KEVIN M. O’CONNOR; SAMSON MARKETING
AMERICAN FURNITURE HALL OF FAME
ORAL HISTORY INTERVIEW
APRIL 3 and 11, 2013
GREENSBORO, NORTH CAROLINA
Tony Bengel, Interviewer
INTERVIEWER: This is Tony Bengel. It’s April 2013 and I’m interviewing Kevin O’Connor at his home in Greensboro, North Carolina. Kevin, let’s start at the beginning. Where and when were you born?
O’CONNOR: I was born July 17, 1945, in a northern New Jersey town called Englewood, a few miles from Manhattan, just west of the George Washington Bridge. That part of New Jersey in those days had no identity other than being a suburb of New York City.
INTERVIEWER: You’re a big-city boy.
O’CONNOR: Pretty much, if that includes being in the suburbs. I don’t remember anything from the '40s, but I remember growing up in the '50s. It was a quiet time, a much, much simpler time. The houses we lived in were built in the '20s, on narrow streets, Archie Bunker type houses.
INTERVIEWER: Row houses?
O’CONNOR: No, they were individual homes, separated by narrow driveways. Cars had become popular enough that there were garages with most of the homes. You looked out your bedroom window and there was a kid probably about 15 feet away looking out of his window. I could look out the back window of my house and see Grant’s Tomb, about a mile as the bird flies across the Hudson River. Out another window, I could see the Empire State Building. I remember the big rotating searchlights they used to have at the top. I would go to sleep at night looking out the window at the sweeping lights. It was a good place to grow up.
My dad was in the service, and I was born while he was in Southeast Asia. He returned from China and saw me when I was 5 months old. He was “flying the hump” from India to Burma to China, delivering supplies and ammunition to Chiang Kai-shek's troops fighting the Japanese. It was a very dangerous route.
INTERVIEWER: He was a Flying Tiger?
O’CONNOR: No, he was in the Army Air Corps, the Air Transport Command, as a co-pilot and navigator. He was there in ’44-’45, towards the end of the war. In the early part of the war, they lost a tremendous number of planes flying across the Himalayas on instruments but without radar. He dodged a couple of really close calls. He never bailed out of a plane; they managed to land between the mountains a couple of times. He went through life realizing that every day he had was a gift, because he lost so many of his flying buddies.
I grew up in a very ethnic neighborhood, where you were either Irish or Italian or Jewish. My great-great-grandfather came over from Ireland during the potato famine in the 1850s. At that time, the O’Connor clan was in upstate New York, (Keysville, N.Y.) on the Canadian border near Plattsburgh, New York, on Lake Champlain. I’m not quite sure how or when, but my grandfather eventually came downstate as a boy with an uncle, and wound up working for Macy’s in New York City. He eventually became the second person in the history of Macy’s to retire after 50 years at full salary. Then, my dad went to work for Macy’s right out of high school before World War II.
INTERVIEWER: You’re talking about Macy’s huge store on 34th Street?
O’CONNOR: Yes, I am talking about the Herald Square store. My dad returned to Macy’s when he came home from WWII, and wound up being an assistant buyer of furniture. Later, he left Macy's and became a furniture rep, which is how I got started in the furniture business, something I didn’t really intend to happen. My dad was a rep in New Jersey and New York for many years for Williams Furniture of Sumter, South Carolina.
I grew up in North Jersey and went to a Catholic grammar school and to Bergen Catholic High School in Oradell, New Jersey. Then, I wound up going to Seton Hall University and spent two years in the seminary there, studying to be a Roman Catholic priest. I was a classical language major, something at which I was not very skilled at. This was during the early '60s when the Catholic Church was changing from the Latin Mass to the vernacular Mass. It was a time of turmoil in the church, and I realized the priesthood wasn’t for me. I switched to being a psychology major. I tried very hard to leave Seton Hall, because I wanted to change my whole life at that point. But my grades had become so poor in Latin and Greek that I couldn’t transfer to Georgetown or Notre Dame or Boston College, where I would have liked to have gone to school, so instead I wound up staying at Seton Hall.
I think things happen to you in life for a reason. I was very immature when I went to Seton Hall, and my decision to go into the seminary was an immature one. But I happened to meet some great people, great mentors there, and I grew up a lot. I think having a Catholic education brainwashed me to some extent into thinking there was nothing better that you could do with your life than to become a priest or a nun. That was not a very mature way of thinking, and the mentors I met made me realize that. They encouraged me to leave the seminary when I was unsure and think about what I really wanted to do. I did leave, and enjoyed the next three years at Seton Hall immensely.
I played on the seminary basketball team, which was like a bad high school team. I wasn't that good of a player, but I loved college basketball. Seton Hall was known as a basketball school, much like Notre Dame was known for football. I wound up broadcasting Seton Hall basketball games for three years as the play-by-play announcer on the University radio station WSOU, which I really enjoyed. I would have loved to make a career out of sports broadcasting, but it is very difficult to make it to the top. The competition is stiff, and it was possible to spend your life as a minor league sportscaster. But I loved sports, and I ended up also doing baseball and football broadcasts as well as basketball for the university. It was really fun!
Seton Hall provided me with enormous opportunities to grow up and become a leader. I helped start a club football team, something that happened in the middle '60s at colleges that didn’t have football as an NCAA program. We also formed a league and I became the commissioner of the league. That was fun, and it taught me some organizational and leadership skills.
Seton Hall went from being a place I didn’t want to be, (in the seminary) to a place that wound up being really good for me. I was lucky to be in the right place at the right time, and to do some things and to meet some people who had faith in me. I just kind of blossomed from there.
After undergraduate school, I was planning to get my doctorate in psychology in a four-year program at DePaul University. But Uncle Sam came along and said I want you. This was in 1968, and there were already 550,000 guys in Vietnam. My lottery number was somewhere around 100, so I was sure to be taken. In order to try to stay out of Vietnam, I enlisted in the Army Security Agency. Fortunately, I had an asthma attack in the fall of 1968 in basic training, and the army gave me an opportunity to get out. I took that opportunity gladly and was discharged in March 1969.
I met my wife Madeline in 1965 and we were engaged in June 1968. We were supposed to marry in May 1969 after I had completed Army OCS. However, now I was out of the service, had no place to go to graduate school and I needed a job. The only problem was that I had no real skills and no idea what I wanted to do.
I remember my dad asking me, “What do you want to do?” I had no earthly idea. But the stock market and Wall Street had always intrigued me, and I was pretty good with numbers. So I asked my dad, “Do you have any connections or know anybody who works on Wall Street?” He said, “I don’t, but I have a friend who is going to take his company public. Maybe he can give you some advice. I’ll see if he’ll talk to you.”
So the next thing I knew, I was driving to New York and meeting a gentleman by the name of Nat Ancell, who was the chairman of Baumritter Corporation at that time, the precursor to Ethan Allen. Nat said, “So you want to go to work on Wall Street?” I said, “Yeah.” I must have sounded pretty unconvincing, so he asked, “Is that really what you want to do? Your dad's a good furniture rep. Why don't you consider selling furniture?”
Now, in my mind, Nat Ancell is the greatest salesman of all time. And he was talking to me, a 23-year-old kid in the 1960s who was going to save the world by becoming a priest, and then later decided to fix the world by becoming a clinical psychologist. Nat started talking about his vision for Ethan Allen, how it would make and sell furniture that would be beautifully coordinated, and consumers would be served by interior decorators who would put together beautiful rooms and beautiful homes. After about two hours with him, I was convinced that I wasn’t going to just sell furniture. I was going to help beautify America and solve America’s problems by creating beautiful homes, and what a wonderful career that would be. Nat next had me talk to a guy by the name of Pat Norton, who was then the Vice President of Sales at Baumritter, and another industry legend in the making.
Because of my dad, I’d been around a furniture guy all my life. I knew the difference between a nightstand and a dresser, but that was about the size of it. One thing I'd done during college was work for my dad in the summers, distributing catalogs and price lists to retailers in New York and New Jersey who he wasn't able to call on very often. Occasionally, if they needed to order something, I would write it down, but I certainly wasn't a salesman. I was just a service guy for my dad.
But my father was more than just a furniture rep-he was the product development director for Williams Furniture. As a result, he would work with some of the prominent furniture designers in the New York/New Jersey area, guys like Tom Hassett Sr., Gordon Perlmutter and Leonard Simmons. He’d bring home beautiful sketches these guys would do by hand. I thought that was really neat and interesting. But if somebody had asked me at that point if I wanted to be in the furniture business, I would have said ‘no’. I thought it would be boring to sell furniture to retailers.
INTERVIEWER: Other than your father, was anybody else in your family involved in furniture?
O’CONNOR: My uncle worked for my dad as a sub sales representative. But those are the only two furniture connections. My brother worked as a rep for various companies and now works for one of our Samson Marketing companies in the High Point warehouse. My son is the Vice President of Sales for Universal, another one of the Samson companies. He spent 12 or 13 years with Rowe and worked for Jerry Birnbach, who recently passed away. Rowe had a great training program. When he got out of college, he didn’t really know what he wanted to do. When he showed some interest in getting into the furniture business, he chose Rowe because of their training program. I guess he was in some ways following in my footsteps, since I joined Ethan Allen because of their training program for young guys.
My son has been very successful. He’s doing a great job at Universal. He joined us about a year and a half ago. When I knew I was getting ready to fade out of the picture, I never wanted to have any nepotism in the family.
My youngest daughter, Colleen Terry has worked for Legacy for 15 years, and is now an independent contractor doing their market showrooms. She started in customer service when she came out of college.
So I’ve had a daughter, a son and a brother who have worked in the business. But my dad was really the only influence on me.
INTERVIEWER: What did you pick up from him?
O’CONNOR: My dad was probably one of the most well-liked reps in the New York/New Jersey furniture business. He was just a very nice man, a real gentleman. I don’t think there’s a soul that would say a bad thing about him. As I said, every day was a gift for him. He was very religious. He went to Mass every day.
INTERVIEWER: Was that also true of your mother?
O’CONNOR: Yes, but dad was much more overt about it. He was always trying to help people. He loved what he did. What he really enjoyed doing in his work life was developing product. I’m not sure I learned that skill from him; rather I think it’s sort of in your blood. I don’t think you can teach product development to people. You either have a feel for it or you don’t. It’s a God-given gift. I really believe that. It’s like an artist. You can teach people to paint and draw, but that doesn't make them a true artist. But you can tell when somebody is gifted. I think the same thing is true in product development.
My dad would get out and talk to people. He worked with his retailers. He knew what would work in the consumer’s mind. He could translate that by working with a designer, getting them to put on paper what he wanted. I think that was his real skill. I watched him work with designers and saw how he did it. I'm not sure what I learned from that. I think everybody has to do their own thing. But I saw what he did, and I thought it was cool.
INTERVIEWER: Did you ever visit his office when he was a furniture buyer at Macy’s?
O’CONNOR: Oh, no. I was too young. He took the job as a sub sales representative when I was about 5. He felt very lucky to be hired as a sub rep. As my dad told the story, the first day he went to work, the rep who hired him said, “Here’s a pencil and paper, and here’s a Lyon’s Red Book. Go out and call on some accounts. After being a buyer, you know what they’re like. Go sell someone.” He got absolutely no training.
My dad wasn’t one of the typical back-slapping, story-telling reps. He was very genuine. He let you get to know him. He was a very emotional person, in a time when most guys coming back from the war were tough guys. He was strong, but unashamed to show emotions. My dad cried when Bobby Thompson hit his famous home run. I could play a recording of that radio broadcast, and if my dad was sitting here today, he would still cry. My dad was one of those people who would always come up and hug you and kiss you. That wasn’t typical in the 1950s. You were supposed to be tough, with a firm handshake. When I say he was not afraid to show his emotions, I don't mean that he wasn't a strong person. He was, but he also was a very kind and gentle person. He won all sorts of honors and awards. He was on Cardinal Spellman’s Home Furnishings council of Catholic Charities of New York, and he won the Brotherhood Award from the National Fraternity of Christians and Jews in New York, which was a very strong organization.
So my dad was a big influence on my life. But, I would say he was more of an influence as a father rather than as a businessman. My dad was my biggest fan always. He was my best friend by far.
INTERVIEWER: When did your father die?
O’CONNOR: Dad died 10 years ago, in 2003, at the age of 83 fine years. He had a stroke in September ’99.
INTERVIEWER: How much did you stay in touch with him during your career?
O'CONNOR: Quite a bit, particularly at certain times. Early on, at Ethan Allen when I moved back from Chicago to New York to work for Pat Norton, my dad's office and showroom were in a building across the street from my office. We went to lunch several times a week, in ’71, ’72 and early ’73.
That lasted until Ethan Allen moved its headquarters to Connecticut. Later, when we built our home in Greensboro, I put a room and full bath over the garage, where he would stay for two weeks when he came to the High Point markets. He and I would ride together to market every day. That lasted until he retired and had the stroke. Then, we moved my parents here to High Point, N.C. to help care for them.
Shortly before they came here, I started Legacy Classic in March ’99, so he was here for the beginning of all that. We had a nice reception for him when he turned 80. We invited all of his friends. Dad loved being here, watching the company grow and coming to the showroom during markets. He loved the business and the people in the industry. He thought we were a very close-knit industry, and he was on a first-name basis with a lot of big-company presidents over the years.
INTERVIEWER: Did he ever carry any lines other than Williams?
INTERVIEWER: Did you ever accompany him when he made sales calls?
O’CONNOR: A little bit. I think people did business with my dad, Frank, because of who he was as much as they did the company. There was so much respect for him that if he fully endorsed a product, they just bought it. In most cases, it was something he had developed with his big accounts.
INTERVIEWER: But you never thought about being a marketing or salesperson until you joined Ethan Allen?
O’CONNOR: No, not really. If anything, I probably thought about being in something like home building, where I could see something come to fruition rather quickly. That's what attracted me to product development, the fact that you can create something, bring it to the marketplace and see the reaction, almost an immediate acceptance or rejection of what you did.
So, getting back to Nat Ancell and why I joined Ethan Allen. He told me I was not going to be just a sales rep. They called us marketing reps. We were supposed to be “retailer consultants”. They had just opened the first of 15 Ethan Allen showcase stores around the United States.
The thing that was intriguing about Ethan Allen was the way they did business as a vertically integrated company. They manufactured furniture only for their own stores, which were owned by franchisees. You had to develop the stores by finding the right people as franchisees, and convincing them they could make money operating according to the Ethan Allen model.
I was among the first of a bunch of college grads in their 20s that Ethan Allen hired. They were getting rid of commissioned sales reps who'd sell product to any retailer that wanted it.
I didn’t have any retail experience, but I ended up working for our Midwest Regional Sales Manager Art Brady, who had retail experience. Within my first year and a half, Art and Pat Norton saw something in me. I'm not sure what. I look back and I shudder at some of the things I said and wrote in those early days. But I was very candid, and I did have writing skills, which a lot of salesmen don’t. I would write service reports and explain what the company was doing wrong, or things that didn’t work.
I now had a major territory with one new showcase store that had just opened and I didn’t know jack-diddly. But I rolled up my sleeves and went to work. Before long, we opened a store in Merrillville, Indiana, southeast of Chicago just over the border in Indiana. Soon after that, we opened up another store in south Chicago.
Pat Norton came out in January 1971 and offered me a job – I think it was for a grand total of $14,500 – to go back to New York and be his administrative assistant and run sales administrations in Ethan Allen’s headquarters, which was based at 205 Lexington in Manhattan at that time. So I went there in March 1971 and worked in New York for the next three years. Madeline, my wife, moved back in June; after school ended. She had been a teacher in Illinois. It was a good move for both of us, since we were closer to our families. As usual, Madeline supported my career opportunities. She has been and is my partner and best supporter.
In New York, I developed a great relationship with Pat. He became my second father over the next few decades, and remained so until he died. I gave the eulogy at his funeral. I think I was probably as close to Pat as anybody. He was a great mentor, and a tough guy, but a very fair man who was a great leader.
After working as his administrative assistant for three years, I did all kinds of things at Ethan Allen in the ensuing years. I ran the sales and administration office. They wanted somebody in the office who really understood what it was like to be a rep and could communicate with them. The company went through a huge transformation. When I joined Ethan Allen, they were doing about $45 million annually. By the time I left in 1981, they were at $280 million, and had grown from 15 or so stores to 315 stores total.
It was a fabulous ride. I had the most fun I ever had in the furniture business in those years. You were really a part of a team. We were on a mission, doing something that was different and creative and meaningful. It was just a fabulous experience, working with very talented people creating beautiful stores and changing the landscape of the furniture business tremendously.
Levitz was just coming on the scene in those days as a huge discount furniture retailer. There were still zillions of retailers selling furniture, some of which we called dirty-window stores. Some appliance stores sold furniture, and every department store sold furniture. But the typical furniture store just lined up bedrooms and dining rooms and upholstery like rows of soldiers. There were almost no environmental settings or room displays. Ethan Allen changed all that.
Nat Ancell was the most brilliant person that I have ever worked for. He was both smart and tough, a true visionary; and he had a very good heart. After Madeline and I had moved back to New York, Nat would invite us to dinners. He took certain young guys under his wing who he must have felt had potential. Madeline and I, at 25 or 26 years old, were at dinners with guys who were 50 and 60 years old. They seemed like “Methuselahs” to us at the time, but they treated us as equals. Especially Nat’s wife, Enid, who was a marvelous woman. In addition to those dinners, Nat would take me to lunch with leaders of national brands. You’d be sitting down with the president of Whirlpool or Ford. Nat was just a fabulous guy.
It was a great education for me to be there, a great launching pad for a career. It made me think differently about things. Selling furniture wasn’t all about price. I was marketing furniture, not just selling furniture. We weren’t just making something and selling it, and it wasn’t just a price competition. I did all kinds of jobs at Ethan Allen, everything from setting up showroom floors to working closely with our computer data-processing people to develop coordinated sales reports that would be printed out on green-bar paper — ancient dinosaur stuff by today’s standards. But we had reports that gave the status of every order from every store.
