Boardroom, Inc. Stamford, Connecticut
Brain Power Becomes Dollar Power
The entire transcript of this episode
The Opening of this Show
HATTIE: Hi. Welcome to SMALL BUSINESS SCHOOL. I take the job of selecting a teacher for the Master Class for you very seriously. And I'm proud that my search has uncovered wisdom, insight and experience with this next business owner that you are about to meet, the founder and CEO of Boardroom Inc, Marty Edelston.
MARTY EDELSTON (Founder and CEO, Boardroom Inc): This is great.
HATTIE: (Voiceover) Marty said we should always be asking ourselves, `What is the highest and best use of my time right now?'
He also said that his employees continually, through the years, ask for more and more computer power, and that their productivity increases with their knowledge of technology.
And that has been the case with me ever since I got my first computer, I want to know more and more. But right now, I feel like I need to know more about how to make my sales presentations more effective--the print materials. I've asked Stephen Jackson to explain how to do that.
If you've ever studied music, you may have attended a Master Class. A Master Class is not taught by a teacher, it's taught by a professional musician who makes a living doing music. Well, at SMALL BUSINESS SCHOOL our Master Class is taught by a master small-business owner. So welcome to SMALL BUSINESS SCHOOL Master Class.
(Voiceover) Marty Edelston is a genuine, card-carrying thinkaholic. His mind never stops. When he's not in the office, he uses a home office, a bedside table and an exercise bike as places from which to capture ideas. He brings work home every night and on the weekend. He solves problems, edits copy, reads and does correspondence at home, then his wife, Rita leaves early each morning to take the work in to distribute to employees.
RITA EDELSTON (Marty's Wife): OK. Can I leave now? I'll take your stuff in.
HATTIE: (Voiceover) He is as big on physical fitness as he is on mental fitness. Push-ups on the knuckles is simply run-of-the-mill for karate guys like Marty.
Why are you doing push-ups on your knuckles?
MARTY: Well, that's what they told me to do, and it feels good. It's very simple, you don't have to think at all, and it's just cleansing, so that the real aim is to have the focus on the first knuckle. And while I focus on the first knuckle, it rolls over to the second knuckle.
HATTIE: Why is the aim to focus on the first knuckle?
MARTY: Well, that's a good place to hit, if you're ever going to hit. But I see karate, really, as a conditioning program. There's nothing better than karate.
As you can see, it's just seconds, with no effort.
HATTIE: (Voiceover) And the punching bag is a great stress reliever.
MARTY: And then we can...
HATTIE: (Voiceover) The office is just a few minutes from home, so little time is spent commuting.
MARTY: I never wanted, incidentally, to start my own company. That was an accident. But it's--I didn't have that ambition, and we're not trying to make it a big company at the present time 'cause it--we have a mission, which is to help people make it in this increasingly hostile world.
HATTIE: (Voiceover) Boardroom Inc produces information. With 1.2 million subscribers of Bottom Line, including me for the last 10 years, Boardroom sets the standard. And they also do Bottom Line Business, Bottom Line Tomorrow, Health Confidential and Moneysworth. For nearly 25 years, Marty Edelston has been building a business which today would be the envy of any entrepreneur. His company generates $110 million in sales, with only 80 employees. This is a productivity rate five times the average Fortune 500 company. If you listen and watch carefully, you will learn his secrets.
CRYSTAL (Employee): Good morning, Marty.
MARTY: One of Crystal's big jobs here is to greet everybody warmly. That's in her job description that she has to be a very enthusiastic greeter, that how she starts everybody's day and ends everybody's day is very important.
CRYSTAL: Every few days I get together with myself in the mirror and try to figure out what kind of nice greetings to make everybody feel good about being here.
MARTY: And we had to work on that at the beginning. It's...
CRYSTAL: He gave me a few books and inspired me.
MARTY: One doesn't think of the importance of the receptionist, that you're just here to check people in and out. But not at our place. Your tone sets the place for the whole . . . sets the tone for everybody.
