Mitch Saranow, founder of the Saranow Group, sits on the board of the Knapp Entrepreneurship Center. In fact, he recently stepped down as Chairman of the Knapp Center, a position he held for two years. In this interview, Mr. Saranow tells us how he grew his business into a world leader, what qualities make a company successful and why he is called Willy Wonkaâ€™s lawyer.
You recently started a company, SureTint, LLC. and this isnâ€™t the first one. Previously, you co-founded Mid-Atlantic CATV, which became the nationâ€™s largest â€œprivate cableâ€ operating company. You also started the Saranow Group, a venture capital firm, through which you founded several successful businesses. Were you always interested in entrepreneurship? How did that interest emerge?
In two stages. First, I left the corporate world and moved to DC to partner with an MBA classmate in his highly successful real estate firm developing hotels and office buildings. After a few years, I decided to go off on my own and search for a company to buy.
What led you to leave the corporate world?
The politics were intense, and unlike my law firm experience, the quality of people were average to only slightly above average, and my law firm experience had taught me the benefit of working with world class colleagues. Also I decided I didnâ€™t want to be a CEO since most corporations move too slow and even the CEOs have to deal with too much bureaucracy.
I noticed that you skipped from industry to industry and from company to company during a time where many people stayed with one company for decades. How come you decided to do that?
Whenever I stopped learning, I moved on to new challenges.
Iâ€™ve also been informed that you have an interesting story regarding the time you worked as Senior Financial and Legal Officer for the Sunmark Companies, the manufacturer of confectionery and snack foods. Could you tell me more about that?
I worked for the Sunmark Companies in St. Louis as CFO and general counsel. We made a deal to manufacture a new line of candy for Quaker Oats based on Roald Dahlâ€™s book â€œCharlie and the Chocolate Factory.â€ Quaker produced the film â€œWilly Wonka and the Chocolate Factoryâ€ just to introduce these new candies. The candies were a flop but the movie was a huge hit, and Quaker decided to drop its candy experiment. In order to protect our investment, we purchased the operating assets and â€œWilly Wonkaâ€ trademarks (e.g. â€œOompa Loompas,â€ â€œEverlasting Gobstoppers,â€ etc. Thatâ€™s how I became â€œWilly Wonka’sâ€ lawyer.
Later, you worked at CFS, which was the nationâ€™s second largest food distributor. This is was right before you founded the Saranow Group. What was it like to go from being a vice president and CFO of the nationâ€™s second largest food distributor to starting your own company?
I went from managing 40 banks and 35 divisions to looking for venture financing for small business; from eating in the corporate dining room to the sandwiches at my desk. It was a complete change of lifestyle.
At the point when you were starting your first business, you already had experience in a variety of industries including cable television, confectionery and snack foods and food distribution. Out of all the things you could have potentially done, why did you decide to focus on color formulation equipment?
It was not a decision to focus on color formulation. Rather, I decided to own a company, and began a search. I identified the Miller Paint Equipment Company through a broker. I liked what I saw, so I decided to make it happen. I negotiated a letter of intent and then got it financed. Rather than targeting a particular field, this is what I was able to find and get done.
What qualities do you look for in a company that makes the company successful?
First and foremost, an ability to become the clear leader in an attractive marketplace. If you donâ€™t have an attractive marketplace, i.e., growth and good competitive characteristics, youâ€™ll have difficulty being successful regardless how good your organization is. Likewise, even in an attractive marketplace, if you donâ€™t have a good organization, youâ€™ll have trouble becoming the leader.
What do you think enabled you to grow Fluid Management into the world leader?
Basically it was a constant push for growth, innovation and deal making with a worldwide perspective. We basically grew the industry and our company with it.
How did you spot the opportunity for SureTint?
This is a result of my ten years spent in the paint color formulation equipment business. We searched adjacent markets and entered the ink market quite successfully. We also identified the hair dye market and attempted to enter it, but we were unsuccessful for a number of years. Three years ago we finally developed products that work.
Has marketing the hair dye color formulation system been different in Europe as compared to North America?
Itâ€™s too early to see the distinction in the hair dye marketplace, but let me answer this question in regards to paint equipment. The European market was much different than the American market for paint color formulation equipment. The European buyer probably had 2-4 more years of education, was much more interested in technology and styling and then thought about cost and durability. In contrast, in the U.S., cost and durability were almost the only issues, even if the equipment was ugly and made with outdated technology.
What do you think about the future of your industry?
Color is a growing, upscale market.
What were some of the lessons you learned from building your own business?
I think some of the key lessons were the need for clear stretch objectives. Since itâ€™s your own business, you can lean back and set easy objectives and not really accomplish much. Also constantly searching for deal making and other opportunities, international networking with suppliers, customers and competitors are absolutely critical.
How did your prior experiences prepare you for running your own company? Also, how did your law degree help you as an entrepreneur?
I am able to see things from various perspectives bringing both business and legal expertise to bear on problems. I am able to effectively identify legal issues and then manage lawyers and the legal process.
Some people say that there is a lot of stress being an entrepreneur. How would you say it compares with other â€œhot seatâ€ jobs, such as the head of a big company, or a partner in a law firm?
There is more stress in a smaller organization since there is always a shortage of support and capital.
What were the most difficult gaps to fill and problems to solve as your business began to grow?
Finding and managing good people.
Based on your experience, what is the best way to find good people?
Good people generally have world class training and experience, come with high energy, high intelligence and willingness to work towards stretch objectives.
In terms of your entrepreneurial ventures, if you had to do it over again, would you do it again?
Sure, but I would emphasize acquisitions more. Start-ups are just too difficult.
Would you do it in the same way? How would do it differently?
Iâ€™m sure if I had it to do over, I would follow a similar path.
I was reading a book by Tina Seelig, who is the executive director of the Stanford Technology Ventures Program. She makes a comment that in the Silicon Valley, failure is acknowledged as a natural part of the process of innovation. Did you have any epic failures of your own? Were you able to learn from any interesting failures of others?
I have found that the toughest losses often create the biggest winners. You have to learn from your own mistakes before you can correct the mistakes of others. You learn much more from your failures than from successes.
You are also very involved in the community, particularly as director and past president of the Juvenile Protective Association and member of the Kellogg Alumni Advisory Board. You also sit on the Board of Governors for the Northwestern University Library. What inspired you to engage in these civic activities?
It was a desire for some balance and to â€œgive back.â€ Also, I wanted to undertake some new challenges and meet new people.
You mentioned that you taught in the Harvard MBA program. How was that experience? Did you find that in the process of teaching, you were able to learn from the students? Did you come away with a new perspective after the experience?
After my teaching experience, I appreciate how hard teaching can be. My students were a mirror into my own youth. They were a mixture of ambition, anxiety, high intelligence and boundless energy. A very demanding lot.
What advice do you have for aspiring entrepreneurs?
Get real top rated experience before you take the plunge. I would tell them that it is very stressful on your family life, often involving moves and difficult finances.