Eddie Weinstein Does Green

Have you seen Home Depot’s latest newspaper advertisement? It’s a cartoon of a big box looking at an almost-weepy planet Earth and saying, “We’re not going to use pesticides anymore.” It took me a few seconds to get it; there is extraordinary power when the message coming down from the big box store is that green is “in”.
Generally speaking, entrepreneurs are at the top of the heap in the world of business (yes, above all the investment bankers and government officials who think they are in business but have never had a paying customer in their lives). Being ahead of the crowd is the small to medium enterprise’s business and many have been living green for decades – because they like it and it makes good sense for the future.
Eddie Weinstein runs Globe Electric, a family business that manufactures light bulbs for green living, and supplies big box businesses such as Wal-Mart. He says that as these enormous retailers choose to go green, they will change consumer lifestyles dramatically. When Wal-Mart asked Eddie for green bulbs, he had been working on building a green lifestyle for more than three decades, and therefore had the ability to manufacture enough product.
Like so many of the entrepreneurs I meet, Eddie is someone who gives back every chance he gets. Last year, he invited David Suzuki to speak at a large function, and he chuckles when he recalls how David shook his hand and said, “So you’re the guy who’s been getting rich from green.”
Eddie is gracious enough not to blast Suzuki, but I shall.
Eddie has a tough business and serious competition. He has worked at it since the age of 18 by getting out there himself and building relationships with retailers, both small and large. He chose to reinvest his own money in his business when he probably could have slept better by putting that cash into Albertan oil stocks or Research In Motion. Contrary to Suzuki’s thinking, getting rich quickly does not happen easily in business; even RIM endured a 20-year uphill ride, and was not generally supported by Canadian investors until Americans noticed the company.
Entrepreneurs live green, not because it is legislated, or because activist customers yell, but because they like it and tend to be decades ahead in their thinking. Back in the 90s, one of my clients, Spiros Pantziris, rebuilt Spintex, his second generation family business of yarn manufacturing, to be green. Spintex takes factory floor clippings of cotton T-shirts and strips them back down to base fibres to be spun again into coloured yarns. This means less dye and less cotton wastage. The factory even captures the waste wisps and clumps them into something that looks like what my cat coughs up. Except they are pellets the size of hockey pucks. These are shipped to local farms.
“Cows eat this stuff?” I asked, anxiously.
“It is cotton – a plant,” Spiros gently reminded me with a smile. When the call came from Target that they wanted green yarn for fishermen’s sweaters, Spintex was ready.
The maharishi of green entrepreneurs, Michael de Pencier, bases his business philosophy on the concepts outlined in a book by Jared Diamond, Collapse: How Societies Choose to Fail or Succeed. One of his companies is a green fund called Investeco, which acts as a private-equity partner in companies such as Eco Drycleaners, a user of environmentally-friendly chemicals. As de Pencier says, “Green living makes sense and smart businesses get green.” Thank you, David Suzuki.

Private Equity Weekly Review

BCE has received confirmation from Industry Canada that all the conditions laid out in the decision of April 8, 2008 have been fulfilled. The marks a positive step towards closing the deal as all regulatory hurdles have been overcome.

Private equity is seeing some healthy signs of recovery as private equity giants like Blackstone, Carlyle, and Bain all made acquisitions this week. The largest deal was made by Blackstone that made a $1.67 billion buyout of Apria Healthcare Group, which was followed by PepsiCo Inc.’s acquisition of JC Lebedyansky, a Russian juice company. See a list of last week’s largest deals here:

Tremors from the credit crunch can still be felt to this day in as far away places as Japan. Deals are getting done, but at lower multiples. Before the liquidity problems in the market, prices paid were at multiples of 10x the annual earnings of Japanese companies. D&M Holdings was sold to Bain this week at 6.7x. This is an indication of not only how much competition there is in the market for good deals, but of the large sums of capital competing for the same prizes.

