This new monthly section examines a business partnership in the ad specialty industry. Each partner tells his side of the story, and then a management expert offers advice for how this type of alliance can be even more successful. This month we look at a distributorship that began while its three principals were students at the University of Washington.
In the photograph (see next page) they stand with logoed T-shirts in hand, each holding what is perhaps a keepsake they helped supply for a client's event. There is Jeff Becker, the leader of the group, sitting in an office chair with the symbol of national pride displayed across his chest. Behind him, on the left, is his brother - Daniel Becker- the programming genius who can build platforms in his sleep. And then there is Nicolay Thomassen, who, despite his laid-back sweatshirt way of dress, can add texture and flair to any design in a pinch.
Above Right: Brothers Daniel and Jeff Becker (left and middle) and Nicolay Thomassen (right) are the driving forces behind Kotis Design, a thriving distributorship in Lynnwood, WA.
The picture was taken back in 2002, when Jeff and Nicolay, two soon-to-be-minted University of Washington alumni, set out to infuse success and growth into the distributorship they started during their early college days. When Daniel, who's 25, graduated two years later, the three of them decided it'd be best if he too joined the fast-paced business. In its first year alone, the company more than doubled its sales.
And if the past is any indication of the future, then Kotis Design (asi/244898) is almost guaranteed to hit its goal of $9 million in revenues this year. Indeed, with such smart business practices as an in-house proprietary technology model and employees who are trained in the art of efficient day-to-day management, who's to say these folks won't achieve their goal?
But, as with anything else, success comes at the price of risk and a constant need for change. Which has the Beckers and Thomassen wondering: Is a franchise model the best way to expand? And when that happens, is it possible for a small corporate staff to still provide excellent customer service?
Jeff's Side of the Story
“I was the overactive freshman who wanted to be involved,” Jeff, 27, says of how he stumbled upon the promotional products industry. When a member of the university's Chi Psi fraternity asked which of the new inductees wanted to order T-shirts for the fall dance, Jeff enthusiastically yelled, “I'll do it!” “I knew nothing about T-shirts at the time,” he says. His mother, however, had owned cross country clubs when he was a kid, and so, he contacted the apparel vendor she formerly used.
Soon Jeff had become the T-shirt go-to-guy for a majority of the fraternities and sororities on campus. Sales-wise, Jeff certainly had it down. After all, he'd been selling “stuff” since he was eight, when the Becker brothers would run out to Costco's and buy candy and sell it at the little league fields. Then came high school, when Jeff noticed Mercer Island's fields were a little too green, and so, the concession stand was born. “We sold hot dogs, candy and soda, and we'd have different toppings for the hot dogs,” Jeff says. “We were there on Saturdays. Our parents would drive us down.”
Above: Left to right: Kotis Design's Daniel Becker, James Upchurch, Nicolay Thomassen and Aaron Dwinell all helped founder Jeff Becker (front) run the business from its beginning days in a residential office
But as for the design aspect? That's where Jeff spent most of his time. Once, after attempting for 15 hours to sketch some columns with ivy twirled around them, Jeff was on the edge of desperation. A local screen printer who'd heard about his commercial reputation via word-of-mouth offered to help. The two collaborated on projects until the spring of Jeff's sophomore year, when luck put this budding entrepreneur in touch with his future business half.
That person was Nicolay Thomassen, a Beta Theta Pi brother who had been designing shirts for Greeks on the other side of the University of Washington. The defining moment came when Jeff “botched up” a sorority girl's order (“She was super picky,” he insists) and the customer inadvertently muttered, “This artwork would have been better had I used Nic Thomassen.” “I said to her, ‘Who's Nic Thomassen?'” Jeff says. One phone call later, Jeff found out that Nic was a design genius who had never gotten paid for his work. “I told him, ‘I promise you we'll make money off of this. Just trust me on one or two jobs, and you'll get paid.' A week went by, I paid him the money, and the rest is history,” Jeff says.
Jeff says he treated Nicolay like a partner from the start, paying his buddy a percentage of the profits. That way, Nic “saw value in the bigger jobs,” he says. Almost immediately, the two became a dynamic duo on campus. If the sisters needed 3,000 champagne bottles for their upcoming philanthropic event, Kotis Design was there. If the performing arts groups wanted to give out roses or free tote bags to loyal fans? Count on Jeff and Nic to help.
Now, the nascent business has expanded significantly from its one-off orders that the pair were used to during college. “We're getting really close to the point where we need to expand because we really have a solid infrastructure built,” Jeff says of the company's current state. “We can process hundreds of orders really easily.”
"Our goal is to build a solid foundation for employees at our central office, who can produce a mass amount of work, so we can pay all the people we have here more money."
