff’s store in Washington, DC. That weekend, Jeff sold directly from the truck, which stayed parked behind the store. In three hours, the truck’s entire contents were gone. Jeff’s gumption was not.

A man who measures his sales in truckloads can rise through the ranks quickly. And Jeff did just that. Over the years he worked in nearly every role possible within the furniture industry. He was a sales manager, a buyer, and a government contractor. He worked in retail, in manufacturing, and he understood design. In each role his knowledge of the furniture business helped him excel and made him a lot of money as he exploited holes in the system he knew so well. “I’ve always looked for some other way to go about doing things that people haven’t thought of before,” Jeff admits. He also found himself at the center of a growing circle of business relationships. “I was able to bring in a lot of new business. Not only did I bring in the manufacturers, but I also got them the contracts.” He was turning cushions into cash. A six-figure income arrived in short order.

Jeff‘s entrepreneurial spirit and his natural inclination to look for the holes in the system made him a standout in the field. His sense for the needs and the demands of the market kept him very well paid. His understanding of the product filled his head with new ideas and he had the expertise and relationships to capitalize on them. What he didn’t have was control.

This point was driven home in the most painful way when his partner retired. Despite everything he’d given the company – his passion, his brains, his moxie -- Jeff was fired from the firm by the man’s son. What is it they say about no good deed?

But Jeff refused to let that insult become an injury. He knew his business and he knew his abilities. It was time to think big… by thinking small.

“There was a huge need for furniture that fits into small spaces, through narrow doors, narrow stairways, into RV’s, into boats,” he tells me. There was IKEA’s flat pack product, of course—“knock-down furniture,” as Jeff calls it—but no one was making a high-quality products that could easily fit through a small space. It was a huge need in the marketplace, so Jeff designed a totally new product to meet it. With the help of designer Glen Laughlin, he developed a line of high-end, ready to assemble furniture. It was as easily packaged and shipped as what IKEA was making but of a much higher quality. And perhaps more importantly, assembling Jeff’s sofas wouldn’t drive you insane.

Their prototypes, the designs for which Jeff patented, were so impressive that Jeff was easily able to sell the licensing rights to a huge manufacturer. The agreement would earn him a patent-royalty fee and a consulting fee for helping to develop additions to the line. Unfortunately, the manufacturer opted to sell the sofas for far less than their cost—obviously not a viable solution. They also did nothing to develop, improve, or expand the line. Despite being consistently paid a consulting fee, Jeff wasn’t allowed in the factory. None of his ideas or new designs were ever looked at. “They never changed a single thing in the three years they had it,” Jeff says, “The pieces they had at the end of the three years were exactly the same as the ones they had before.” When the company went bust, its stock and licenses were acquired by another entrepreneur. This man didn’t do anything with Jeff’s designs either. Nor did he pay his bills.

This was getting ridiculous. Jeff had now been driven out from his position in the name of familial nepotism and watched as a poorly run manufacturer squandered his best ideas. What was it going to take – starting his own damn furniture company?

Well, OK then.

He went back to school to earn his MBA. Jeff had a clear plan and a great product. Surely things would now go his way. But his next obstacle wouldn’t come in the form of outside forces. It happened inside his own chest: a massive heart attack.

His recovery took months and produced a small mountain of medical bills. It was a financial setback that could not possibly have come at a worse time for someone trying to start a new business. Even worse, his health was now a worry for potential investors. They questioned it at every turn and used it to lowball him or pin him to unfavorable terms.

He survived the heart attack, but would his business? Jeff was faced with two choices:

1. Raise more money through investors and relinquish more control of his company

2. Take on as little outside investment as possible and maintain control

The choice was clear for Jeff. This company was going to be his. It was the entire reason he had gone to business school. The most important thing was maintaining control of his company and the outcome of his product. He would find a way to work with what he had. How many outside investors did he need, anyway?

It turned out: just one. The investor brought the money and Jeff brought his design, expertise, and sweat equity to the table. In this way, Jeff would be able to minimize his financial risk but he would be investing his time and a lot of work. It was going to be a bootstrap operation.

It gets even better. If the mounting odds on the personal and financial sides weren’t enough, the entire American furniture industry was having a heart attack of its own. As labor and manufacturing costs in the United States increased and raw materials became easier to source elsewhere, companies moved overseas. “Eighty percent of all wood furniture that is sold in this country is made overseas,” warned Jeff. “It’s that bad.” The country was officially in a recession too.

“So there we are,” says Jeff. “The recession has just hit, we have a product that is expensive furniture and is a type nobody’s seen before. It’s made by a small company that nobody’s ever heard of, and our job is to convince people to buy this stuff.”