We were selling rugs and carpet and lamps and wall art and window coverings because it was a whole-home approach back then, as it is today. We weren't only selling case goods and upholstery, but all home furnishings. We were decorating entire homes, and we were training designers/decorators, not just salespeople. One of the big voids in our industry today is that consumers still are looking for decorating help.
Nat was a visionary in understanding and realizing the whole-home approach. It extended well beyond Ethan Allen stores. He had, I remember, a rendering in his office done probably in the 40’s or 50’s that showed what an Ethan Allen shopping center would look like. The consumer could go there to buy a piece of land and develop a home. There would be an appliance store there, and a landscaping store. The centerpiece, of course, would be the Ethan Allen store, which would help you decorate your entire home. Consumers would create everything from landscaping the house to decorating the house, all under the Ethan Allen label and all financed together.
Nat had begun to develop these ideas back in the late '30s, early '40s, so when I got there in ’69 it was a well-developed concept, but it was only coming to fruition. He really saw what the future could look like, and he started by thinking about the consumers' needs and working back from there.
Unfortunately, like a lot of people as they get older, I think Nat got stuck in a time warp. He didn't understand how the consumer would continue to change, and that an Early American style wouldn't ultimately satisfy a lot of them. I think one of the problems in our industry is that some of the icons stay around too long. Ethan Allen stalled after Interco bought it in the late '80s, but later, after Farooq Kathwari took over, he was able to update Nat's whole-home concept, and the company grew again.
Even before the Ethan Allen sale to Interco, I think Nat and Ethan Allen had lost its edge. After his wife died, Nat was away from the business for a couple of years, psychologically wounded. Pat Norton, the Vice President of Marketing and Clint Walker, the President, ran the company during his absence. When Nat came back, he wanted to take the company in a different direction than those of us who'd been running it. By that time, I was the head of product development for case goods, and we had different ideas about what to do. That led to a number of us leaving the company.
Pat Norton left and ultimately went to La-Z-Boy. I had a couple of opportunities to go with Pat to DeSoto Furniture in Mississippi, and also to Curtis Mathis, a big TV company that was trying to enter the home entertainment furniture. Pat wanted me to go wherever he went. But, things didn't work out that way.
I met one of the principals of La-Z-Boy at a retailer conference in ’76 or ’77. He was a man named David White, who was the son-in-law of La-Z-Boy founder Ed Knabusch. David actually helped me with a project at Ethan Allen creating a centralized fabric inventory control system, which was something La-Z-Boy already had implemented. Working on that project, David and I became friends.
The La-Z-Boy people eventually approached me to interview for a job as a Vice President of Marketing in 1980. At that time, they had these small recliner stores called La-Z-Boy Shops. They were independently owned stores of 2,000 or 3,000 square feet. They were enamored with people at Ethan Allen and thought they might be able to go into full-sized stores. I was 34 and, since I was the head of case goods product development, I really didn’t know much about upholstery.
I did interview at La-Z-Boy, and told them, “It’s a very flattering job offer, but I don’t think I’m ready for it. However, I know somebody who is.” Of course, I meant Pat Norton, who was in his late 50s at that time. I introduced Pat to the La-Z-Boy people, and he went there. Obviously, it was a marriage made in heaven. Pat stayed there until he was in his 80s, and led La-Z-Boy through a period of tremendous growth.
Pat left Ethan Allen in April ’81. I left in August of ’81. He asked me to go to La-Z-Boy with him, but I declined. I knew that since Pat and I were like a father and son, I’d always be Pat’s assistant, Pat’s boy. As much as I loved him and admired him, I wanted to do my own thing, and I wanted to do it in case goods.
I remember when I resigned at Ethan Allen to take the job at Singer, Nat Ancell said to me, “Well, kid” – he always called me kid – “if you work hard, maybe someday you’ll be the president of Singer.” I looked at Nat and said to him, “If I really work hard, maybe someday I’ll be the president of Ethan Allen.” He looked at me, smiled, and said, “Maybe you will.”
Nat and I remained very good friends. He’d always visit me at the companies where I worked. One of my regrets is that I didn’t go to his funeral. I can't remember why. I may have been overseas at the time. I loved him. He was a great man and very, very kind to us.
We had adopted our daughter Christine, after we moved to Connecticut while I was working for Ethan Allen. We didn’t think we could have any children of our own at that time. We adopted her through Catholic Charities. As with most adoption agencies, you become foster parents for a year before the adoption is finalized. Just as we were getting ready to finalize the adoption, they told us there was a problem. Connecticut had just passed a new adoption law that required the permission of both parents before a child could be released for adoption. The previous law only required the permission of one parent, typically the mother. The new law didn't have a grandfather clause that allowed adoptions begun under the old law to continue under the one-parent requirement. So, we were in limbo with about 200 or 300 other couples who had begun adoptions under the old rules.
I told Nat about our situation. I told him we might have to move to Canada because we just weren't going to have our baby taken away from us. He immediately called the Connecticut governor’s office. He brought state senators and representatives to Ethan Allen's board room in Danbury and lobbied them to have the law changed. He gave me all the time I needed to write letters seeking support. He released me to do whatever I needed to do. I spoke to the state senate committee about the adoption issue. I spoke to the entire Connecticut House of Representatives. And, eventually, we won our case. We got the law changed.
Nat was terrific at supporting people like that. That’s the kind of person he was. He was magnanimous in helping people, both employees and others. He was very generous.
In April 1981, I had an opportunity to go to work for Singer. The president of Singer Furniture was a guy by the name of Charlie Shaughnessy. Charlie’s dad and my dad had worked together at Macy’s. Charlie came out of Harvard Business School, and worked for Cushman and General Interiors before joining Singer. I went to work there, moved to Atlanta, and ran the Manor House division of Singer beginning in August of ’81.
I took the job at Singer as much for the move to Atlanta as for the job itself. I also had an offer to go to work for Albert Prillaman at Stanley Furniture. I think Albert was Vice President of Product Development at the time, and I had been talking to him for several months. Frankly, I was afraid to move to little Stanleytown, Virginia, as an Irish-Catholic kid from the Northeast. That would have been a pretty big change for a big-city guy. Atlanta seemed like a much better fit for my family at that time.
I was the General Manager of Singer’s Manor House Division. Manor House, at that time, was best known for their Paul Bunyan Collection that was introduced in 1976. That was a big scale collection, almost disgustingly huge, but it was the rage of the industry for a couple of years. I was replacing a terrific gentleman who was the father of the Bunyan Collection. Bill was in his 70’s and wanted to retire. Charlie liked my background and took a chance on hiring me.
Singer was a huge company in 1981. Singer and Bassett were the two largest companies in the industry, both doing about $400 million annually. I've always described my move from Ethan Allen to Singer as going from Mars to the real world of furniture, because at Ethan Allen we were really in our own universe. We didn’t really care about anybody else. We competed against ourselves. When you developed a case goods collection at Ethan Allen, you were developing a product to replace your own product. Of course, it had to be better than the old product, but we really didn't think of it as competing against everybody. But at Singer, that's exactly what we were doing, competing on price and style and everything else. It was a totally different world. After I got there, I thought to myself, “What the hell have I gotten myself into?”
But, I was ambitious. At Ethan Allen, I wanted to be a vice president by the time I was 35. I wound up being a vice president at Singer by the time I turned 35. Going to Singer doubled my income. They offered me twice as much money as I was making at Ethan Allen after working there for 12 years. We had always lived modestly almost on a shoestring, and now we had the opportunity to do things we'd never done. I worked hard at Ethan Allen, and it was a terrific place to work for the vast majority of the time, but you didn't make much money. I bought my first new car about a year before I moved to Atlanta. It was a little Mazda; I had three kids and one car most of the time. The Singer offer was something I couldn’t pass up. I wanted to be on my own and prove myself. I felt like I needed to spread my wings and do my own thing.
One of the things I've neglected to mention is the education I got while working at Ethan Allen. I've always had a thirst for education, and a great desire to educate myself about business. I'd taken some math classes in college, but I didn’t know anything about business except what I'd picked up on the job. From ’76 to ’78, Ethan Allen sent me to the executive MBA program at Columbia, although it was actually a M.S. degree in those days. It was a fabulous program. I went to Columbia in Manhattan every Friday for two years. It was a great opportunity, but it was very hard on my wife and family, because I was working on Saturdays to make up for the time away from work on Fridays and studying all day Sunday. Pat Norton, however, gave me an enormous amount of latitude to do what I needed to do at my job.
I got my M.S. degree in ’78. It was a great learning experience at one of the top five business schools in the United States. I was exposed to some great professors. But more importantly, I was exposed to a lot of great business leaders as classmates. I was the youngest guy in the class at age 30 when I started. There were folks who were 50 and 60 years old in the program. AT&T and IBM would have filled the whole class if they could, but Columbia wouldn’t allow more than two people from any one corporation. They graduated about 100 people a year at that time. I went through in a section with the same 50 people for the two years. We got to know each other. We took finance classes, accounting classes, operations and research classes – all the classic MBA courses – but I probably learned the most from the real-life experiences of some of the older students. We would do case studies, drawing upon the experiences they had. Many of my classmates had been in business 30 years already. It was a very diverse class in gender, ethnicity, culture and experience, and it really prepared me for some of the things I did later on.
When I look back on it, I realize the classes some think are basically less important, like human resources, are the things that I used more than anything else. As you rise as an executive within an organization, you can find people to take care of accounting, financing, operations and so on. I needed to have a working knowledge of all those skills, but mostly I needed to know how to manage people. Looking back at my Columbia experience, it helped me a great deal. Equally important to me is the fact that I was very lucky to work with a lot of people that I learned a lot from about how to manage people, like Pat Norton, Nat Ancell and Leonard Fisher, who was one of the top guys at Singer.
Leonard took me under his wing at Singer, and I was involved in the development of the Open Home Collection, which turned out to be the largest-selling collection in Sears' history. It had a relaxed Early American look. I remember the first meeting that led to its development occurred two days after Christmas in 1981, not long after I joined Singer. We ended up working with a designer named Raymond Waites to create Open Home, and the collection proved to be a very, very good seller.
Creating Open Home was a great fit for me. I had just come from Ethan Allen, where developing an Early American look was comfortable for me. We put a fresh finish on it, and we created a whole-home environment with upholstery which was second nature to me from my Ethan Allen days. We worked together with Don Belgrad, president of Schnadig, to create the upholstery. The collection was an immediate success because the display was like “an oasis of beauty” in a sea of brown low end furniture and lawnmowers at Sears. Open Home was a lot better, and certainly better looking.
Of course, I was one of many involved in Open Home, and can't take full credit for its success. Later on, I worked with fashion designer Diane Von Furstenberg on a contemporary furniture collection at Sears, which happened to be a disaster. A lot had to do with the flexibility and adaptability of the “name designer” and knowing the retailer’s core customer.
Leonard Fisher took a liking to me at Singer, and I learned a lot from him about the commercial furniture side of the business. Charlie Shaughnessy also taught me a lot. About a year after I joined, Charlie left Singer and moved to North Carolina to work for Burlington's furniture division.
Soon afterward, Charlie offered me the opportunity to join him at Burlington as Vice President of Marketing. Therefore, in spite of some success, friendships I had made at Singer and loving living in Atlanta, I made the move. Burlington Furniture was a better fit for me. Singer was a good learning experience, but it was a low end furniture manufacturer, whereas Burlington was high end furniture. Fisher didn’t understand why I left, but I knew it was the right move to make, both for me and my family. I wanted to settle down. We had moved from Connecticut to Atlanta, and I saw that we ultimately would end up in North Carolina, the center of the furniture industry. If I had this nice opportunity with somebody I trusted, why not go there? So we did. Within a year, we had built the house where we're doing this interview, in the Sedgefield section of southwest Greensboro.
Charlie and I moved mountains trying to get Burlington's furniture division turned around. The division had been losing tons of money, but Burlington Industries had a vision somewhat akin to Ethan Allen, although it didn't include having their own stores. They wanted to make Burlington products for the entire home, not just sheets and towels and curtains and draperies and carpet, but furniture too. In the early '80s, they ran commercials on national television on the theme “Burlington throughout the house.” They were going to feature singer Petula Clark in a whole-home concept.
With my background at Ethan Allen, I was a pretty nice fit for Burlington Industries. But, it was a huge, international company, a lot different from the other companies I'd worked for, with a fancy office on the Avenue of the America’s in New York. Their top officers were famous executives – William Klopman, Abe Steinberg and Frank Greenberg. The year I joined, Klopman was on the front cover of Forbes magazine, labeled as being the toughest boss in America. At one of my first meetings with the top brass, he looked at me and said, “O’Connor, don’t you know this is a Klopman, Greenberg, Steinberg organization? How the hell did you and Shaughnessy get in here?”
They were very good to Charlie and me. They listened to everything we said and let us do pretty much what we wanted to do in furniture. We turned the furniture division around in a couple of years. We weren't making much money, but at least we broke even. At that point, they said, “Well, what’s next?”
Burlington Industry’s labor situation was interesting. A modern textile plant doesn’t have much labor. In a plant where you might have 40 workers in textiles, you might have 500 workers in a furniture factory of similar size. In textiles, they run the looms 24/7 if business is good. Furniture factories operate only in daylight, five days a week. American factory jobs in the South didn't pay high wages or benefits. But Burlington's textile workers were paid better and had better benefits. The furniture business just couldn’t afford such benefits. If you gave furniture workers similar wages and benefits to what textile workers got, you just couldn’t compete against other furniture manufacturers who didn’t pay those kinds of wages and benefits. The cultures of textile and furniture manufacturing were different. To their credit, the top management realized it and wanted to move on.
So Burlington basically said to us, “You've got the furniture division to a break-even point. Let’s put it on the market and see if we can sell it.” Burlington Industries was starting to have financial problems, and ultimately got broken up as textile manufacturing moved overseas.
Burlington sold the furniture division to Webb Turner, who ended up buying and ruining several furniture companies. I was one of his first casualties. Turner called me into his office during premarket in September 1984. He said, “Look, I’m sure you’re a nice guy, and very talented. But I don’t know you, and I can’t afford to have somebody I don’t know. I’m gonna let you go.”
I was devastated. I had always been the fair-haired boy, the kid who was going to be the next superstar in the organization wherever I'd been. I literally came home and cried. I didn’t know how to handle being fired. Looking back, there really was nothing much to cry about, because the people at Burlington were very good to me. When they put the company on the market, they said, if you decide to go with whoever buys it, that’s great; if you decide not to, we’ll give you a full year's pay to find work. So, I had that in my back pocket.
But when you lose your job, you lose your self-worth and your identity. It devastated me. I loved Burlington. I thought Burlington was a great match for Charlie and me. I wish that it had never ended. Charlie and I said we wished that we had found the company years earlier because it was a great company to work for. I enjoyed the people there. They were great to me, even though we worked there only two years. It was a really neat company with a great sales force.
Unfortunately, Webb Turner came in and destroyed Burlington Furniture and its whole furniture division. He overpaid for Burlington and specifically he brought in the wrong people who didn’t understand Burlington and lost a ton of money very quickly. His whole furniture empire was gone in 13 months and sadly a lot of good people lost their jobs.
Personally, I was on a mission to prove Webb Turner made a mistake in firing me, so finding a right “next” job was important.
At that time, late 1984, I had another opportunity to go to Stanley but I wasn't going to move the family, and uproot them for the third time. We had three little kids, and we had just built this house in Greensboro. Albert Prillaman's attitude was that if I wanted to commute an hour and 15 minutes one way every day to Stanleytown, be my guest. But Hank Timnick, who was Stanley's chairman and Albert's boss, said, “You have to be immersed in the community if you’re going to work for Stanley.” So, I turned the job down.
I had the luxury of time on my side to look for a job. I wound up interviewing with LADD and taking a job there with a big cut in pay, because LADD was based in High Point and I wanted to stay in Greensboro. I went to work for LADD's Lea Industries division under John Foster in January of 1985.
Don Hunziker, Bill Fenn and Dick Allen had created LADD, and they were the darlings of the furniture industry in those days, winning all the awards for management. They had acquired the old S&H companies and turned them around. The corporate name LADD is an acronym for Lea, American Drew and Daystrom. They eventually acquired Barclay and American of Martinsville. I was Vice President of Sales for Lea. We did good things. It was a good company to work for and I was pretty happy there.
I was 40-something at this point. I had always wanted to be the president of a company, as long as I had a balance in my life. I'd seen people who had destroyed their families in the process of advancing their career, and I didn’t want to do that. I actually was quoted in an article while I was at Ethan Allen saying that I would like to be the president of a company but not at the risk of not being a good dad or a good husband.
Well in 1981, out of the blue, I was approached by Hyundai Furniture to be the company president. I was not looking for anything. In fact, I was happy at Lea and pretty successful, but along came this opportunity.
Hyundai is based in South Korea. I didn’t want to work for a foreign company, and had no desire to go overseas. I also didn’t know much about the import business, and wasn’t really sure I was ready to be a president. But as someone said to me once, “How many jobs as president come open? And once you’re a president, you’re a president.”
I remember talking to Charlie Shaughnessy when I was offered a job in Singer’s corporate hierarchy after only a year of working there, while I was still the Vice President of Marketing. I said to Charlie, “I don’t think I’m ready for that.” Charlie looked at me and said, “Kevin, you’re never ready. Nobody’s ever ready to take the next step. You have to have confidence in yourself, and just get in there and prove that you’re ready. You know people have confidence in you. You’ve got to have confidence in yourself.”
I didn’t see anything potentially going on at LADD that I was being groomed for, so I interviewed for the job at Hyundai. They were nice enough people, and they said, “Make us an offer.” I made what I thought was a ridiculously outrageous offer. They said “Yes”. I said to myself, “Oh, God, now what do I do?” I took the job.
I swear, I was so scared for the first six months at Hyundai that I lost 15 pounds. I didn’t sleep at night. I was a nervous wreck. But I couldn’t tell anybody that I was in over my head. I had to learn a whole new way of operating. I was scared to death to get on an airplane and fly 15 hours to Korea. The language was totally different and the place had a different smell. It was just very disarming.
Furthermore, Hyundai wasn't in the bedroom business, which I knew something about. They are in the dining room business, the occasional table business, and the castered dinette business. And, they were making tons of money.