- Jeff Becker, Kotis Design (asi/244898)
Their secret? A hyper-efficient approach to business. At Kotis Design, technology operates at lightning-fast speed. Clients pick up the phone. Or perhaps type in the company's URL, www.kotisdesign.com, log in their order and hit submit. The company's team of artists retrieves it. They upload the necessary artwork, obtain the customer's approval, and send it off to the supplier. Bingo. In three minutes' time - assuming it's a basic logo - the items have cycled their way into and out of the system.
“Our goal is to have zero e-mails in our inboxes,” Jeff says of the distributor's workplace philosophy. “We do Outlook training, efficiency training, we do things like these so our salespeople can sell, so they don't have to waste their time processing orders.”
Jeff sees this system, built by Daniel, to be a key factor in their success. It's part of his long-term expansion model - building a nationwide network of independent sales professionals whose sole jobs are to sell. That's because back at the corporate office, Jeff and the rest of the crew will be there, handling invoices, accounts receivable and other tasks that take up quality marketing time. (All contractors will also have access to the company's sales technology.) Despite his future goals for expansion, Jeff says he wants to keep employee headcount at around what it currently is.
“Our goal is to build a solid foundation for employees at our central office, who can produce a mass amount of work, so we can pay all the people we have here more money. The more people you have, the more personnel issues,” he says. “Eventually, I'd like to run the business out of the Caribbean and people may laugh, but that's the truth.”
Company: Kotis Design (asi/244898)
Partners: Jeff and Daniel Becker, Nicolay Thomassen
Location: Lynnwood, WA
Revenue: $4 million in 2007
Number of Employees: 35
Top Partnership Challenges:
• Expanding the company: Is a franchise network their best bet?
• Small staff, great customer service. Doable?
Nicolay's Side of the Story
“One guy's company went under. He promised a lot of people things and none of it panned out,” Thomassen, 28, says of his initial business ventures. “Another guy in my fraternity didn't make enough in sales and he sort of fizzled himself out.”
No wonder Thomassen was skeptical of Jeff initially. “He promised, ‘Just give it a shot and I'll show you the money,'” Thomassen says of what Jeff told him on the phone. He did, and right away too. “We kept working together, me doing the design work while he did sales. Everything he did was what I didn't enjoy doing and vice versa.”
What kept the two partners together after graduation, he continues, was a keen desire to capitalize upon their success. “Both Jeff and I had other jobs we could have pursued,” Thomassen says. “But we'd done this in college for a couple of years as part-time, so we decided that summer afterward, ‘Let's give it a shot. Let's see how far we can take it.' Both of us figured if it doesn't pan out in a couple of years, we can go back to what was on the backburner.”
The business also appealed to Thomassen from a design angle. “No printer has seen proofs like ours. It's much more like how the fashion industry shows proofs,” he says, adding that some notable features are relative-to-size drawings and arrows marking any special features or dimensions. “It took some adjusting, but now our printers have all learned to accommodate,” he says.
Distinctions like these make a difference, especially in today's competitive marketplace. In fact, Thomassen believes Kotis Design's emphasis on doing things in original ways accounts for its strong performance thus far. “We have this attitude of constantly wanting to move forward and rethink the process and ways to do it better,” he says. “That's one of the benefits of coming into it with a fresh mindset. We're not set in any particular way the industry runs.”
Of course, on the flip side, being too cutting-edge also has its downfalls. “It's made us reinvent the wheel sometimes when we wouldn't have had to,” Thomassen says. “Most of it has been good, but there have been times that if we had early on read a book or two, we might have come upon that conclusion earlier.”
But still, risk-taking is good, at least in the case of Kotis Design. Nicolay most recently tested out a model similar to Jeff's - an independent designers' network - by using his cousin, a Washington Western University student, as a prototype. The test case went well and Thomassen hopes to get this effort underway soon. Once that happens, Kotis Design would be on a smooth path to … what? Where exactly do these three partners see the business ending up?
“In terms of an exit strategy, it's something we're not even considering now,” Thomassen says. This they do have: A contract that dictates what to do in case one of the partners dies, becomes disabled or encounters some other misfortune. Thomassen and Jeff's marriages last year made the binding document a necessity so that if one of them passes away, their spouses would inherit their share of the company.
Daniel's Side of the Story
He may only be 25, but Daniel Becker has both the short- and-long term vision that makes him the realist of the bunch. “Jeff will come up with an idea and I'll have to look at it and ask, ‘Will this really work?'” Daniel says. Perhaps that's why he likes programming, a skill that requires the ability to think ahead to what one is ultimately building, and which Daniel honed while serving as a high school intern at Microsoft. The experience came in handy when creating Kotis Design's Web site, and even in the early days, when Daniel created a way for Jeff to manage his flow of e-mails.
