Where executives go to give each other a leg up
Costa Mesa, Calif. — On the nuts-and-bolts level, a TEC group's first aim is to give its members hard business advice to save them money. Another member of LePatner's group, Vern Edler, president of Edler Industries, which makes insulation for solid-fuel rockets, saved about $20,000 on a $25,000 computer software package by adapting a package another TEC-mate had developed. This one move paid the TEC tab.
Howard LePatner is a self-made man, his own best cheerleader, and a true believer in the company he created, Caradco-Pacific. ''Come on down here and I'll show you something like you've never seen before,'' he says on the phone, a New York inflection in his animated voice.
But for a while Mr. LePatner nearly lost the old spark. His four-year-old company - which distributes doors, windows, and some energy-related building products - rides on the construction industry, where fortunes have recently been soaring like dropped crowbars.
''What am I doing here?'' LePatner has asked himself during the past year. ''What do I need this for?''
He was tempted to close up shop and pick up the business again when the whole recession blew over, but he had obligations - ''a lot of employees with families to feed.''
He took these questions to his TEC group - 13 other shirt-sleeved businessmen gathered around a conference table, each at the head of his own company.
TEC is the familiar name for the Executive Committee, a network of groups like LePatner's where successful entrepreneurs meet once a month to get ideas and trade on one another's business sense.
In the broader view, TEC serves as a kind of unofficial board of directors. It's a peer group for people who are out on their own.
In a way it's one of a crowd. A growing throng of seminars, networks, and interest groups for small businesses have been gathering in recent years, as the virtues of entrepreneurialism and innovation have been sung louder.
For the most part LePatner's group sympathized with his problems, but it got him to think further about why he was in business. When he got home he listened to the tapes of the session. It woke him up to hear himself. It reminded him who he was and what he was about.
''I'm a fighter,'' he says, ''which all entrepreneurs are. I didn't get here because my father handed me something. I started from zero.''
He was not going to fold his business and wait out the economy. ''We had to turn our heads around,'' he insists, not the economy.
He did. While sales growth stalled around five months ago, his market share continued to grow. Now Mr. LePatner has hired an extra salesman, and his 14 employees are working overtime to meet orders.
LePatner spends $6,000 a year, a full working day a month, plus two hours a month more on his TEC group. By his estimate, it easily earns him back his money.
On the nuts-and-bolts level, a TEC group's first aim is to give its members hard business advice to save them money. Another member of LePatner's group, Vern Edler, president of Edler Industries, which makes insulation for solid-fuel rockets, saved about $20,000 on a $25,000 computer software package by adapting a package another TEC-mate had developed. This one move handily paid the TEC tab.
Each TEC group - TEC actually began 25 years ago - is something like a private and exclusive club. It's a carefully crafted blend of the best aspects of a business lunch, a conference seminar, and a wide-open brainstorming session. Here some of the most successful small-business men come to know each other and their companies well. The result is something members feel is unlike anything they can get elsewhere.
LePatner's group quickly sets a casual but energetic and practical tone. There is much laughter and camaraderie, but the talk is frank and straightforward. This is a field day for these businessman (there are about five women among the 500 TEC members in the Southwest), but it is one they all expect a lot from.
''Being the president of a company is a very lonesome job,'' says LePatner, ''not lonely but lonesome. You're making decisions that affect a lot of lives. You can talk to your wife; you can talk to a casual acquaintance, but not in depth, with people who really know what you're going through.''
Despite the low-key style of TEC managers, membership has been growing - until the current recession - by nearly 20 percent a year.
Now there are about 50 TEC groups around southern California; San Francisco; Albuquerque, N.M.; Dallas; Houston; Milwaukee; and Jacksonville, Fla., and one just starting in St. There are generally 12 or 13 heads of successful companies in each group, all people who seek new ideas and the objective eye of the group.
Howard LePatner's group, one of the newer ones, is less than a year and a half old. It meets once a month. The members take turns hosting the group. The morning is spent, seminarlike, chiefly with an outside speaker - an expert on marketing, pricing, management, futurism, or any other pertinent field. Among the visiting ''resources,'' as TEC dubs them, have been management expert Peter Drucker and Willis Harman, director of the Stanford Research Institute, a think tank.