So, I went to work at Hyundai. We redesigned the High Point showroom for the April ’89 market and introduced four new dining rooms. We created a great marketing campaign and it was a fabulous reopening. Everybody came in and we sold those dining rooms to virtually everybody. We finished the market, and the company's workers in Korea went on strike for nine months. We didn’t deliver anything. It was total disaster.
The workers ultimately got raises and went back to work. We delivered some of the furniture. But, it wasn’t so hot. We tried some new designs and sold more stuff. Then, the owners came to me and said, “We’re going to shut down our facilities in Korea because we’ve had more than three years of a compounded 30 percent wage increase. That means we can’t compete with companies based in Taiwan and Malaysia. We want you to source the furniture from outside of Korea.”
I started traveling all over Asia. I went to Taiwan, China, Thailand, Singapore and Malaysia. We outsourced everything. We also shrunk the size of the furniture company from about $25 million to $15 million, but eventually broke even and even made a little money.
INTERVIEWER: So you had a rocky start at Hyundai. But at least your initial product designs went over well, even though the strike made it impossible for you to deliver.
O'CONNOR: True. You get that kind of product feedback pretty quickly, which is not true in all businesses. I remember in particular one of the best known and respected marketing professors I had at Columbia whose name was John Howard. He was a poor lecturer, but renowned for research. However, what really turned me off was that he had worked as a consultant for about 10 years on a product for Proctor & Gamble called Sizzlean, a soy-based bacon product that supposedly was healthier than the real thing. All consumer research pointed to success, yet it turned out to be a huge failure. I can't imagine working on something for that long, then finding out that it doesn’t work.
One of the neat things in the furniture business is that you have an idea, you make your prototype, you price it, you bring it to market, and you know almost immediately whether it works or doesn’t work. The bad part is that hardly anybody ever does any consumer research. But I’m not sure you really can do effective research on style and color and finish and things like that. Part of successful product development in furniture is just being first to market, being fresh and understanding what consumers want. It’s frustrating in some ways but it can also be gratifying. The fun part of the industry is that you’re able to create something, bring it to market, get instant acceptance or rejection, and move on.
INTERVIEWER: Of course, if you do create something that’s a success, a dozen other companies quickly knock you off.
O’CONNOR: Yes, but being first to market still pays huge dividends. The most successful product I ever developed was a Louis Philippe group for Legacy, when everybody and their brother had a Louis Philippe group. My group was essentially a cleaned-up 18th century look with fairly simple cases. I worked on it in late 2001 for introduction at the April 2002 market. Samuel Kuo, the chairman of Lacquer Craft, our parent company, said to me, “You’re nuts. Everybody’s got one of those damn things. You’re just wasting your time.”
But we found a unique veneer, and instead of going low on price and scale, we beefed it up. We did some things that were not necessarily Louis Philippe-like, especially with the dining room. We had a unique finish with a lot of fire on the face. We had a leather bed headboard when leather was new on headboards. We put a little bit of carving on the table legs and the same thing on the chairs. It turned out to be a $50 million group for many years and years. We probably retained our market share for 5 to 7 years.
There have been bigger groups, of course. Broyhill's Fontana was probably a $100 million group. But, they did lots of versions and probably a thousand SKUs. We did $50 million with two dressers, three beds, two dining room tables, and two chairs. We couldn’t make enough of it, and it wasn’t cheap. It was a $2,000 to $2,500 retail bedroom in 2002. We were making 1,500 dressers a month. I couldn’t get any more. We sold the factory out.
Everybody tried to knock us off, but nobody came close. For some reason, they never could get the finish quite right. Nobody knocked it off cold. There were some pretty lousy knock-offs. One retailer who dropped our version and bought a knock-off later told me, “I made a mistake. I tried a cheap knock-off and it didn’t sell.” So he came back to us and did well.
The problem with a successful, long-running collection is that the company becomes so dependent on it that you’re afraid to drop it or reinvent it. If you wait too long to reinvent it, it just slowly fades away and becomes a commodity.
INTERVIEWER: Were you a little frustrated in product development at Ethan Allen because they were so heavily into Early American style?
O’CONNOR: No, because we did venture into product other than Early American. True, we had Early American maple and a pine group. But, we also had a group called Classic Manor, a sort of bastardized traditional. Then we had an 18th century cherry group. And, we brought out an English Tudor group in oak and I did a country French group. I have a piece from that group in my house here, one of the original samples. I have some of the English Tudor pieces in the hallway here. I've collected pieces over the years of what we did, mostly handmade samples, some of which I helped finish myself, working with the guys in the factory. All of it was totally solid wood construction, which was design constricting, but was also our identity.
I think it’s great to have an identity for your company and to work within a framework, like Ethan Allen did. It was a pretty big framework in which you could change and freshen up the core traditional look. It’s hard to determine who Ethan Allen is today. The company had more of an identity back then, than they do today. If you look at their newest offerings, they remind you of what you might see at Restoration Hardware or Pottery Barn, rather than anything classical in style.
I didn't find Ethan Allen's core identity confining. What I did find confining in the end, and what caused me and a lot of people to leave, was that Nat Ancell had decided we ought to do historical reproductions — take history books and replicate classical pieces and classical designs. I thought we needed to respond to the marketplace, offering what people were looking for, which was functional furniture that had some historical legacy. I’ve got a piece in the house here that was the last thing I did at Ethan Allen. It's a simple tapered-leg country pine suite. I think we called it Craftman Classic. There were some pretty pieces in it, but it wasn’t furniture you could live with easily, particularly if you had kids.
INTERVIEWER: Early on at Ethan Allen, your main task was finding successful furniture merchants in the Chicago area who would open an Ethan Allen store, right?
O’CONNOR: Yes, absolutely.
INTERVIEWER: How did you find them?
O’CONNOR: It was hard. There was one gentleman, named Norman Emanuel, who owned a very successful general furniture store, but saw a real opportunity with Ethan Allen. He opened an Ethan Allen store and put his son, Ron, in charge of it. Ron and I became pretty close friends. He was 22. I was 23. Neither of us knew much about furniture, but we grew together, and it was a fun experience. It was the first Ethan Allen Carriage House in Wheaton, Illinois, just west of Chicago.
Another gentleman named Meyer Garfin owned a store in downtown Gary, Indiana, in a terribly run down part of town. I remember being in the store all day, and people would come in and pay a dollar a week for rebuilt refrigerators and stoves. This was before Truth in Lending laws. Meyer would buy carloads of restored refrigerators and gas stoves for $40-$50 a shot, and Mrs. Jones would end up paying a lot more than that at $1 a week before she owned it.
Meyer and his family wanted to get out of the business, out of downtown Gary and out in the country, so he opened an Ethan Allen store in Merrillville, Indiana in November 1969.
Finally, I found two terrific guys who had a furniture store on Chicago’s South Side, which wasn’t the best side of the city at that time. They were Don and Will Morrison. The first time I walked into their store it was summer and hot. I’ve got my three-piece suit on and I'm carrying my big sample case. The furniture was all lined up in rows, and there was a chain-link fence around the parking lot. It wasn't a good area back in ’69. I walked in and said, “I’m with the Baumritter Corporation.” This was just before we went public as Ethan Allen.
A guy in a gray smock, which all the salesmen wore, said to me, “The Baumritter Corporation? You'd better not come in here. You’re not welcome here.” They'd just pulled Baumritter furniture off the floor after selling it for years.
Here I am, 23 years old and on the road for only a few months, and nobody had taught me how to deal with this. So I went out with my tail between my legs and put my bag back in the car. I thought to myself, “Well, how do you deal with this?” I left my case in the car and went back in the store. The guy who had greeted me said, “What are you doing back in here?” I said, “I’d just like to see the owner for a second.” He said, “He's in the back, but you're taking your life in your hands if you go back there.”
I went to the back office and said to a lady sitting there, “My name is Kevin O’Connor, I’m with the Baumritter Corporation, and I'd like to speak with the owner.” Will Morrison, one of the two owners, apparently heard me from his desk. He stood up and shouted, “The Baumritter Corporation? You're not welcome! Who the hell are you and what are you doing here?”
I said, “Sir, I don’t know what my company did. I just went to work for them and I've been on the road for only two months. I’d just like to know what my company did to you that made you so mad.”
I must have sounded pretty pathetic, because Will calmed down and said, “Well, your company was very disrespectful to us. But, I know you had nothing to do with it. Come in here and sit down.” So we started to talk, and by the end of the conversation, we kind of got along. I told him about the Ethan Allen store concept, and that we had opened the first store in metro Chicago about six months prior, and planned to open up a second one soon. He said, “How's the store doing?” And, I said, “It’s doing fabulous.” He said, “Really?”
It ended up that Will and Don Morrison opened a successful Ethan Allen store on the South Side. Will and Don were about 50 years old at the time, 30 years older than me. Will recently died. I called and spoke to his brother Don, who’s 90-something now and still plays golf, after somebody sent me a really nice piece about Will from the Chicago news.
You asked, “How did I find these guys?” Well, I just went out and looked for them. I took them to Cleveland, Ohio, to see the newest prototype store we had developed. These were guys who realized that the furniture business, even then, was getting tougher and tougher. They were all thinking, “How do we compete? How do we separate ourselves from the pack?” Ethan Allen was a new way. This was a company that was setting the tone for how to display and sell furniture. The stores didn't look like a thousand other retailers out there all doing the same thing. Ethan Allen would help your company to market furniture and become better at what you did. We were looking for a younger generation of retailers to do that.
The negatives are that, as things changed over time, not all the stores would wind up being in a good location, and the second and third generation owners didn’t necessarily want to take over those businesses. The retail furniture business is a tough business. You've got to work very hard at it. A lot of days it isn’t fun.
We found the guys who dared to be different. Most of them were from the furniture business, but there were a few successful ones that came in from outside. There were a lot of people who were struggling to run general furniture stores even back in the late '60s and early '70s, and saw Ethan Allen as a better way to sell furniture. It was a franchising kind of deal, much like McDonald's, which was coming along strong at that time. In the early days, there was no written agreement between our corporation and the store owners. It was all done on a handshake.
INTERVIEWER: What kind of money did it take to become an Ethan Allen dealer?
O’CONNOR: Back then, I think you needed about $1 million to get into the business, but it was your building. Back then, there were two store sizes, 11,200 square feet of display space and 14,500 square feet of display space, so the cost would vary depending on the store size and the cost of real estate in the area.
The stores were highly efficient. We were yielding way over $100 a square foot at a time the industry average was way below $100 a foot. We were doing $3 million in that original Ethan Allen store in about a year and a half to two years. It was a real money maker because we were turning inventory. The concept really caught on. In the mid-'70s, we were opening 35 stores a year. That’s a store every week and a half, all over the United States. Nobody had done anything like that before.
INTERVIEWER: Did Nat Ancell or Pat Norton teach you anything critical about product development?
O’CONNOR: No, since Pat was a salesman. He really wasn’t a product guy. My strength was product development, but I think I also had a gift for working with retailers and selling them on the product. Perhaps, I was able to make more of a science out of what I saw my dad do intuitively.
Nat’s genius was in strategically seeing what the world was going to look like. That’s what I learned from Nat. I learned that if you saw something in a strategically different way that allowed you to have a competitive advantage, you had to have the courage to be different. You had to believe in yourself and believe your concept was fundamentally correct. I think that’s what gave me the courage to be innovative when I had the opportunity with Samuel Kuo to change the way the import business was done.
Having a concept, having faith in it and sticking to it is what I learned from Nat. You also need to become a preacher. If you’re going to do something new and different, you need to sell yourself and you need to sell your concept. That was Nat’s great gift, and I think I picked some of that up.
Pat taught me early on that you can be tough on people and very demanding, as long as you're fair. Pat was a man’s man, a great sales manager. He would say some of the worst things to people at times. He'd berate retailers, if he felt they weren’t following the Ethan Allen formula, yet walk out of the meeting arm-in-arm with them later. His motto and guideline was, “You can be as tough as you want to be, as long as you’re fair.” That’s probably what I’d like to be known for. I’m not sure I was as tough as Pat was. I don’t think I had as many things to be tough about as Pat did.
Pat was a Missouri boy. He was shot down as a fighter pilot in the South Pacific during the Second World War. He was stubborn as a mule. I liked him because he was able to make tough decisions. He thought through what he had to do, and I think he was convinced in his mind that he was right and that he was fair with people. Pat stood for the Midwestern work ethic, honesty, fairness and integrity. Those are the things I try to stand for also.
I always tried to manage people the way I wanted to be managed, because I saw so much of what I thought was wrong. I was not always the boss. I put in a lot of time along the way as a little guy. You can learn from all kinds of people.
At Ethan Allen, after I moved back to New York and worked in the office, I had a secretary, which I'd never had before. I got to be friends with her after a while. She was a tough girl from New York named Gail Lubinski. Gail said to me one day, “We weren’t really sure what to make of you when you first came here. We knew you were young and we thought you were a little cocky. But we all changed our minds because of the way you pitched in when we had to get that mailing out.”
I've always been bad about waiting until the last minute to do something. This incident happened on a hot Friday afternoon when a mailing had to get out. It was a rush job on old mimeograph paper with blue ink and stencils. I was responsible for writing the material, and of course waited until the last minute.
Gail told me later, “You rolled up your sleeves and licked and stuffed all the envelopes and we got the thing out. We decided you were one of us. You were willing to do the same things we were doing.”
As a leader, a manager, you have to prove to the people who work for you that there’s no job that’s too dirty or too menial, and that you’re willing to do whatever you ask them to do.
That’s part of what Pat taught me. Pat and Nat both said that when business is bad, you really don’t have to beat up on people. When business is bad, everybody knows it’s bad. They’re working hard just to survive. When business is good is when everybody tends to gets lazy. That’s when you have to keep your foot to the pedal.
Pat was great at managing sales forces because he knew you need to be aggressive and keep the pressure on. Pat was like the drill sergeant you would want in the trenches with you. He was willing to go out there and fight the battles with you. He loved traveling with reps because he knew he would learn more traveling to an account with a rep than he’d learn meeting with the account alone.
Another thing I learned from Pat was to pick carefully who you listen to, both inside and outside your organization – the retailers. Who are the people you trust to know what is right? Who can help you define a path that makes you different from other companies? The retailers are critical to help you do that. Your reps are with you in the same boat. If you only listen to people in your own boat, you’re just hearing about yourself. The retailers are the best barometer, because they’re the ones who are seeing everybody and then making a judgment.
INTERVIEWER: Here's another question that will take you back. What do you remember about the first furniture market you attended?
O’CONNOR: My first market was the Chicago market in June 1969. Madeline and I drove to the market immediately after our honeymoon. She dropped me off downtown for the sales meeting before the market opened. I was late because we had gotten lost on the way to the American Furniture Mart on Lake Shore Drive. They were in the middle of a presentation on Oriental rugs that Ethan Allen was introducing. Being the local guy in Chicago, I was responsible, along with my regional manager’s office, to get the showroom set up. My wife, Madeline, wound up being the receptionist. I was the kid and there were all these older guys there. It was an exciting experience, but I was mostly in a daze. We got lots of retailers from all over the Midwest. The market was heavily attended in those days. The regional markets lasted four or five days, if I remember correctly.
The first High Point market I went to was in October of ’69. We were in the National Furniture Building, second floor. I think we started on a Wednesday or Thursday, with two or three days of learning the new products before the market officially started. I remember sitting around a lot because I had only two Ethan Allen dealers at that point. I can’t remember what I sold them.
In 1969, the High Point Market opened on a Thursday, but closed Sunday mornings so everybody could go to church. The market lasted for eight or nine days, and with the sales training, we were in High Point for a full two weeks. When I became the merchandise manager of case goods, we were in High Point for two and a half weeks helping to set up the showroom before the sales meetings and then the actual market. It was a long process.
I learned a lot at those early markets. It probably was more exciting than today because you had so many more retailers that came to the market.
INTERVIEWER: Let's go back now to your Hyundai days. When did they get in touch with you?
O’CONNOR: In the summer of 1988.
INTERVIEWER: What did you know about them at that point? Weren't they mostly a car company?
O’CONNOR: I don’t think anybody in the United States knew much about them then. I think the car company was relatively new, and the furniture company existed before the car company came along. The Yugo and the Hyundai came out at about the same time as cheap alternatives to Hondas and Toyotas. They made furniture and cars at the same huge complex in Ulsan, Korea. There were about 1.2 million people in the city of Ulsan, and about 900,000 of them were employed by Hyundai. They were the second-largest ship builders in the world, and they started to make furniture for the ships. There was a joint venture with a big insurance company in Malaysia, which had tons of rubberwood. Hyundai was a Universal Furniture wanna-be. It was a huge corporation with tons of money, and they figured they could come in and capture the U.S. furniture market.
INTERVIEWER: How did they get that notion?
O’CONNOR: I don't know. A lot of companies have tried to do that — Singer, Masco, DeSoto, Meade Paper, and U.S. Plywood. None of them succeeded. But I interviewed for the job. I didn’t really want it, so I threw a crazy number out there, and they accepted it.
INTERVIEWER: Who was your boss at Hyundai?
O’CONNOR: A man by the name of W.H. Chung. He was the corporate head of several divisions. They had a U.S. gentleman that kept an eye on the money here, a Mr. Shim. They all went by last names. His first name was Mansoup, but they say the last name first, so he was called Shim Mansoup, or Mr. Shim for short.
I was at Hyundai for four and a half years. During that time, I got familiar with a lot of Asian furniture factories, especially after Hyundai started to source all of its furniture outside Korea.
Ron Hahn was president of Universal back in the '80s, but left when the company went public in the late '80s. Ron, along with Taiwanese businessman Robert Hsieh, another Asian furniture maker, started a new company called Master Design in about 1989 or 1990. They quickly became the best low priced supplier of American oak occasional tables and casual dining.
Ron and I became friends while I was at Hyundai. They couldn’t sell to Levitz due to some political things that happened at Universal, so while I was at Hyundai I got the opportunity to source some of Master Design's oak occasional product from their plant in Taiwan and sell it to Levitz under the Hyundai label. Taiwan was the furniture making capital of Asia at that time, and we had a nice business with Levitz.