Long odds – and Jeff wouldn’t have it any other way. He’d built his company around a business model that required as little overhead cost as possible. That meant subcontracting all manufacturing and relying almost exclusively on reputation and word of mouth to get the company’s name out into the market. It also meant going back to the drawing board.

With the help of Glen Laughlin, with whom he’d developed his initial ready-to-assemble prototypes, “we went back to work, and we came up with new designs and new patents,” says Jeff. The two developed a line of furniture pieces meant to fit into small spaces and tight places. Sofas that could fit through narrow doors and up steep stairwells, into RV’s and boats. Furniture that goes where no furniture has gone before. They called them Simplicity Sofas.

As if anything up to this point had been simple!

Building off of what he had learned from their previous efforts, Jeff and Glen approached their designs with a specific idea in mind. “I had learned that the best way to sell this thing and make money is to sell direct to consumers and not go through retail stores.” This meant his pieces had to be easy to sell over the Internet and they had to be easy for his customers to assemble—easier than their first designs, easier than IKEA.

And they’d have another advantage, too. Thanks to his years in the furniture business, Jeff knew its Achilles heel. “In the furniture industry, customer service is terrible. We went exactly the opposite way.” Jeff developed a customer service program founded upon communication first and foremost. Customers were notified of every step their furniture took in its development and shipping process. And their feedback was valued.

“Within 24 hours after the furniture arrives, we contact the customer,” says Jeff. Something as simple as asking their customer: How did they like their new piece? Were they happy with the process? Does it look good in the room? Easy questions, but questions no one else seemed to be asking. And the ingenious design of the product allows Jeff to offer an even harder-to-find customer-service capability. If something does go wrong, it can be easily replaced at no charge. “We can replace just an arm if the arm is broken.” No other furniture company would dream of free replacements, especially because doing so would likely mean replacing the entire piece. “The reason we can do it and nobody else can is because of the modularity of the furniture,” says Jeff.

Clearly, many customers were ready to replace their old way of buying furniture with Jeff’s new approach. Simplicity Sofas began to gain traction in the market largely through word of mouth, which Jeff credits to his high quality product and excellent customer experience. They have grown so much, Jeff has already moved the manufacturing to a larger facility. Despite the challenges of scaling the business, the customer service has not suffered. “In six years and over 2,500 customers, we’ve never had a negative review,” Jeff says proudly. Simplicity has been recognized as The Most Innovative Small Business in America and Jeff is finally beginning to take a salary.

But to get there, the kid who sold a truckload in an afternoon had to take a much longer view.

“Basically, it starts with a goal,” he says, “When you have a goal, you just have to fix on that goal and go toward it. Sometimes it takes a lot of extra work to get there. You have to give up things to get there, but if you keep that goal in mind, just keep going and don’t let anything in your way.”

What makes Jeff Frank’s story so encouraging is that it represents everything the Baby Boom generation has going for it:

And unlike many of today’s generation, when Jeff faced adversity time and again, he did not roll over. He did not give up or point fingers. He took responsibility for his own fate. He learned from his mistakes, he marshaled his resources and experience, he talked to the people he knew, and he moved forward toward a goal of his own creation. In his mid-50s, on the other side of near-fatal heart attack, and the short end of the nepotistic stick (twice), Jeff Frank didn’t lie down on the couch — he reinvented it. By hiring himself

“It’s Time to Get Out” –Transitioning Technology

While Jeff Frank was repeatedly blindsided, Brian Hess could see the writing on the wall. It was just a matter of time until the larger cellular providers pushed his business, The Phone Works, out of the marketplace. He didn’t care to wait around to watch it happen.

He knew the cellular industry through and through. He had to. Brian owned and operated what had been Columbus, Ohio’s first retail cellular store and had been working in cellular since the technology began to take off. He understood the products, he understood the market, and he understood his customer base. Most important, he understood the key to success in the cellular business: keeping your customers your customers. He predicated his business model on customer service and a guarantee: your phone will work. Even today that’s a bold claim. Back in those days it was downright cavalier.

“What I offered was something for your home, car, and business with awesome service,” he told me, “We delivered. We guaranteed that the phone worked, and that was a rare thing.”

And just like his phones, the business worked. At 37, Brian had paid back his investors and was sitting on $800,000 in profit. But he could feel competition breathing down his neck. As major cellular providers started opening their own stores to sell phones, his independent business became less viable. They controlled what Brian would never be able to: air time. And they could offer deals. “If you went to one of their stores after you were at one of my stores, I never saw you again.”

Brian knew that it was time to get out. But where was he going to go? He liked the cellular business model: sell the phone and then continue to make recurring income through subscription service. He also understood that cellular technology had nowhere to go but up. As he sat in his showroom, trying to come up with options, his eyes focused on the large box affixed to the wall.

His alarm system.