HATTIE: (Voiceover) When they hear about Marty, business owners and leaders in big corporations scratch their heads and say, `How does he do it?' He treats people with respect, and he is more fascinated with the way the mind works than he is his balance sheet. Here's the story from the beginning.
MARTY: One day I got a call from Norman Pakoritz, the editor of Commentary, one of America's leading intellectual publications, wanting me to be the business manager. So we got together and I did that. So I moved, and I sold advertising, promoted circulation, started a book club, published greeting cards, started a record club. It was very exciting. It's for a non-profit organization, and it's a superintellectual publication; there wasn't too far I could take it.
And in the meantime, some thoughts started seeping in, that I liked the business books. They told you what to do, how to sell, certainly how to plan, how to fire, how to hire.
Whatever it was there's a book on it, and they're all in--some are better than others, but it's worth it. I'd learned early on that I couldn't spend money on books unwisely because it's so good to take ideas and expose it to others. One of the other people, who's a friend -- I'm just writing a note, gonna have lunch with him in a week or so -- said, `Well, why don't you put little things in your publication, too? There are great pearls that get lost, wonderful three lines, six lines in this magazine--in Automotive Age, in Rubber World, whatever it is, this stuff is there. Why don't you pick that stuff up.' Great. So I wound up making this amalgam of stuff. I'd look--it took me years to look for money--or I looked for money. I started the recession of the early '70s.
HATTIE: You personally started the recession of the '70s?
MARTY: Yeah. Business was great up to that time, and every time I took a step forward with an idea, the financial world moved backwards. So the great Fred Adler, in an interview said, `Happiness is positive cash flow,' which was very meaningful. I thought that means you gotta make a lot of money. Well, you don't. You just have to see to it that the stuff that comes in is more than the stuff that goes out. And that's what you want to get to.
So I went to a number of periodicals 'cause I knew a lot of people, and said, `I'll tell you what, you run this ad'--and I had the best copywriter in the business--actually, his picture is on the wall there--prepare an ad for me--`You run this ad and I will give you a share of my business, one share of stock for every paid subscriber that I get from your publication,' which was fine, except--conceptually, so you could do it with nothing, and it cost the periodicals nothing 'cause they would only use it when they had an empty space, and God doesn't bring down all the ads and all the editorial and put it together and have it work out to a perfect printing form. So in one month or another there had to be some open space. So I guess I had six or eight periodicals that went along. Unfortunately, the ads didn't produce, but I took the copy and put it into a direct mail form, and somewhere along the way--in one of the framed things here -- I did my initial test, which was either 12,000 pieces or 17,000 pieces.
It's nothing. I mean, you can't do what I did then in direct mail. I mean, w...
HATTIE: You tested with the small sample. In your view, 17,000 back then worked, but it wouldn't work today.
MARTY: Well, it shouldn't have worked then but it did. We learned a lot. But most important, the concept was good, got a good response and had some--developed a relationship with the great Peter Drucker, who wanted me to go visit him and just discuss that. He says, `Marty, I'm gonna be in New York, and I was gonna do a zillion things, but I couldn't do it all. How do you do it? And how do I find a good editor?' which was something important. So we got together, and then, `How many of these things you gonna start at once?' `Just one a year.' He says, `Well, good, you're the editor.' `Me? I can't spell, I can't do this, I never thought of it, it'--I mean, all the things I had done, I had never thought of being the editor. `Everyone is smart, I'm a salesman--boy, am I a good salesman, but I gotta find a good editor. Now you have drive, you have curiosity. You will be it.'
And that was a very important moment, 'cause then I didn't have to be big, I didn't have to be Time-Life or American Express; I just had to strive for ideas, what's the truth. And I've been an incredible driver for the truth ever since.
Unidentified Man #1: OK, idea number one.
HATTIE: (Voiceover) The centerpiece of Boardroom's corporate culture is something called I-Power.
MARTY: (Voiceover) I-Power is a simple suggestion system that's sort of automated.
Unidentified Man #2: We have many premiums in inventory in very small quantities that are still usable, but they're just not being used, so my idea is why not test a premium offer for Bottom Line Personal and Moneysworth in which we give a mystery gift of six different premiums, our choice.