Later, Robert Hsieh's brother William and mother got in financial trouble with their investment in Datong Furniture. Robert bailed them out and bought Datong for Master Design, which is now the marketing company for Master Home, a publicly held company in Taiwan.
In April ’93, I was hired as the president of a company called Master Fashion, which is a division of Master Design. I was there for about a year and a half, when Robert and Ron had a disagreement, and Ron left the company. Robert asked me to take over as the president of Master Design in 1995. The company was then doing about $45 million a year. That was when we got into the dining room business, and I started selling retailers like Macy’s, Levitz and some others.
That was when Master Design really started to grow. By the end of 1998, we were doing nearly $120 million, and we’d just introduced our first bedrooms. In the meantime, Robert bought Wickes Furniture, the U.S. retailer, and wanted to buy Levitz. He started leveraging some of Master Home's stock. The stock price started to fall, the Taiwanese equivalent of the SEC found some improprieties, and Robert was arrested. I knew nothing of this. I had been with Robert and his family for a couple of days in January ’99, and he told me everything was fine.
When things started going wrong, I was embarrassed, and had no idea what was going to happen to Master Design. Allegedly, there were illegal things going on, none of which involved me or any other Americans who worked for the company. But, I was deeply embarrassed by the whole affair.
When this happened in early 1999, I had been sourcing product for about 3½ years from Samuel Kuo, the owner of Lacquer Craft in China. He was already an exporter of furniture to the United States. We did a very nice business with them. I was with Samuel when he got a fax from his wife Grace, who was in Taiwan at the time. The fax said that Master Design Home and Robert Hsieh were in financial trouble. Samuel said, “What are you going to do?” I said, “I’m going to resign. I’m not any part of this. I don’t want to be any part of it. I don’t know anything about it – nothing. I've got to find something else to do.”
At this point, Master Design and Universal probably were the biggest Asian furniture makers exporting to the United States with most of the furniture being produced in Taiwan. China was really just emerging at that time. The first bedroom suites from China that were sent to the United States were made in about 1995. At that time, a lot of retailers didn't trust imports from China – especially bedrooms. The average U.S. retailers weren't going directly to the factories in Asia to buy furniture like they are today. Universal and Master Design were basically U.S.-focused design and marketing companies that manufactured in Asia and warehoused the furniture in the U.S. for distribution to retailers. I had been thinking about a different approach. Why not put the product in stock overseas, where it was being made? Then you could ship containers directly to U.S. retailers. You wouldn't warehouse product in this country, which just added cost without adding value.
Now, you also have to remember, that in 1999, there were only about 50 retailers who bought direct containers – Sears, Montgomery Ward, Levitz, Wicker, JC Penney, etc. Why? Because they needed to be able to buy a minimum of 100 sets of dining room or occasional tables to make it work. Furthermore, they needed to create a letter of credit and be willing to purchase 4-6 months prior to receipt of goods and have overseas offices or agents to assure quality.
So when Samuel asked me what I was going to do, I told him about my idea of both manufacturing and warehousing in Asia. He said, “If you want to do that, I want to help you.” I didn’t tell him at the time, but I was thinking to myself, “I've known Samuel a couple of years. I think he and Grace are nice people. But I’m obviously not a very good judge of character because I just got hood-winked into thinking somebody else I was working for was a pretty good guy.”
By the way, Robert Hsieh was a manufacturing genius, probably the best and most disciplined manufacturing guy I’ve ever met. I learned a tremendous amount from him. Samuel is probably just as good of a manufacturer, but different, very different. However, they’re both geniuses in their own way. Their genius enabled me to design product and get it made with high productivity, efficiency and discipline. I could develop product to hit certain price points, and the furniture would be the best it could be at those price points. They were both fabulous manufacturing guys.
INTERVIEWER: When did you first meet Samuel Kuo?
O’CONNOR: I met him in early ’96, and we developed some product together, as I've said. Samuel was a very, very likeable guy. He spoke English well and was much more marketing oriented than Robert Hsieh. Samuel and I got along very well. His wife Grace gave me a jacket, probably in ’98, with a company name on it, which was Kevin & Samuel. We kid about it, because it was like a prediction of things to come with Legacy Classic.
We had developed some nice products that Lacquer Craft made for Master Design. We became a fairly decent part of their business. They had been doing business with all kinds of U.S. retailers on their own – Value City, Rooms To Go, Bassett, Ashley, and other companies.
When Samuel said he wanted to work with me after we learned that Master Design was going bust, I said, “Well, let me think about it. I've got to go home and talk to Madeline. I don’t know what I want to do yet.” I went out that night with my friend, a designer named Charles Harris and we get royally drunk, because we had both lost everything that we had worked on for five or six years. Then I got on a plane and went back home.
I’m not proud of this, but I remember looking at myself in the mirror after drinking too much that night, and not really wanting to tell my wife what had just happened, and saying to myself, “I'm pretty pathetic.” My wife would always say to me, if you’ve got a big problem, turn it over to God and let him solve the problem. This is something that you don't want to do if you’re a strong-willed person like I am and think you’re in control of things in your life. But the older you become, the more you realize you’re in control of nothing, and you really are better off turning it over to Him.
That night was a real low point for me. I had worked very hard at Master Design. We’d been very successful, yet it all went up in smoke. It was nothing that I had done or anybody else that worked for me had done. It was someone else's doing, a person that we shouldn’t have trusted.
So I came home, and the first call I made was to Pat Norton at La-Z-Boy. I talked to several other people as well – Alan Cole was one of them. He was President of Lifestyle Furniture at the Marco Group Company. I told them about what had happened and asked them what I should do now. I was reluctant to go back to work for an overseas company, yet I had invested 10 years in offshore manufacturing and I could see where the furniture business was going. I knew that it was just a matter of time. I could see what was happening to the American manufacturers.
I asked myself, do you have the guts to start something from scratch? Nobody could answer that question but me. Pat Norton offered me a terrific job at La-Z-Boy, but he didn’t know what the heck I was talking about when I explained what I wanted to do – build and warehouse a product line overseas. Similarly, Alan Cole and Wayne Lyons were not interested in starting a new company but offered me jobs with their companies.
INTERVIEWER: Why did you believe it was better to warehouse in Asia rather than in the United States?
O’CONNOR: Because, like I said, there was no value added in handling furniture in U.S. warehouses. Of course, I'm going to have transportation costs, no matter what. Let’s say it's 10 percent of the cost of goods to ship from Asia to the United States, so a $100 item becomes $110. Once here, that's my base cost. But if I need to work out of a warehouse here, that's roughly 20 percent of added costs. Now, my $110 item becomes $135 or $140. Then, you’ve got transportation costs to the retailer, which is probably another 10 percent, for argument’s sake. Now I’m up to $160 if I pay the freight.
But if I warehouse it in Asia and ship containers directly to the retailer, the costs go down. We'd figure about 15 percent for warehousing in Asia and U.S. marketing. With 10 percent freight cost to the retailer, I've got a product that’s landing at his door for about $125 versus about $160. There’s no value added by warehousing furniture in the United States, just added cost – 20 percent more.
Smaller retailers typically couldn’t handle a full container. But if I had a broad product line where a retailer could buy two of this bedroom, two of that dining room, two of these occasional table groups, and two of these wall units, as long as it added up to a container load, or about 40 cubic feet then it would work. This meant any smaller retailers could buy from me, for example “Mr. Small Town Retailer” in Dubuque, Iowa, could buy at the same price as Levitz and Wickes.
If it is well-made product suited for the American market, it's a terrific value. I may be 20 percent cheaper than imported product that's warehoused in the States, but I’m 40 percent cheaper than an American-made product. I’ve got something really special. I’ve got an 18th century bedroom, say that was retailing for $3,000 that now can retail for $1,799.
It was like shooting fish in a barrel. It provided an enormous competitive advantage: well-made, nicely designed furniture that in many cases was better than what was being made here. It was a total game changer that virtually eliminated the warehouse business in the United States. In 1999, when Samuel Kuo and I launched Legacy Classic, few people thought we could do something like that. They couldn’t envision China being good enough to pull it off, for one thing. We never could have been as successful as we were, if we hadn’t had a Chinese owner who was a great manufacturer and willing to invest in a U.S. marketing venture. Samuel made money, the marketing company made money, we all made money. It's a vertically integrated manufacturing/marketing operation, and the retailer gets a great deal to boot.
Samuel, Grace and I met in late February 1999 at Sedgefield Country Club in Greensboro to create what we eventually called Legacy Classic Furniture. We spent two days working out our game plan. The idea was that I would take two guys from the soon-to-be -defunct Master Design — an operations guy named Richard Mihalik and a sales guy named Jerry Sagerdahl. And, we would form Legacy Classic as a U.S. marketing company. I would do the product design and development, and I was the president, CEO and chief marketing person. Samuel didn’t want to divulge that he was the owner, so it became known as Kevin’s company. We said Legacy was owned by me and the two other ex-Master Design guys.
INTERVIEWER: Did you actually have an ownership stake?
O’CONNOR: In reality, no. But nobody needed to know that. I told Samuel from the outset that eventually I wanted to own part of the company, and when we went public later, I became a gifted stockholder.
I officially resigned from Master Design on March 15, 1999. I had already begun working on sketches for the Legacy Classic product, which we took to the March premarket. I sat down with some of my best retailer friends in the business that premarket week and showed them what we intended to offer. Their reaction was very positive. That was very gratifying to me, probably a result of all the years I had put into being partners with these retailers at the previous companies I'd worked for.
I wouldn't be telling you the truth if I didn't admit that some days I'd wonder where all this was leading, and what the heck was I doing working for a Chinese company? I even questioned the success we had at Master Design after the company blew up. But I could see the handwriting on the wall. Asia was getting better at furniture making, and that was something American companies couldn’t stop, and which would become increasingly difficult to compete against.
What was happening in China was almost magical. You had Taiwanese furniture factory owners, who already were good furniture makers, moving their operations to mainland China. For them, it was an hour's flight to Hong Kong, and an hour's drive to the Shenzhen and Dongguan manufacturing areas. Taiwan had become uncompetitive, so they brought their middle management and opened factories there. They spoke the same language and had the same culture, the same religions, so it wasn't a big change for them, just a relocation of operations. They had the experience, and now they had cheaper labor, and it was like, “Poof!” Chinese furniture making just exploded. In my opinion, it will never happen again anywhere else like it did in China. The combination of experienced management and cheap labor, and the ability to make a nice product was unique. We just couldn’t compete against it as Americans.
Let's face it: Furniture making is a dirty industry, a low-paying industry. Only a few American workers are willing to do it. People here would criticize China, saying it was a horrible, oppressive country with few human rights. Well, I’ve been going over there for 25 years now, and I’ve seen the industrialization and the emergence of China and the other countries in Southeastern Asia. They've compacted 100 years of our industrial revolution into 20 years. I’ve seen the enormous change, and of course some of it hasn't been pretty. But compared to where they used to be, people’s lives are getting better. The quality of the work environment is getting better, even to the point where China is becoming less competitive today.
Going back to those early Legacy Classic days, let me tell you about sitting down with Keith Koenig, the CEO of City Furniture in South Florida. I talked with him at the Radisson Hotel in downtown High Point during the March 1999 premarket.
I came with my sketchbook, sat down across the table from Keith and told him the story of what happened with Master Design, and how Samuel Kuo and I had just created Legacy Classic. I opened the sketchbook, put it in front of him and said, “Here’s what we’re working on.” He quickly closed the book and pushed it back across the table. I said, “What’s the matter?” He said, “How long have you and I known each other?” I said, “Probably 15 years.” He said, “You’ve never steered me wrong. You tell me what I should buy and I’ll buy it.” I said, “Are you kidding?” He said, “No. We've always trusted one another. You tell me what you think I should buy and I’ll buy it.”
That’s the kind of thing you can’t put a monetary value on — the faith that people have in you because they believe in your honesty, your integrity. I had been successful with all the companies I'd worked for, but I was also honest with people. I always tried to be fair. I pressed hard for whatever company I worked for, because that was my obligation. But, I never tried to hoodwink anybody or do anything wrong.
Of course, we didn’t tell people who really owned Legacy Classic, and I’m not sure that I am 100% all right with that part of it. When asked, Samuel simply said, “Trust Kevin. You’ll be OK.” We were sourcing from both Markor and Lacquer Craft, and to some degree that was a diversionary tactic to deflect the fact that Samuel owned the company. We wanted it to look like he was just selling to me, to Legacy Classic. That’s the way we structured the business, and for about two years it worked.
But, that didn't stop the speculation. Everybody knew that Pat Norton and I were close friends, and Legacy's showroom was in the same High Point market building as La-Z-Boy. When we moved our showroom, the person who showed up every other day to see how I was doing was Pat Norton. Many people in the industry were convinced that La-Z-Boy was backing me. They knew I didn’t have the money to own the company, and everybody was trying to guess who the backer was. Others did think it was Samuel Kuo or maybe Richard Fong.
We busted our butts to make Legacy Classic a success. At our first market in April 1999, the buyers from Macy's walked in. They were one of the two largest customers of Master Design, and one of the Macy's buyers, Sandy Merell, was a good friend. They saw the new dining room and bedroom, and bought it. He asked, “How soon can we get it?” I called Samuel on the phone that night and told him, “If we can do it, we can be in the July home book of Macy’s New York. But I'll need both the bedroom and the dining room.” He said, “I don’t know that I can do that.” I said, “We've got to try. It will be the biggest thing we ever did - if we can do it.”
He did it. We shipped it on the 20th of June. It was two weeks on the water in those days to the West Coast. We drove it across the country to Macy's. In mid-July, we were the centerfold of Macy’s furniture magazine in the Northeast with our bedroom and dining room, a double-truck spread of the bedroom and dining room, which originally was meant for Master Design. So we were in the summer book of one of the most visible retailers in the United States, and it was the biggest-selling bedroom and dining room product Macy's has ever had. It was at unheard of pricing, and there was a fair amount of hand carving on the cases.
It was a fabulous beginning for Legacy Classic. We grabbed as many of the Macy's books as we could and sent them to all our sales reps, probably about 10 guys by mid-year. Montgomery Ward and Art Van also bought the dining room, along with about 20 other retailers in the United States. We had some quality problems with the dining chairs at first, but it started selling like hotcakes. By the October market, everybody had heard about the success of the collection at Macy's and Art Van.
In fiscal year 2000, our first full year in business, we did $42 million. The second year, we did $84 million. The third year, we did over $100 million. I couldn’t get enough capacity. I was screaming at Samuel every night, “Give me more capacity! Drop some other customer! This thing is on fire!”
INTERVIEWER: Why do you think you were so successful right out of the box?
O’CONNOR: Well, it’s pretty nice product, fairly traditional. It's carved, but not too heavily carved. It looks like it could be made by Lexington or Broyhill, but it’s a little nicer. More like Lexington than Broyhill, but at Broyhill or lower prices. At the next High Point market, we introduced a pine country suite, a West Indies sort of traditional collection, and a kind of New York ethnic traditional that’s in an off-white finish, kind of a Bernhardt-looking group. We sold the heck out of all three of them.
Combined with the success of that first group at Macy's, the reputation of the company continued to grow. We started with shipping containers to 30 or 40 retailers, and we had 150 to 200 customers by the end of the first full year of business.
We were so successful that Samuel decided he wanted to buy Universal Furniture, which the parent company LifeStyle Furniture was trying to sell. Lacquer Craft was already doing some sourcing from Universal, which had plants all over Asia. We started negotiations in June 2001 and closed the deal in August of 2001. This was the beginning of Samson Marketing, which eventually became the U.S. marketing company over both Legacy Classic and Universal. We designed product here in the U.S., we bought it from the Lacquer Craft factories and sold it in the United States. When we took over the company and started manufacturing in China, we almost instantly made them successful and profitable. We continued to grow as a corporation, and I continued to run Legacy Classic. We eventually took the company public in 2005 on the Hong Kong Stock Exchange as Samson Holding.
Universal Furniture, which had started losing money making product in eight factories in Asia and selling from U.S. warehouses was, at that time, losing even more money.
INTERVIEWER: Why did you decide to go public?
O’CONNOR: We felt the market was right. That either was a stroke of genius or pure luck, because the market was pretty much at its peak before the recession hit. In November 2005, we saw the first indicators that the U.S. housing industry was starting to take a downturn. The stock took off immediately and did very well for a while. It came down with the recession, of course.
When you go public, you have to put on a road show for investors and stock analysts, explaining why your company is a good investment. I was a part of that, and it's one of the most interesting, educational and yet brutal experiences I’ve ever been through. We made eight to 12 presentations a day, no more than an hour each, telling our story, fielding questions, one presentation show after another all through breakfast, lunch and dinner. There were many flights in the middle of the night. We did presentations around the world, starting in Shanghai right after the High Point furniture market. We went to Singapore, Hong Kong, London, Amsterdam, Germany, Scotland, New York, Washington, Boston and San Francisco. It was a brutal two weeks, but it was also really interesting when I look back on it.
We bought Craftmaster in late 2006, a Taylorsville, North Carolina, upholstery plant. In 2007, Samuel asked me to take over as the head of Samson Marketing. Universal and Legacy were starting to get in each other’s way in the marketplace, so we segmented the companies more definitively. Legacy today has a president of the kids division, which does a significant business. At Universal, I broke off the mass merchant division, and that’s headed by a different president. Jeff Scheffer now heads the rest of Universal, which went through a tough time but is now rebounding. Jeff’s been there for five years now and has done very well. We have a direct container division, Lacquer Craft USA, as well, that doesn’t report to me. Finally, we hired an experienced contract furniture executive, Noel Chutwood to run our hospitality division, which will have a pretty nice year. We bought a marketing company in the U.K. that also sells to the European market.
Samson Holding is now a diversified company with annual sales in the $450 million range, and it is very profitable. I’ve enjoyed running Samson Marketing, but in some ways it’s tough to be over multiple companies and manage all the presidents. I was pretty much a hands-on guy, and I’m not so sure I did a very good job of that in the first few years. I became head of Samson Marketing in October 2007, and soon after that the furniture business fell apart and the recession took hold in 2008 and into 2009. It’s been tough managing through the recession while at the same time redefining who we are.