Brian knew nothing about alarms, outside of the fact that he had to pay a monthly bill for his service. So he did what any curious electronics entrepreneur would do: he broke into it. “Inside, I saw this really dinky, worthless battery,” he says. There wasn’t much else inside the big, metal alarm panel so Brian couldn’t help but wonder, “Why the big box?”

He could see no reason why he couldn’t “go get a CD player and gut it and put those parts inside.” Rather than risk a minor electrical fire, he teamed up with an engineer to outfit the alarm in a much smaller vessel and make it work on a phone line. They then set about to take the alarm in another direction; one that Brian had seen an increasing demand for in the phone business. He wanted to cut the cord — to utilize cellular technology to make it portable.

The alarm business had been around a long time. Cellular had been around long enough. But no one had found a way to combine the two. To create a wireless alarm panel—one that didn’t need to be tethered to a wall—would actually upgrade the security of the system. With the wall unit, an intruder could disable the system by simply unplugging it from the phone line. “So, silly me with the old portable cellular business,” says Brian, “I thought, ‘Well, I’ll make a portable alarm system!’”

And just like that, Brain cut the cord to his old business, kicking off a years-long process of invention, re-invention, and refinement as Brian honed his Tattletale alarm system. As with Jeff and Simplicity Sofas, Brian hated junk, and was steadfastly dedicated to building the highest quality product. So much so, that he gave up the opportunity to work with the country’s largest alarm manufacturer after the company told him he needed to compromise his design.

Instead Brian spend $100,000 developing his prototype and took it to Cadex, a small company out in Texas that promised to give him exactly what he wanted. Brian attributes this perfectionist drive to the values with which he was raised: if he’s going to do something, he’s going to do it the right way.

Hadn’t anyone told him that’s not how people do things anymore?

Eight-hundred thousand dollars of his own money later, Brian was holding what he refers to as “The Best-Built Stupid Box.” His prototype finally matched the vision he had many years before. “It was supersonic,” he describes, “It sent a signal out in 6/10ths of a second and the sensors could go half a mile.” His system was equipped with a built-in motion detector, strobe lights, siren, 15 hours of battery backup, and three watts of cellular power. It was light years ahead of anything else on the market. But just as it seemed that Brian’s years of hard work were about to pay off, two words brought his progress to a crashing halt.

“Ice chest.”

An acquaintance came into Brian’s shop. The man had followed his inventive process over the years and was familiar with Brian’s prototype. And he’d found a flaw.

“Hey, I know how to beat your alarm.”

Brian smiled. “All right. What do you have?”

“I’m going to come in and I’m going to bring in a Coleman cooler full of ice water,” he said. “I’m going to drown your system in an ice chest.”

He was right. Brian had packed his invention with a bounty of the latest wireless technology, but he hadn’t taught it to swim. All alarm systems allow a 40-second window between engagements—someone walks in the house—and activation. This window gives the homeowner time to punch in the code to turn it off. In that 40 seconds, the alarm is doing nothing and the system, which is sitting out in the open, is completely vulnerable. Of course, Brian could make the panel waterproof but the underlying problem, the 40 seconds of vulnerability, would still be there. In his mind, there was only one decision. “I’m not going to market with this.”

Brian called the president of the manufacturing company with his bad news. In spite of the flaw, the man was still resistant to the idea of postponing production and sale.

“Brian, it’s still the best portable alarm system I’ve ever seen!”

So what? It was Brian’s prototype. And he wasn’t going to put it out into the world until it was perfect, until it was made right. It was the same ethical approach that he had with his phone business and it was holding true now. Brian wasn’t about to build a slipshod product; he wasn’t looking to milk the market. “There’s no 50-50. You have to be 100% in,” Brian explains. “That’s the way my dad raised me.”

Much to the grief of would-be burglars the world over. But I’m getting ahead of myself.

Because now a new question plagued Brian: “How do you make that box know it’s in a fight?” It took six months to solve the problem but Brian was able to configure Tattletale to instantly trigger the alarm if it is tampered with during those first 40 seconds. Finally, it was ready. His alarm system went to market.

The invention process is a difficult one even for the guy tinkering in his garage. I’ve had any number of ideas over the years, some I’ve done patent searches on only to find they already existed, others I’ve taken all the way to the prototype phase before realizing there was no real market for them. It can be a tough pill to swallow. Add in the need for funding and the stress factor can climb exponentially.

You realize pretty quickly that thinking up an idea the world has never seen before is actually the easy part.