MARTY: It was something that Peter Drucker suggested, not with that name, but he said, `Make your meetings more interesting. Ask the people at their next meeting for two suggestions,' which I did, and I was just knocked over by the suggestions. They were just so fantastic.
This is the essence of the Japanese system, which is "kaizen," and that was given to them by Deming as continuous improvement. It was imposed on them by MacArthur. Deming was brought over there by MacArthur, and the leaders of Japanese business were told, `You pay attention to this man.' So that it was imposed on relatively small businesses at that time, and it just grew and grew and grew. It works. It's just amazing, and it's not just the suggestions, that's the detail. It's how we get people to think, and it brings about a huge amount of cooperation. The I-Power meeting that you did attend only hinted at it. But at some of these meetings, you'll come out with an idea and someone else'll say, `But we could make it blue,' and then someone said, `Yes, but we could put yellow polka dots on it.' And, obviously, I'm saying it wrong, but it's just so exciting when that building goes on.
HATTIE: The give and take and the back and forth between departments and between units who would not normally talk to one another, and then maybe eventually jeopardize each other's productivity, not on purpose, but just because they weren't talking. But the I-Power gets them together to talk.
MARTY: And we've used it--once you become adept at it, you can use it in other ways. We've had differences between people here, some really unpleasant situations, where--you're gonna have in any business, we had it too--and others have tried to solve it, and then I came in a couple of times and I say, `Hattie, would you please give me five reasons--five things you can do that would make Marty's life better.' And, `Marty, would you please give me five things that you can do to make Hattie's life better.' And also, `Hattie, would you give me five things that Marty is doing that steps all over your feet,' and vice versa. `But give it to me, don't exchange it,' you know? `Give it to me, I'm in the middle, and then I will edit it out and change the language so it's acceptable.' And it's just incredible. It's just like magic.
HATTIE: I-Power, then, is a way for you to describe your corporate culture.
MARTY: Indeed. Besides the ideas, the important thing with I-Power is the development of the individual.
Modify Your Behavior
MARTY: (Gesturing to objects of art) This is by Orsey Dershaw. This is a slice of a brain.
HATTIE: (Voiceover) Boardroom's headquarters is filled with art because Marty believes art teaches. Art makes order out of chaos (still touring the office).
MARTY: OK. Now these are the clubs of virtue, which are--although they look like junk, they're really quite valuable, and it says you're gonna be beaten.' As it ties into beaten children, `You're gonna be charming or I'll beat you. You be patient, sit there, or I'll beat you. You be efficient or I'll beat you.' Now that's not the way to run things, and as it happens, I was an abused child--not a sexually abused child, though.
HATTIE: But your father hit you?
MARTY: Yeah, a lot. But in that period, it was the thing to do. The children were to be seen and not heard, and you do exactly what the parents say, etc., etc. So I learned a lot from that in trying to change that on th...
HATTIE: And not be that kind of a dad.
MARTY: Well, I was a bad one in the beginning. I had to learn a lot.
HATTIE: You were?
MARTY: Yeah. But I wasn't anywhere near as bad as my father was, but then I would say, `Hey, this isn't right.' When my kids came into the business, I had to deal differently, and I was a very tough boss for a long time, really tough. When my kids were here, I couldn't fire them and I couldn't -- I had to treat them fairly. So if I treated them specially I had to treat you specially... HATTIE: So then... MARTY: ...so I had to change my whole...
HATTIE: Having them come in elevated the quality of the workplace.
MARTY: It was very helpful. And we worked not to argue. I learned a l -early on -- I had a terrible time -- I won't go through the detail now -- but one peers -- my typesetter made a tiny mistake, and it was before a deadline, and I was incredibly abusive verbally. And the editor said, `But there's another way, Marty.' `No there's not. If one of us is gonna get ulcers, it's not gonna be me.' `There's another way, there's another way.'
Now the interesting thing is, that there was. It took me years to find it, and it's really important, and that is that we seek the truth.