Another thing that is an important issue for us as a corporation is the antidumping movement, which I believe began in 2003. That's when U.S.-based bedroom makers accused Chinese factories of selling wooden bedroom furniture in this country at prices that were below their costs, and petitioned the U.S. government to impose duties on imports from those factories. The government investigated and did slap duties on a lot of Chinese factories, sometimes in the 300 or 400 percent range. Lacquer Craft and Markor were the only two companies that didn't get duties. In other words, they weren't dumping. We were, of course, making money, which everybody knew, but we weren't dumping. Still, we had to defend ourselves against the dumping charges, and Lacquer Craft took the lead in doing that, spending millions of dollars. I’m very proud of the company for doing that. The antidumping movement was started by Vaughan-Bassett, which was led by John Bassett at the time. Interestingly, John’s two sons, Wyatt and Doug, and I are really good friends now.
Quite a few of the Chinese factories had to quit making bedroom furniture because of the high duties imposed on their shipments to the United States. So a lot of the bedroom production simply moved to Vietnam, since shipments from that country weren't subject to duties. I don't believe the antidumping effort really accomplished anything, at least in terms of protecting U.S. factories and jobs. Except for Vaughan-Bassett and Stanley, there's almost no commercial bedroom furniture being made today in the United
States. The case goods business basically doesn’t exist in the United States any longer. Stanley is a shadow of who they were. Vaughan-Bassett has done nicely because they’ve invested in their plants. The exceptions to this are solid wood manufacturers like Ethan Allen and some others like the American Furniture Companies and lower end, non-wood, or flat line manufacturers.
Today in the United States, you couldn’t start up a case goods factory with the regulations on air quality and wood dust you’d have to meet. We’re in a different place today. In case goods, China is now the high-cost offshore manufacturer in a lot of ways, since labor costs have gone up. So we’re trying to find new ways to market ourselves going forward, because you can’t compete on price alone. You'll get beat up if you rely on price alone, even though the great recession has tended to make price king again. It's almost like you can’t get low enough. One of my real fears in today’s world is that we'll make furniture a disposable product, much like a smart phone that people throw out every two years because no one wants old technology and they have to have the newest style.
Young people in their 20’s and 30’s today do want to own furniture forever, like my parents or most people of our generation. They want to own it for a little while and then get something stylish and new. That might be the plight of a lot of furniture, if we can't figure out a way to be better and market it better.
There are only a few high-end furniture makers and retailers in this country these days. I'm not talking about the iconic, super high-end companies like Baker, Marge Carson and the decorator lines. I'm talking about the more typical, commercial high-end lines. Lexington is the new high-end now. Universal, Bernhardt and Hooker are probably the better commercial lines today. Jeff Scheffer has transformed Universal into a better company. He has made superior furniture and has marketed the company better to create a higher perceived value.
Marketing furniture will be more important in the future. When I ran Legacy, we never took out even one ad. We did it all by word of mouth. We did it all on our reputation. We promoted ourselves to retailers the old fashioned way. We wrote homemade newsletters. We personally got out there and talked up the product. We had a fabulous team that believed in what we were doing, and we were the first to do it. We did it better than anybody else. That’s how we built Legacy into a $200 million company in 2005 and 2006, and stayed there a couple of years until the recession started and retail bankruptcies hit us hard in 2007 and 2008.
But things have changed with the recession. You just can’t replace a Breuners or a Wickes or a Levitz or a Heilig-Meyers. Heilig-Meyers was once the largest furniture retailer in the United States with more than a thousand stores. Where did all that business go? I don’t know if anybody ever recaptured 1,000 stores worth of business. I remember the opening order at Master Design for Heilig-Meyers putting a new suite on all their floors was 1,500 suites. That was just the opening order. Now, we don't even sell Rooms To Go because they do a lot of direct importing, which many big retailers are doing more and more.
Companies like Samson Marketing must market themselves better, especially after the recession, when everybody’s answer is to cut prices. Now, when things are starting to turn around, I'm afraid we’ve conditioned the consumer to spend as little as possible on furniture. This is a problem, but it can be overcome.
Look at bedding, which had a fabulous year last year. Why? Because they took Tempur-Pedic memory foam mattresses, a product that was $4,500 in queen or king, and Serta came along with iComfort and made it a $2,500 purchase in a cool foam. Serta marketed it marvelously, to the point that Tempur-Pedic is cutting their margins like crazy today. Serta had really great marketing, which is much more than just cutting the price. People are living in bed these days and the industry is offering airbeds, adjustable beds and all kinds of bells and whistles. It’s great technology and everybody wants one.
INTERVIEWER: How did you choose the name Legacy Classic for the company?
O’CONNOR: I had to get the rights from Don Belgrad of Schnadig, who had trademarked the name Legacy. I don't remember if he had used the name for a collection or was just planning to use it. I remember Samuel and Grace sitting in the car with Madeline and me asking, “What does Legacy mean?” We said, “It’s something timeless, something that has meaning over a long period of time.” It was just a name that I latched onto. One of the college kids down the block from our house here in Greensboro was a graphic artist and she did the logo for us.
INTERVIEWER: I assume the word soon got around that Samuel actually owned the company.
O’CONNOR: Yes, but we were so successful so quickly that nobody cared. We had proven ourselves. Timing is everything. Being in the right place at the right time with the right idea was what made for our success. Others have since caught up, and that’s made it more difficult to market ourselves. What we’ve seen with Universal’s recent success is the importance of branding. Universal's Paula Deen line has been enormously successful. It’s a good product married with someone the consumer can identify with. I think that’s what we’ll have to do with our other companies. It differentiates you in the marketplace since there are very few brands in furniture.
The partnership with Samuel and Grace Kuo has been a wonderful experience. There’s a tremendous amount of trust. In 1999, if you had asked me would I ever be as happy as I was back in my early days at Ethan Allen, I probably would have told you no. But these past 14 years have been a joy. The Legacy experience, and the more recent Samson experience of hiring and developing our managers, has been a very happy time.
With the recession, the past three or four years haven’t been nearly as much fun. You just couldn’t grow, and we were so conditioned to growing astronomically that it was tough to endure that. Still, even through the recent recession years, it's been an enormously gratifying time to be in the business with Samuel and Grace Kuo. They’ve given me great latitude to do what I felt was in the best interest of the company. For the most part, we’ve been very successful.
INTERVIEWER: Your main focus has remained product development?
O’CONNOR: Yes, I would say so. But running the business the right way, being good partners with our retailers, that’s been a critical part of it.
INTERVIEWER: When Legacy was growing by leaps and bounds, were you selling the same product to everybody, or were you customizing it to some degree?
O’CONNOR: To some degree we were customizing the product, but that was when business was good. Today you can’t get away with that as much because the volume isn’t there. Nobody’s selling product at the same velocity we were back then. As I've said, case goods manufacturing is pretty much gone in this country. But upholstery is different. There's much more of a need for customization in upholstery than in case goods, and much more of the upholstery manufacturing has remained here.
Of course, there's been a contraction in the number of retailers you can sell to. It’s a big question how many brick-and-mortar stores will continue to grow, and how much business will shift online. My daughters don’t get in the car and run around and shop anymore. They go online and do research. When they do shop, they want to go to a place where they can get things for the home, not just furniture. They want to go to places where they can get decorating ideas and express their individuality. Most furniture stores don’t do that. They just sell furniture.
Now, if you surround the furniture with stuff that entices a consumer, makes them think about what they could do in their home, it’s a different world. You can do that electronically, but the difficulty today is that most retailers think they’re in the e-commerce business simply because they have a website. I think there's another breakthrough opportunity out there today. I’m working on it now and I can’t tell you too much about it yet. It involves partnering with retailers. I do think people want and need to sit in, touch and smell the furniture before they buy it. But they may not consummate the sale in the store. They may not want to deal with Joe Blow, the used-car kind of furniture salesman. And, we may be able to whet their appetite better online than we can in a store.
Just as we made choices at Ethan Allen 45 years ago, we may need to make choices in the future. If we’re going to be a better-priced furniture company with value, the big issue is, how do we create value in the mind of the consumer? Right now, value is only in price. We're not exciting the consumer to buy something. That’s what we need to do, and I think we can do it better electronically than we can in a brick-and-mortar store. Then, we have to figure out how we get the brick-and-mortar store to look more like the website, or at least not disappoint consumers when they get there. That isn’t something that I’ve been able to get the Far East to understand, but we’re getting there. We will get there. I’m not sure I’ll be around to see it all come to fruition. But as sure as I was in 1999 that the Legacy Classic model, rightly executed, would work, I'm just as sure now that what I’m talking about will work in e-commerce. Our industry has to change and embrace the Internet.
INTERVIEWER: What was the ownership structure of Legacy Classic when you launched it?
O’CONNOR: It was entirely owned by Samuel Kuo and his wife Grace, and it was part of Lacquer Craft Corporation, which was privately held by them at that time. Legacy was set up as a legal entity in the United States, but as a subsidiary of Lacquer Craft. When we went public in 2005, Samson Holding was the overall holding company, based in Taiwan. Lacquer Craft and Legacy Classic became subsidiaries of Samson Holding. At the outset, Samuel and Grace invested $5 million in Legacy, and we set up the organization here. Legacy officially started on March 15, 1999. We rented a three-bedroom apartment in Greensboro. I had a desk in the living room. As I said, I brought two key people from Master Design, Jerry Sagerdahl and Richard Mihalik. Our CFO was sent here by Samuel and Grace. His name was Victor Hsu. He was a graduate of Taiwan University and had been with Lacquer Craft. He also received an MBA from the University of Illinois and spoke English very well.
INTERVIEWER: What were your target price points? Were you upper-middle?
O’CONNOR: No, not upper-middle more like middle. Imports had been on the scene for some time, but Chinese-made bedrooms were fairly new. Samuel made his first bedrooms in ’95-’96. They were trial-and-error things in the beginning, but it had started to become a business.
A four-piece bedroom was about $2,000 retail, so roughly $1,000 to $1,100 delivered to the retailer. At that time, that would have been a middle price point, perhaps skewed to the lower-middle. But it was a better product than a typical product manufactured in the U.S. at middle prices. Samuel didn’t want to do low-end products. That couldn’t make him enough money, and there were a whole bunch of people doing low end. In dining room, we were extremely competitive, because we were shipping knocked-down chairs which the retailer set up himself. That saved a lot of money. Most dealers had never set up chairs before, so we made leveling devices that could trim leg ends and sent them to the retailers. As we got better, nobody needed to do that.
But, it was a different world then. We were on the front edge of something that dramatically changed the pricing structure of what I consider to be good furniture.
INTERVIEWER: Why do you think no one had come up with the concept of warehousing in China? Or had somebody tried it and not executed it properly?
O’CONNOR: To the best of my knowledge, no one had done it. It’s a very simple concept, but it did not fit with the mentality of Far East manufacturers at that time. They didn't want to tie up their money, and with wire transfers and letters of credit, they were in effect being paid before they sealed the container. If you can get somebody to pay you cash for something the moment it leaves your factory, why would you ever build and store a whole bunch of product in hopes that somebody will come and order it from you? No one over in the Far East was doing business with American companies on a terms basis.
I think Samuel had talked about warehousing in China with a couple of marketing companies. I had heard conversations about somebody doing that, so it was being bandied around, but nobody had the guts to put money into it until Samuel decided he wanted to do it with me. I suspect he was just waiting for the right person to partner with.
The two best plants in China at that time, arguably, were Markor and Lacquer Craft. Richard Fong, Markor's owner, and Samuel were good friends. Legacy did business with both companies.
If I remember correctly, Legacy probably operated for the first nine months with a negative income statement. But, we made a lot of money the next year. It was beyond our wildest dreams.
INTERVIEWER: I've read that Chinese and American business cultures are quite different. Did you experience that?
O’CONNOR: Oh, yes they are different. I'll just say that within the Asian business culture, everything wasn’t always as above board as we would view it, that there were what we would call paybacks and under-the-table dealings.
It's important to understand that Asian furniture manufacturers had a whole different mentality. In general, it was a subcontracting culture. There was a guy who made legs. There was a guy who made tabletops. There was a guy who made aprons. There was a guy with a plywood plant. There was a guy who had a seat plant. They all bought from one another. Then there were the assemblers and finishers. That’s how Universal’s Larry Moh, and really all the Asian factories, got started. That’s the way they manufactured. They didn’t try to do everything under one roof, the way a lot of American factories did. That kind of culture almost begets a certain amount of cozy dealings or whatever you want to call it.
As an American going over there, I was very lucky. I had an agent when I first went with Hyundai. His name was Larry Reese. He taught me early on that in Asian culture, it wasn’t about how much money you had that determined whether they would do business with you. Of course, you had to be solvent, but they would do business with you if they liked and trusted you, not necessarily because of what your balance sheet looked like. When I went to Hyundai, I had to sell myself to all the vendors, because Hyundai wasn’t a household name at that time.
The language barriers, the religious and cultural barriers, are significant. I was hoodwinked at Master Design. Obviously, I felt I knew those people, and they were very good to me for a long time. But there were some things going on there that weren’t right financially. I felt very, very bad that I had been misled. I don’t know if there was anything I could have done that would have changed things. I guess I trusted too much and didn’t ask enough questions. But if I had asked the questions, I might not have been told the truth anyway.
So when Samuel Kuo said he'd help me launch Legacy Classic, there were real questions in my mind. Could I really trust him? I might not have gone forward with it if Grace hadn't been a part of it. I had always gotten along nicely with her. I didn’t know her nearly as well as Samuel, but there was a genuineness and a sincerity about them. They were different from most Taiwanese business people, who typically were micromanagers, all over you asking questions and being involved in your business. Samuel and Grace could not have been more hands-off. They left us alone. They would question me as to what I was doing and why I was doing it, but they didn't interfere or second-guess. Also, in the first six or seven years of Legacy, every projection I made I came within a smidgen of hitting the goal. So Samuel thought I walked on water from the standpoint of doing what I said I was going to do. We were incredibly successful and everything worked like a charm.
One advantage I had was that I had made most of my mistakes — and learned from many of them — while I was at Hyundai and Master Design. I had made good and bad decisions, and had learned from them, so when I got to Legacy, I had a good 10 or 11 years under my belt dealing in Asia. When we set up Legacy, we knew exactly what we wanted to do. I not only had two very good Asian partners, but I had two great U.S. partners in Jerry Sagerdahl and Richard Mihalik, the people I'd brought over from Master Design.
INTERVIEWER: When you started Legacy Classic, did some retailers question how you could deliver quality merchandise at the prices you were quoting?
O’CONNOR: Yes, they did question our prices. It’s interesting how comically crude our initial marketing was. I bought a Rand McNally map of the world and put it on the wall in our showroom. I drew an arrow from Hong Kong to North Carolina, and another arrow from Hong Kong to the West Coast. I posted 21 days on the arrow to North Carolina, and 14 days on the one to the West Coast. The whole gig was: You give me an order, and in two or three days we’ll have the order processed and in progress, and we can ship it from our warehouse and get it into a container ship in about 10 days. Then, counting two weeks on the water to the West Coast, we could get the order to your back door in about 30 days, or 40 days to the East Coast.
Two things worked on our behalf. Lacquer Craft was known as a good facility, probably the best in China at that time. They had produced goods for Master Design that we had marketed for at least two years. The other thing was that I had a good reputation as a product developer, and of living up to what I said I was going to do. That helped get us the first orders. Then, of course, we had to make it work and on the whole, we did.
INTERVIEWER: Did you have any major quality problems?
O’CONNOR: Initially, yes, we did have quality issues. On the first dining room suite, some of the chair backs started to split. I knew the guy who was running the testing lab in the furniture manufacturing program at North Carolina State University in Raleigh. They had a machine that could simulate months of exposure to various temperatures and humidity conditions. They tested our chair backs, which had solid cores between two veneers. It turned out the cores hadn't been dried properly. They were at a 20 percent moisture content level but should have been between eight and 10 percent. We identified the problem within a week and corrected it. Fortunately, it was mostly a problem in the colder and dryer Northern areas. We didn’t have a problem in the Southeast or the Southwest.
We also kept some inventory and parts in a North Carolina warehouse, so we could replace the chair backs quickly and at a pretty low cost. That was really the biggest quality problem we had, and we solved it quickly. There were normal little things here and there, but nothing of epic proportions. That's a testimony to the fact that we had a good manufacturing facility. Even when we had problems, the product was selling so well that retailers were willing to live with a little inconvenience.
INTERVIEWER: How much customization were you able to offer retailers?
INTERVIEWER: So they couldn’t get a slightly different finish or different hardware?
O’CONNOR: No, we had no customization. Discipline is a critical factor in running a manufacturing facility. I know there’s a clamor for customization today, and there are concessions to that by some manufacturers — dining sets with chairs available in red, green, purple, yellow. But most people buy either a white chair, a black chair or a brown chair, and all the other colors may combine for 15 percent of the business. With Asian manufacturing, you just can’t accommodate that, so customization is not an option. We did do a version of our Louis Philippe suite for JC Penney where we changed the hardware, and maybe had a different turning on a bedpost or something like that. But it was a separate suite. We didn’t consider that customized. Most people refer to it as an alternate of something you’re running.
INTERVIEWER: Did you offer a fairly broad variety of styles?
O’CONNOR: We did offer a broad variety. Our first two introductions were a traditional and a promotional 18th century bedroom and dining room, with occasional tables and a wall unit. That was for our big commercial customers, such as Levitz and City Furniture. The traditional was bigger with some carving, and we sold that far better than we sold the promotional suite. Everybody had a promotional suite from one manufacturer or another, and ours didn’t look much different from anybody else’s. It was priced competitively, but it wasn’t cheaper. It was a bit more expensive, as a matter of fact.
We did two traditional collections to begin with. The second market, we did a country pine suite. We did a white-washed suite in a traditional design. And, we did a West Indies suite.
The next market, we did a contemporary, which we didn’t cut because I didn’t believe Samuel could make it right then. We also did a very successful Arts & Crafts suite in cherry with more of a relaxed, casual look. I can’t remember what else, but we continually added to our line. Contemporary was probably the last thing we were successful in doing. It was a pretty broad variety of goods through those first four years.