By Jeff Watson, Loewen & Partners

Private Equity Digs Deep Down Under

A report from Australia confirms that private equity is continuing its metamorphosis as it seeks innovative means of reaching targeted returns. The private equity market is still active, though not to the same degree as 12 to 18 months ago. Firms are continuing to work on their portfolio companies, complementary acquisitions deals for existing portfolio companies, and of course, the growing popularity of acquiring distressed debt.
Posted by Jeffrey Watson, Loewen & Partners

Make the world a better place

"In a way, the world is a great liar. It shows you it worships and admires money, but at the end of the day it doesn't. It says it adores fame and celebrity, but it doesn't, not really.
The world admires, and wants to hold on to, and not lose, goodness. It admires virtue. At the end it gives its greatest tributes to generosity, honesty, courage, mercy, talents well used, talents that, brought into the world, make it better.
That's what it really admires. That's what we talk about in eulogies, because that's what's important.
We don't say, 'The thing about Joe was he was rich.' We say, if we can, 'The thing about Joe was he took good care of people.'"—Peggy Noonan, "A Life's Lesson," wrote this at the passing of one of her journalist colleagues, Tim Russert.
I credit Peggy Noonan for Ronald Reagan's success as she wrote many of his speeches, bringing back that combination of big vision but pulling it back down - like a kite string - to how the big idea applies to each of us.
Are you using your talents to build up the people in your team, to create a great place to work and in your own way, making the world a better place? If so, hats off to you. Keep going.
The private equity money will recognize your tenacity to keep adapting to how to apply your talents to make the world a better place. This spirit is the essence of good management and good teams get the best finance partners.

Is Your Company As Much Fun?

I recently ran a strategy workshop for a large NGO. They get given a cool $11 million grant from the government every year plus their work contracts are bought by the government. That is a lot of support from tax payer money. The NGO staff work in a beautiful office building and the culture exudes quiet competence. Their skills and staff are impressive and I have to say, I had a great time working with the top team. What a lovely group of happy, proud and smart people.

Attending the strategy workshop was a branding expert. As the top management team went through their branding exercise, choosing key words to describe their business, this consultant talked about MARS - the venture capital incubator for uprising start ups. He spoke about how there is a sense of urgency with crackling energy in the air. The core brand MARS has developed is "speed to market". The brand expert could see that the NGO needed that same fire to the feet urgency to get their many products to market rather than dotting every i and making it 100%. In the real world of finding customers to transfer their cash from their wallet to your hand, there is real pressure.

This NGO might want to be speedier but everything in their business model cuts them the slack to not feel pressured about making money from satisfied clients. They are enjoying making Canada a better place - seriously - and they have made Canada a better place in their way. Plus their culture is very supportive, making it a truly marvelous place to work. Except that employees now push back at any mention of the D word - dollars.

I think we all need to understand the enormous differences in culture that develops and grows from the forces and demands exerted on the staff and owners. In the case of the NGO, there ain't ever going to be a sense of urgency because if some division has a shortfall, guess what, it doesn't matter. The bank is not going to threaten the owner and the staff will get their payroll paid. Where is the force to push for urgency?

These not-for-profits provide a great job environment. I looked around the room at the impressive team. They were more intellectually rigourous and more open to discussion of sticky issues than many management teams. It was almost like being at a Club Med resort because everyone was so relaxed and - hey, tomorrow was another day making a difference for Canada.

When I work with early stage companies, there is none of that laid back, let's think about it and reach consensus attitude. It's time to make money or bust. It's a fight every day. That's why MARS has to make "speed to market" a core part of its brand rather than making Canada a better place. There is just not the luxury of being socially responsible.

Is it dangerous for the Canadian economy to have so many great people working in these tax backed companies rather than having to make their way in the commercial world? Maybe these NGOs are keeping the great talent for themselves rather than the economy which makes the revenue to pay the taxes that then get passed to the NGOs. Whatever. I honestly can say I enjoyed myself so much I think I'm going to get myself a job at a not-for profit. Then I can stop worrying about making customers satisfied.