So I don't remember the last time I had an argument with anybody 'cause I'll be on either side. I have an idea, I have a position, and you give me a better something or other, I'll come over to your side, but let's seek the truth. If we don't have a good answer, let's stop and we'll come back again and come up with a good answer. But I have no idea when the last time was that I had an argument.
HATTIE: But doesn't that go back to what you said your people philosophy is, number one, to respect the other person?
Celebrate the Individual -- A song along the way
MARTY: Karen, where are you? Here we go, kid.
KAREN (Employee): Oh, thank you.
MARTY: (Singing) Happy anniversary to you, happy anniversary to you, happy anniversary, Karen, happy anniversary to you.
KAREN: Thank you very much. Thank you.
MARTY: I'm not finished. I'm not finished.
KAREN: Oh. Is there another...
MARTY: Yeah, it's the best part. (Sings) Here's wishing you a happy day in every way on your anniversary day, and hope for many years to say, greetings on this happy day.
KAREN: Thank you. Thank you very much.
HATTIE: Is this company different from the company you came from?
KAREN: Oh, yes, much different, much different. This is much better. This is the best place I've ever worked.
HATTIE: Do you think money is a motivator?
MARTY: Yes. It's not the only motivator. Recognition is very important and treating people with respect is very, very important. So my people here are all paid well, but they also love to collect I-Power money at the end of each month.
Lightbulb: Ask Questions. Get behind the surface.
HATTIE: (In the Studio) Over and over again, I asked myself, "How do they do it? What is their secret?" I think the answer can be found in Marty's book, I-Power. He teaches us to recognize the whole person. He wants us to tap into the tremendous talents and abilities each of us have. He wants each of us to be our best. And, as a business practice, he forces each person to think, "What is my power?" Then, in a systematic way, he encourages each person to bring ideas to the table. Employees aren't rewarded for agreeing with others; they are rewarded for their own unique contributions.
The source of this virtually miraculous sales per employee only happens in a business where people are treated with profound respect.
What Marty is doing seems so obvious: Make people feel good by asking them questions; help people learn to think by asking them to contribute ideas; appreciate them and they'll perform at a higher level; create an environment that's nourished by art and appreciation.
It seems easy, but it does take time.
You may think you don't have time to pat people on the back every time they have an anniversary with the company. Or you may not have cash to reward people immediately for their ideas. You may not have time, you think, to have an I-Power meeting. Well, Marty would say, `You don't have time not to. You don't have the cash not to do these things.'
I want to convince you that things don't happen overnight. You cannot change your culture overnight, and you will not ever be Marty Edelston. But you will be when you say "thank you" to people, when you ask questions and truly listen and act on their answers, when you create environments in which people know that their ideas are valued.
(Voiceover) Marty told me one of the suggestions that comes consistently through the years is the request for more computer power. You may not publish anything, but we all need maximum computing power to do our work and make it look good on paper.
Family and Succession Planning
(Voiceover) Rita, Marty's wife, has worked with him all along.
RITA: Marty used to get the mail in New York, and he'd come home on the bus carrying a big sack on his back. The mail -- we'd open it up at home, and between the kids and me, we'd sort it out. I made the deposits -- you know, checked everything off, made the deposits, and then we'd send the orders out for these little Speed-O-Mat metal plates to be made.
HATTIE: OK. When you were doing that back then, did you ever dream that you would eventually have $110 million in sales, with 80 people?
RITA: No. No. That was a different world. I mean, you still think back and say, `My goodness, we're from there to here.' No, every time we think back of what we had in the basement when we started,"'How did we ever deal with all this stuff down there?'
Planning to let go
HATTIE: Would you say you're the size you want to be?
MARTY: We've been discussing this for the last couple of years, and right now, as I move close to my 68th year -- my 67th birthday, 68th year -- it takes on greater seriousness because, well, we have a succession team in place and they are working with a training group that trains succession teams, literally, and they're coming up with their mission statement.
HATTIE: (Voiceover) All three of Marty's children, Sarah, Marjorie and Sam, work in the business, and today, along with another 15-year Boardroom veteran, Brian Kurtz, they form what is called the succession team.