Then in 2004, our fifth year, we entered the youth category, and that immediately became very successful. We really were the first to have a true youth program from the Far East. Nobody believed you could do it because it wasn’t a typical adult four-piece bedroom; it was 25 or 30 SKUs with the various bed and dresser sizes. The youth business had changed from wrap groups to free-standing pieces.
INTERVIEWER: Did you work with various designers?
O’CONNOR: We worked with only one designer: Charles Harris. I met Charles when I joined Hyundai. He was a very talented young guy who had worked in Tom Keller’s office for a few years. We had worked with several other designers at Hyundai, but I saw some raw talent in Charles and we developed a great chemistry together and were a very successful team from about 1990 thru 2007 when I left Legacy. I owe a lot of my success to Charles.
INTERVIEWER: At Legacy Classic, or maybe even earlier in your career, did you consider going into upholstery so you'd be a whole-home source?
O’CONNOR: No, we never really considered upholstery. Case goods and upholstery are very different disciplines. There are not a whole lot of companies that have been successful both ways. Now, at Samson Marketing, we'd like to get deeper into upholstery since we acquired Craftmaster, which is having a very nice year this year. It’s been profitable, and it’s been growing since we bought the company. But it operates totally independently. Could I see Craftmaster making goods for Legacy in the long term? Yes. I don’t know whether they want to, but I certainly think they could.
We plan to grow our Craftmaster business, and I can see two entities working together within a corporate structure to make things work. But you’ve got upholstery buyers and case goods buyers in our industry, and they’re really different. I think occasional and upholstery belong together and ought to be marketed together, but you can’t find a whole lot of people that can do both successfully.
I think one of the craziest things about our industry is that we don’t have more women in it. A lot of retailers have figured that out, so we have more female buyers and merchandise managers at retail than we’ve ever had in my 45 years in the business. They realized that they are selling mostly to women, which is hardly news, so they've added more women to their work force.
I'm not sure why manufacturers don’t have more female sales reps on the road. Sure, it’s a harder life for a woman on the road in a lot of ways because they’re away from home so much. But there are ways to work around that. I just don’t think we’ve done a good job of hiring and supporting women. At Universal, the salesperson of the year this year is going to be a woman. Universal has three or four women reps now and probably will add more. We have one or two at Legacy. Also, you don’t have a whole lot of female furniture designers, or female product developers. Well, you do on the soft-goods side, but not in case goods. You often hear that the guys in the factory don’t want to work with women. That was true when we manufactured in the U.S. and it is also true today in Asia.
Since our primary customer is a female, I think more women in the industry as a whole will be one of the big changes in the next 10 years. Part of that will be because of electronics and the Internet, where much of the shopping will be done. It'll be more interactive, hands-on and face-to-face, with women talking to other women.
INTERVIEWER: Did Samson or its subsidiaries ever consider going into retail?
O’CONNOR: Oh, we considered going into retail, we looked at it. For a lot of reasons, we rejected it. Probably the most important reason is that we didn't want to be in competition with our retail customers. At the time we seriously considered it, we were already a $450 million publicly held company. If you’re going to go into retail, it's much better to do it while you're private, without stockholders jumping down your throat. If you do it, you'll lose a bunch of existing customers for every store you open, because you're now a retail competitor. When Master Design bought Wickes, Heilig-Meyers, a big customer, told us they wouldn't do business with us anymore even though we weren't direct competitors in a lot of markets. Ashley and Ethan Allen were private when they went into retail. La-Z-Boy has probably been the most successful at starting dedicated stores, most of which are franchises. But it's a real distribution challenge when you have your own stores and also sell to other retailers.
I believe the biggest change coming in our industry is in the way people shop. It’s already happening. But for the most part, the industry has decided that people really won’t buy much furniture on the Internet, because you have to sit in it, touch it, feel it, and smell it. Then you have all the problems of delivering furniture to someone who's bought it online. And then how do you get it back if they don't like it?
But, the way people shop and buy and live today is changing. What's likely to change most dramatically is the number of brick-and-mortar stores needed to serve even a national market. Ten years ago, nobody had heard of Restoration Hardware. I don’t know how many stores Restoration Hardware has in the country now – 15, 20, 30? And now, everybody knows them. They’re pretty expensive, but they’re very innovative and offer a great shopping experience.
It’s hard for brick-and-mortar stores to be in the right place year after year, because shopping patterns are constantly shifting, and real estate and labor keep getting more expensive. You've got to constantly change the look of a store if you want to keep attracting people, and that's expensive too. But companies can change the way they look and get to a lot more people more easily electronically today than they ever could before. With all of the social media — Pinterest, Facebook, Twitter and so on — people are talking to more people about their shopping experiences, and what they see and buy. We already see major retailers like Macy’s and Costco selling a huge amount of furniture on the Internet. Why is that? Because people trust the companies they’re buying from, and it’s easy to shop there. They trust that if there's a problem, the company will make it right. Today, Costco is probably our largest customer.
I have fairly good intelligence that as much as 20 percent of the furniture business at some stores is being done on the Internet. Of course, these are the big retailers, and that wouldn't be true for smaller, local retailers. I don't think the majority of the furniture business will be done on the Internet, but within 10 years I believe 40 to 50 percent of the business could be done online. That’s because you can create a better and easier shopping experience for a customer using, say, an iPad. The iPad has literally changed the way people conduct their lives and shop. It's only been out for a relatively short time, and it's going to get better and easier to use.
I think the challenge for manufacturers is, how do they market themselves today? The Internet is the first opportunity in a lot of ways for factories to market directly to the consumer. I’m not saying to get rid of the retailer. I’m saying to make him a partner. The retailers probably don’t have the capability to invest the way a manufacturer can, in changing the way the business will be done, to invest in the websites and in the shopping experience.
We’re supposed to be a style business. Why do women go to Restoration Hardware and Arhaus and all of those trendy stores? Because of the shopping experience. They’re not just looking at furniture. They’re looking at pillows, carpet, accessories. It’s hard for a furniture store to keep up with all of that, especially if you’ve got multiple stores. Of course, we’ve got some great looking stores. But are women likely to have the time to get around to all those stores?
INTERVIEWER: Do you think retailers will ask factories to deliver directly to the consumer?
O’CONNOR: I don’t necessarily think retailers will do that. Suppose a consumer comes to my website, looks at the furniture and wants to buy it. They may want to buy from me directly. But if you're a nearby retailer and you’ve got the furniture on your floor, why wouldn’t I give you the order and let you deliver it as my partner? Why wouldn’t that be good for the retailer? I’ll tell the consumer I've got a great retail partner nearby where she can see and touch the furniture. The challenge is that, if I have a great-looking website, the retailer needs to have an equally great-looking store. One of the main reasons retailers are losing sales today is that their stores don’t look all that good. If the furniture in stores looked as good as it does in the factory showrooms in High Point, the retailers would do two, three or four times more business.
A lot of stores still just line up product on the floor. The recession we’ve just gone through has stripped a lot of cash out of the systems so they are just trying to survive. Now, they’re not able to invest in displays the way they once did. Of course, nearly every retailer has a website. But many of them mostly show pictures of what furniture they've got to sell, and that doesn't inspire anybody to buy. That's not an interactive experience that really explains the products and helps the homemaker decorate. Consumers and retailers are looking for help.
When you walk into a store, what’s the first thing the consumer says to the guy who walks up and says, “Can I help you?” She says, “No, I’m just looking.” What’s the first thing an Internet retailer hears on the phone when they get a call? The customer says, “I need some help.” It’s a philosophical difference in the way the customer approaches an Internet dealer versus shopping in the store. In the store, you don’t want to be bothered. You just want to look. That might be because we don’t train our retail salespeople well enough, so the consumer gets turned off by what they essentially see as the equivalent of a used-car salesman that just happens to be selling furniture.
Research shows that something like more than 80 percent of furniture purchases today start on the Internet and that consumers use the Internet at some point in the shopping process. Consumers get tired. The research shows they may visit two or three stores, then revert to the Internet because they can’t find what they were looking for. They’re not about to jump in the car and go to 50 different furniture stores looking for what they want. They’re much more likely to go online and search, and let that lead them to where they need to go.
INTERVIEWER: Did Legacy or any of the other companies you worked for do any consumer research?
O’CONNOR: None of the companies I worked for did any consumer research that I know of, unless it might have been Ethan Allen. We did do a lot of talking to the retailers who sell our furniture. In particular, I had four or five retailers that I would depend upon for information. I considered them to be excellent retailers who knew their customer base, knew what was going on in the marketplace and had a good eye for design. I would take them my sketches and my ideas, personally explain what I was trying to do, and get their feedback. I’d try to find somebody at a Macy’s or a better store like Kittles. I’d go to buyers at Levitz and Wickes, and to people at good independent stores like City Furniture and El Dorado. That was what I considered my consumer research.
Furniture Brands went out several years ago and did all kinds of consumer research. They did focus groups showing sketches to women. I just don’t think it works with furniture design. Trying to define good design is a little like trying to define pornography. A few years ago, I think the Supreme Court said something like “I can’t really define pornography, but I know it when I see it.” Nobody can really explain good design to you. When a consumer walks past something in a store, they’re telling you that it just isn’t appealing to them. When they come across something they like, they can’t tell you why they do like it, just as they couldn’t tell you why they didn’t like the other item. But they stopped walking to look at the pieces they like. They know it when they see it.
It comes down to the fact that you’ve got to make a whole bunch of samples to show retailers at premarket and market. For the most part, retailers can’t read sketches very well. But they can tell you what samples they like and don't like, what they think will sell or not sell. So I’m pretty low on consumer research. I think you’ve got to ask the people who are selling the furniture about what people like and don’t like. That's useful.
INTERVIEWER: You talked about Samson going public. Why did you decide to do that?
O’CONNOR: We went public in November 2005. The reason is that we wanted to raise capital, both to expand our existing business and to buy other companies, which we started to do when we acquired Craftmaster. When the economy turned down in 2008, it’s no secret that Samuel Kuo bought shares of Furniture Brands amounting to about 14 percent of FBI's stock. That obviously never worked out, but we did start several new divisions such as a hospitality division. However, we are still very open to acquisitions when the right opportunity comes along.
There was one other reason for going public. That was to reward some of us who helped to start the business with Samuel Kuo. It was a way for us to be given shares of the company. As I've mentioned, the recession hurt our stock price significantly, so you could say the timing was bad. But if we had waited, we probably would never have taken the company public. So we were lucky to get what we got at the time we got it. The ones who got hurt the worst were Samuel and Grace Kuo, not the rest of us. They’ve since done very well, so I don’t think they’ve been crying over any spilled milk.
INTERVIEWER: Has there been any talk about taking the company private again?
O’CONNOR: No, not that I know of. We've just announced that the company would buy back some treasury stock, but not nearly enough to take it private.
INTERVIEWER: Tell us more about why you decided to buy Craftmaster and Universal.
O’CONNOR: Universal was losing money. Their manufacturing facilities were spread all over the Far East. The parent company, LifeStyle, was looking to sell it. Harvey Dondero was running Universal Furniture at the time. He was doing business with Samuel. I think he saw the writing on the wall with LifeStyle. I don't know who approached whom, but our acquisition of Universal made all the sense in the world. Once we saw how successful the Legacy model could be, we said, “Why not take over another company and do the same thing?”
We bought Universal in 2001, at a very good price. I didn’t particularly like it at the time, to be honest with you, because Universal was my major competitor, and I wasn't enthusiastic about them now being my brother. But things worked out just fine. Our initial idea was that we would move Universal up in price points to keep them away from Legacy. That's what we eventually did, but it didn’t work well at first, and Universal's volume continued to fall. Almost four and a half years ago now, I hired Jeff Scheffer, who had been at Stanley, to run Universal. He has retooled and reconfigured Universal to be a better-end company. The volume has grown, but more importantly, the profitability has grown. Universal has really established a niche in the market now, and it is very successful.
We bought Craftmaster because we wanted to get into the upholstery business, and we had the cash to do it. We saw it as something that was better to do with an American company, and it’s turned out to be a very wise investment. In the very near future, we expect to expand Craftmaster's business with a move into more motion and other initiatives.
Craftmaster has turned out to be profitable. American-made upholstery has regained its momentum with its customization capabilities, where it's faster to bring it to the market. Leather upholstery was China’s thing. It once was mostly brown leather and even more brown leather of different qualities. But now, fabric choice and customization is being widely rewarded here, and the motion business has gotten better as well.
INTERVIEWER: How have you spent the majority of your time at Samson Marketing, and has that changed?
O’CONNOR: For the first five years, most of my time was spent restructuring the corporate entities, and making sure we had the right guys in the top jobs. That wasn't easy. I took too long to change some of the people, but I needed to wait to get the right guys in the right jobs. It’s hard to always be right. I happened to be lucky with the first two guys I brought in; they turned out to be very good. The next one or two, not so hot.
In the past year, I’m doing more of what I probably always should have been doing, which is to act as a mentor to our presidents. Also, I am acting as the person who looks at the marketplaces in general, trying to see what’s likely to happen down the road. When you’re in the trenches every day running a company and doing everything you can to make it successful, you tend to jump from one thing to another, and you lose sight of the big picture.
That's particularly true of the past four or five years, which haven't been fun for anyone. It’s been a struggle. There hasn’t been much growth.
Today, I try to spend more time looking more closely at where we are, and trying to guide us to where we need to be. A part of that is becoming really involved in overall industry activities like the High Point Market Authority and the Premarket. That's been one of the most rewarding things I’ve done in my career. And, I am also on the AHFA Board of Directors.
I’ve become very involved with other company presidents, and there’s been a lot of interaction with other companies. As a result, I’ve become much more aware of what's happening globally in our industry than I ever was when I was running the company day-to-day. It’s given me exposure to a large range of things. I’m not as involved in going to stores to see what’s selling. I still do that because I love to do it, but I'm involved in a lot of industry issues, which has helped to broaden my perspective.
INTERVIEWER: What did Samson Marketing do to cope with the recession? Have you mothballed factories and had layoffs?
O’CONNOR: Yes, we have consolidated to gain efficiencies mostly in warehousing and IT. At about the time we brought on a second warehouse and three additional manufacturing facilities, the recession hit. That was at the end of 2007. So when we finally had the capacity to match our growing business, the business fell off. We got rid of one of our warehouses, and combined Universal and Legacy warehousing and offices into the Legacy building that we built in 2007. We also mothballed some facilities overseas but we are now starting to open them up in 2014. We are now picking up business in some places where others have fallen off. So we’ve coped with the recession.
INTERVIEWER: Are you ready for the upturn?
O’CONNOR: Yes, I think we all are. With the deterioration of price points in our case goods categories, the big challenge is, “Can we continue to market ourselves so that people realize they can buy better things that are of value?” I think we have a better chance of doing that when the economy comes back.
INTERVIEWER: You said earlier you didn’t believe in trade advertising.
O’CONNOR: No, I didn’t believe in trade advertising at the time we started Legacy. We didn’t need it. We kept on selling out the capacity of whatever we had thru 2007. I didn’t even add salespeople because we didn't have the capacity to service additional business.
Today, I believe trade advertising is useful to deliver out messages, but companies need to be able to afford to do it continually. But, I only believe in trade advertising if you have a different story to tell. Not to show pretty pictures.
INTERVIEWER: You've described the mentoring you received from Pat Norton and others. Was there anybody else you’d like to add?
O’CONNOR: I've mentioned Leonard Fisher and Charlie Shaughnessy at Singer. Both taught me how to deal with the commercial furniture part of the business, which I never had to do at Ethan Allen. They were very, very helpful in building my confidence and giving me opportunities.
There were also a number of retailers who took me under their wings and taught me how to do business. I learned that you could be tough but still be fair from all of those guys. For the past 14 years with Samson, I’ve learned a lot from Samuel Kuo. He’s been very supportive.
INTERVIEWER: Tell us about some of the mentoring you’ve done.
O’CONNOR: It’s been fun to see someone like Jeff Scheffer, who I met when I was at Hyundai, come along. He was from the upholstery business and came into the case goods business and learned a lot with us. He left and went to Universal Furniture, American Drew and Stanley, and now he’s back with us running Universal. He has totally rebuilt Universal strategically and culturally. Most importantly his ideas are working. Teaching and encouraging some of the young guys in the business has been very rewarding. I try to challenge them in their thinking but not discourage them from having their own thoughts and pursuing their own ideas. I do give them my thoughts about their ideas. But in the end if it meets the logic test, you let these young guys follow their dreams. I'd always say to them, this is the way I did it, and here’s the thought process and the logic that I used. But it doesn’t mean that will work today or work for you. For everyone, your ideas have got to fit your personality.
The key in my job is finding the right people who are smart and disciplined. Then providing them with support and acting as a good sounding board. But in the end, I have to trust their judgment and let them live or die with their own decisions.
INTERVIEWER: Would you describe yourself as a risk-taker?
O’CONNOR: Yes, I’d say I am a conservative risk-taker. I think you have to take risks. You have to dare to be different, in order to be successful. I don’t think just following the mob, especially when you’re not the low-priced guy, will make you successful. Taking a risk is also part of the thrill of business.
INTERVIEWER: What would you say was the biggest risk you took?
O’CONNOR: The biggest risk I took was probably the jump to Hyundai as president, because I really didn’t want the job. I was scared to death to go to Asia. I mentioned that I lost 15 or 20 pounds. I wasn’t sleeping. I wasn’t eating. But, it was an opportunity to prove that I could run a company. I always felt that I wanted to run a company the right way. I knew what it felt like to work for somebody and to be either under-appreciated or unappreciated. I also knew what it was like to work for a great company like Ethan Allen in the early days, where you could develop a team and everybody worked well together. That was fun. You didn’t think twice about going to work, no matter how hard you worked, because you were growing and you were part of something exciting. It was like being on a winning football or basketball team. It wasn’t about making the most money in the world, because I turned down jobs for more money.