“I remember when I was in college I'd be up at midnight all the time talking to Nic,” Daniel says. “And I'd get this barrage of e-mails from Jeff between 3 a.m. and 4 a.m. He had woken up in the middle of the night because he couldn't sleep and was working.”
"We have this attitude of constantly wanting to move forward and rethink the process and ways to do it better. That's one of the benefits of coming into it with a fresh mindset."
- Nicolay Thomassen, Kotis Design (asi/244898)
E-mail is actually the primary means through which the partners communicate. In the beginning, Daniel says the three convened to make decisions, but business matters are now handled separately. That's not to say one has no clue what the other two are doing at any given time. “We talk about things all day. So it's not like we don't know what's going on,” Daniel says. “So if at any point someone has an issue with something, we'll just stand up and speak out.”
Daniel says recently the three partners have all been focusing their attention on two key issues - namely how to hire and retain the right employees and the viability of the franchise model. The former, Daniel says, was a problem when the company initially started, but they've learned to administer personality tests and arrange for multiple interviewers. “We're trying to figure out: How do you know if this person is going to be effective and working in a position where they'll want to stay with us for a long time?,” he says. “And will they fit in with the company culture?”
And as for the franchise itself Daniel asks: “How do we expand into new cities? We've got to plan for problems such as salespeople who are overlapping territories. How do you deal with that type of thing? What's the best way to go about expanding into more cities? Do we open an office and just hire people from scratch?”
The latter, Daniel believes, wouldn't work as well as hiring individuals with their own office space. That way, Kotis Design can supply the name and technological infrastructure, enabling these folks to sell.
And what about the future? Does Daniel, the serious thinker out of the three, see that far ahead? “Our plan is to grow and get really big, to the point where we're a Top 40 company. We've talked about buying other companies, too.”
And would he ever consider selling the company, or at least his share of it? Nope, he says. “We haven't even talked about what would happen if someone left.”
Why? “Because it's not relevant,” Daniel says. At least not right now, he adds.
Ernie Doud Jr. is a management consultant and president of Doud Hausner & Associates. Here, he provides insights on how this three-person partnership can grow their business and if it's possible to do so with their current plan.
First off, this partnership's a healthy one, Doud says, and here's why: It's got all of the elements of a fruitful business. There's the legal aspect, by which all three of them have some type of documentation joining them in business together. Next comes the financial, meaning the trio all have something to gain and risk. Of course, there's the social side of their relationship, too, as manifested through their daily interactions and high level of amicability with each other. And finally, there's the emotional, which focuses on each partner's distinctive strengths.
Jeff's got terrific sales energy. Daniel has technology down pat. And Nicolay brings life to any project with his keen design sense. “This is working in part because each of these guys perceives that the other brings something to the partnership that is needed,” Doud says. “And they all carry their equal weight.”
However, the expert continues, some things do need attention, such as the partners' lack of consensus on an exit strategy. Whether it remains in family hands or gets sold off to a competitor, the principals should take a moment to make sure they all have the same “endsight,” as Doud calls it. “They should all see the future reasonably,” he says. “They don't have to see it exactly the same, but they should make sure they see it the same way.” It's best to work these fine details out now rather than later, Doud says.
“We worked with one business in which there was substantial conflict among the owners, and they were all related to each other. What they didn't figure out was there was a group of them who wanted to build their business so that it would have continuity and perpetuation into yet another generation of family ownership and management. One of the siblings really wanted to build it up for sale. That fundamental difference in endsight made things difficult for them. They were all mad at each other and couldn't figure out why.”
Besides, Doud adds, having something set in stone is actually a great way to measure growth and how far away one is to realizing those goals. And keep in mind objectives can and should change, as the business's needs evolve anyway. “But don't let it change by accident and forget to tell each other about it,” he says.
There also seems to be too much of a focus on the past, and their success back then, Doud points out. What worked back then may not necessarily work now. For instance, Jeff's plan to expand the business via the franchise model (and not a bad one, per se) is based off of the premise that he'll extend the company's outreach, while maintaining a relatively small staff at the company's headquarters in Lynnwood, WA. Not only should they hire a sales management expert to help execute the strategy, but they should also consider increasing employee headcount once the orders do come in. There is no way one can expect to provide outstanding customer service while operating under the same-sized staff, Doud says.
“Customers just need someone to take care of them,” Doud says. “It can be done by technology sooner or later, but this industry is all about people-to-people. If you don't stay in touch on an individual basis, you'll lose customer loyalty, whether that is an internal customer who buys your products or an employee.”