In what sounds like the start of a fabulous rom-com, Chuck Fandos got his start in the promotional products industry because he fell in love. He met arguably two of the most important people in his life – his wife Susie and his future business partner Conrad Franey – in 1984 when they all worked at St. Louis-based incentive and marketing company Maritz, which afforded them the opportunity to travel the world operating incentive trips for large companies to places like Paris, Hong Kong, Rio and the Bahamas.
After leaving Maritz, Fandos worked at his family’s Greek restaurant while Susie started selling logoed items for a local distributor. Seeing the potential for industry growth, the Fandoses opened GatewayCDI in 1988. “We didn’t know what we didn’t know,” Fandos says, laughing. “We were newly married, poor and naïve. I miss those days.”
With Franey on board at Gateway in 1992, Fandos led the company to become a multimillion-dollar Top 40 distributorship, but came to the realization – as the years progressed – that the promo marketplace was changing and the smart companies would have to adapt to survive and thrive. Enter Facilis, which is, according to Fandos, “a business model designed for distributors based on community, technology and supplier relationships to help them grow their business.”
“In 2004, Facilis had five Canadian companies using the model, and wanted to make a move into the U.S.,” Fandos recalls. “One of my partners, Dan Rochette, who created the model, asked Craig Morantz of Leed’s who he might recommend to talk to in the U.S. about the U.S. market. Craig gave Dan my name. My other Facilis partner, Martin Weber, called me up and wanted to show me this hot new system designed for distributors and flew to St. Louis to meet with me. Martin, who is German, had only been in Canada for a few years and his English was a bit ragged, but he showed up in his Captain von Trapp suit and showed us the system, which we loved. GatewayCDI became the first U.S. customer.”
Today, there are 105 Facilis partners in North America representing companies with combined annual revenues totaling just over $500 million.
With a talent for prescient, prodigious decision-making, Fandos next looked at the business he and Franey built, as well as the shifting buying trends in the marketplace, and sold Gateway in January of this year to Brand Addition, the largest European distributor firm.
“We wanted to transition the company to our next generation at Gateway, be a part of global growth, protect jobs in the U.S. and look toward the next phase in our lives,” Fandos says. “A large percentage of distributors and suppliers are owned by people 50 years of age and older. What’s the exit strategy look like for that? Here’s my advice: There’s no guarantee of a pot of gold at the end of the rainbow… It seems to me that people hold off selling because they’re waiting for the perfect deal, the ultimate payout. You shouldn’t let ‘perfect’ get in the way of ‘really good.’”
Fandos, now the CEO of Brand Addition in the U.S., admits that Gateway was sold to a European company because he and Franey wanted to take care of their staff, pointing out that if they’d sold to a U.S. company, their people would have been redundant and perhaps not had jobs.
“A key to our success is the way Chuck interacts with, communicates to and generally cares for all the team members,” Franey says. “I’m biased, obviously, but I believe we maintain a unique culture … and we work at it daily. And make no mistake, Chuck is the leader.”
Chris Lee, CEO of the 350-employee Brand Addition (with $120 million in annual sales and 10 worldwide offices) and Counselor’s International Person of the Year in 2013, says that with mature operations in the promotional merchandise industry in Europe and Asia, the company was looking to make an investment into the U.S. market. “In finding the right company to invest into, there were three important things we were looking for: First, the sector. We wanted someone focused on large, contracted programs and Gateway ticked this box. Second, the commercial deal. Chuck both negotiated hard and stood in the shoes of us as the buyer to help construct a deal that worked for us all.”
Lastly, Lee says, was the business culture. “By far the most important thing to us was understanding the culture at Gateway. After our initial discussions, Chuck allowed us great access to his management team and it quickly became clear we were two like-minded organizations. Chuck’s overall approach and personality allowed us to build a great relationship through the sale process that continues today.”
Cocktails & Poppycock
When asked what the industry will look like in 10 years, Fandos, ever the optimist, sums it up in one word: “thriving.” “We’re a resilient group, but the industry will look different,” he concedes. “We’ll have more consolidation on the distributor side and supplier side, and distributors will have to work together on technology, product safety, clients, etc. But we will always find ways as an industry to add value to our customers.”
He does acknowledge that the industry needs to collapse some of the steps in the order processing and fulfillment from, say, seven steps to two or three. “Look, customers want the most easy and expedited order process possible, but not at the cost of a personal touch,” Fandos says. “I’m calling bulls*** – let’s say ‘poppycock’ – on people who say that this industry will one day be all online-based. It’ll be a mix of clients who want to order from an actual person and those who are more comfortable ordering online. Because, frankly, I’m not sure how you run one of these businesses without relationships.”
And if there’s one area where Fandos – who says, surprising to no one who really knows him, that he’d be a bartender if he wasn’t in this business – has succeeded in spades, it’s building relationships. “We’re in an industry of amazing people in every respect,” he says emphatically. “The relationships I’ve built over the years are what I love most about the industry: the conversations, cocktails, trips, debates and fun with people have been phenomenal. I feel very blessed to stumble into this business and I wish more people would drop the force field and join in.”