Brian had invested two years and $800,000 of his own money into the development and manufacture of his Tattletale system. He had also just raised one million dollars from investors by selling 18% of his company and cashing in on his industry credibility—something that would be nearly impossible for someone 20 years his junior. “They buy who you are and where you’ve been,” he points out. Brian had been a top-selling cellular dealer for ten years. His years of success spoke well of him and demonstrated his knowledge of the technology. Still, as he proposed entering a new industry with a new invention their question was, as it always was, “Can you pull this off?” Brian had raised the stakes on everyone by telling his manufacturer, “I’m not going to market until I have this right.” Now, all-in, having assumed major personal financial risk himself, it was going to be an even harder thing to tell “a million-dollar bunch of investors…it’s not selling.”

But that’s what happened. When Tattletale finally hit the market it quickly became apparent that Brian’s worst-case scenario was coming true: his product wasn’t selling and he was running out of money.

Buy why? The box was perfect!

The Tattletale system is a sizable black box made of molded hard plastic, with a slightly futuristic shape and a foreboding look to it. Perfect to give intruders a second thought, right? The problem is, intruders don’t buy alarm systems. Homeowners do, specifically wives and mothers. Well, women didn’t like the look of the Tattletale system. “We couldn’t get women to let it in the house. They wanted to put it in the closet, or in the basement.”

The box could finally swim. But it wouldn’t fly.

The cost of the alarm was proving prohibitive as well. Its technology outpaced anything else in the industry and the price reflected that. Brian was charging $899 for the box while his competition was charging $99. Neither the design, nor the cost, could be significantly altered. Brian was staring down the barrel of failure and at a lot of unhappy investors. The prospect of having to start all over again was a very real thing, and the clock was ticking.

Brian was down to $32,000 in payroll money. Realistically, Tattletale could last one more month. It was like being on the Enterprise — “I’m givin’ ya’ all she’s got, Captain!” — except the Enterprise was pretend. Brian was looking at a very real empty refrigerator.

Then, just like that, Brian sold 1,000 units. But it wasn’t housewives who bought them. It was hardhats: a million-dollar sale to a construction company that planned to use his units in the trailers on their job sites. “Terrific. My box is trailer trash,” he joked. His ego may have been bruised, but Brian wasn’t about to spit at a million in revenue. He went home, licked his wounds, and came back the next day with a new focus.

“This is a guy’s box. That’s how it’s going down, and it’s not going to change.” He began to market the Tattletale system specifically for job sites and developed new ways to tailor the system to the needs of that market. He pioneered outdoor wireless technology; motion detectors, sensors, and on-demand tracking that make it impossible to steal a Bobcat.

It turns out the box had been right all along. It was the target market that was wrong.

Brian has since earned back all of the money he staked in his venture and, with Tattletale earning $5 million a year in sales, his investors are very happy. “I have a brand that’s never been defeated and not one dissatisfied customer in 15 years.”

Just a lot of dissatisfied thieves.

Brian credits his success to his 100% dedication. “You’ve got to put your butt on the line,” he says, “If you are not authentically in, don’t be in.” But there’s more than just dedication at the heart of Brian Hess’s story, there’s something more of which dedication is just a part; something kind of unique to his—and our—generation: strong values.

Throughout his early years in the cellular industry and then bringing the Tattletale system to fruition, his values anchored his success. Just look at what he’s talked about in our conversations:

Being “authentically in” – that’s called honesty

Putting “your butt on the line” – that’s called sacrifice

“There’s no 50-50” – that’s dedication

Delivering “awesome service…guaranteed” – that’s humility

Doing something “the right way” – that’s integrity

The values exhibited by both Brian Hess and Jeff Frank are what make the two men as successful as they are today in the face of all they have endured. Theirs are traits most of us over-50s can recognize in ourselves, our generation, and the culture that defined us.

Unless you’re still a hippie, in which case: Get a job!

But what makes Brian Hess and Jeff Frank successful as entrepreneurs is that they leveraged decades of experience inside specific industries (they didn’t throw them away or discount them) and used that knowledge to identify unfulfilled needs and fill them; to spot opportunities and take advantage of them. This is something each and every one of you who have worked your entire lives at one company or in one industry could do today.

You start by asking the right questions:

What could they be doing better in my company/industry?

What ideas have I had to make things easier or more efficient?

What would I change if I were in charge? How would I do it?

Who do I know who thinks like I do?

What institutional/industry knowledge do I have that younger/ newer people don’t?

I asked myself a version of these questions when the Internet really started to explode and TV was having trouble figuring out what to do about it or how to take advantage. Applying the lessons from my decades in the entertainment industry, it’s why I ended up doing the Priceline commercials and taking the stock-option compensation deal they offered that netted me millions. It’s why I’ve had a personal website for years where you can follow my appearances, contact me for booking, or buy memorabilia. It’s why I am able to do Brown Bag Wine Tasting on my YouTube channel without a second thought or a care in the world.

So what’s your Simplicity Sofa? Your Tattletale system? Your Brown Bag Wine Tasting? I know you have one. Spend the time to figure it out. The world is waiting and only you can do it.