The afternoon is spent in confidential, round-table discussion of issues members have brought forward. The group's chairman is a full-time TEC employee who moderates the day and spends two hours with each of the members between meetings.
About 28 of these groups are run by the Executive Committee based in San Diego, owned by Vedax Sciences Corporation in Tustin, Calif. The TEC groups in the Midwest are related through licensing agreements.
Each group has an individuality of its own. The members in a group like LePatner's are very different both in their industries and in their personal styles. ''The nice thing about our group is that not everybody is cloned,'' says Mr. Edler. The diversity keeps things livelier.
But TEC isn't for everybody. Some people don't click well with their group and are moved to another. In any TEC group, a company president has to have both a thirst for ideas and a willingness to toss some of his challenges before the group.
''The quality of the experience is a constant, burning issue with me,'' says Pat Hyndman, who became president of TEC upon retiring from his own company in 1976.
Thus Mr. Hyndman is concerned with raising the standards for TEC membership, which are somewhat subjective, as TEC becomes more popular.
But the key to quality is the TEC chairman. When Milwaukee businessman Robert Nourse started the first TEC group 25 years ago, he envisioned college professors as his group chairmen. ''But now we've only got one college professor'' among some 22 Milwaukee-based groups, he says.
It was more important, he found, to find the right kind of personality to make a group work well together. Mr. Hyndman in San Diego sees it the same way. Even though half of the TEC chairmen in the West hold doctorates, education is not crucial, he says. Rather it takes the right kind of attitude toward people: understanding and a deep-felt interest.
About half of the chairmen under Hyndman have business backgrounds - including a former partner at the Booz, Allen, Hamilton consulting firm - and half are behavioralists.
The behavioralists, like Doug Kruschke, chairman of the group Howard LePatner joined, are steeped in what are commonly known as ''people skills.'' These people are often better prepared to run a TEC group than business experts, Hyndman says.
One case is Dr. Frederick Eigenbrod, head of the career counseling center at the University of California, Davis, when he came to TEC. By his own admission, he knew nothing about business. Yet last spring, TEC surveys showed his group ranked themselves highest of any in the management skills they had learned.
''The chairman is not there so much as an expert consultant,'' explains Doug Kruschke, ''but to provide an occasion for something that entrepreneurs don't usually do, and that is slow down.''
A chairman can't try to tell anyone how to run his business. Instead, he is like a coach, as Mr. Kruschke sees it. He has an ''analysis and review function, '' especially during the two-hour one-on-one sessions every month. It's a time for taking stock.
But the end of all this is action. Learning and stock-taking need to have a dollars-and-cents payoff. ''We have (a few) laid-back, philosophical chairmen who tend to surround themselves with similar people,'' Hyndman says. Yet the key to what makes TEC unique, he insists, is that it is ''highly action-oriented.'' It is important that it keep that edge.
''Our group as a whole is interested in the hard facts of business,'' says Steve Sherwood of TEC 28, Mr. Kruschke's group, in explaining what he wants from TEC. The key question is: ''I'm in trouble; what can I do?''
Mr. Sherwood and his partners have been like the ants in a business full of grasshoppers; they played it safe and conservative in boom times for Sunbelt real estate, and now in devastating times they're prospering.
They've turned $2 million of their own equity four years ago into roughly $25 million of their own equity. ''Now we're looking pretty smart,'' he confesses.
But growing so fast, Clayton, Williams, and Sherwood felt the need for an accountant. How should they hire? Sherwood brought the question to the TEC group where his peers persuaded him he needed more than an accountant - ''someone with a little more horsepower.''
So the firm hired a financial vice-president, with a much broader range of money-managing responsibilities.
This decision alone will easily pay the TEC membership fee this year, Mr. Sherwood says.
Since an accountant would have cost around $30,000 and the financial vice-president will cost upwards of $50,000, the decision was not an obvious one. But they save money by having a staff member who manages their finances more actively than an accountant would have. ''Being conservative by nature, we probably wouldn't have done it,'' Sherwood admits.
But this is just the kind of advice he wants and gets from TEC. ''You bring a question (to the group) and you find out it's not the right question.''
The right questions and the right answers are the first interest of any TEC group. But the spark that ignites the group and makes it run is what Kruschke calls ''collegiality with other people who have put their lives and their money on the line and taken big risks.''