SARAH (Marty's daughter): Well, the company has spent 25 years building a structure that's Marty-focused. And we have 85 people who all look to Marty. And now we're gonna have a new structure that's gonna have a team of four rather than one, and we have to build a whole new infrastructure. And none of us are Marty, none of us have his creative gut and his sensitivities, so we have to figure out how we operate in the future.
MARJORIE (Marty's daughter): And none of us want to work 20 hours a day.
HATTIE: Like he does.
SARAH: Yeah. Well, we're at different life stages. When he started the company his children were all--we were all older elementary school, junior high school age. He had a wife who was home and 100 percent supported. We have two women who are married, so that--we've got husbands, we've got children that we have to deal with. We have two fathers with young children, so that we all want a different balance in our lives, and want to--we're at different stages where we need to know our children and be able to involve ourselves in that way as well.
Marty, like most entrepreneurs, didn't know what to do. He knew he had to do something, but he didn't know how to teach us. And we--he would try something, and we would try to respond to it, and we were never talking the same language. We didn't know what to do 'cause we'd never been in the situation before, he'd never been in the situation before. And Marge through the Family Business Council, had identified that there are people out there who can help us.
SAM EDELSTON (Marty's Son): For one thing, we've been getting together as a foursome for several years now and just talking through--talking about issues and now, for the first time, we're being asked and really sort of compelled, you know, forced to come up with group opinions on a subject.
SARAH: Marty said to us, `Go have lunch, go deal with succession, go figure out what's gonna happen.'
MARJORIE: `What happens when I get hit by a bus?'
HATTIE: He said to the three of you.
SAM: Five years ago.
SARAH: `Go have lunch and come back and let's talk about this stuff.' And the three of us went to lunch, and the first subject that came up was, `We can't do this without Brian,' because he's such an integral part of the marketing department. He's been here for 15 years--at that point he'd been here for 10 years--but he is Mr. Direct Mail. He knows everybody, he knows his business better than anyone in the business, and he knew a portion of the direct marketing and list business that none of us did, and it was someone--we work well with him, we feel like siblings with him.
BRIAN KURTZ (Boardroom's, Marketing Department): Well, you know, how many businesses survive from first generation to second generation? The odds are...
HATTIE: Most businesses fail at 27 years. You all are right on the cusp of failing.
BRIAN: Right. And that's still first generation.
HATTIE: That's why you're doing--most businesses don't make it through the succession.
HATTIE: That's why what you're doing is so smart, and that's why you will because what you're doing will prevent the failure.
BRIAN: That's right.
SARAH: We have to figure out what's our vision. Marty has his vision. He probably talked to you about survival in a hostile world. And we have to figure out our definition of that vision, which is very much in sync, but is it exactly the same? Maybe, maybe not.
Advice from the ages and from the sages.
HATTIE: (Voiceover) Here's Marty's advice to all of us who would like to build our businesses.
MARTY: Well, it's classic advice: Know what you're doing, and find out in every possible way. Of course, it's best if you are moving into an area that you're fully cognizant of, but then read everything you possibly can. And people are so lazy it's just incredible.
HATTIE: You said earlier there were a handful of books that you really believe in, in terms of business advice. Can you recall the list or...
MARTY: It's really life advice. I'm not sure I can remember all of them offhand 'cause there's so much going around in this little head here. Everything is selling 'cause you have to sell so much. And whatever--well, you sold me on the interview, I have to sell you on doing it right, etc. The best book is, `How I Raised Myself From Failure to Success in Selling,' by Frank Bettger, and now, a lot of years, 30 years or so after its original publication, it's still very much alive. And oddly, it was featured, as you may recall, in the film `Barcelona.' It was the silliest thing I ever saw. I mean, to build a sophisticated film around that book and people's dedication to it, but it was a wonderful film, actually. I mean, the concept was silly, but it was really beautiful and it was so powerful.
The measure that you want to apply to everything all the time is 'What's the highest use of my time right now?' Sometimes it's to sleep, of course; sometimes it's to skip rope; sometimes it's to do push-ups.
HATTIE: (Voiceover) And what continues to fascinate a person who has achieved so much success?
MARTY: I'm most interested in the continuation of our society.