I've always had a big mouth. I was always critical of my boss — constructively critical, I hope. I would challenge my boss, and I was pretty brazen about that in some cases. It got me in trouble a little bit at LADD with John Foster at one time, but we resolved that and became good friends. The Hyundai job gave me a chance to show that I could be a successful boss and create a winning team. I improved Hyundai financially. At Master Design, we grew that business for more than three years.
But, I think it all came together for me with Legacy. Of course, there was a risk involved with the creation of Legacy, but I probably was the happiest I’ve ever been in my life when we started it. You had a clean sheet of paper, and you could do whatever you wanted to do. And Samuel Kuo let me do it. We would sometimes debate for hours at a time about what we should do, but if I stuck to my guns, in the end he would say, it’s your business. I've expressed my concerns, but if that's what you want to do, do it.
INTERVIEWER: So launching Legacy didn’t feel like a big risk?
O’CONNOR: I didn’t feel like it was a great risk, because I was convinced that overseas warehousing and container shipping was bound to happen, and we might as well be the one to do it, because nobody else had the money or the guts to do it at that time.
INTERVIEWER: How would you describe your management techniques?
O’CONNOR: I'd have to say my management techniques were more autocratic than democratic, particularly with Legacy. I really felt that as the guy who was running the company, I needed to have the vision of where the company was going, and I needed to set up the organization in a very disciplined manner to allow that to happen. But I needed to also know my strengths and weaknesses. When I set up Legacy, I knew my strengths were not in running a warehouse and controlling back-end costs and that kind of stuff. That's why I brought in Richard Mihalik, because he was an experienced warehousing and manufacturing manager and did a very good job at those things. I let him run his part of the business, and I let Victor run the financial end of the business.
Legacy Classic was essentially a marketing company. I was the key sales and marketing guy, so I managed very strongly in those areas, while keeping a close eye on the back end, finances and credit, to make sure they were in line with what we were trying to do in the marketplace, and that we could take the appropriate risks. I was a very hands-on manager. It’s been a difficult transition for me going from running Legacy to overseeing several companies. I’ve put new people in place, and my job now is to be a lot more of a mentor, supporting them. Perhaps that's a little more democratic, although I still have a pretty strong vision of what I want to see happen with the corporation, and where everyone fits in. But when I was running the company, I was a benevolent dictator to a great degree, although I didn't micromanage in areas where I wasn't knowledgeable.
Similarly, if I was going to do all the product development and manage inventory and be overall general manager – then I needed a sales manager and a good key account executive and Jerry Sagerdahl filled that void very well.
INTERVIEWER: What have you learned about conveying the vision you had for the company? Have you gotten better at it? What’s worked for you?
O’CONNOR: Conveying the vision is a function of communicating with the presidents and the people within the company. Prior to this year, I had two meetings a year where I called in all the presidents, and I’d bring in someone like Jerry Epperson to talk to our group about what’s going on in the industry and beyond. I also used to bring in one of the industry’s best analysts and forecasters a couple times a year in order to get all the sales managers together to talk about the business and who we could be selling to that we weren't. I think that helped build our value equation and our reputation in the long run.
I don’t think there should be surprises regarding what your vision is and how you're going to carry it out. No one likes surprises. Everyone likes consistency. So it shouldn’t be a surprise to anyone that we think we ought to stay in China and continue to find ways to make our products more valuable to the retailer and consumer.
The question is, how do you do that? Part of it is, you become more efficient and drive down costs in your plants. It’s a chicken-and-egg thing to some degree. You’re not going to get the volume unless you hit the right price points. So you convince the plant that if you do this kind of product and cut down on the complexity of that product, you can hit a particular price point. You thus drive the volume and win. Or, you’re able to market yourself and improve the perceived value of what you do. The other part is to really improve, with better products and finishes, so you're not only perceived to be better, but you are actually better. Typically, it’s a combination of all of those things. Again, communication is the key. I’m on the phone or in the offices of our top guys on a constant basis, having in-depth conversations about what we can do to improve.
INTERVIEWER: When you look at changes in the industry during your career, I suspect the major change you'd cite would be the shift to offshore sourcing. That didn't happen overnight, of course.
O’CONNOR: No, but I think it happened more quickly than anyone ever suspected it would, at least in bedroom. Once Legacy got going in 1999, and showed we could produce the kind of product, at the prices that we had, and deliver it quickly, the bedroom business rapidly went overseas, like dominoes falling. Before '99, I don’t think anyone ever thought that U.S. manufacturing would go overseas the way it did. It's also become a global business, with Asian factories selling to the U.K., Europe, the Middle East and elsewhere.
INTERVIEWER: Today, everybody seems to be talking about the prospects for growth in the Chinese domestic market. Do you think your Chinese factories eventually might turn away from the U.S. market to serve the Chinese market?
O’CONNOR: It's a possibility. Samuel Kuo already has furniture stores in China. So does Markor with Richard Feng. I think they'll have to make up their minds whether they’re going to make domestic-styled Chinese product or make Western product for the Chinese market. I think that remains to be decided.
INTERVIEWER: You've already mentioned some of your industry activities. You recently joined the American Furniture Manufacturers Association, now called the American Home Furnishings Alliance.
O’CONNOR: Yes, I’ve been on the AHFA board for two or three years now. I tried to join back in my Master Design days, but they wouldn’t have me because we were importers. That changed later on, but I held a little bit of a grudge for a while. But a few years back, I really saw the benefit of joining, what with all of the government regulations that were coming. I decided we needed to participate in a more meaningful way. It’s worked out very well for us. I’m really glad I joined. I’m a board member, and now second vice president. It’s been good for our corporation, and good for the industry. I think the lobbying we do in Washington is critical. Being on the board has increased my awareness of all of the issues of the furniture business community and the people involved with it. I’m very supportive of the AHFA.
However, my biggest industry movement over the past seven or eight years has been with the High Point Market Authority. At first, I joined the Board, and then I went on the Board's executive committee, and eventually I became the Chairman in 2007. As many know, I was a big critic of how the High Point Market was run, especially the involvement of the International Home Furnishings Center management.
INTERVIEWER: Why was that?
O’CONNOR: Because they acted like they were dictators. They controlled the market directories and the registration. If something was good for the IHFC, they did it. If it wasn't, they treated non-tenants poorly. At that time, they worked for key industry investors who owned the IHFC. They were doing what was in the best interests of the IHFC to the exclusion of others, not what was in the best interests of the High Point Market. Things probably would have been even worse if the Chicago-based MMPI folks hadn't come in and bought some of the other market buildings. Some IHFC tenants who had been treated badly moved to Furniture Plaza or Market Square. The MMPI folks, specifically Tom Mitchell, tried to offer a good alternative to the IHFC and worked more for the benefit of all of the High Point Market.
In a lot of ways, the best thing that happened to the High Point Market is that the Las Vegas Market came along and threatened them. That prompted the strengthening of the High Point Market Authority and the hiring of Brian Casey as its president. That meant the IHFC could no longer be a dictator. I think the High Point Market Authority and Brian did a marvelous job of getting state funding, building the transportation center, and generally making High Point more user-friendly again. They went to the hotels and restaurants and helped control the price gouging that had become a part of the market scene. They did everything a good trade show organization would do to help the exhibitors and the buyers.
But Las Vegas was still coming on strong, and they made buyers feel that if they weren’t a part of it, they would somehow lose out. It felt like you might be the last one standing in High Point. I got pressure from our own factory people to show in Las Vegas. Consequently, both Universal and Legacy signed leases. I did it reluctantly, but I did it. We went into the second building, Building B in January 2008. I didn’t feel like I needed to be there, but I kept on getting pressure from the factories in the Far East to be there. They felt the High Point Market wasn't going to survive.
INTERVIEWER: You never believed that, did you?
O’CONNOR: I thought that it was possible, because High Point had gotten so arrogant and lackadaisical. However, two things happened that hurt the Las Vegas Market in my opinion. First, the recession hit in 2008, only a few years after the Las Vegas market opened. It couldn’t have come at a worse time for Las Vegas. The cost to an exhibitor going into a Las Vegas space was $28 to $30 a square foot, whereas in High Point it was less than half of that. So the cost never made any sense, but you didn’t want to be the last guy standing in High Point, and more and more companies were signing up to show in Las Vegas.
But when the recession hit and business contracted, the costs of showing in Las Vegas became really out of line. When Legacy went into Building B in January 2008, it cost us a million dollars between the rent and the work we had to do to set up the showroom. The showroom was gorgeous but the timing was terrible. I don’t think we wrote a million dollars’ worth of business. Later, I got a chance to get out of the lease because a big player wanted the space and the market organizers wanted to satisfy them. So I was able to pull Legacy out, but I wasn't able to pull Universal out.
The second thing that happened to Las Vegas was that — I can’t remember if this was 2009 or 2010 — but they moved the summer Las Vegas market dates to late August, close to the September premarket in High Point. That might have worked earlier, when premarket had become pretty insignificant, but it was a disaster for Las Vegas when they tried it. One of the things that I’m most proud of is that I helped revive and restart premarket after I got involved with the High Point Market Authority.
Here is that story. Going back to my days at Hyundai, I had been involved in getting our company ready for premarket just like it was the actual market. I took the Hyundai job in October, and by the April premarket, which was in March, I had totally renovated the showroom like it was the first day of the April market. The space was dramatic, basically in black with the furniture spotlighted, a lot like Macy's had done the year before in their New York store. Everybody else had sketches and maybe a few sample pieces, with the showroom all torn apart as they got ready for the April market. I sold practically everybody who came in, and I really became a big believer in premarket. It was another way you could do something different that got people’s attention. At Legacy, we always had very successful premarkets.
I remember going into premarket in 2005, or maybe 2006, and we had only 10 or 15 buyers show up. I felt like I would be going into the formal market “naked,” because I didn’t know what many of my key retailers thought about what I was introducing. Because I had no feedback, I was scared to death.
So after premarket, I got on the phone with about half a dozen retailers and asked them why they hadn't come. They said it wasn't worth their time and money to see just sketches and finish panels of upcoming introductions, which is what most of the exhibitors had at that time. I asked them, “If we could get 10 or 15 of your key vendors to be ready for premarket, would you come? Do we have to buy you a plane ticket? Do we have to put you up in a hotel?” Some of them said, “Well, it would be nice to hear 'yes' to all of that, but if enough of the vendors would have actual samples of furniture at premarket, we would pay our own way.”
Then I phoned about seven or eight manufacturers: Stanley, Hooker, Vaughan-Bassett, Bernhardt, American Drew, Magnussen, Samuel Lawrence, and maybe a few others. I said, “Are you willing to join me in organizing a premarket that would actually attract retailers?” We got together for a meeting and decided we had to revive premarket. We got administrative help from Brian Casey and the Market Authority, and we got the support of some of the major buildings, the IHFC, 220 Elm and the MMPI buildings. So for the next premarket, we had the buildings as sponsors and some 12 to 15 manufacturers who had actual sample product, including a few upholstery companies like Palliser and Natuzzi.
We didn't know how much it would cost, but we decided to put up the buyers at the Grandover Hotel and have a reception and dinner for them. Each of the manufacturers threw about $20,000 into the pot, and we worked hard to recruit retailers. We brought in some 50 or 60 retailers that first time. Most of us had never had more than that even at the peak of premarket. And, it cost us a lot less than $20,000 each to put on a very nice first class event.
I ran all of the organizational meetings, and I ran them with an iron fist. We put tremendous pressure on each of the sponsor companies to be market ready. We set rules. Each company did their part and it worked like a charm. Premarket turned out great, and it has continued to thrive. Now we’re up to, including walk-ins, around 150 buyers at premarket — we don’t really want more than that — and there are about 20-25 sponsors for premarket.
In the beginning, I must tell you, we did twist some arms to get the buyers to come to premarket. We even paid for a few airfares individually, but we made it clear it was a one-time deal. Now more people who once didn’t ever come to premarket are coming. It really makes the buyers' jobs infinitely easier. They come in, they see real furniture fully displayed with real prices, close to the way they’re going to buy it. Yes, they do have an opportunity to change things a little bit here and there. You can’t change much, maybe a piece of hardware, a new bed or tweaking a finish, but they feel like they are able to get some input. More importantly, they get a chance to see the furniture, go back and look at their current assortments on the floors, and decide if they really want to buy this versus that. Then they come back and see it one more time at the spring or fall markets before they have to pull the trigger.
I can’t imagine coming to market as a buyer, looking at maybe 15 or 20 vendors, and making a judgment in four or five days about whether you’ll commit to buy or not buy. Of course, buyers can commit at market, then back out later, but you don’t want to do that too many times because a supplier won't trust you. The whole concept of premarket just makes all the sense in the world.
Premarket gives retailers a day or two to see their key vendors, then verify what they want to buy at market. Once they are at market, they go to see their non-major vendors and others they may be interested in. It cuts down on the amount of time buyers spend at market. Before, most were spending six to eight days here, and it's now mostly four to six days. The result is that both exhibitors and buyers are accomplishing what we want to accomplish in about the same number of days when you combine premarket and market. The 150 buyers who come to premarket probably constitute almost 50 percent of the buying power in case goods, so I'm happy with that.
The premarket dinner also allows some networking among both retailers and manufacturers, and everybody enjoys it. We get a chance to spend quality time with our top customers, which there isn't time to do during the market. It helps strengthen our relationships, and everybody gets to know each other a little better. Most of our sponsors feel it’s the best money we spend every six months, bar none.
When the Las Vegas market changed its dates to the end of August, close to the High Point premarket, I put on my High Point Market Authority chairman’s hat and got my premarket sponsor group together for a meeting in High Point. I said, “We've got to make a stand. I want a pledge from all of you that you’re not going to introduce any new product in Las Vegas, that you’ll only introduce product at the September premarket.” We never signed a document, but we got pretty much complete unanimity on that. Nobody wanted to walk away from High Point because they saw that premarket was working again.
Remember that most of the case goods suppliers are now manufacturing in the Far East. You can't afford to make two sets of new samples for both High Point and Las Vegas at pretty much the same time. With premarket, you get a chance to show your product and know whether you’ve really got something before the actual market. There's no opportunity to do that with the Las Vegas market. Most retailers thought that the change in the Las Vegas market dates was nuts in the first place. They said, “How am I supposed to go to the Las Vegas market, then premarket, then the High Point market, all in less than two months? That’s crazy.” Furthermore, in most cases there was nothing new at the August Las Vegas market that they hadn't already seen at the April market in High Point.
That, in my opinion, put a nail in the coffin of the Las Vegas market as a national market. I don't mean it killed it, of course, but it certainly ended talk that Las Vegas might replace High Point as the national market. To me, Las Vegas was trying to bully High Point and force something to happen that didn’t make sense. Under the circumstances, it was my job as High Point Market Authority chairman to make the High Point market more attractive. And, we used the bullets we had in our arsenal. I think it worked.
The market situation has completely changed since 2011. The same company, International Market Centers, now owns the Las Vegas market and the major High Point buildings, with Tom Mitchell as the head of its High Point operations. Tom was a big backer of the High Point Market Authority in the beginning, when he was working for the MMPI folks. Brian Casey left the High Point Market Authority probably because he wasn't sure what would happen to the High Point Market Authority after the International Market Centers came in and owned 60+% of the real estate in High Point. But the High Point Market Authority still runs the Market.
As I said, when we were reviving premarket, no single group owned the High Point market, no matter who owned the major buildings. We all own the market — the building owners, the exhibitors, the reps, the retailers, the city of High Point. It's our market. The High Point Market Authority is the only group that represents all of the constituencies that make up the market. The premarket effort we made proved that it was our market. That’s what I’m most proud of: that when leadership was required, I stepped up with a group of other company presidents and said, “We can do this.”
Just a little while ago, under the leadership of Doug Bassett, my successor as High Point Market Authority chairman, the CEOs of 42 companies that exhibit in High Point wrote to the governor when state funding for the market looked like it might be cut. The cuts were restored. I don't think that would have happened 10 years ago, but the market is much more unified now. The High Point Market Authority has provided the vehicle and the leadership to gather the market constituencies together and represent the market. I’m incredibly proud of what we accomplished as a group during a very difficult time for the High Point Market Authority and for the industry as a whole.
There have been two major divisive events in our industry over the past 10 years. One was the antidumping issue, which pitted manufacturers against importers and the retailers who were importing. That has been resolved. The other was the Las Vegas Market versus the High Point Market issue. That has pretty much been resolved by the common ownership, and the leadership of the High Point Market Authority.
INTERVIEWER: Are you still deeply involved in the High Point Market Authority and premarket?
O’CONNOR: I've backed off some. I’m now chairman emeritus and will stay on the executive committee for another year or two if they want me to. Doug Bassett is now the chairman. We’ve diversified the Market Authority board to include decorators and designers, and real estate people from smaller buildings other than just the big market buildings. I spent a lot of time interviewing people and helping hire Tom Conley, who replaced Brian Casey as the High Point Market Authority's top operating executive. Tom Conley came from the toy industry, and had actually worked with Brian Casey in Chicago at the McCormick Center. Tom is very smart, and he’s the right guy for the job at this time. I’m very pleased with what he’s done since he’s come on board. The High Point Market Authority is in good hands, and well represents all constituencies of the market. Also, the staff has grown and has done an incredibly good job of marketing, particularly through social media.
INTERVIEWER: How do you see the markets playing out over the next several years? Is there a need for two major markets?
O’CONNOR: I think the industry already considers Las Vegas to be a regional market. Many major retailers east of the Mississippi who go to Las Vegas will tell you the major reason they go is for bedding. There was a time before Tom Mitchell became involved with the International Market Centers that High Point was making a play to get the bedding people back here. But they're a major anchor now for Las Vegas, so he’s not likely to pursue that.
It’s really too bad that we’ve never been able to get significant market attendance out West. Master Design had a big showroom in San Francisco in the 1990’s, and the company was based in Ontario, California, where our major distribution center was located. Yet, we still never had great attendance in San Francisco. I think Las Vegas is entertaining for a market or two, but I don't believe a lot of retailers will go there every six months. I think many of the manufacturers learned something from Las Vegas — that we could show our product line in less square footage than we have at High Point.
INTERVIEWER: You don’t see any reason for Samson Marketing to have a presence in Las Vegas?
O’CONNOR: At the present time, I see no need for that whatsoever. In fact, it would be easier and cheaper for us to pay for everybody on the West Coast who wanted to see us to come to High Point than it would be for us to show in Las Vegas. The cost isn't justifiable, and I don’t see that changing. Las Vegas is a good regional market if a company wanted to launch new product out there or for a West Coast-based company with a large West Coast dealer base. AICO seems to fit that mold. They’re a West Coast-based company. My guess is that Las Vegas is trying to entice some new companies to go out there with some pretty good deals. But, those of us who've been out there and experienced it really don’t see the need. We don’t see the cost justification.
INTERVIEWER: Tell us about your involvement with the American Furniture Hall of Fame.
O’CONNOR: When Jeff Cook, president of A.R.T. Furniture, asked me to go on the Hall of Fame board several years ago, I said, “I’m up to my eyeballs in all sorts of other stuff.” I went on the board anyway because I support and believe in the Hall of Fame. But I don’t think I attended more than three or four board meetings in the years I was there. I just didn’t have the time. Don Belgrad was the first one to ask me to go on the board. I like Don a lot; he’s a good friend. But I said to him, “I just can’t. I can’t afford the time.” I’m deeply grateful for the nomination and for being elected to the Hall of Fame. It’s very worthwhile and I'm extremely flattered to be in it. But I haven't really done anything to advance the Hall of Fame.
The charitable activity that’s been a major part of my life has been support of the City of Hope, the cancer research and treatment center in California. It was a way for me to honor my daughter Christine, after she went through her cancer.
INTERVIEWER: Was she treated at the City of Hope?
O’CONNOR: No, she wasn’t. Christine was diagnosed in 2003 at age 31, with stage 4 breast cancer. When they found the cancer, it had already metastasized to her bones. It was a very dire diagnosis. Some people told her to go home and make herself comfortable. She chose to fight it. She had children who were two and four years old at the time. She was treated at M.D. Anderson Hospital in Houston. They hit her with everything they had — stem-cell therapy, mastectomy, two different chemos, radiation, etc. A year after the dire diagnosis, she had no evidence the of disease. So the treatment worked incredibly well, and she had five and a half healthy years, and her kids got to know her. Unfortunately, a little over two years ago now, the cancer came back and spread to her liver. She was re-diagnosed in November 2010, and she died the following October.
I became involved with the City of Hope between the two diagnoses and for the last few years have been chairman of the Spirit of Life dinner here in High Point. It was always an honor to get up and say that she was a survivor. It’s been hard to say she ultimately lost her battle. One of the things really near and dear to me was the fact that she was treated with two medications that were developed at the City of Hope. They have more patented cancer medicines today in use than any other facility in the world. I was honored with their Spirit of Life Award in 2007.
I’ve remained very involved and fly out to visit the hospital in Duarte, California every year with our honorees. We raised a million-and-a-half dollars, which was a record, last year alone. We’ll raise more than a million this year, and we’ve got blockbuster honorees lined up for the next couple of years. I’ll do the dinner, probably, as long as they want me to do it. It’s been an honor and a labor of love. I’m on the City of Hope executive committee for the industry. I’m proud of the fact that the home furnishings industry is the oldest industry to support the City of Hope. I think this is our 48th year of support. We’ve raised a ton of money over the years.
The City of Hope is a terrific place. It’s not a big hospital like M.D. Anderson or Sloan Kettering. It’s more of a research facility, with brilliant scientists who've made incredible breakthroughs. Unfortunately, cancer is not one of those things where you can come up with one vaccine to cure it, like with polio. It’s a very complicated disease. The City of Hope also works on cures for diabetes, HIV and other diseases. It's taken a lot of my time in the past few years.
I've also devoted time to our church here, St. Pius X. I was on the building committee and I’ve been the head of the finance council. When we moved to Greensboro in ’83, I think Catholics were two percent of the population in the South. A lot of people around here had never met a Catholic. Seeing our parish grow and build a new church has been really satisfying. Its three years old now, and the new church is a beautiful mixture of traditional and contemporary. My faith has been a big part of my life. It’s gotten my family through a lot of things.
I also stay involved with Seton Hall University in New Jersey. Madeline and I made a significant donation to the restoration of the chapel there. An old classmate recently retired as president of the university.
INTERVIEWER: Did you ever get involved in the Home Furnishings Council?
O’CONNOR: No, I did not, because I wasn't a significant player in the industry at that point.
INTERVIEWER: The idea was to bring the industry together and create an ad campaign to convince consumers about the value of a beautiful home so they would spend more money on furniture, and it was perhaps Nat Ancell’s last contribution to the industry. Would you agree?
O’CONNOR: Yes, I would agree. Unfortunately, Nat took that on when a lot of people thought he was past his prime. It was a good idea, but the industry was just too fragmented to come together on almost anything at that point. You couldn’t sell the idea because people couldn’t see how they were going to get a direct benefit from such a campaign. I think the industry is more cohesive today than it was then, but I'm not sure the idea would work even now.
INTERVIEWER: You spoke earlier about the antidumping case. What was your personal involvement in that issue?
O’CONNOR: Our defense primarily was led by the president of Lacquer Craft, Mohamad Aminozzakeri. Mohamad is my counterpart in the Far East. I run the U.S. marketing side here. He runs the manufacturing side over there. He’s the president of Lacquer Craft Furniture and I’m the president of Samson Marketing. Mohamad really rallied the manufacturers to oppose antidumping duties. If John Bassett and Vaughan-Bassett were the leaders of the antidumping movement here, it’s fair to say that Lacquer Craft headed the Chinese manufacturers' defense. John Bassett told me personally on a number of occasions during the fight, “Look, I’m not after you guys at all. You’re not who I’m after.” John Bassett really became infuriated when he saw other companies clearly selling beneath their material costs with really stupid pricing. That just infuriated him. He’s very smart, even though he would like to make you believe he is just a good old country boy. So John Bassett led the movement, and others jumped on board.
Lacquer Craft pretty much led the funding of the defense, hiring some good Washington lawyers. As I've said, Lacquer Craft and Markor wound up with zero duties, which proved we weren’t dumping. Legacy was a marketing company and thus not directly involved in the case, although those were the two manufacturers we did business with in the Far East.
We spent an enormous amount of time, effort and money in defending ourselves. I don’t know how much it added up to in dollars. We went through interrogations here, with the U.S. Commerce Department coming in and looking over our records. Then, there were personal interviews. It was really nerve-wracking. It's like being audited by the IRS. It makes you nervous even if you know you've done nothing wrong, at least not intentionally. You can still get penalized for something.
The one thing I remember more than anything else is that Samuel and Grace Kuo, all through the investigation, felt like we absolutely had to tell the truth – good, bad or indifferent. They said, don’t falsify anything to make it look better, even though you think you might have a reason for it. Just tell it the way it is. There’s too much at risk here. We’re doing things the right way, so just tell the truth.
I have reason to believe that was not necessarily always the way everyone else played the game. Samuel and Grace really earned my respect for the way they treated the whole issue, as angry as it made them. We had to spend millions of dollars defending ourselves because we might have suffered collateral damage, even if we weren't the companies the antidumping folks were targeting.
INTERVIEWER: Were any Chinese wooden bedroom manufacturer actually put out of business because of high duties? Did the antidumping effort succeed in eliminating some of the worst violators?
O’CONNOR: Well, some of the Chinese factories stopped making bedrooms, but I don't know if any companies were put out of business. As I've mentioned, I don't believe the antidumping effort saved any U.S. jobs, because bedroom manufacturing was simply transferred to Vietnam to avoid duties. Nothing was gained. It probably exacerbated the demise of American manufacturing, because in moving bedroom production to Vietnam, the prices went even lower. U.S. factories couldn’t prove that imports were putting them out of business because almost no bedroom product was being made here.
INTERVIEWER: The issue obviously brought up a lot of ill will. Is that still lingering and hurting the furniture industry?
O’CONNOR: I don’t think so, not anymore. I think the industry has moved on. Doug Bassett, John Bassett's son, said something to me the other day that I thought was interesting. We were talking about possible antidumping action against Vietnam factories, and Doug said that even if it were a defensible case, none of the U.S. manufacturers have the stomach to go through the ill will and the animosity again that was created between them and a lot of the retailers during the Chinese antidumping issue.
We've recently been to Vietnam. It’s our judgment that all of the things that have happened in China to raise costs and prices are in the process of happening in Vietnam, and it’s going to happen there even more quickly. One of the things to realize is that the farther down the Pacific Rim the country is located, the less efficiency there is, pretty much the way things are when you go south of the United States. Why haven't Mexico, Brazil, Chile or other Central and South American countries emerged as great furniture-making places? It’s because the culture is different, and there's less manufacturing efficiency in most of those places. It’s never been up to what we did here in this country, even with highly efficient machines. The same thing can be said in terms of China and Vietnam. I don’t think Vietnam has the work ethic that you find in China. That’s also true of Thailand or Malaysia. Otherwise, manufacturing already would have moved there.
We once opened a plant in Bangladesh. Sure, labor was really cheap there, but the infrastructure was so poor and the culture so different that it was hard to solve problems. China may be a dictatorship, but the government is very efficient, and if there's a problem, you can usually solve it without a lot of hassle.
INTERVIEWER: You've talked about women’s issues. Have racial attitudes ever affected your companies?
O’CONNOR: No, I can’t say that they have.
O’CONNOR: I do plan to retire. I’ve told Samuel Kuo that I wanted to work half time this year and really go out next year. He may want me to continue to play some role, which I’d be willing to do.
I’ve backed out of the High Point Market Authority, and to a great degree I’m going to turn over my premarket duties in the next year or two. I saw Pat Norton stay around until he was 80-something. That’s too long. I’m almost 68, and stuff starts to happen to you.
Losing Christine changed my life. When you lose a child, you realize your own mortality more than ever. You also realize what's important in life. I don’t want to be remembered for selling more nightstands than anyone else. I started a great furniture company, ran a furniture conglomerate, helped save the High Point Market and revived premarket. Our company is now positioned to grow after the recession, and if I can help with a few new initiatives, it could lead us on another great growth path. My role is to put the nuts and bolts in place for that, then let someone else do it. I’m beyond being the hands-on person that has to do it because it’s got to be done my way. That’s not being helpful. I realize I made mistakes with our guys in managing them. Where it wasn’t working, I was trying to inject myself too much. I was well-meaning, but I didn’t help them or the company. I realize now that other people, in addition to myself, have good ideas.
I didn't always believe this, but I’ve become an absolutely firm believer that you have to reinvent your company every five to seven years. If you’re just a middle-of-the-road company and not very successful, maybe you don’t need to do that because nobody is chasing you. But if you have been out front as a leader, people are going to chase you, catch you and surpass you if you just keep doing the same thing. What you need to do is reinvent yourself and make yourself more relevant. That’s what we’re in the process of trying to do now. Of course, timing is important — being in the right place at the right time. I think a couple of ideas have the possibility of being the right ideas at the right time, and so could lead to greater success.
I’ve been reading books by Jim Collins in the past few years — “Built to Last,” “Good to Great,” “How the Mighty Fall.” In the latter book, he doesn’t really tell you how to succeed. He basically says, you can change and fail, or you can remain the same and fail. In the furniture business, I believe if you remain the same, you will fail. Our business is a fashion business, and you have to react to the times. Many in this industry haven’t reacted fast enough. But, there are many examples of ways to react. It doesn’t necessarily mean you’ve got to go low just because everyone else has gone low. Universal is growing its business and profits by going up in price and so is Lexington. There are ways to reinvent yourself and be better even in a down economy.
INTERVIEWER: As you pull back from some of your industry duties, what kind of leisure activities do you expect to enjoy?
O’CONNOR: I want to get back to playing golf. I'll continue to work for the City of Hope. I'll probably get involved in more local activities. As you get older, you realize how little things mean a lot to people. There are a lot of really good people that go to your church or live in your neighborhood that you can help in a lot of ways.
I want to spend more time with the grandchildren. You don’t do what I’ve done without sacrificing a lot of time with the family. I don’t feel I've missed out on a lot with the kids, but there are more things I could do. I can’t replace Christine as a mom to a 13-year-old and an 11-year-old. But, I can be there as a guidepost as they get older and so they know somebody loves them and cares for them.
Finally, and most importantly, I want to spend more time with Madeline and do some of the fine things we’ve missed out on doing while we were raising a family, building businesses and doing what we had to do to be good parents. Madeline has been my life partner, my best friend and my moral guidepost all these years. It’s time for us to enjoy some of the fruits of our labor.
We have a house at the beach where we want to spend more time. I'm a big sports enthusiast, and my office looks like a shrine to the New York Giants. I’m a huge Giants fan and still have season tickets. I’ll probably get to a few more football games than I can get to now.
INTERVIEWER: What do you see as the greatest single challenge facing the industry today?
O’CONNOR: I believe that most consumers see furniture as an easily postponed and disposable purchase today. As a general statement at retail, we do not offer a whole lot of decorating help. The marketplace has evolved to generic styling, and there’s not a lot of perceived value. Coming out of the recession, restoring furniture to a value proposition is critical to the industry’s long-term success. That will be difficult to accomplish at retail because of the under-capitalization that’s taken place because many companies have churned through so much cash in order to just stay alive during the recession.
The key to gaining the consumer’s confidence and creating value in her mind is, in my opinion, the effective use of social media and e-commerce. It’s a way to communicate with the consumer in a much more personal way than an ad on television or a furniture store walk through. The Internet is better able to create excitement and a desire to decorate your home, and to help in that process. So re-energizing the consumer’s buying experience is the biggest challenge we face today.
INTERVIEWER: Would you describe yourself as a workaholic?
O’CONNOR: Yes, I am close to being a workaholic. But, I do believe that if you really love what you’re doing, you’re not really working. It wasn’t a chore for me. I didn’t have to do something. I wanted to do it. The drive to be successful and the drive to make the company successful became one and the same. That’s why Legacy will always be special to me, because that’s what I can honestly say I created, although I certainly was lucky to have the support needed to take the company from infancy to great success. Of course, Legacy is only a 14-year-old business. It’s not like it's been around for 50 years, like some businesses.
My greatest pleasure was not the money I made for myself when we had a good year. It was passing out the checks and the bonuses at the end of the year when we had done really well and we rewarded everyone. All of the employees felt good about themselves. When that doesn’t happen, it doesn’t feel good.
I did try to find a balance between work and family, which is always a challenge. I think faith helps you to do that. Madeline almost died 12 years ago in February. She had a brain aneurysm, and her life hung in the balance for two weeks. She probably had less than a one percent chance of living. When our daughter Christine died, Madeline asked, “Why did Christine have to die and I lived?” I said, “Well, because you helped her for nine years to get through her disease, and now you’re going to help your grandchildren.” You can’t really explain any of this stuff. You have to rely on faith and keep on moving ahead. That’s the way life is.
Some people consider faith a crutch. You can call it a crutch if you want to, but I do believe there’s a better place, that there is a God, and that we're here to help other human beings, to treat others as you would want to be treated. One of my great personal satisfactions was working together for the good of the home furnishings industry. I enjoy giving back. You reach a point in your life where you feel like you can give back, much like your mentors did with you.
Some of what I have learned in my business life I can use to help charities or other local organizations, but when I was younger I couldn’t find the time to do it. As I am now getting older, I am more able to find the time. It's healthier for me than just grinding out more furniture.
I've been away from work for about six weeks now after having back surgery. I don’t think I was ever out of work for more than two or three days in the past 45 years. Of course, with the Internet, I can stay more involved in the business, but I’ve been surprised that I haven’t missed going to the office all that much. Part of that is, we have good people in place, who I trust, and I know they can run the company.
INTERVIEWER: So you don’t have to worry too much about the business.
O’CONNOR: No, thank goodness.
INTERVIEWER: What do you consider your own greatest contribution to the industry?
O’CONNOR: One of the things I’m proud of is that I've shown that a person can be successful with integrity and fairness. What I would like to be remembered for is that I tried to find the balance between doing the right thing for my company and also for my customer — just trying to be fair in that regard.
Some of the most personally satisfying things I’ve done haven't been directly for the benefit of my company, but to provide some leadership for the industry as a whole. That was true of my work on premarket and the High Point Market Authority, and also to some degree with my efforts for the City of Hope. I think I was able as a leader to bring different people to the party. So many people are willing to do things if you just engage them. Since God gave me the ability to engage others and to provide some leadership and structure, I’ve been fortunate enough to accomplish all kinds of wonderful things.
To me, the biggest need in our industry now, and also in our country, is leadership. I think there’s a lack of it to a great degree. I don’t philosophically agree with our current president, but there are different ways to succeed. I don’t think the Republicans have all the answers, and I don’t think the Democrats have all the answers. What I most regret about President Obama is that I don’t think he provides leadership. I don’t think he provides a platform on which people can compromise. He’s too divisive. As much as I disliked President Clinton as a person, I think he was a brilliant politician and leader. He was able to bring people together and work out compromises. I don’t think Obama has the experience and the leadership ability to do that. He’s smart and a good talker, but that’s all he is. If given a script, he can deliver it masterfully.
Good leaders reach a point where they are able to see things a little more clearly than other people. I didn't understood this as a young man. You can be smart, but it's experience that gives you the ability to realize what to do and what not to do. When we started Legacy 14 years ago, I believed that I'd had enough experience at that time, and I had studied the industry well enough, that I understood what would work and what wouldn’t work. Sometimes you can get in a zone where you are able to see things more clearly because your experience acts as a guide.
These days, a good leader needs to understand the potential role of the Internet and social media. It's a way to reach, educate and help the consumer that we’ve never had before. It's relatively inexpensive, and the payback can be tremendous.
INTERVIEWER: Have you thought of writing a book about your ideas on leadership and communication?
O’CONNOR: I don't consider myself a writer but I have had an interesting career. Maybe after I sit back for a little while and reflect on my experiences, I might do that.
INTERVIEWER: Thank you for taking the time to do this interview for the American Furniture Hall of Fame. It’s been a pleasure for me, and the industry will benefit from your experience and insights.
O’CONNOR: Thank you. I've enjoyed it.